It looks like George W. Bush is determined to add Detroit to New Orleans, as this modern-day Nero fiddles while a second American city drowns. Bush says he is concerned that the automakers will not survive, but he is totally unwilling to take any action. It’s clear that General Motors will be forced into bankruptcy by the end of the month and that Chrysler will fail no later than late January. Those collapses will then eat away at Ford’s supply base and ultimately destroy whatever is left of the auto industry in the upper Midwest. Dealerships will close, tool-and-dye shops will close, subcontractors of all kinds will either slash their work force or go straight out of business. All autommakers will then be disrupted. The United Auto Workers will basically cease to exist.
That’s the kind of legacy Bush is going to leave to the country and to the Republican Party. Chris Dodd and Barney Frank cannot save the world in three days. If nothing else, GM needs money to cover this month’s expenses so a new Congress can tackle this problem.
If GM is a month from shutting down how come nobody heard about until a few weeks ago? Whatever the realities may be, this is disaster capitalism at its finest. Bush’s real crime is that his administration is directly responsible for this whole economic meltdown, and the rest of us are caught in the middle between continuing to coddle incompetent and corrupt corporate executives and letting them fall and take down the decent people with them.
We are kind of in the position of Cuba after the fall of Batista, when the Mafia slavery/whorehouse/bootleg/drugrunner buz collapsed and left its dependents permanently impoverished. Welcome to the third world — who could have ever imagined we’d get here so fast?
Probably because the credit markets seized up and you can no longer get a lease on a car.
Sales of SUVs and other fools’ toys were tanking for years, but we didn’t hear anything from Detroit about an imminent collapse. I’m all for some kind of government action to prop up workers’ jobs, but this is too much of a rerun of Paulson’s “don’t ask questions, give me money” scam. If there’s no other way, the fed should directly pay the workers’ wages for a couple months as a loan to the companies while rational ideas for repurposing industrial assets are worked out with the care and attention they require.
I agree that the auto companies are run by fools. But they are asking for loans, not a blank check, unlike the financial sector. Also, Ford is asking for a line of credit. Paying for pensions and salaries of workers (not executives) could be one way to help them out. But, I get the sense that nothing at all is going to happen.
Also, universal health care would help tremendously.
I did pay some attention the the execs’ testimony after their ritual humiliation in Congress. Didn’t hear anything that suggested how they’d recover once they got short term loans/lines of credit. Did you hear anything other than the bleats of clueless whiners? Seriously — what gives you hope that these asses have any resources to turn things around after they get their bailouts? Maybe Congress should think about letting the carcos fail and then finance a buyout by the unions. (Although United Air did something like that and it’s still hopeless.)
As to healthcare, yeah, universal healthcare would have helped tremendously 60 years ago when UAW head Walter Reuther begged the auto honchos to join him in lobbying for socialized medicine. He warned them that one day the burden of private insurance would crush them. They basically told him to fuck off, they weren’t gonna make nice with no socialists. This industry has been run by assholes and crooks from the very beginning. The highway system is still the biggest government subsidy anybody has ever gotten, and they still can’t make a go of it. I hope you can understand why, despite our empathy for the workers, just pouring in more money to buy more of the same feels like swallowing jagged glass.
I don’t see anyway out of this but nationalization.
Seriously.
What I’d do in these circumstances is to create a bill to buy stock in these companies, which would probably be close to a controlling interest. Perhaps it would be a controlling interest.
As of 3:15 pm Friday, GM’s market cap is 2.5 billion dollars.
Yeah, the feds could just buy a controlling interest in a heartbeat.
GM’s market capitalization is $2.5 billion. Buying the whole thing, maybe turning it over to the unions or intelligent executives, would be pocket change compared to the bailouts. It would also seem like a huge bargain for the Asian/European carcos, which are also in bad shape but could probably still come up with the cash.
but they’d still have to pay the creditors. I think they should go ahead and buy them.
Who should? The gov? Asian/European cos? The unions w/ gov help?
The government should buy them. Then they should use their control to steer the new green economy effort. Eventually it can be sold off to whomever can cobble together enough cash.
Booman, I agree the government should by the auto companies.
But having done that. why sell later?
I totally understand. But, from my perspective, where I live will suffer from a Great Depression style downturn. There is no way around it. My dad’s pension, he can’t even think about what will happen to it. I hate to give money to jackasses, but holy crap, I can’t imagine the devastation to ordinary people.
I’m a midwesterner too, and Chicago and the whole Great Lakes region will suffer unspeakably from an auto industry collapse. I’m serious about turning the companies over to the unions as one way to make this bailout (which now looks more in the neighborhood of 200 billion, according to some) actually have a chance of doing more than sucking up more money to keep doing the same old thing a little longer.
You didn’t say: what gives you reason to think cutting checks to the carcos has a chance of turning things around? What kind of oversight would it take? My problem is not so much the idea of bridge “loans”, it’s this rerun of Paulson’s disaster capitalism scam: “There’s no time to think this through, just give us the money and fuck off”. There has to be a better way.
