Auto Bailout: "redistributing wealth from the successful to the failed, an implausible formula for prosperity."

Ronald Bailey | November 19, 2008

Washington Post columnist George Will nails the proposed Federal bailout of the Big 2.5 today: 

"Nothing," said a General Motors spokesman last week, "has changed relative to the GM board's support for the GM management team during this historically difficult economic period for the U.S. auto industry." Nothing? Not even the evaporation of almost all shareholder value?

GM's statement comes as the mendicant company is threatening to collapse and make a mess unless Washington, which has already voted $25 billion for GM, Ford and Chrysler, provides up to $50 billion more -- the last subsidy until the next one. The statement uses the 11 words after "team" to suggest that the company's parlous condition has been caused by events since mid-September. That is as ludicrous as the mantra that GM is "too big to fail." It has failed; the question is what to do about that.

The answer? Do nothing that will delay bankrupt companies from filing for bankruptcy protection, so that improvident labor contracts can be unraveled, allowing the companies to try to devise plausible business models. Instead, advocates of a "rescue" propose extending to Detroit the government's business model for the nation -- redistributing wealth from the successful to the failed, an implausible formula for prosperity. (emphasis added)

And it only gets better. Read the whole column here. 

Comments

|11.19.08 @ 9:58AM|#

Since I imagine the bailout is going to happen anyway... the best idea I've heard is that the bailout is contingent on the board of the companies firing all of senior management staff and over turning their golden-parachute clauses in their contracts. Congress would then shield the board and shareholders from civil litigation coming from the fired idiots.

Unlibertarian as all hell, but it's reasonable to ask a bum to stop peeing on your leg if he wants to "borrow" a dollar.

Abdul|11.19.08 @ 9:58AM|#

When you've lost Mitt Romney on a big boondoggle to one of his pet interests, you've lost the nation.

Or so I hope.

BDB|11.19.08 @ 9:59AM|#

I agree with SugarFree. If you're going to bail out the piper, at least get to make the bastard carry the tune you want.

Lefiti|11.19.08 @ 10:02AM|#

Let all those saps employed by the auto industry eat cake! Nature must run its course! No medical...er, I mean, government intervention!

|11.19.08 @ 10:04AM|#

Anyone make the mistake of reading Thomas Frank today in the WSJ? He actually talks about how card check and bigger and more unions are good for the country. Yeah, unions have been so good for the auto industry. Did you know that organizing more and more powerful unions is the way to help the economy? How after the last 50 years could anyone be so stupid to beleive that? Worse still, how could anyone not being paid big bucks by the unions to do so, say so in a national forum? With people like Frank running around, things really may be hopeless.

Lefiti|11.19.08 @ 10:04AM|#

STOP SPOOFING ME!!!

BDB|11.19.08 @ 10:05AM|#

Frank is employed by the WSJ for the explicit purpose of making leftists look as stupid as possible.

Lester Hunt|11.19.08 @ 10:05AM|#

"redistributing wealth from the successful to the failed, an implausible formula for prosperity" Generally, all redistribution is like that, isn't it? Who has the money to steal? The successful. Who "needs" to receive it? Those who have failed to produce it.

|11.19.08 @ 10:05AM|#

Since I imagine the bailout is going to happen anyway...

We'll see. At a certain point, continuously pissing off the electorate by bailing out various fat cats is going to hurt Congress' re-election chances. Will the auto makers get the money before that point is reached? We'll see.

Lefiti|11.19.08 @ 10:07AM|#

Krugman says that because of the bad state of the overall economy he reluctantly favors a government bailout of the auto industry. He gives two reasons:

The credit lines normally available to the auto companies are now frozen, so a Chapter 11, bankruptcy, would quickly turn into a chapter 7, liquidation. Such a liquidation would mean that over one million jobs would evaporate.
And so, the net result to the economy would be a negative stimulus, and in the terrible slump we are in, a negative stimulus is the last thing we should be engineering.

|11.19.08 @ 10:09AM|#

BDB

He is earning his wages.

Epi,

The auto bailout is an interesting clash between Presidential electoral politics and Congressional ones. From a Presidential perspective, Michigan and Ohio are key states. Obama is toast in 2012 if he doesn't win those. So a bailout looks pretty good if you are President. Congress on the other hand has lots of people from other parts of the country where unions and Big 3 are not popular. All those Dems who won in Republican leaning southern and western districts are going to have a lot of explaining to do in 2010 if they keep voting to spend billions to bailout wall street and the UAW.

