Auto Bailout Worries

by: Chris Bowers

Mon Nov 17, 2008 at 14:09


I'm genuinely torn on the auto industry bailout. Here are some of my concerns:

  • Isn't it just corporate welfare? I am not generally of the inclination that what is good for large American corporations is also good for America as a whole. Bailing out these corporations will not give us ownership over them, it will just transfer public funds into the private sector. I really, really hate that sort of governmental policy.

  • Won't the money just go down a rabbit hole, and we will have to bail them out again? Another concern is that even if we give out the money, the Big Three will just be in trouble against a few months or years later, and need more. The same people will still be in charge, they will still oppose increased environmental standards, and they will keep making cars people don't want to buy. So, not only will we transfer money to the private sector, but it won't even help the companies over the long-term. In this regard, it is rare that I find myself agreeing with a Republican, but I agree with Senator Shelby of Alabama when he argues "any government aid to the car companies should be accompanied by a demand that senior executives resign."

  • Shock Doctrine yet again? How bad is the crisis in the auto industry, really? Are we just being sold another load of "crisis" bullshit to force through a major piece of policy yet again?

  • Oversight. The bailout is currently supposed to have oversight attached to it. However, that is what we were told about a host of other pieces of legislation, most recently the Wall Street bailout, and it didn't happen. Further, the Dingell vs. Waxman fight is still unresolved, and you can guarantee that Dingell won't exactly hold the auto industry's feet to the fire if he wins.

Now, here are my concerns in the other direction (more in the extended entry):
Chris Bowers :: Auto Bailout Worries
Then again, maybe we should do the bailout:

  • Auto Industry ready to file Chapter 7? Rather than Chapter 11 bankruptcy, which would keep the auto industry functioning, it might instead file Chapter 7. That means it would just liquidate and cease to exist.

  • The end of the domestic auto industry would be really bad: If the "Big Three" go under, the auto industry in America would move almost entirely to the south, be foreign owned, and non-union. That's bad, for a variety of reasons. First, we will lose a couple million high-paying, unionized jobs at a bad time for the economy. Second, we will lose those jobs in Midwestern swing states, which could crush support for the new Democratic trifecta before it starts. Third, the end of Big Three would shift economic and political power in the country to the South, and we have had quite enough of that over the past decade, thank you very much. We probably need a domestic auto industry as part of a green jobs economy in the future, too. If there isn't one, then we are in trouble. For example, Chevy Volt technology would be completely lost if the American auto industry goes under.

So, I am genuinely torn on how to proceed. Even though I opposed the Iraq war from the start, Yglesias writes something that I currently identify with:

I feel like some of the commentary on the prospect of an auto industry bailout is starting to remind me of some of the stuff I fell for before we invaded Iraq. The kind of thing where someone yes, "yes this sounds like a bad idea, but if we do it like this and like that and like this then it'll all be okay, therefore we should do it."

I am open to hearing other thoughts. This is an issue where I am currently on the fence.

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Auto Bailout Worries | 95 comments
Medicare for All (4.00 / 4)
As Atrios said, take health care off their books. This in effect frees up millions of dollars for the companies, directly benefits workers, puts cash into all companies, not favoring one over another, and saves the USA $350 billion a year. What is not to like?
Health care is off their books... (4.00 / 3)
...starting in 2010, the UAW has assumed all health care and pension costs... GM will have the lowest labor overhead of any manufacturing company in the united states... if it survives that long!

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[ Parent ]
health care cost (4.00 / 2)
Health care cost and pension for UAW retirees only will be transferred to the UAW. All current employees health care costs will still be borne by the domestic manufacturers only contrary to the rest of the Automobile Manufacturers in world, whose employee health cost are being paid a sigle payer health system
[ Parent ]
GM management retiree health benefits end 1/1/2009 (0.00 / 0)
> Health care cost and pension for UAW retirees
> only will be transferred to the UAW. All current
> employees health care costs

GM has terminated retiree health benefits for all management retirees and surviving spouses as of 1/1/2009.  

sPh

[ Parent ]
It's not the big three that are the problem... (4.00 / 6)
...but their 35,000 suppliers, which is the core essence of manufacturing in America.

If these suppliers go down, which they surely will if GM goes down (unfortunately, bringing much more solvent Chrysler and Ford with them), there will be no manufacturing base left in the U.S.

Without a manufacturing base, there is no way to implement Obama's green economy, no one to build solar cells and windmills, and can we pass as many Employee Free Choice acts as we want, but it won't make a difference... the good union-type jobs will be gone forever...

As any person living in the rust belt can tell you, once a manufacturing plant closes, it never, ever reopens... except as a Wal Mart.  A Wal-Mart nation who only consumes, and doesn't build anything, can never be prosperous... ever!

In addition, Michigan, Ohio, Indiana... all blue states, would be totally screwed.  Michigan would probably have 30% unemployment... there is no retraining program that can compensate for that...

Chris, I know how pro-union you are... ever wonder why the republicans are dancing with joy over the Big 3's demise?  500,000 union jobs, at the very least, would be gone!

Without unions driving our agenda amongst the working classes, we have little hope of a progressive future...

So, I've given you an economic, humanitarian, and political reason why we should support the bailout.  After all, if we can give 20 times the money for insurers to party in the Caribbean, certainly we can give hard working Americans a chance at a prosperous manufacturing future...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

Yes, but (0.00 / 0)
If we give the Big 3 a hundred quadrillion dollars and they keep building horrible cars, what good will that do? We need to coerce (force) them to build cars that the other two billion drivers outside of this country actually want to own.

We need to do what Japan and Korea did, and treat our auto industry as a joint venture between private industry and the government.  

"Don't hate the media, become the media" -Jello Biafra

[ Parent ]
their cars are not horrible - they are better than you think (4.00 / 3)
No apologies for GM's products pre 2002 or so, but many of their cars today are very good - and a very good dollar value.

They make few class-leaders, but the cars are solid.  Malibu and Corvette are excellent.  Cadillacs are mostly excellent now.  Saturn products are good.  Buicks and Pontiacs are now reasonably competitive.  New smaller crossover SUVs are very good.  Trucks (for those who truly need trucks) are good.

Coming down the pike is an outstanding new small car called the Chevrolet Cruze, it looks like a home run.   Sure, would have been nice to have it 2,3,5,7 years ago, but it's not too late.

GM Europe makes many very good vehicles....when GM is forced to adjust, they adjust.


[ Parent ]
I wish. Consumer Reports says no. (0.00 / 0)
http://www.consumerreports.org...