The Disaster Capitalism fad is getting annoying.
The disaster is real and these companies really were going bankrupt.
What’s getting annoying is that massive entities are unable to plan for their future without giving taxpayers and their “representatives” more than a few weeks to hand over $trillions. What the fuck do all these thousands of MBAs, “economists”, and other million-dollar men do all day? To all appearances, they figure out ways to scam the rest of us. I still haven’t heard anything, from the execs or from you, about how the bailout will fix things long-term.
I’ll tell you what won’t fix things. Letting GM and Chrysler go bankrupt won’t fix things. Letting the entire financial sector of the country collapse was not going to fix things.
It’s quite bit worse than annoying, but it isn’t some pat pseudo-communist critique of the capitalist system.
We all know what won’t fix things. You seem unable to come up with a scenario in which the demanded bailouts WILL fix things. I have no idea what your “pseudo-communist critique” is supposed to mean. Especially when you’re advocating that the government should start making cars.
I’m talking about Naomi Klein.
And you make the argument for me. Capitalism is collapsing, which kind of argues against the theory that this is all a plot by capitalists to loot the treasury.
There’s no reason on earth to think capitalists care about capitalism when there’s loot to pick up. If they cared about capitalism we wouldn’t be where we are.
Actually, if Capitalism is collapsing — which I hope it is — then the smartest thing for the Capitalist to do , is to loot the Treasury, as they escape to their Valhalla.
Let us make for them, a firey Valhalla.
the ordinary people are already suffering. november job losses for non-farm payrolls were 533,000…far more than the 335,000 drop that was projected. they fell 403,000 in october. in november, manufacturing payrolls declined 85,000, when combined with the october losses brings the 2 month total of 104,000. that’s roughly 2 mil jobs lost this year.
the unemployment rate now stands at 6.7%, which is the highest rate in roughly 15 years…and that’s according to the cooked numbers that the fed uses…in actuality it’s probably closer to 10-12%.
add to all that gloom and doom the average workweek figures, which declined to 33.5hrs in november, which means the labor market is rapidly disappearing. add in the prospect of the big 3 going down and you’re talking bread and soup lines in the rust belt and beyond, another large step toward the great depression v.2.0
l don’t know what the answer is, but it seems to me, that if we can throw hundreds of billions at the financial
asshatswizards that got us into this mess without any meaningful strings or oversight, that something has to be done. the ramifications of allowing them to fail are well beyond acceptable.…and none of those numbers reflect the 600,000 or so that just vanished from the work force.
Michigan’s unemployment rate a whopping 9.3%.
The nation’s unemployment rate is 12%+% according to PBS’s The News Hour on the 12/50/08 Broadcast.
The problem is being caused by the evaporation of cheap money. Detroit was inflating their car sales through zero percent financing and easy leasing and other devices to put people in cars. Their whole business model collapsed with the credit seizure.
Obviously they would have been under stress anyway in a slowing economy. And the spike in gas prices took a huge toll, too. But their shortfalls are so staggering and the prospects of recovery are so small, that they’ve basically driven themselves out of business.
Only a return to cheap money could save them, and that isn’t happening.
The GOP wisely doesn’t want to throw billions at a sinking ship. But the ship is going to drag down everything with it. Even Mercedes and Honda are going to be fucked if all their suppliers go under.
They’re still advertising zero percent financing.
The whole state of Michigan and a large chunk of Southern Ontario will be devastated if these companies go belly up. Imagine what the stock market will look like on that day. If your retirement fund is low now, that ain’t nothing.
yep. You might as well just nuke them.
Now, I’m just filled with the holiday spirit.
Seems to me that the entire “bailout” program–both financials and automotive–is just a desperate attempt to reinflate the bubbles that got us into this mess in the first place. New car sales are down 40% (so far). They tell us it’s because credit has dried up. Sure it has, but cheap credit isn’t going to create credit-worthy buyers of cars or houses or widgets. The consumer is tapped out. It’s going to take years to work our way out of this. Throwing money at the car companies won’t fix the problem. We’ll just find ourselves a few months down the road a few months older and deeper in debt. It’s like using duct tape to fix the leak in the dam.
I’m thinkin’ that we should raise the quota for Cuban auto mechanics.
Spare me. The Republicans have thrown Several trillions at failed enterprises.
Let me tell you first about Iraq.
Then there are other bedtime stories to come that will give you many years of nightmares.
Cash and credit is drying up faster than the polar ice caps are melting. Banks have essentially shut down and are forcing the federal government to become the lender of last resort, but the government isn’t providing cash or loan guarantees to anybody but the banks.
Normally a company could reorganize under the bankruptcy laws (and yes even a car company could) but DIP (debtor-in-possession) financing is gone. No financial institutons are providing DIP financing anymore and without DIP financing you’re faced with liquidation rather than reorganization.
What really needs to happen is a complete nationalization of the banking industry in order to force the credit markets open. The nationalized banks could then focus on qualifed borrowers, small businesses and companies looking to reorganize or in need of a bridge loan.
can’t get a lease, can’t get a loan, and the banks kept the money for themselves because congress and the senate refused to put strings on the funds.
wheeee! everyone’s nero.