Abdul|11.19.08 @ 10:12AM|#

The credit lines normally available to the auto companies are now frozen, so a Chapter 11, bankruptcy, would quickly turn into a chapter 7, liquidation. Such a liquidation would mean that over one million jobs would evaporate.

Given that a credit crunch is coming, won't it also affect all the people needing car loans to buy the cars that the bailed out industry will produce?

|11.19.08 @ 10:12AM|#

"The credit lines normally available to the auto companies are now frozen, so a Chapter 11, bankruptcy, would quickly turn into a chapter 7, liquidation. Such a liquidation would mean that over one million jobs would evaporate."

I don't think that is true or if it is it really matters. First, if the big three went into chapter 11, they would be able to get rid of a bunch of their debt and obligations. That makes them more not less attractive borowers. It is the same reason people get credit card offers right out of bankruptcy, since you got rid of your old debt you can pay your new debt. Second, the Big 3 still sell a lot of cars and produce a lot of cash flow. That cash flow is valuable. Someoen will come in and buy the companies, sans their debt and stupid union contracts and make a fortune.

|11.19.08 @ 10:12AM|#

We'll see.

You know what I'd rather see done with that $25B? The neo-WPA. Thousands of UAW and motor co. executives rebuilding the infrastructure of America for minimum wage.

IIGTBSA Disclaimer, of course.

BDB|11.19.08 @ 10:17AM|#

I think Toyota or Honda would at least buy up the old plants in Michigan and Ohio if the Big 2.5 really did go under. They just wouldn't be Union plants anymore.

Lefiti|11.19.08 @ 10:17AM|#

I haven't posted yet here!!

Lefiti|11.19.08 @ 10:18AM|#

Why are you hitting yourself? Why are you hitting yourself?

economist|11.19.08 @ 10:21AM|#

"Let all those saps employed by the auto industry eat cake! Nature must run its course! No medical...er, I mean, government intervention!"
Translated Lefiti: The bailout of an industry screwed up by bad management and unrealistic union contracts is necessary to prevent poor people from starving to death, so sayeth the Great Pelosi.

|11.19.08 @ 10:21AM|#

Thousands of UAW and motor co. executives rebuilding the infrastructure of America for minimum wage

No, I want them totally out of work. They can join Lefiti in the Sterno and Milk Bones habit.

economist|11.19.08 @ 10:22AM|#

BDB,
But...but... they HAVE to be union plants. Look at all those exploited nonunion in Japan!

|11.19.08 @ 10:22AM|#

Let's assume for the sake of argument that the credit crunch really does prevent the Big 3 from borrowing. IF it is that bad, then it also prevents or makes it harder for other companies to borrow. Since the government will borrow the money to give to the big three, they are just taking credit away from profitable companies and giving it to the unprofitable Big 3. Yeah that sounds like a good idea.

The Angry Optimist|11.19.08 @ 10:22AM|#

"negative stimulus".

I do not want to hear that abomination of the English language again, please.

I think Toyota or Honda would at least buy up the old plants in Michigan and Ohio if the Big 2.5 really did go under. They just wouldn't be Union plants anymore.

Ohio is entirely more equipped to handle it than MI; some days I think that MI is going to end up like Vermont: a city here or there, nice trees and nature and all kinds of winter activity...and place to vacation but not to live.

MI should embrace this.

BDB|11.19.08 @ 10:22AM|#

Ha! The thing is they DO have Unions in Japan. But they're Company Unions. Which FDR, in his infinite wisdom, outlawed here.

Fluffy|11.19.08 @ 10:23AM|#

the best idea I've heard is that the bailout is contingent on the board of the companies firing all of senior management staff and over turning their golden-parachute clauses in their contracts. Congress would then shield the board and shareholders from civil litigation coming from the fired idiots.

Wow, this particular absurd injustice would look real nice on the mantelpiece among the Bush administration's many other absurd injustices.

It's just unfair enough that it would probably appeal to the criminal rogue in Bush's heart.

The credit lines normally available to the auto companies are now frozen, so a Chapter 11, bankruptcy, would quickly turn into a chapter 7, liquidation.

I would rather see a Chapter 11 filing where the Fed or the Treasury provided the DiP financing than a straight bailout.

