I was against the $700 Billion Crap Sandwich…

That is all I have to say right now.

…after the tide’s come in.

The $700 billion bailout means that, for the time being, moral hazard is… well, dead.

I think technically Detroit has been keeping up with Tokyo, and they certainly adapted to Americans looking for family sized cars as DC was telling them to put as all in oversized roller skates. Tokyo stuck with oversized roller skates. What changed rapidly in Japan’s favor was the rise in gas prices. Nobody can shift that kind of production that quickly.

What’s killing Detroit is the money they have to put into the pension funds from each car they make today and the generous benefits from union driven contracts. Bailouts won’t fix those problems, but if we explicitly transfer those costs to government they will go away, and I think that is what Detroit it trying to do piecemeal. Personally I think that cure is worse than the disease and the problem in the current environment is going to be convincing enough of the rest of the country to agree with me.

You’re a little remiss as an editor to ignore the fact that the National Association of Manufacturers supports the loan plan at the very first link on their home page.

Now, I’ve been around here on Redstate long enough to remember Pat Cleary (NAM Senior Vice President for Communications, and resident blogger-in-chief) blogging here on a regular basis and I’d like to hear his candid view of why the NAM supports the loan package.

Of course, we know why. They can’t finance their operations right now and they’re hemorraging money because of binding obligations that cannot be set aside. You can’t retool when you can’t borrow the money to buy the tools, and the humongous outrush of money to people who no longer do any productive work cannot be staunched.

So the automobile industry is saying: “The unions and the government got us into this, and we got into this ourselves, but now everyone must help or we’re all going to be on the street.”

Oh dear.

I clearly remember when Lee Ioccoca testified before a Congressional Committee the last time Chrysler asked for a bail-out to guarantee their loans in 1979. He told the commmittee ‘it would be the last time Chrysler asked for such help”.

Chrysler was subsequently acquired by a German company Daimler Chrysler and recently by one of the largest private equity investment firm in the US , Cerberu, based in Manhatten.

What other “too large to fail’ companies will we taxpayers be asked to bail out while being told by the new president that our taxes and energy costs will skyrocket?

Maybe small businesses should demand the same treatment since they provide the majority of jobs in this country. I know they’re not ‘union jobs’ but maybe there’s a chance.

Where does the line form?

Just give each auto worker one of the new cars they can’t sell and let them live in that. Maybe a year of sleeping in a product they made will snap them out of their attitude of entitlement.

Just say NO to more bailouts.

I agree that Bush should sit on the sidelines and let the next administration make the decisions. We now what the liberal decisions will be. It’s interesting that Obama said in his godawful press conference that there can only be one president at a time. He pushed for extending the unemployment insurance and stimulus packages, and said if it isn’t done now, he will do it in his admin. Please God let it fall on his head.

I remember back awhile ago reading that one of the major American auto companies has a very fuel efficient vehicle that they are manufacturing and selling in England, and it would be cost prohibitive to ship those vehicles to the US. The vehicle would be too expensive here because of the shipping costs. The rapid road to fuel effiecincy did not start recently. Why would an American auto company do in England what it did not do here? I have a feeling it may have to do with the costs of doing business in the US ie Corp. Tax Rates and labor rates.

Last fall, all three of the Amer. auto companies had to renegotiate the Union Contracts with UAW. They immediately started laying people off. No, they bled jobs. The Health Insurance and Pension costs were enormous. Quickly I believe Toyota took the top spot in sales. They are not unionized. For every $28 paid to union workers, Toyota pays about $18 per hour for the same job.

Obama will have to do what the UAW and auto companies demand, as well as all other unions as they are the ones that funded and supported his election. Time to pay the Piper. But God in Heaven let him pay the price and not have a Republican signature on it.

to the auto makers’ problem, IMO, is for the auto workers to, with the help of the UAW, buy out GM and Ford. Or at least buy out one of them, and make it their own. Then they can run it whatever way they like – they can run it as a not-for-profit, for the sole benefit of the workers, if they like. Ford currently has a market cap of only 4.4 billion dollars. Divide that by 400,00 auto and allied service workers, and it comes to 11,000 dollars each. General Motors has a market cap of 2.5 billion dollars. Seven billion dollars would buy both Ford and GM according to what the market says they are worth. That comes to less than 18,000 dollars per auto and allied worker. Let them borrow the money and ante up, not me and my neighbors. It is the auto workers that have the biggest stake in the long term survival of those companies.