General Motors is a mixed bag. Among the bright spots is the redesigned Chevrolet Malibu; in its first year, the four-cylinder version is better than average and the V6 is average. The Buick Lucerne with a V8 and the Pontiac G6 with a four-cylinder are above average, and the Chevrolet Avalanche has improved to average.

snip

But a quarter of GM models are still well below average in reliability. Some that didn't fare well are fairly new designs that did well in our testing, such as the Cadillac CTS and the Buick Enclave, GMC Acadia, and Saturn Outlook SUV triplets.

[ Parent ]
Consumer reports has a very anti-detorit bias... (0.00 / 0)
...they have never, ever liked american made cars no matter how good or bad they really are.  They have a pro-japanese "house effect" if you will... take whatever they say with a grain of salt.

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!
[ Parent ]
Source please (0.00 / 0)
I'd appreciate more info on your statement:

They have a pro-japanese "house effect"

[ Parent ]
house effect (4.00 / 1)
I've seen stuff on this topic before.  Now, Japanese cars are generally excellent, although not uniformly.  

Is there a statement in that issue about how many of Hyundai's cars, though they may be better in reliability, are inferior on various performance aspects?

Some bad Japanese cars you don't hear people squawking about:  the Hyundai Accent.  The Toyota Yaris. (yes, they're reliable, but offer inferior performance compared to the class leader, which is the Fit.)  Why don't you hear people saying, "Toyota or Hyundai can't build a good sub-subcompact?"  

There may also be sample bias in CR's surveys.  They never reveal sample sizes.   I'd love to see the statistics.

Nevertheless, CR's surveys are useful.  But I believe they overstate the quality of the best cars and understate the quality of those in the middle.  CR, again, is not the bible. Try Car and Driver, Motor Trend, and Automobile.  

[ Parent ]
Hyundai = South Korea (0.00 / 0)
For whatever it's worth.

New Jersey politics at Blue Jersey.
[ Parent ]
i know = i lump asian cars together (0.00 / 0)
hyundai really has made phenomenal strides in the last few years...i'd love to see gm work at that pace.  

I also think Ford has some fine vehicles.

Chrysler..not so much

[ Parent ]
Depends on what you get... (0.00 / 0)
...Chrysler minivans are still the gold standard, and no one can compete with their stow and go features...  Chrysler cars?  Well, that's a mixed bag....

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!
[ Parent ]
not anymore (0.00 / 0)
actually, they are not the gold standard anymore, sadly.  they're ok.  but honda and toyota overtook them a few years ago. odyssey is widely regarded as the best  Yet, the chyslers aren't "bad."   But they lost a category lead.   That company i don't have much hope for.  Somebody will buy the jeep brand, and their trucks are decent enough (there is funny product loyalty among some americans).  But their cars are far behind gm and ford.
[ Parent ]
Where's the beef? (0.00 / 0)
If there's a "house effect", there's surely some sort of study as such.

I don't see an anti-Detroit house effect, as Consumer Reports also said (in my earlier link - bolding mine):

Ford's three brands-Ford, Lincoln, and Mercury-continue to pull away from the rest of the Detroit automakers. Almost all Ford models are now average or better, with the exception of some that are truck-based. Excluding those, Ford's reliability is now on par with good Japanese automakers.

Dear Crab, to address some of what you say:

Some bad Japanese cars you don't hear people squawking about:  the Hyundai Accent.  The Toyota Yaris. (yes, they're reliable, but offer inferior performance compared to the class leader, which is the Fit.)  Why don't you hear people saying, "Toyota or Hyundai can't build a good sub-subcompact?"

First, Hyundai is a Korean brand - most of their current offerings are inferior in terms of MPG - and perhaps just above average in terms of reliability.

In addition to say that a car is not good "because it's not a performance car" is like saying that any car that's not a 'vette or a Z is bad.

Performance and reliability are two different things.

[ Parent ]
i know. you don't know what you don't know (0.00 / 0)
look, go do some research yourself.  you'd benefit from it

I am in a rush.  I can tell you how a 4 cycle engine works.  I can draw diagrams. I can tell you about cam profiles, suspension designs, camber, caster, etc..... I know cars, OK?  I know the industry.  I know hyundai is korean. I never did not know that.  I actually have written articles about cars for newspapers before, if that's worth anything. (hmm.. maybe not, given journalism these days)

Re: performance, duh, I'm talking about braking. handling. acceleration. safety performance.  OK?  

CR NEVER publishes their stat methods.  

If you want to google, i read a piece once about TSBs and recalls and toyota policy on these vs. gm/domestic policy on these, and how this affects CR's ratings to the benefit of japanese co's.  It sounded good to me at the time i read it.

But by all means, go on believing what you believe......

[ Parent ]
If there's an anti-US "house effect", why would CR praise Ford? (0.00 / 0)
To repeat (slightly out of context)
Ford's reliability is now on par with good Japanese automakers.

[ Parent ]
you miss forest for trees (0.00 / 0)
forest, trees. GM and Chrysler.   i've been reading cr since i was a child in the 70s.  I believe in the house effect.

that statement is isolated, but they have begun to reverse their ways.  Go research the TSB and recall thing i mentioned.  And ask them why they don't reveal their sample sizes (you'll see much bigger foreign car owner response than domestic response, i bet)

I also belive in my analogy to the press coverage of the Democratic party.  False equivalences, false balance, etc.  

That is NOT to defend the domestic companies work in the late 70s and 80s into the mid 90s, which was atrocious.  

[ Parent ]
false equivalences (4.00 / 1)
also, braking and handling and acceleration are all safety features.  

I never said all cars must pull 1 g on the skidpad like a vette with 35 series tires.  you are puttin gwords in my mouth.

you want to try a high speed lane change to avoid a collision with a car that does this well, or one that does not?

that is the point.  

here's a funny thing i just remembered...the accord, which i admire as a car, often would score poorly in braking performance in comparison tests a few years back (car and drver, road and track, etc..  you NEVER heard about that in CR.  Or in the mainstream press.

The bar is so high for domestics.  that is the larger point.  It's like the democratic partyy.

[ Parent ]
Uh, Hyundai is a Korean company (0.00 / 0)
100% ack with the rest.
[ Parent ]
Just my personal opinion, but I support Mike's view. (4.00 / 1)
I spend cosiderable time reading tests at consumerreport, too, and I also have the feeling that they are somewhat pro-japanese. Imho it's obvious if you compare their tests with European ones. I can't say much about their tests of US cars, just that I often can't understand why rate them so low. Many points seem to be very subjective.

As for your question for a source - do you believe there's an objective test of consumerreport tests somewhere???

