Whether or not to bail out the Big 3 auto makers has been the raging question of the last few days. And watching the Three Amigos of American business, the CEO's of GM Ford and Chrysler, testify in front of both the Senate banking committee and the House, one is struck by the fact that a real change has taken place. But its hardly a change I can believe in. In fact its change that is hard to believe.
There were the Republicans, staunchly taking a stand against giving tens of billions of tax payer dollars with no strings attached to the grossly irresponsible CEO's of GM, Ford and Chrysler, and there were the Democrats pushing it for it.
If this is the kind of change we can expect from Obama and the Democrats its going to be an interesting four years. There was Dick Shelby, Republican conservative from the South arguing against throwing $27 billion to the Big 3 automakers and there was Chris Dodd, liberal Democrat from the north, making the case for it.
The more you watched the hearings the stranger things became with Bob Corker, the Republican senator from Tennessee standing up for the taxpayer and making the most sense, and Bob Casey, the Democrat from Pennsylvania sounding like a GM apologist and lobbyist and pontificating about this being an important issue and thanking the CEO's for coming. Thanks a lot Bob. The buffet will be served next to the cloakroom.
So the Democrats, with Obama and Pelosi leading the way now want to throw $27 billion at the 3 most irresponsible corporations in America, which everyone knows is only a down payment anyway since they will be back for more and its the Republicans sticking up for the taxpayers.
Since when do Republicans stick up for the taxpayers while the Democrats screw them? Since now, obviously.
Throwing $27 billion at the automakers is nothing more than trickle down economics, the failed Republican economic ideology that has never worked, now being pushed by Democrats hoping that by giving money to the same management teams that screwed up in the first place, it will all trickle down and save jobs and the companies themselves. The Democrats, the party that used to stand for justice now wants to reward the lousy management of the Big 3 for the horrible job they did fighting tooth and nail against fuel efficiency standards while foreign car makers embraced them, and then producing gas guzzling cars which people didn't want when the price of oil skyrocketed.
But the Democrats, who seem to be playing politics with this more than anything else, want to give $27 billion with practically no strings attached even though they know they will be back asking for more. And they are doing it, in Maxine Waters words, by rolling over.
How about insisting that if they give them the bailout money, that current management step down? How about a provision insisting that any executives at the Big 3 making $500,000 a year or more, work for a salary of $1 a year until the money is paid back?
The CEO's of these three companies which lost $70 billion over the last 3 years, make on average $28 million a year. Just to put that in terms people can understand, that is $600,000 a week.
And now they want the taxpayers to hand over $27 billion to help them out of all the bad decisions they've made business wise for years. It's the management of these companies that are responsible for the mess they are in not the economic crisis.. They blame it on the economic crisis but that hasn't caused the stock of Honda, Nissan, Mercedes, Audi, or Toyota to drop 80%. They are in the same economic environment and those companies aren't hurting the way Detroit is.
The reason they are on the verge of bankruptcy is because of the way they have done business for decades.
I write a lot about little things mean a lot and how big pictures can be drawn from small things. Ive seen it with Obama and his nonsensical verbiage designed to fool people who cant think for themselves into thinking that it sounds good when its all nothing but nonsense with nothing behind it.
I made a similar observation of a small thing that told me a lot a long time ago when it came to Detroit and American cars.
I never owned an American car and so I never made this observation until one day, about 20 years ago when I rented a car. I was getting familiar with the dashboard when I noticed something that caught my eye I thought was an astounding and,telling discovery. Very telling in the little things mean a lot category. The odometer on the Ford I was renting had only 5 digits. The odometer on my foreign car had an odometer with 6 digits. That kind of small thing revealed some big thinking. Who was designing and conceiving cars that were built to last ? Who were designing and building cars meant to give people their moneys worth and were meant to stay on the road a long time?
The difference between Detroit's 5 digit odometer and the 6 digit odometer of foreign cars tells you all you need to know about Detroit's management thinking and the mess they are in now and what they thought of their own product..
A commenter here wrote the other day disagreeing with my position,that if the Big 3 failed it would be a major disaster for the country. The Big 3 have already failed. They aren't very big any more. They've been failing for decades and lost $70 billion in the last 3 years while their CEO's were making $28 million a year for all their good work.
There should be no bailout of Detroit.They are using the economic crisis as an excuse. Its not the reason they are in the shape they are in now. If there is no bailout the auto industry will not go under. GM can go into bankruptcy and reorganize and/or there can be a merger with the other two. Detroit will build fewer but better cars. The money the auto makers want ( which would continue to pay those CEO salaries) could be better spent guaranteeing the pensions of every auto worker and doubling the unemployment and severance for those who get laid off and do it for a lot less than $27 billion. These are the people who should get assistance. Not the people who caused the problem,. The other auto makers will pick up the slack in about a year when things start to pick up and hire those workers.
There is no reason not to let GM go into bankruptcy like any other failed corporation. The airlines did it and they've come out of it it smaller but viable. The biggest point the CEO of GM thought he was making against bankruptcy was that a survey showed that 80% of consumers wouldn't consider buying a car from a company in bankruptcy The Democrats on the committee all nodded knowingly proving that crash test dummies come from anywhere and can even rise to the level of CEO and US Senator, ( and even President of the US as the last 8 years and the current President-elect has shown).
There is only one reason people said they wouldn't consider buying and it's because a car is in an investment. People want to know there will be a company standing behind the warranty. And what could be easier to deal with? The government, for a fraction of what the automakers want in bailout money, can guarantee the warranties on all of GM's cars just like the FDIC guarantees bank deposits. That money would only be needed if GM actually went out of business which is not likely.But It would take care of people's fears and it would cost the taxpayers a lot less if GM management couldn't turn it around.
The bailout as it stands now makes no sense but the Democrats seem intent on giving them the money, not on taxpayer terms but on auto makers terms..
Maxine Waters asked the 3 CEO's if they would be willing to set aside $1 billion of the $27 billion to help ailing dealers who were suffering under the credit crunch and laying off workers. Sitting there and watching her take no for an answer as each CEO essentially told her no, and watching her trying to make it sound like a yes was one of the more pathetic moments of the House hearing. None of them agreed to do it with GM saying they needed all the money for operating costs Chrysler another saying they felt they were already doing what she was asking and so didn't need to set aside $1 billion, to which Waters responded
"so is that a yes"?
The Democrats have the votes and so if they want to throw this money at the auto makers with no strings, no management sacrifice, no management change and no guarantee that it will save jobs, they can do it. But the auto makers sound like they are taking everyone for a ride and the Democrats seem to be ready to hop in. Its not what the Democratic Party of 10 years ago would have let happen.
NOTE: The Senate yesterday refused to approve the $27 billion auto bailout with even some skeptical Democrats refusing to go along. Harry Reid amazingly said " we dont believe we need the legislation". Oh no? Then why did you try and pass some? What Reid is now saying is that Bush can allocate the money out of the TARP something Bush has already said he wont do. The Republicans were willing to pass legislation that would allow the auto makers to take $25 billion already passed and allocated to the auto makers to help make more fuel effecient cars and divert that to meet their present emergency money needs but the Democrats said no. No? If this is an emergency then why not? If Obama is insinuating himself into this behind the scenes then its starting to look like trickle down ineptitude is hitting the Democrats.
We’re living in the Upside Down - I’ve heard the Stranger Things reference to the Upside Down several times in the last 24 hours. For the current upside down zeitgeist let’s go to the tweet...
15 hours ago