A bailout of GM's current cost structure will just delay the inevitable. If a bailout has to happen, I'd rather see those funds applied to a post-Chapter 11 GM that actually would have a chance to succeed.

economist|11.19.08 @ 10:25AM|#

"negative stimulus is the last thing we should be engineering"
We're not "engineering" the negative stimulus. The bailout would be "engineering" a transfer of wealth from the successful and responsible to the unsuccessful and irresponsible. Then again, it already happen with Wall Street, so why not Detroit? And who knows, if oil keeps going down those oil companies might need a bailout, too!

|11.19.08 @ 10:25AM|#

It's hard for me to pin the blame solely on the UAW as Daimler has to deal with a much stronger union. Compared to IG Metall, the UAW are a bunch of pikers. This is a complex problem that includes dealers and the (state) laws that make it difficult to consolidate brands and dealerships. It cost billions to get rid of Oldsmobile and that brand was gawdawful. There are better brands that need to get killed, but would cost the Big 3 a fortune. Blaming this all on the UAW is overly simplistic, rigidly ideological thinking.

I still think the best way to handle the bailout is for the government to predicate it on a Chapter 11 filing and have the Federal government be the Debtor-in-Possession lender of last resort. That way you get the benefits of restructuring (including a way to kill some brands without paying billions, like they did for Olds) included.

economist|11.19.08 @ 10:25AM|#

"Ha! The thing is they DO have Unions in Japan. But they're Company Unions. Which FDR, in his infinite wisdom, outlawed here."
According to the Crow-Eating Dumbass, company unions are not "real" unions.

The Angry Optimist|11.19.08 @ 10:25AM|#

If you're going to bail out the piper, at least get to make the bastard carry the tune you want.

Does anyone here think this is going to reduce the incentives for bailout in the future?

|11.19.08 @ 10:26AM|#

We'll see. At a certain point, continuously pissing off the electorate by bailing out various fat cats is going to hurt Congress' re-election chances. Will the auto makers get the money before that point is reached? We'll see.

And as tough as this may be for the union beholdin' Dems in congress to swallow, the average working person views UAW members as blue collar fat cats.

Even here in Michigan there are grumblings about tax dollars going to prop up the big 2.5. It is not all directed at management.

economist|11.19.08 @ 10:26AM|#

"It cost billions to get rid of Oldsmobile and that brand was gawdawful"
Even the name was awful. "Oldsmobile".

The Angry Optimist|11.19.08 @ 10:26AM|#

We're not "engineering" the negative stimulus.

Gah! Stop saying that word!

economist|11.19.08 @ 10:27AM|#

AO,
You're right, I should have "negative stimulus" in quotes. My bad.

VM|11.19.08 @ 10:27AM|#

"I think that MI is going to end up like Vermont: a city here or there, nice trees and nature and all kinds of winter activity...and place to vacation but not to live."

not quite as lame as VT, so I second Lt. Dru's vote!

and what Mo said!

|11.19.08 @ 10:27AM|#

Second, the Big 3 still sell a lot of cars and produce a lot of cash flow. That cash flow is valuable.

The latest quarterly "earnings" [teeheehee] reports from Ford and GM show a negative cash flow in the near neighborhood of $4.5 BILLION dollars per month.

A no-strings-attached bailout is just shoveling money into the furnace.

I reiterate: Wagoner should be escorted off the property with nothing but the shirt on his back and the change in his pockets.

BDB|11.19.08 @ 10:28AM|#

Economist--

He also said Japanese workers, who have one of the highest standards of living on earth (arguably, the highest), are "exploited". So yeah.

The Angry Optimist|11.19.08 @ 10:29AM|#

Seriously, once Detroit *officially* becomes a ghost city, what's the next-largest metro area? Grand Rapids? Ann Arbor?

Michigan is just not a serious state.

(oh, and it's *Beat Michigan Week*, so swallow salt as necessary :-)

economist|11.19.08 @ 10:29AM|#

"And as tough as this may be for the union beholdin' Dems in congress to swallow, the average working person views UAW members as blue collar fat cats."
Sorry, but pushing a button at the right time isn't worth $20 an hour. I exaggerate, of course. The UAW just got pissed when they started to automate the button-pushing.

|11.19.08 @ 10:29AM|#

I would rather see a Chapter 11 filing where the Fed or the Treasury provided the DiP financing than a straight bailout.

Fluffy,
Once again, great minds think alike.

A bailout of GM's current cost structure will just delay the inevitable. If a bailout has to happen, I'd rather see those funds applied to a post-Chapter 11 GM that actually would have a chance to succeed.

Actually, the current cost structure for the Big 3 is pretty good. They're creaking under costs for people they formerly covered. It's a technicality, but the people they hire now are a significantly lower cost basis and in 2012 the UAW will own the retirement and health care liabilities. It would be interesting to see how they do after that (if they make it to 2012).

|11.19.08 @ 10:30AM|#

Fluffy,

I have a cruel heart. And a natural love of watching people pay for their mistakes. Besides, they don't like the conditions they don't have to take my (and your) money, now do they?

economist|11.19.08 @ 10:31AM|#

AO,
Michigan is an economically moribund state. And there was some buzz recently about Barack Obama tapping the governor there as an economic advisor. Haven't heard much about it since.