[ Parent ]
Consumer Reports (4.00 / 1)
CR is simply one asshole's opinion.    It's like taking the word of one poll but dismissing all others.  Example...  They did Vacuums and rated the Dyson mediocre.  Others rated much higher.   My Dyson has lasted 4 years with no issues... My mom bought their top rated in that one (I think a Hoover) and it broke within 2...plus, while the suction at the start was about equal... the hoovers got worse as time went by.  

Again... CR is but one opinion... I'd actually check out some other sources as well.

[ Parent ]
They didn't do a long time test on vacuums? (0.00 / 0)
What ididocy! It's common knowledge that those cleaners are only good when they're new, and then performance goes down fast. Even if you exchange all filtes, yo always have the feeling that the power isn't there anymore. That's the strong point of a Dyson, because of the different principle it keeps its high power for a long time. My brother has one, not new anymore, I tried it and was quite impressed.  
[ Parent ]
Average is "good" in CR - they say so themselves (4.00 / 1)
If only a quarter of their models are below average, that's not bad at all.  Several Hyundai's are bad (some are very good) but Hyundai gets great press.

RE: press, The US automakers are like the Democratic party until maybe this year.

And "average" by todays CR standards (it's on a curve) is much better than average for 10 years ago.

Were you happy with a Toyota's reliability 10 or so years ago? Then you'd be happy with a below average car today (per CR).  The entire industry has improved.

There are several Mercedes Benz and BMW models you would not want to buy on CR's metrics, as well.

CR is useful. But it is not a bible.  

[ Parent ]
Does "average" mean what it usually means? (0.00 / 0)
If the commonly accepted meaning of "average" is applicable, then GM is doing pretty well to have only 1/4 below average. Usually you expect 1/2 to be below.

Maybe "well below average" is pertinent - but more than 1 standard deviation below average should still include ~32% in a normal distribution.

Or maybe "average" is a CR category that has been divorced from its usual meaning?

[ Parent ]
Will you stop with the talking points... (0.00 / 0)
There cars are NOT horrible, Chrysler maybe cut Cerberus is only making cars by mistake.  

A joint venture into green economy is what it needs. You really need to read this.  Automakers need higher gas pricesIt is a great way to move it forward and help pay for it.   But first, we have to give people the jobs to earn the money on which to pay taxes.  

They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich  

[ Parent ]
... (0.00 / 0)
So you have an alternative explanation for why foreign car sales are surging and domestic brands are faltering? And then there is the issue of competing overseas...

If American companies are producing affordable, reliable, safe, low-fuel consumption cars that can compete with Honda and Toyota, then the auto companies had better use a big chunk of this bailout for an ad campaign, because even if they made better cars that have to deal with their reputation as well.

Instead they will probably just make more and bigger SUVs since gas is getting cheap again and they lack the basic foresight to realize that the price of gas could actually increase in the future.  

"Don't hate the media, become the media" -Jello Biafra

[ Parent ]
If you wanted them to stop building horrible cars (0.00 / 0)
you needed to get people to stop buying SUV's.  I would agree that there are many things the big 3 screwed up on, but stop letting consumers off the hook for creating demand for SUV's.
[ Parent ]
comparison to Iraq (4.00 / 2)
I see the parallels, but I don't think the equivalence is really there at the nitty gritty.  As it stands, the available evidence says the big-3 really are in serious trouble, and the consequence of them going chapter 7 or 11 would be bad.

Perhaps that should be a condition of the bail-out - that they open their books to some congressional auditors who would be sworn to secrecy but could at least affirm that the automakers are not deferring some chunk of profits or writing off large losses early to exagerate their financial troubles at the time when they are most likely to get money.

From the perspective of risk/reward and mitigation, it seems like the potential downsides of not acting here and being wrong far outweight the costs of bailing them out if they don't really need it, or don't do smart things with the money.  This also was not true with Iraq - the certain downsides of war are very very bad so the harm you seek to avert must be an order of magnitude larger.  This was never plausbible with Iraq.  Even if they had chemical and biological weapons, the harm one could do with these is not really all that great.  

So the question is not bail-out versus nothing, it is bail-out versus what?  If you let the big 3 fail, how do you catch the workers who will be impacted?  Opposing this bail out progressively really requires a better plan, not "no plan."  

socialist shock doctrine (4.00 / 7)
The Govt. should write it as a partial nationalization; there needs to be a great deal more "taken" by the Federal government, including a major (possibly dominant) role in future directions for the company -- not just promises, but actual voting positions on the board.

Why shouldn't GM be partially in the business of green technology anyway? Turn the shock doctrine around.

complete nationalization, actually (4.00 / 2)
The three domestic automakers are together worth less than $10B.  The government should take majority ownership in each of the domestic automakers and take control of each of the majors' boards in proportion to the amount of capital they inject.  We can keep the current management, but let them know if they don't do what we want they get fired.
[ Parent ]
And maybe, eventually, make them employee-owned. (4.00 / 1)

[ Parent ]
negotiating THAT with the union would be tricky (4.00 / 1)
as they all employ a bunch of non-union middle management, determining what these people get ina  deal would be a bit of a mess.

But an interesting idea, nonetheless.

[ Parent ]
Disagree with one point... (0.00 / 0)
Second, we will lose those jobs in Midwestern swing states, which could crush support for the new Democratic trifecta before it starts.

Regardless of what happens, Republicans have lost Michigan for a generation.  If the bailout fails, Indiana and Ohio would join them.  People won't forget who went out of their way to crush their state.  Michigan news is GM 24/7... nothing else matters up there... Republicans will have ceded the midwest for awhile...

Long term, poverty helps the Republicans... but retirees have long memories... the auto generation will have to completely die off before they regain their foothold in these states.

But, destroying unions and their strength in GOTV and convincing blue collar folk to vote for their interest instead of against it... well, that is why Republicans are so giddy at seeing the Big 3 fall...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!

I'd vote against them, almost did this time. n.t (0.00 / 0)


They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich  
[ Parent ]
Agreed and More (4.00 / 3)
As Josh says, be bold, and require green-shift.  I expect that Obama, who always was careful when speaking of saving jobs in car manufacturing to couple that promise to a green future, has some such proposal on the table.   If Detriot can hold on, we all will be better off on this matter after January 20.  The Big Three probably realize that the best way to avoid "Change You Can Believe In" is to ramp up talk of emergencies now, before the Trifecta is in place.

Still, talk about change: universal health care and a green auto industry.  Not a bad way to start.

Avoding change you can believe in? (4.00 / 2)
Hardly... The U.S. auto industry is pretty much counting on Obama...  If they weren't running out of cash so quickly, they would have just waited until January 20th for assistance...  Pretty much Obama is Obi Wan Kenobi to the auto industry... their only hope!

