It's another deadline week, so posting will be sparse... I haven't had time to read the details of the GM bailout and forced Chrysler merge, but my gut reaction is...
"Bullshit."
Yes, viewed in a vacuum, I say the government gets to dictate terms when they bail you out. If that means, "fire your board," or "your shareholders get a haircut," that's fine. Don't take the money if you're not willing to abide.
But the fact that the auto companies—companies that nation-wide employ hundreds of thousands of people in good living-wage jobs manufacturing real, durable, tangible goods that contribute to the economy in myriad ways—are getting a trial by fire from the Obama team. Last I checked, the Big Three didn't blow through everyone else's savings (well, excepting Dodge Avenger owners) and drive themselves and the economy over a cliff with borderline-illegal high-stakes gambling. At least at the end of the year Detroit can point to several million cars as a result of their business.
Meanwhile, the greed cancer-infested financial sector that engaged in an unregulated spree of graft and thievery is getting comparatively soft, kid glove treatment and a bailout approach that seems hell-bent on preserving the previous, fatally flawed system and those who run it. Oh, and did I mention an exponentially higher price tag?
This double standard is fucking bullshit. Automakers get raked over the coals for how they flew into D.C. while Wall Street thieves walk away with taxpayer-funded bonuses totaling in the billions.
Someone explain to me how this doesn't sound exactly like something that would have happened under the previous administration.
UPDATE: Mike's spent some more time thinking/reading/writing about this...
UPDATE 2: And so has The Michigan Posse.
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Adding It Up
10 comments:
We've got a post up too. This is a massive double-standard, and that Wagoner was forced out is sad and has impacted Michigan poorly. Obama forces the car makers to change on strict deadlines, and cans a CEO for the "poor decisions." But AIG's CEO gets to keep his job? And there's no accountability on how the dollars are being spent?
You said it: Bullshit.
Another example of the Golden Rule: You've got the gold, you make the rules.
Just imagine if Geithner, Summers and Obama were in the Big Three's pocket rather than Goldman Sachs' pocket:
1. The Big Three would have gotten trillions in bailout money, through the front, back and side doors;
2. Geithner would actually be Wagoner's second-in-command at Treasury;
3. Wagoner, as Treasury Secretary, would have just announced plan that allows The Big Three to sell unsold motor vehicle inventories at marked up prices to themsleves, 85% of which sales are financed by non-recourse government loans, guarantees, etc -- the other 15% of which come from bailout money.
Applesaucer
Isn't it possible that lessons were learned in the financial industry bailout and those are being applied to the auto industry bailout?
I'm just asking, I haven't followed either closely enough to know many of the details.
Not to put too fine a point on it, John, but...NO.
This is the same bullshit stance the last Administration and Congress had with the automakers. If anything, the populism dial is up to eleven now.
After all the AIG horseshit, jackasses in D.C. (and this currently includes Obama) are anxious to kick some CEO tail and look tough with someone.
And it only provides cover for more Treasury/Wall St shenanigans while everyone is lamenting "those crappy American cars" and whether or not any testifying executives flew coach.
John, DC has had their eyes on the auto industry for some time now, so I can't buy that they are trying to learn from their mistakes. If not the stink about the AIG bonuses, I doubt we would be getting the faux outrage from Congress and the Administration.
As I have said before, I have mixed feelings about the bailout, but it just burns me that there is a double standard. As Smitty puts it, it's fucking bullshit.
Yeah, it is bullshit.
I think Applesaucer's hypothetical example is dead on.
while everyone is lamenting "those crappy American cars"
Exactly. It plays right into that UAW-made American cars are crappy sentiment. People love to rip GM and Ford (though Ford was in a position to skip the bailout), and here was an opportunity. Too bad, too, that all of the criticisms levied against GM and the UAW are not actually based in actual, measurable fact.
But why let the facts get in the way of a good argument?
while everyone is lamenting "those crappy American cars"
Unlike those fine-tuned, humming-right-off-the-assembly line MBSs and CDSs that Wall St. wheeled out over the last couple years.
American know-how, baby. Our questionable derivatives are the world's best. We HAVE to support that industry.
While I generally agree with this post, my one exception is Chrysler. They've taken bail-out money before, and they're privately-owned by a company that has more than enough money to prop them up if they choose. They need to suck it up.
I have a two-pronged response, Deb. The previous Chrysler bailout is actually a good example of why the gov't SHOULD bail them out—Chrysler retooled, came back stronger and paid back the loans with interest.
That's not the situation now though. I'm not sure any "bailout" is going to return GM to profitability—they haven't made money in I don't know how many years. What needs to happen is far more drastic then what Chrysler and Iococca went through.
Plus, as you said, Chrysler is owned my Cerberus—a big fucking investment entity that paid cash for the company at a discount and can easily inject it's own capital. They want the gov't to make them whole (or profit) on their investment—fuck them. They bought, what? Two years ago? They went in eyes wide open, and if they lose money, too bad.
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