BDB|11.19.08 @ 10:32AM|#

Was Michigan put on earth so Ohio would have a state to feel superior to?

|11.19.08 @ 10:32AM|#

Anyone looking for capital to open a new company with the current business model of the begging 3 would be laughed out of an investment meeting. No one would ever invest in this business model going in so why should we be forced to invest in the already failed model just to prove it is indeed a failing business model. Likewise as it is now no one would buy it either because.... drum roll... it is a failing model. With all this to big to fail bullshit we obviously need regs that say how big a company can get before it must retart further growth so that when it does fail we can allow it to do so.

|11.19.08 @ 10:33AM|#

The auto bailout is an interesting clash between Presidential electoral politics and Congressional ones. From a Presidential perspective, Michigan and Ohio are key states. Obama is toast in 2012 if he doesn't win those. So a bailout looks pretty good if you are President.

Did you even see the election results? Obama could have lost Michigan, Ohio, Indiana (another big union manufacturing state) and donated New York for shits and giggles and still would have won as many electoral votes as Bush did in 2004.

The Angry Optimist|11.19.08 @ 10:33AM|#

I even blame Michigan for saddling the Great State of Ohio with a union town like *shudders*...Toledo...

Was Michigan put on earth so Ohio would have a state to feel superior to?

BDB, we're also bordered by Indiana, West Virginia and Kentucky. There isn't exactly a dearth of candidates for "States that make Ohio look good."

economist|11.19.08 @ 10:33AM|#

AO,
Sorry, but what is "beat Michigan week"?

|11.19.08 @ 10:34AM|#

Bailing out the big 2.5 is only going to stifle production of good cars that people actually want to buy. Whether their assets would be bought up by the likes of Toyota and Honda or by some other company looking to get into the business, we're not just propping up failures, but we're putting down efficiency, innovation, and entrepreneurship

economist|11.19.08 @ 10:34AM|#

And if Ohio looked farther south, it could find Mississippi, Alabama, Louisiana, and Georgia.

BDB|11.19.08 @ 10:35AM|#

"Mo | November 19, 2008, 10:33am | #
Did you even see the election results? Obama could have lost Michigan, Ohio, Indiana (another big union manufacturing state) and donated New York for shits and giggles and still would have won as many electoral votes as Bush did in 2004."

Plus all the rustlbelt states (OH, PA, MI, IN) are going to bleed Electoral Votes after the next census. The new swing areas are the Southwest and South Atlantic, which will pick up Electoral Votes.

|11.19.08 @ 10:35AM|#

economist,

Ohio State vs. Michigan

|11.19.08 @ 10:35AM|#

Personally I would like them to go through restructuring bankruptcy or even full blown bankruptcy where other companies would be able to take their place. If the gov't just has to spend some money on them, then help out the workers that will lose their jobs because of this, don't help the unions and the management of these companies that got them into this problem. In the long run we will be far better off having either other companies building cars or a restructured Big three that can get rid of some of its bad past decisions through bankruptcy.

economist|11.19.08 @ 10:36AM|#

Louisiana and Mississippi exist as equals. They both exist so Alabama can look down on them. Alabama exists for Georgia to look down on. And Georgia exists for... most of the country to look down on.

BDB|11.19.08 @ 10:36AM|#

"economist | November 19, 2008, 10:36am | #
Louisiana and Mississippi exist as equals. They both exist so Alabama can look down on them. Alabama exists for Georgia to look down on. And Georgia exists for... most of the country to look down on."

Arkansas?

economist|11.19.08 @ 10:38AM|#

GM could be completely liquidated and the United States won't have lost anything that anyone should miss.

economist|11.19.08 @ 10:38AM|#

BDB,
Good point. I forgot about Arkansas.

economist|11.19.08 @ 10:39AM|#

I'm really not sure where Arkansas fits. Somewhere between Alabama and Mississippi, maybe?

BDB|11.19.08 @ 10:40AM|#

IMHO Arkansas ties at the bottom with West Virginia.

Hogan|11.19.08 @ 10:40AM|#

Arkansas exists so people can have a state to completely forget about.

BDB|11.19.08 @ 10:40AM|#

"Hogan | November 19, 2008, 10:40am | #
Arkansas exists so people can have a state to completely forget about."

I thought that purpose was already filled by Wyoming.