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!
[ Parent ]
The American Auto Industry Nightmare (4.00 / 2)
General Motors has come to Washington, begging for a $25 billion bailout to keep it and its ailing Detroit counterparts going next year. But nobody seems too thrilled about the prospect. Liberals dwell on the companies' gas-guzzling sport-utility vehicles. Conservatives obsess over all the well-paid union members with gold-plated benefits. And people of all ideological backgrounds remember how they used to buy domestic cars, years ago, but stopped because the cars were so damn lousy. "The downfall of the American auto industry is indeed a tragedy," the Washington Post editorial board sermonized recently, "but the automakers and the United Auto Workers have only themselves to blame for much of it."
- Jonathan Cohn in The New Republic.

General Motors! I remember when I started buying Japanese cars thirty or so years ago after two GM cars that literally fell apart on me because of lousy craftsmanship: one an Oldsmobile 88, one a Corvair. Since that time I have had Toyotas, Mazdas, Subarus, Nissans (had a VW in there, too, for a time), all fine cars that were well made, got good mileage and lasted a long time. Currently I'm driving a 2001 Toyota Echo that gets, on average, 37 miles to the gallon. My wife just bought a Honda Fix after her 11-year-old Mazda finally needed a repair that would have cost more than the 50% down payment on the new car. She expects to go another 11 years with this one.  Neither of us believe an American car would have done us as well.

Now, here we are with a major financial crisis and the jobs of millions of folks both in the manufacturing, but also in the dealership, parts, carwash, muffler-change industries depending on GM surviving. And there is the promise of the Volt, a plug-in hybrid, by 2010 (No doubt after a plug-in Prius by Toyota is already on the market.)

A lot of Japanese cars are now manufactured in the US in states that don't mandate Union membership. They provide jobs, make profits, make good cars and support their local economies. They are not, however, the scale and the scope of GM. Nor are their executives paid the same kind of money as those at Toyota or Honda, who make much less than GM officers. And GM is coming to Congress seeking 25 Billion Dollars.

And they will most likely get it.

Jonathan Cohn again:

But the debate over a Detroit bailout should begin a larger political conversation, one that sprawls beyond the Midwest and the intellectual confines of lean production techniques and workers' legacy costs. Whatever mistakes the Big Three and the UAW have made, their struggles are a pretty good indicator of why the government--not employers--should be responsible for providing health insurance and why, without broader action to fight climate change, improving fuel efficiency will be a struggle. Naturally, the Big Three should enthusiastically promote these reforms, something they haven't done in the past.

Nothing can stop the revolution in auto-making and drivetrain technology; even under the best of circumstances, the Big Three need to become smaller, more efficient, and more environmentally conscious. But if the government manages that change and uses it as a springboard for discussion of broader economic reforms, everybody can benefit.

And in a few months they will be back for more, wont they?

Under The LobsterScope

"Nice" anti-union dig. (4.00 / 8)
A lot of Japanese cars are now manufactured in the US in states that don't mandate Union membership.

What a pleasant euphemism to use in exchange for "right-to work" laws, which would immediately raise a red flag to many posters.

A right-to-work state means that employers cannot include union shop in their contract.  However, federal law requires that unions represent everyone within the workplace, both members and non-members.  This means not only do the negotiated wages and benefits of union members apply to non-union members, but union reps need to represent non-members in grievances around  disciplines, firings, etc.  Essentially it's the same as allowing people to opt out of paying taxes while still allowing them to receive government benefits.  Or, imagine if you're a business, and your customers aren't required to pay any fee when you provide a service.  

This makes organizing in a "right-to work state" far harder.  Unions need to constantly internally organize to keep their membership levels high, and also are never financially secure.  Of course, that was the whole point of passing the laws to begin with - setting a wall around the South to make organizing damn near impossible.  

Regardless, the union status of the Big 3 plays almost no role in the trouble they're in.  GE makes scads of profit building locomotives in Erie, where union workers make $27 per hour.  The UAW has already bent over backwards with a number of concessions as well - there shouldn't be any expectations any more should be taken out of the worker's hides.  Given how badly managed the Big 3 are, I have my doubts that this will be enough, but the alternative is horrifying.  

[ Parent ]
I never had an ounce of trouble with my Sunfire (0.00 / 0)
paid less than $20K for it new in Jan 2002.  Driven cross country with it a couple of times. The quality thing really has become pretty damn overblown.  

Now when I owned a Mitsubishi, on the other hand...

Now, they do need to fix the executive compensation problem.  And it would make sense to consolidate the stupid dealership system they have.  

But cutting the unions out?  Really?  

[ Parent ]
1988? Christ, you don't get over much, do you. (0.00 / 0)
Are you still pissed at your mom for grounding you from that football game?  

They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich  
[ Parent ]
Living Near Detroit (4.00 / 2)
It has been kind of eye-opening I guess since I live so close to Detroit.  I obviously get the PRO-bailout side from everyone around these parts, well most I should say not everyone.  So its been eye-opening to see the blog-o-sphere and many others from different parts of the country being against a bailout.  

I stand on the fence with it and can see arguments for both sides.
 

And this, I think, is the answer (0.00 / 0)
we should be anti-'stupid bailout.'
[ Parent ]
Stipulate the Money Is Only For Green Cars (4.00 / 2)
Let them use the cash they have to stay afloat.  Then let the stock market do what it is supposed to do, put in longterm investment capital not be a get-even-quicker-richer scheme for management and investors. Give the Big-3 money without conditions they could very well just use it for executive bonuses and stock dividends. (Sound familiar.)

I agree there is as much downside as upside to saving their sorry asses.  But if they go down the 3.5 million lost jobs is a hit this economy can't take.  Without people buying things and paying taxes the whole worldwide economic system could implode.

Europe is shoring up their auto industry, how are they doing it?

And, a question for conservatives; are all union auto workers, and pensioners, Democrats?  Cause if you won't do anything they will be in short order.

We are shoring up our auto industry??? (0.00 / 0)
Ok, there are talk about bailing out Opel, which is in dire straits because of GM US, but nothing decisive yet. What's your point, Steve???
[ Parent ]
Europe Is Investing $65B To Bailout Their Auto Industry (4.00 / 1)
Do you know what terms they are getting, interest? voting stock? etc?  GM Europe, Russia, India account for 40% of their income.
[ Parent ]
Pls provide a link! (4.00 / 1)
This is total news to me, and I live in Europe. A 65 billion bailout? Who? Where?
[ Parent ]
This bit from Deutsche-Welle: 40 billion Euros (0.00 / 0)
http://www.dw-world.de/dw/arti...
German carmaker Opel has asked for tax incentives for new car purchases, the introduction of low-cost consumer loans and a bonus for taking cars more than 10 years old off the road.