Read this:

http://www.newsweek.com/id/166659

Short version: Chrysler is dead no matter what happens. A MINIMUM of 34,000 jobs are toast and that’s probably ridiculously optimistic. When your best case scenario is that a crippled automaker (GM) aquires a terminal automaker (Chrysler) in order to euthanize it (at a loss of at least 34,000 jobs) and sell it’s organs to get enough cash in order to (hopefully) stay alive (not declare bankruptcy) until 2010 (when GM’s latest contract with the UAW allows it to pass off a bunch of it’s healthcare obligations to a trust fund), we’re past hand wringing over “moral hazards.” That ship has already sailed.

Now read this:

http://www.newsweek.com/id/168109

And this:

http://biz.yahoo.com/prnews/081107/clf042.html?.v=101

And this:

http://money.cnn.com/2008/11/05/autos/autojoblosses/index.htm?postversion=2008110515

Short version: GM is blowing through cash and without either a bailout or a miracle will have to declare bankruptcy by the first quarter of 2009, if not by the end of the year. Ford has more cash and can probably make it through 2009. The problem is that Ford has cash because it mortgaged everything it owned to get it in 2007. It’s all still debt.
As I said before, Chrysler is toast.

So, sure, bailouts suck. The taxpayers are stuck paying the bill, yadda, yadda, yadda. What’s worse? Loaning $50 billion (and probably more) to get GM and Ford to 2010 so that they can (hopefully) start making money again after they get out from under their healthcare obligations to the UAW? Or letting the Big 3 go under 1 (Chrysler), 2 (GM), 3 (Ford) between now and October of 2009, followed by all of their suppliers, regional distributors, deallers, the small businesses that service factory towns, etc. resulting in 2- 3 million of our fellow citizens out of work?

I don’t want us to become so wedded to our ideology that we start pulling for national economic disaster because we believe it will help our side politically the way the Democrats pulled for bad news and setbacks in the wars in Iraq and Afghanistan because they wanted to be able to score political points.

…there is no 100% guarantee that they will survive. Those workers waiting for the government – should not. They need to get off the sinking ship while they can. They might off to go to work for Toyota, Honda, etc and make less money. Cold, cruel, economic reality. The first thing Detroit needs to do is slash & dump advertising. They spend billions per year of in-effective feel good advertising. They need to slash the number of brands, models & options. They need to lead in electric car design & manufacturer before it is too late.

I shot video for a City of Arlington video in a GM plant that makes Tahoes, and other SUV’s. I would have to say it was one of the most depressing places I have ever been. The workers had such attitudes and NO ONE smiled not even once.

I went into one part of the factory that was fully automated with robots doing all the work. The manager said that was the goal.
Get rid of as many people as possible. That ship has sailed and the union workers are at the dock arguing about what they are going to wear at the ball.

And, while I am 100% against it, is nothing more than a blip in the night.

The real problem hasn’t even been discussed yet. The scenario is this: the federal government has bailed out the banks, the housing industry and the auto industry. Because of the recession (depression) that was caused by a combination of federal government policy, ignorance of the markets and simple inattention under Bush, the States are facing major revenue shortfalls. See NY and CA for starters. The feds have to step up and contribute to the shortfall of the States or children will be starving and they will have to lay off police and firefighters.

You ain’t seen nothing yet.

It isn’t like the factories and equipment would just go ^POOF^ and be gone.

Someone else would buy the assets and run the business as a profitable venture.

How is that a bad thing, when compared to the US taxpayer flushing more money down a toilet that never stops flushing?

Proper grammar saves lives.

Let’s eat Grandma.
Let’s eat, Grandma.

---

Activists Taking Action: Unified Patriots

I don’t have a problem with it. The cash has already been approved. It’s either going to go to the automakers or it is going to get flushed down some other toilet at this point. I’d rather it go to loans to automakers than renegotiated home loans for people who don’t pay their mortgage or bonuses for bankers or spa time for AIG executives.

Of course I’d rather they not do the $700bln ($850bln if you include the pork used to secure its passage) bailout at all, but that ship has already sailed.