Warty|11.19.08 @ 10:42AM|#

Has George Will always been this good? I don't remember him being worth reading in years past.


...But then again, I have terrible judgment.

The Angry Optimist|11.19.08 @ 10:42AM|#

Plus all the rustlbelt states (OH, PA, MI, IN) are going to bleed Electoral Votes after the next census.

I wouldn't say "bleed" is accurate. Most of the projections I have seen so far have OH -2 and PA -1; not that big of a swing, I'd say.

|11.19.08 @ 10:43AM|#

Wyoming has righteous mountains, so does West Virginia. I forget what Arkansas has, teh Huckster?

|11.19.08 @ 10:43AM|#

News From Kentucky. Front page story; it's a little long but you will be entertained.

Teaser:

To be fair, the partial closing of U.S. 68 for some nine hours on a Friday night is pretty major in Nicholas County, where [Sherriff] Garrett was reviewing a Mayberry-like constituent call concerning a thwarted attempt to snatch a fresh cherry pie from a kitchen.

BDB|11.19.08 @ 10:46AM|#

Minus 2 is big as far as swings in electoral votes go. MI will be at least -2, possibly -3.

|11.19.08 @ 10:48AM|#

...But then again, I have terrible judgment.

It's reassuring that you realize this. Or maybe not.

economist|11.19.08 @ 10:48AM|#

phalkor,
And Bill Clinton.

|11.19.08 @ 10:48AM|#

I have a cunning plan. Let's take the bailout money and use it to buy Toyota, which we will give to GM. GM can run Toyota into the ground, too, thus ensuring American automaking hegemony until the South Koreans kick our ass.

We'll do the same with Ford and Honda.

economist|11.19.08 @ 10:49AM|#

Episiarch,
Not so reassuring.

|11.19.08 @ 10:49AM|#

SugarFree,

The best line was, "Basically, he said, he could have arrested the lot of them: Barton, her brood and the hauler. The charge, he said: 'being ignorant.'" There aren't enough prisons in China to arrest everyone guilty of that.

|11.19.08 @ 10:50AM|#

The other morning, the BBC news had a story about a factory in CHINA, where reduced demand for products had resulted in reduced output, layoffs, and voluntary(!) reductions in wages for the remaining workers.

The fucking "Commies" understand this shit!

economist|11.19.08 @ 10:50AM|#

ProL,
I have an even better plan: We use the bailout money to bomb the Japanese into submission. We did it once, and we can do it again! How dare Japanese auto companies compete with red-blooded American auto companies!

Hogan|11.19.08 @ 10:51AM|#

Wyoming has Yellowstone, the Grand Tetons and a buffalo on their flag. That's not a bad haul.

All I've seen of Arkansas is the delta from West Memphis down to West Helena and that's the shittiest part of this country I've ever seen. They do have Hot Springs National Park, maybe that's nice.

Hogan|11.19.08 @ 10:52AM|#

SugarFree - excellent article

economist|11.19.08 @ 10:52AM|#

P Brooks,
The "Commies" are getting smarter. Eventually they'll figure out that artificial devaluation of currency to boost exports is a bad idea. Then we'll be screwed.

economist|11.19.08 @ 10:53AM|#

Wyoming also has a location where alien ships land and communicate with humans.

BDB|11.19.08 @ 10:54AM|#

I forgot about Yellowstone. And yeah, WV has cool mountains and skiing.

Arkansas really is the worst state.

|11.19.08 @ 10:54AM|#

PL,
With $25B, you could buy Toyota ($9B market cap), Honda ($3B), Mitsubishi ($1.8B) and Nissan ($1.4B) or Daimler ($22B) and run all of them into the ground.

|11.19.08 @ 10:55AM|#

economist,

We can't do that. Where will we get our sushi from if we bomb Japan?

|11.19.08 @ 10:55AM|#

I thought the best line was:

[Sheriff Richard] Garrett, a wiry chain-smoker who ran
for re-election with the slogan of "More 'Dick' in 2006"

|11.19.08 @ 10:55AM|#

We use the bailout money to bomb the Japanese into submission.

We should hire the Japenese to bomb Michigan; once we rebuild, we'll kick their asses!!1

|11.19.08 @ 10:59AM|#

"Japenese"?

stupid keyboard

|11.19.08 @ 10:59AM|#

PB,

Probably made in China. They hate the Japanese.

|11.19.08 @ 11:00AM|#

George Will is definitely worth reading these days. The more fed up he became with the Bush administration and Republican b.s., the better he got. While he may never embrace libertarianism, libertarians should embrace reading his columns.

|11.19.08 @ 11:01AM|#

"The latest quarterly "earnings" [teeheehee] reports from Ford and GM show a negative cash flow in the near neighborhood of $4.5 BILLION dollars per month."