The automaker said around $52 billion (40 billion euros) would be needed to set up and finance the low-cost consumer loans which could be managed by the European Investment Bank.

It sounds green - and directly addresses the credit crisis.

[ Parent ]
As I commented here, only Opel asked for a bailout... (4.00 / 1)
..and it's not decided upon yet, and it isn't 65 billions. Also, it's somewhat unlikely that they'll get it, because nobody wants to spend such a vast sum, only to see it vanish at GM US.  
[ Parent ]
The Facts I Quoted Were From A Sunday News Show (0.00 / 0)
I think it was Sen Carl Levin on Meet The Press - it might be on You Tube or NBC.com.  If my very, very old gray cells recall right it was the EU putting up the so called bailout.

[ Parent ]
It's more of a German discussion right now (0.00 / 0)
Even though it has been discussed to help the industry on a European level, that is misleading, since it seems this discussion only happens in Germany. And so far it's mainly  centered around GM's German branch Opel, other automakers only expressed interest in the governing coalition maybe implementing tax reliefs for buyers of new cars, but no direct bailout so far. I guess  the auto managers don't want to ruin their stock performance by looking like they are in trouble.

As for Opel, the issue has become a campaign issue, and since now both the conservatives and the social democrats want to show that they won't let about 50000 jobs simply vanish, a medium sized bond of about one billion Euros is becoming more likely. Good report about this in an English language story in German weekly Der Spiegel now:
"As GM Falters, Opel Seeks Government Help"
http://www.spiegel.de/internat...

As for the "European" subsidies, this story shows that this isn't really a European initiative now:
"EU May Be Eying Auto Industry Subsidies"
http://www.spiegel.de/internat...

[ Parent ]
consider... (4.00 / 2)
- GM can't declare Chapter 11, because they would need a lender to provide them capital as a "debtor in possession." In today's financial market, no such lender exists.

- Even if the Big 3 end up borrowing $50 billion, it is substantially less than the treasury receives in taxes from the employees of GM and their suppliers, distributors, and dealers over two years (about $36 billion per year).

- Wouldn't it make sense to lend them enough money to survive the current financial market crisis? That way, if a Chapter 11 bankruptcy were necessary for them to re-organize, the economic climate would be such that they would have that option. The government would not be willing to act in such a capacity, because no politician want to tell a business that they have to cut jobs.

GM's at biggest risk (4.00 / 1)
Companies need some cash on hand to keep operating, to pay suppliers and employees.

At least according to the business press, Ford has done more for its cash position - it can survive for about a year.

OTOH, GM is perhaps a quarter away from "running out" of cash. By "running out", I mean they would fall under a minimum amount of operating capital. In other words, their choices - at that time - would be to stop paying employees or suppliers or declare bankruptcy.

As Chrysler is private, nobody is quite sure about their position. However, they reportedly have a good cash hoard as well, which is supposed to be the reason why GM tried to merge with them.

Thus, the question becomes what happens if GM goes under early next year. If that means a cut in supply, that could be good for the other automakers (but awful for workers). Would that save Ford and Chrysler? Would other automakers (including the American divisions of Honda, Toyota, etc.) be able to pick up some of the GM plants that would otherwise close?

I guess the big question is what's best (or worst) for the economy - for the industrial base - and for the workers - a bankrupt GM or a situation where every US automaker is closing plants?

Or under what conditions could we save jobs with a bailout? Can we say "no bailout" unless there are "no layoffs"?

Chrysler (4.00 / 2)
which is supposed to be the reason why GM tried to merge with them.

I had rather heard it was merely to acquire Jeep, which is the sole valuable brand Chysler has that has any enduring value.  

GM probably would have discontinued all other brands, maybe folding in a few successful models into their existing brands.

[ Parent ]
Supposedly Chrysler has some cash (0.00 / 0)
http://www.nytimes.com/2008/10...

G.M. needs the $11 billion in cash that is currently on Chrysler's books, and Cerberus is said to be considering a large investment in G.M. stock should the deal be done.

Though I don't know how much of it would actually be useful for GM.

A merger would almost certainly lead to plant closures, however. And you might be right w/r/t other brands w/in Chrysler:


In addition, he would have to drastically reduce Chrysler's manufacturing capacity and employment, and absorb billions of dollars of its outstanding debt.

[ Parent ]
My understanding... (4.00 / 3)
Is if GM fails, they all fail.  

This is because many auto parts companies produce for GM, Ford, Chrysler, as well as the "imports."  If enough suppliers fail with connections to Ford and Chrysler, and alternate supply chains cannot be figured out within a few weeks, the other two will quickly fold as well.  At which point it's going to get damn hard for any auto supplier to survive in the company - which could even stop production of Japanese and German cars in the U.S. for quite some time.  Prices will shoot through the roof.  

In chapter 7 bankruptcy, assets should be sold off in order to pay off as much debt as possible.  It's theoretically possible that certain plants could get picked off by foreign producers for this reason.  Given the specializations of brands, it would probably only make sense to purchase a plant if most of the brands made at the facility were also purchased.  Typically, a company does not hire any old employees on unless it chooses to, and almost never recognizes the union.

Practically speaking, given the credit crisis, I don't think there would be many takers for these factories - most likely they would simply go idle.  Perhaps the government could have a "plan B" buyout - allow Toyota (or whoever) to buy the facilities with government aid, provided they continue to recognize the UAW and keep on the old employees.  It may be the best solution, in terms of preserving union jobs and getting the U.S. auto industry out of the hands of idiots.  

[ Parent ]
arrg, should have said (4.00 / 1)
"in the country", not "in the company"
[ Parent ]
We have to go through these scenarios in detail (0.00 / 0)
to either justify them or not.

Thus, I really appreciate analysis like that presented by telephasic, instead of simple slogans like "make all the CEOs resign if they want a bailout"

[ Parent ]
What I don't understand - why don't they sell more brands? (4.00 / 1)
They just sold their Suzuki share, ok, but that's just pocket change. Why don't they sell Saab, too? Or any other brand? They have to reduce the scale of their operations to make the money last longer. Why didn't they already do it? I know that legal concerns about their dealership keeps them from shutting down US brands, but what about international branches?
[ Parent ]
I wonder if there's trouble finding buyers (0.00 / 0)
If the cash crunch is affecting Mergers and Acquisitions, perhaps there are no willing buyers (or perhaps no willing buyers who are able to get the requisite cash).
[ Parent ]
billions for people not corporate welfare (4.00 / 1)
This blogger for The Economist is against a carmaker bailout,

a bail-out involving tens of billions of taxpayer dollars ought to hold out the promise of helping the people it's supposed to help. Saving Ford, General Motors and Chrysler provides no such hope. In all probability, a bail-out will hurt the very region it's meant to help. One reason for this is that a rescue is unlikely to work.