Gambling, DaveW, don’t forget the major money source for the Mafia in Cuba. Gambler-Americans didn’t even have state lotteries for the jones in those days!
I was watching CNBC interview the leader of Bush’s economic advisory panel. It was strange that he only focused on the Credit Markets and Financial Sector as the ones needing a bailout. And it didn’t seem to register with the CNBC interviewer when he stated we need to help banks and Wall Street because that is what help main street..i.e. Credit. He didn’t mention the word we need more jobs once and that more jobs were lost after the “bail-out” was started in September.
I wonder if some Japanese company is going to give W a million (+) to give a speech, much like Ronald Regan did when he left office.
Remember, Reagan giving the Japanese a speech was considered a bargain for a million, because Ronnie’s Star Wars speech to the U.S. cost us over 150 billion and counting.
I’ve had it. Where are all of our union members at this site? Where are all of the Michiganians at this site? Let’s organize a giant march on Washington. I’m serious. This is an attempt to break the unions and we should not just sit by idly while it happens!
It’s no wonder that support for Republicans absolutely collapsed in Michigan. I was absolutely shocked when I saw Obama’s numbers in Grand Rapids. He almost broke even there, which is stunning. I guess Michiganders finally figured out that the GOP wants them dead and on their knees, with their whole way of life destroyed.
Bush caused that. Granholm has had a difficult run and I predict our next governor will be a Republican.
Where are all of the Michiganians at this site?
No such thing. There may be a few Michiganders, though.
I like the term that doesn’t make us sound like geese 🙂
Sorry, didn’t realize you were self-identifying. Seriously, all of my relatives on both sides of my family (Dad’s from Detroit, Mom’s from Jackson) are from Michigan. Michigander is the only term I’ve ever heard used for identifying a native of the state.
I’ve got a few relatives on my dad’s side that are on pension from FoMoCo. I haven’t heard from any of them, but they must be worried right now.
Michigander is the official term. My dad retired from Ford and is now living in Florida – due to his arthritis. I’ve told him that the guest room is ready if we have to. He doesn’t want to, but, if it comes to that, I’ll have live-in baby sitters!
we live in the most embarrassing times for our country.
our national reputation is shot to hell (torture, warmongering), we’re totally incomeptent at warmongering (iraq, lebanon), our economy is shot, and we no longer manufacture anything.
a nation of boobs and saps.
How about making some of those 25 (or 34) billions available to consumers for car loans? It would go a long way toward helping this problem. Meanwhile they should be hard at work revamping/consolidating their car lines.
I think a better plan would be to create a program that would guarantee massive sales of modernized autos which would include:
As for number two, people could given the opportunity to buy cars for as little as 4 or 5 thousand dollars as a way to flood the zone with the new technology. This would make the most sense with a hydrogen change over.
If we’re spending hundreds of billions, we should give the little guy a benefit.
I don’t disagree, but what you describe takes a long term view, and will take time to have an impact. Making funds available now for car purchases will alleviate to, a fair degree, the immediate problem.
Who?
All these subsidies, bailouts, and mandates will put some serious stress on globalization, trade agreements, etc. Maybe a good thing, but it’s going to push a lot of our trading partners into protectionist mode which probably isn’t a good thing.
Hold on to your hats, folks, the ride is going to get a lot rougher. If the auto industry goes in combination with residential housing and finance, what with the multiplier effect and all, we will spin into depression within a few months. Our people will be petrified with the fear of imminent collapse and will back the new president tremendously. Fear will do that to a population.
I’m not convinced that we aren’t already there. We just need some “official” pronouncement. Seems to me we’re in that “phony war” time period where the necessary events have already been set into motion, but nobody’s acknowledging them. It’s too late for GM, etc. It’s just too late.
That’s the way it feels to me. But I don’t think anyone really knows for sure. There are just too many variables.
The “bailouts” that have already been tried don’t seem to have helped very much, have they? So it just doesn’t make sense to expect that the upcoming ones will help.
Bail away, sure, try it, but I’m not optimistic. It won’t do any harm, because all the money is funny now. The currency will have to be reconstructed. We will have new dollars, with some time-limited exchange of old dollars for new dollars at 100:1 — that is the usual ratio. At the same time, all non-currency paper assets automatically become worthless — because they are denominated in old dollars, doncha know.
What other alternative is there? We broke the old money. Shattered it. Burnt it up. Now we have to create new money. It’s the only logical thing to do. But of course, many people would rather die than accept common sense and a nod to the future consequences of their action.
Well, that’s just my opinion.
The economy jumped off the cliff this summer. It is just that nobody is reporting it.
Off shoring and outsourcing are coming home to roost. Now that credit has collapsed Americans don’t have money to spend. The Depression is here now. Real wages are needed from real jobs. Gutted factors are just as valueless as foreclosed homes.
LINK
Yep, and he’s wired there to the bitter end.