They only have a negative cash flow because they have so many obligations under their union contracts. They still sell cars. Get rid of the union contracts and they could make money again.

robc|11.19.08 @ 11:02AM|#

SugarFree,

As bad as the CJ is, they would never use "looky-loos" in a story.

|11.19.08 @ 11:04AM|#

robc,

The whole thing is a farce of journalistic writing and standards. Good for them. If the paper can't be interesting, it can at least be funny.

|11.19.08 @ 11:04AM|#

I hear something on NPR this morning (I think) about Barney Frank saying that we can't let the car manufacturers fail, because bankruptcy would allow them to potentially hit the reset button on the unions. Can't have that.

If this is about Amur'cun jawbs, then what about my job? I'm an American working for an American company. In a sector that is a far, far, far great employer of people than the auto industry is. What about Circuit City? Why can it fail? Or Washington Mutual?

|11.19.08 @ 11:04AM|#

Heard.

Bingo|11.19.08 @ 11:05AM|#

Holy shit NutraSweet, I'm dying of laughter here. That is the most perfect news article that could ever be published in a Kentucky newspaper. The accompanying picture is beautiful.

Oh my god. This is too much.

|11.19.08 @ 11:06AM|#

You guys think it is so easy for the Democrats to say no to this. I think you are wrong. Despite what Mo and company think, Dear Leader is not so popular that he can just throw away Michigan and Ohio. Yes I read the election results, but those results are no gaurentee of what 2012 will look like.

Further, don't under estimate the help the unions give the Democrats. Where do you think that big turn out machine ground game comes from? The unions hold a lot of clout because they throw around a lot of money to a lot of people and are good at getting people out to vote. Further, there are a lot of people in the Democratic party who really do beleive the union's line of bullshit. This is supposed to be the new new deal. A lot of Democrats are going to be really devistated and feel very betrayed if the Democrats let the UAW down on this one.

Maybe you guys are right and this is a no brainer and the Dems can say no without any real consiquences, but I doubt it. You guys make good points about this being unpopular with the country, but it is not that simple. It is going to be ugly for the Democrats either way I think.

|11.19.08 @ 11:08AM|#

Alan Mulally just referred to "9/11" in his prepared statement.

Drink up!

robc|11.19.08 @ 11:09AM|#

Bingo,

Holy shit NutraSweet, I'm dying of laughter here. That is the most perfect news article that could ever be published in a Kentucky newspaper. The accompanying picture is beautiful.

While this is a great story, you are wrong. The greatest story in the history of jounalism was published in the Frankfort, KY paper a few years ago.

Without giving away any of the good parts (I will try to find a link, I have posted it before), it involved a chainsaw attack over an unpayed loan. Yes, that isnt the good part.

Kyle Jordan|11.19.08 @ 11:09AM|#

"Maybe you guys are right and this is a no brainer and the Dems can say no without any real consiquences, but I doubt it."

As lemming like I think many Dems (and Repubs too) are, I'm with you on this one. The majority of them CAN'T be that stupid.

VM|11.19.08 @ 11:11AM|#

excellent article SugarFree! Most splenda!

Hogan|11.19.08 @ 11:12AM|#

My name is Charlie Brennan, from Charlestown I come.
I've traveled this wide world over, and many a race I've run,
I've traveled this wide world over, and some ups and downs I saw,
But I never knew what mis'ry was till I came to Arkansas.

I dodged behind the depot, to duck that blizzard wind.
Met a walking skeleton whose name was Thomas Quinn,
His hair hung down in rat-tails on his long and lantern jaw.
He invited me to his hotel, the best in Arkansas.

I followed my conductor to his respected place,
Where pity and starvation was seen in every face.
His bread it was corn dodger, his meat I could not chaw,
But he charged me half a dollar in the state of Arkansas.

But I didn't like the work, nor the food, nor the swamp-angel,
nor his wife, nor none of his children. So I went up to him and I told him,
"Mister, I'm quittin' this job. I want to be paid off."
He says to me, "All right, son." And he handed me a mink skin.
He says, 'That's what we use for currency down here in Arkansas.'
So I took it into a saloon to see if I could get a pint of whisky.
Put my mink skin on the bar, and be durned if the bartender didn't slip me that pint.
Then he picked up my mink skin, blowed the hair back on it, and handed me three 'possum hides and fourteen rabbit skins for change...

...