And there is the direct opportunity cost of the money involved - $50bn spent propping up the Big Three is $50bn that can't be spent on direct investments in the people and cities of the Rust Belt. That kind of money could fund early retirement for older workers and unemployment benefits and retraining for younger workers, with enough left over for infrastructure improvements, research incentives and educational grants for the region as a whole.

http://www.guardian.co.uk/comm...

Maybe we would all be better off with the big three car companies out of business, the assets used to make new smaller car companies.

If we do a bailout the $50 billion will only be a tiny down payment. I mean the car companies spent $40 billion yearly just on advertising, $50 billion is nothing to them. It will be another AIG, burning through the first installment in weeks, back for more billions again and again.

If the automakers fail... (4.00 / 1)
...we'd lost $185 billion of taxes the first year alone...  $25 billion seems like a viable investment strategy, personally...

REID: Voting against us was never part of our arrangement!
SPECTER: I am altering the deal! Pray I don't alter it any further!
REID: This deal keeps getting worse all the time!
[ Parent ]
Yes (0.00 / 0)
the apocalypse scenario should be a total government buyout.  

Just letting the auto industry collapse would have so many disastrous second and third order effects that it is almost unthinkable.

[ Parent ]
Some, we did it to ourselves, some, really bad foreign policy (4.00 / 8)
I work in the auto industry. I've designed electronic airbag modules that are in Ford, GM and Chrysler vehicles. I've worked for 3 auto suppliers.  Today at 3pm we are having a meeting about the state of our company and the industry.  The auto companies have been painfully slowly changing thier vehicle line-up since about 2005.  Ford has shed 40,000 jobs since 2005.  The credit crisis has made the auto industries problems very acute in the past two months.  Where 90% of auto loans/leases were being approved, less than 70% have been getting approved over the past several months.
I also think the oil centric foreign policy of invading Iraq was some kind of cheap oil gambit that has obviously blown up in unintended fashion.  The auto industry was allowed to limp along for a few more years on the delisionary hope that cheap enough gas could keep the house of cards standing.  $4 gas killed that notion.  Now gas is $1.88/gal here in Detroit and nobody cares.  
Myself and Eric B over at Michigan liberal has been discussing the mulitude of failures that have gotten us to today and where we need to go.  Talking with my collegues, liberal and conservative alike, we'd like to see a loan program with a strategy attached to it.  Obama spoke of this in his 60 minutes interview.  

I can say this, here in Michigan, we are on the ropes.  It's been this way since 2002.  We never got to enjoy the housing boom, the bust quickly started here in 2005 and has accelerated ever since.  I think the Big 3 executives are open to some kind of health care reform to shift the costs of thier books.  This is a crisis but also an opportunity.  A chance to outline a roadmap for the future.  I think that we will need to build up an urban mass transit system but I also believe that automobiles are are very liberating, flexible and dynamic tool for a modern economy.  They  should no longer be built on the oil-centric model but hopefully by the time my daughter graduates from high school, we will have energy stations instead of gas stations.  part gas, part electric, part flex fuel.  Diversity, the best way forward.

Iraq/Financial Sector bailout comparison. (4.00 / 1)
I share the feeling that, once again, some powerful group is predicting disaster if we don't act right now to serve their interests and line their pockets, and that we are asked to trust people who have proved themselves to be untrustworthy.

But I see a couple basic differences between this and the Iraq and the financial sector bailout: first, the auto crisis isn't shrouded in secrecy (the balance sheets are public, and it seems pretty clear that they are going broke); second, I don't see that the US auto industry's woes are entirely self-created (Toyota, Nissan, etc, are all hurting as well, but they may weather the storm without help); third, the failure, which appears to be a virtual certainty without the bailout, undoubtedly has dire immediate consequences for average Americans.  Because I think the crisis is pretty simple to understand (that is sinking sales and gas prices rising as the economy faltered, and high overhead), I am less concerned about another unjustified or doomed bailout - sales will someday increase, which will be a worldwide event.  I also have little doubt that the money will be used in ways that the government roughly intends it to be - unlike the banks, who decided not to lend money, the car makers will design, market, and build cars.  Even if the industry is ultimately doomed (as the Republicans say), it seems better to keep it afloat during the impending recession.

I don't like it, but I'm inclined to support this bailout.  

Give them loans (4.00 / 1)
The problems are manifold, primarily due to the fact that the U.S. has kept gas prices low.  If they had not had the refuge of the truck market, they would have shaped up long ago.  In fact, they are pretty good now, but they neglected the car market way too long because there were obscene profits in the truck market that they still owned.

They are hurt now by the credit crunch after they were hurt by high gas prices.  Gasoline is now at a two year low.  If people could get credit, they would go back to buying gas guzzlers.  All the mfgs have gone to bigger cars.  The current Honda Civic is larger than the Accord was when it first came out.  Toyota and Nissan had moved to making gas guzzler SUVs.  It's a bad time to raise gas taxes, but it really should be done so that the incentive is there to build smaller, fuel efficient cars.

Who deserves blame?  The automakers, the unions, Congress and the American people.  I favor the loans.

I agree with all of your points. (4.00 / 3)
But, if they take the $25B out of the financial bailout I think I am all for it. The automakers won't put it to any worse use, and it might do some good. We all know the $700B number was made up anyway, so the financial sector can deal with $675B.

I also think the leadership of the big three should have 6 months to find replacements and resign. The bailout should also put caps on executive pay for the companies. Tie their pay to company performance.  

The truth about John McCain.

While resignations may happen in exchange for bailouts (0.00 / 0)
I don't think it's required for all. Alan Mullaly has put Ford in a better position than GM. Their product development is in better shape. They can lean on their European sales a bit. Based on public reports on their cash flow, they don't need the bailout until late '09 - if the economy doesn't improve by then.
[ Parent ]
Probably right. (0.00 / 0)
Blanket resignations probably aren't necessary. But, for $25B we can afford some congressional investigations into what went wrong, why it went wrong, and whose responsible. Those deemed responsible should be forced out. Taking away any golden parachutes for those responsible would be nice as well.

The truth about John McCain.
[ Parent ]
Hmm (0.00 / 0)
I don't trust Bush to do what Obama wants... at this point you either have to A) Pass Obama's plan but give in on the Colombian Free Trade or B) pass a small bailout to keep them a float until After January and pass a bigger better plan then.    
The US-Treasury Bubble is about to burst (0.00 / 0)
no one will bankroll a declining power that only knows how to print money.

Why not simply but Honda or Toyota with the money?

GM is betting the company on the Chevy Volt. (4.00 / 1)
See also excellent The Atlantic article.

If the U.S. government bails out huge Wall Street financial firms after all their greedy irresponsibility, and then stands by and lets GM go under when they take a big risk on developing the mass market plug-in hybrid, moving the state of the art ahead by possibly years, that seems very wrong to me, and would send a horrible message. This looks to me like the sort of positive risk-taking that's worth rewarding. I mean, many people are suggesting nationalizing the auto industry and putting it on a green tech crash course -- but GM is already doing this.

GM "stole" the vehicle line executive from the German reasearch center (0.00 / 0)
Frank Weber:
http://gm-volt.com/2008/02/25/...

Rumours in Germany say, the Opel folks aren't happy. But then, of course, they have more to worry about than simply manpower drain. After years of US executives' interference ruining their operations, they finally got enough independence again to really develop cars fit for the European market. Only to be put in severe financial straits because of GM transferring money to the US. There are already talksabout a bilout for Opel. But nobody wants to subsidize GM US, so now there are discussions about how Opel can be spun off from the sick mother hen. I guess this has no chance in hell, but who knows?
http://www.thetruthaboutcars.c...

[ Parent ]
Except (4.00 / 3)
GM's decision to kill the EV1 set it back years.  If they had kept the EV1 going as a concept car even if it wasn't commercially profitable they might be ahead of Toyota now.

Having watched Who Killed the Electric Car, I find GMs conversion too little too late.

However, I would probably save them if you fired the senior management and basically used the fed money to build "green" cars.  If it is a blank check to build SUVs and crappy sedans, forget about it.

[ Parent ]
I dunno. (0.00 / 0)
While I don't know too much about the whole story and situation, I can see how there could be charitable explanations. I.e. GM tried the electric car and got bitten badly, so they stayed away for a long time (while the rest didn't even try). Now they're trying again (while the rest aren't).

And obviously, there are also less charitable explanations, as per your post. I'll leave it to people with greater knowledge of the facts to decide where the truth lies.

Either way, having come this far, losing the Chevy Volt -- which is the project we have closest to designing the mass-market usable electric car -- to chapter 7 liquidation seems to me like it would be an absolute travesty.

[ Parent ]
"we will have to bail them out again?" Maybe. In 29 years or so. (4.00 / 1)
Chrysler 1979.
Took until 2008 for them to come begging for money again. Not really bad.
Exactly (4.00 / 1)
And since we're all going to die someday, who needs universal health insurance?

Republican thinking at work...

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton

[ Parent ]
And by all accounts (4.00 / 1)
the government and taxpayers actually made money on the Chrysler bailout.
[ Parent ]
It isn't a bluff. (4.00 / 2)
The point is that domestic autos have legacy and other costs that make them more expensive.  NAFTA puts them at a total disadvantage when it comes to competing.

Their legacies are the history of our industrial revolution. We need to figure out a way to preserve the ideals the business model embodies while relieving them of the burden.   They cannot carry this burden and compete.  They have already reduced in size 30%, and the unions have given huge concessions to help their restructuring.  They were limping along until the freaking economic meltdown.  It is hard enough to get a loan when your a good risk, let alone on verge of bankruptcy.  

It is also a matter of national security.  A country that can't make anything can't sustain or defend itself.  The US might as well be living in China's basement.  

Here's are some things to read that will give you more insight into the industry.  It is worth and deserves to be saved.  

Automakers need higher gas prices

The potential bankruptcy of GM, and what it could mean to you (Part I)

Part 2

Part 3 Much ado about GM, Part 3 of 3

Toyota Hits Rocky Road

The Case For Detroit - Bailout two of the Automakers

They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich  

Volkswagen used the similar EU market to its advantage (4.00 / 1)
The VW folks first bought Spanish automaker SEAT when the wages there were still quite lower than in Germany, and established it as a more youth oriented, sportive brand. This seems to work well even though the Spanish wages are similar to the German ones right now. And then Volkswagen bought Czech automaker Skoda when the Warzaw Pact crumbled. This brand is doing very well, too, selling more family oriented cars to cost sensitive customers. Volkswagen also produces cars in Mexico, Brazil and China, so it sure is possible be successful in global free trade and still maintain production in the more expensive home country.

Imho it's more of a problem of corporate culture, and of  allowing foreign branches to act relatively independent from the corporate headquarters. Too much US management interference has been a problem of Ford and Opel for decades. Just one example: When Diesel became increasingly successful in Europe among gas price sensitive customers, Detroit beancounters still didn't want to allow their German research centers to spend muc money on the development of new engines. Consequently, Ford and Opel got into problems because they couldn't profit from the new trend. Car nuts began to ridicule both brands as being powered by scrap iron!

So,imho, it's more that a failed global strategy is responsible for the downturn of the US automakers than any problems with NAFTA. I guess Detroit managers are much too focussed on their domestic market and this prevents them from using international trade to their advantage. But such one eyed stragegies can't work in the global markets of the 21st cwntury anymore.

[ Parent ]
They were doing great overseas.... (0.00 / 0)
It was helping to make up for the bleed in north american operations.  Then the world recession.   China has huge tariffs on US auto imports.  They don't want transplants into their country, they want to build their own.  China isn't stupid, just us.  We are the only country that hasn't done shit to protect our industry.  

They're asking for another four years -- in a just world, they'd get 10 to 20. ~~ Dennis Kucinich  
[ Parent ]
Most people have already bought their last car, they just don't know it yet. (4.00 / 1)
Between U.S. and global financial collapse, CO2-induced climate change, and peak oil, unfortunately the automobile industry as we know it has only 5-10 years left in any case.

The model of Asia lending the U.S. money so that U.S. "consumers" can purchase (with leverage and easy credit) far more than their productive output as workers is coming to an abrupt close.  This won't be pretty.  As mentioned above, the mother of all bubbles is the T-Bill bubble.  We're now getting just a glimpse of how this will look.  Pre-collapse, in the good old days, when people walked in for a car loan only 10% were denied.  In other words the whole easy credit game was working great -- the world we're all familiar with.  Today more than 30% of car loan applicants are denied.  Watch this stat get better in the next year, but then worsen more or less permanently as global deleveraging unfolds, with a corresponding fate for the auto industry.