So farewell to swamp-angels, to canebrakes and fever chills
Farewell to sage and sassafras and corn-dodger pills.
If I ever see this land again, I'll give to you my paw
But it'll be through a telescope, from Hell to Arkansas.

|11.19.08 @ 11:13AM|#

Gettlefinger (abridged):

"Won't somebody think of the retired lotboys?"

|11.19.08 @ 11:15AM|#

Kyle Jordan,

I think they are in a world or hurt. They can't do things like the auto bailout and card check without putting their gains in the house in real jepeaody in 2010. But at the same time, if they won't bailout the UAW and do card check, from their base's perspective what the hell was the point of winning the election?

There best hope is for the Republicans to bail them out by voting for some of this crap and making it "bi partisian" sellouts rather than Democratic sellouts. The Republicans need to stick together and vote NO on all of this bullshit but not fillabuster. Fillabustering just lets the Dems off the hook by allowing them to say "we wanted to do that but the evil Republicans fillabustered it". Don't let them do that. Let them have their votes in the Senate and take responsibility for doing or not doing things.

|11.19.08 @ 11:19AM|#

Barney Frank is now reading into the record a Ben Stein column.

I'm....





awestruck.

|11.19.08 @ 11:20AM|#

robc,

I remember that one. You ever been to Frankfort? After only 5 minutes my extremely polite and politic father-in-law said "This is a real shithole."

By the way, the story says 4 adults and 8 children lived in the single wide trailer. A single wide has the outside dimensions of 16'x60'. That's 960 sq. ft. The actual usable space is about 400. That's 33 sq .ft per person, or a square 5.7'x5.7'.

That's smaller than a cell at Pelican Bay. (7x9 IIRC)

Warty|11.19.08 @ 11:23AM|#

It's reassuring that you realize this. Or maybe not.

A man's got to know his limitations.

|11.19.08 @ 11:24AM|#

Wagoner:

Ummmm, blrpgh! gaack! weezleweezleweezle! snrrrrrph!

|11.19.08 @ 11:28AM|#

I would rather see a Chapter 11 filing where the Fed or the Treasury provided the DiP financing than a straight bailout.

A bailout of GM's current cost structure will just delay the inevitable. If a bailout has to happen, I'd rather see those funds applied to a post-Chapter 11 GM that actually would have a chance to succeed.

I hadn't thought of that, but it's actually a good idea. Well, not that any kind of bailout is a good idea, but since we all know it's coming, may as well do it the right way.

Citizen Nothing|11.19.08 @ 11:33AM|#

"I even blame Michigan for saddling the Great State of Ohio with a union town like *shudders*...Toledo..."

If it wasn't for the border war with in the 1830s, Toledo would be in Mich. now.
Ohio did LOSE that battle, didn't it?

|11.19.08 @ 11:35AM|#

Maxine Waters:

Paulson is a fibber!

Business is hard. Women and minorities hardest hit.

kinnath|11.19.08 @ 11:38AM|#

Saw an article in the International Herald Tribune this morning. Mercedes, Toyota, and Nissan are now renting space at the Long Beach port to "park" thousands of cars coming off container ships, because the dealers can't or won't take them.

left-titi, proud UAW member|11.19.08 @ 11:41AM|#

You mean I'm not worth $75/hr?
Damn, now I am depressed.

Jesse Walker|11.19.08 @ 11:47AM|#

what is "beat Michigan week"?

These days it's just about every week.

|11.19.08 @ 11:51AM|#

Krugman says that because of the bad state of the overall economy he reluctantly favors a government bailout of the auto industry. He gives two reasons:

The credit lines normally available to the auto companies are now frozen, so a Chapter 11, bankruptcy, would quickly turn into a chapter 7, liquidation. Such a liquidation would mean that over one million jobs would evaporate.

I'm pretty sure that people will continue to drive cars, and people will continue to be employed to make cars, if all of the Big 2.5 go under. They just won't be UAW worker built cars.

But, hey, Krugman won a Nobel prize in economics, so any ignorant partisan statist crap he spews about economics as it relates to politics must be taken seriously, right?

|11.19.08 @ 11:52AM|#

"These days it's just about every week."

Last week at the big house they had a public address anouncment that read as follows,

"Could a Mrs. Klingensmith please report to the field level entrance at the 30 yard line and pick up your 11 children. They are beating the Wolverines 24-0."

|11.19.08 @ 11:56AM|#

Gettlefinger:

Nobody understands us! We're the good guys!

|11.19.08 @ 12:04PM|#

Alabama, Arkansas, Louisiana and Mississippi exist to make Texas look civilized.

robc|11.19.08 @ 12:05PM|#

I remember that one. You ever been to Frankfort? After only 5 minutes my extremely polite and politic father-in-law said "This is a real shithole."