Despite this, as an immediate step, keeping the auto industry on life support is probably the best that can be done.  As others here have said, the immediate collapse of an entire key domestic industry is simply too costly and politically problematic to contemplate.

But don't be fooled into thinking that a bailout will gain us anything more than a year or two of keeping these millions of workers from unemployment.  We're not talking about "retraining" here.  We're talking about having to find productive employment in entirely new industries which have barely even on the drawing board yet, let alone created or reconstituted: green energy, massively expanded electified mass transit, etc.  We're never going to see "business as usual" again.

Two words: export market (4.00 / 2)
US drivers aren't the only ones who buy cars. China is an obvious market, also Russia, the mideast, etc. Even Cuba, where apparently most people who have cars are driving ones from the 50's. When Castro goes--or even before, with Obama in office--it will be a huge export market. Plus, US automakers can branch out into other lines of vehicle types, and focus on leapfrog technologies like plug-ins.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton
[ Parent ]
Are US cars the right choice for international markets? (0.00 / 0)
I don't think so. Imho the domestic US market is shaped by some pecularities that are different from many other countries. Firstly, gas is way too cheap in the US, and this has handicapped the development of cars with better mileage. Also, the focus has been on engines that are designed long lifecycles when automakers abroad focussed on higher performance and less weight. And Americans spend much more time commuting than most other nationals. This favors more comfortable cars, but in other nations, the focus is more on performance aspects and on making cars more fun to drive. The US is more rural, with consequences on car design and customer needs, while abroad, the urban and suburban customer is the focus of attention. And so on.

All in all, simply exporting cars designed for the US market is a marketing desaster. Cars have to be designed for the markets where they have to be sold. And the US centered corporate structure of the GM and Ford isn't very good at this. And, btw, the relatively high wages in the US (compared to china and Russia), plus the almost totally missing care for the shenanigans of the dollar,with its constant up and downs, make simply exporting US manufactured cars to other countries a losing strategy. And so, I guess, when Castro goes, US cars won't become the most common view on Havanna's streets, but more probably cheap Volkswagens, built in Mexico and Brazil.

[ Parent ]
Who said that it had to be the same cars? (0.00 / 0)
The Big 3 can certainly re-tool to have different lines for different markets. Other automakers do that, so why not them? And US cars have been exported to other countries for over a century, and continue to be exported. Not all US cars are gas-guzzling behemoths that will break down 2 blocks from the dealer, out of warranty.

As for labor costs, they can set up shop in other countries, as foreign automakers do here, while still designing and building subcomponents in the US.

None of these issues are unsolvable. None.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton

[ Parent ]
Give every buyer of an "American" Car an X Thousand Dollar (4.00 / 1)
check? Or maybe better yet the government can buy the cars, the ones closet to being green say, and then lease them, fairly reasonably, to consumers. Do the leasing through the most efficient bureaucracy the Social Security office.

Jeff Wegerson
I, too, like the idea of just direclty subsidizing the cars (0.00 / 0)
If the government just goes and takes an amount off of the sticker value of the car, then the news reporting it, alone, will be a huge advertising kick for the big three.
[ Parent ]
Bailout with strings (0.00 / 0)
I find myself in favor of the bailout, because I see the collapse of the US auto industry as the much greater evil at this point. The broader economic impact would be devastating. It would have a negative political impact in key states (I hate to make that argument, but it's true). And it would gut American manufacturing at a time when we need it if we're to shift to a green economy.

But if we do it I want big strings attached. I'd love to see the auto companies split up into much smaller units. I can't imagine 30 smaller companies would all screw up as badly as the three big ones have. I want tough environmental and emissions standards on new vehicles. And taxpayers should get an equity stake.

Size matters. (0.00 / 0)
Sry, but small companoes can't be the solution. The trend everywhere around the globe is going to bigger corporations. Small companies can't built the kind of competitive, efficient cars that will be the future.
[ Parent ]
any business that is too big to fail (0.00 / 0)
should be regulated as a government sponsored monopoly, like utilities are. If we don't have the basic protection, the corporate giants can pull the TARP over our eyes every time.
[ Parent ]
Destroying the Big 3 is the GOP's "Northern Strategy" (4.00 / 2)
I.e. put one of the biggest overall northern employers--and especially employers of labor--out of business, destroy labor in the process, put a lot of union workers out of work, wait a while, then flip them over to GOP as they work through their anger and confusion. Refusing to support any auto industry bailout is the GOP's way of chipping away at Dems' dominance in the north, one union shop and employee at a time.

"Those who stand for nothing fall for anything...Mankind are forever destined to be the dupes of bold & cunning imposture" -- Alexander Hamilton
Volt? (0.00 / 0)
I saw a Frontline recently that had a pretty pathetic test of the Chevy Volt.  Does anyone know if this car really will be online in 2010 (assuming the persistence of GM)?
Some quick comments (0.00 / 0)
First, read this about the VOLT http://www.theatlantic.com/doc...
It has revolutionary implications for global warming and battery technology and carbon pollution from nickel mining.
Second, Consumer Reports had the Saturn rated number one in its class for around four years while GM was actually practicing TQM in those Saturn plants and not just using it as a buzz word.
Third, the estimate of lost jobs is more like 4 million.  That's 4% of our workforce.  That sort of thing cascades.
Fourth, because of the financial meltdown, there is no possibility of chapter 11.  
The government can just operate as if it were chapter 11 and step in where banks no longer have the means to do so.  It is the only sane alternative.
If we can support (4.00 / 1)
banks, we sure as hell should support automakers.  Just to be open, I own two Hondas.  Yes their product line was crappy, and yes they have been poorly managed.  Letting these companies fail might be the final straw for the economy.  Somewhere btw 2 and 4 million people losing their jobs!  How many of them will loose their healthcare, their homes, their ability to send their kids to college?  As some others have noted there will be a huge loss of tax revenue.

The big question that remains is, will the bailout right the ship or will they fail regardless.  I can't answer that with complete confidence, but I do believe that they can improve their cars and their image.  I had the priviledge of driving a Hyunda Sonata from CA to IN, about 9 years ago.  That car was a piece of shit.  I wouldn't have bet a nickel that Hyunda would still be around today.  They are.  Toyota has taken some hits recently about the quality of their cars from Consumer Reports.  The point is things change.  I have to believe that, if the big 3 can make it through this time period, they will be highly motivated to be better companies and build better cars.

One last note about building SUV's.  They wouldn't have built them if people weren't buying them.  Especially with the profit margins on SUV's being so high.  Consumers are just as culpable in this area.      

Auto Bailout Worries | 95 comments
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