Oh yeah, Ive got a friend from there. During high school, we played both Frankfort and Franklin Co in one quiz bowl tournament. Our motto for the tourney was "Fill in the hole".

I refer to residents of Frankfort as Morlocks and Eloi, depending whether they live in the pit or on the rim.

You ever go to the free breakfast in Frankfort hosted by the governor on derby morning? Scary.

|11.19.08 @ 12:08PM|#

You ever go to the free breakfast in Frankfort hosted by the governor on derby morning?

[shudder]

There's a disc golf course in a public park off of 60. Look, if you feel the need to be three hundred pounds and beat your scabby kid in public, could you at least not do it in a tube top?

|11.19.08 @ 12:10PM|#

Gettlefinger:

Thank you Congressman, for that stirring emotional defense of union jobs in America.

The check's in the mail.

robc|11.19.08 @ 12:12PM|#

SugarFree,

There is a Frankfort fair/expo that is known, by my friend from Franfort, as the "White Trash Expo".

|11.19.08 @ 12:15PM|#

Look, if you feel the need to be three hundred pounds and beat your scabby kid in public, could you at least not do it in a tube top?

Your world frightens me, NutraSweet.

|11.19.08 @ 12:19PM|#

Like I said... you get numb.

VM|11.19.08 @ 12:23PM|#

hay - at least they're in the game!

|11.19.08 @ 12:25PM|#

Unknown Congressman:

Will you promise to close your least economically viable operations first?

|11.19.08 @ 12:33PM|#

Is it just my imagination, or are there about three times as many commercials on CNBC after 10 AM EST?

|11.19.08 @ 12:36PM|#

Will you promise to close your least economically viable operations first?

Oops; I must have been "projecting".
That was "...most economically viable operations first?".

|11.19.08 @ 12:43PM|#

The fight over the auto-bailout is kind of a good thing. It highlights front and center what kinds of policies the Democrats really WANT - essentially to subsidize a bunch of fat inefficient corporations so that union workers can have cushy jobs with big pensions. it keeps that public eye on the craven shilling of people in congress to subsidize the livelihoods of those that vote and donate for them.

A lot of people won't see how corrupt that is, but many will. It also tarnishes Obama's "change" message, since reminds people of the 70s, rather than the 90s, or some future utopia.

If this can be dragged out right up until inauguration day, maybe people will be exhausted and fed up with the whole notion of bailouts by then.

We've already got Paulsen publicly defending himself in the NYTimes yesterday, so it sounds like government intervention isn't working out so well.

Let's put "progressive corporatism" on crack and run it into the ground before Obama takes office.

|11.19.08 @ 1:21PM|#

I have been sitting here for much, much longer than I ought, waiting for somebody/anybody (I'm looking at you, Mister Industry Analyst!) to point out that a major part of what we are seeing here is the cumulative effect of forty years' worth of unintended consequences directly resulting from government policy and legislation.

Thus far, no luck.

Nate|11.19.08 @ 2:56PM|#

robc- any chance of you following through with your promise to dig up that other Kentucky news story? I'm salivating at the prospect of something even more bizarre than the one posted here.

|11.19.08 @ 3:19PM|#

Walmart is headquartered in Arkansas, and they piss off lefties something fierce. So that's something in Arkansas' favor...

robc|11.19.08 @ 3:25PM|#

http://www.state-journal.com/news/article/445062

Nate,

There ya go, I just found it a second ago. All the formatting (and for some reason, key punctuation, like quotation marks and stuff) are missing. Stupid archiving.

Nate|11.19.08 @ 3:28PM|#

Wow, thanks. That really had to be seen to be believed.

robc|11.19.08 @ 3:31PM|#

Nate,

I love how the guy actually hurts the guys arm with the chainsaw but they dont discuss the injury at all.

"Threw a stick or something"

And, of course, may favorite bit, having to start the truck with a screwdriver, while a guy is attacking you with a chainsaw thru the window.

MattXIV|11.19.08 @ 4:33PM|#

They only have a negative cash flow because they have so many obligations under their union contracts. They still sell cars. Get rid of the union contracts and they could make money again.

But they sell a smaller fraction of the cars in sold in the US as time goes on. See here. Their market share has dropped unabated since the 1970s. It's not just an issue with their financial situation - they've ran their brands so badly into the ground by producing shitty cars that people won't buy them, even thought the gap in quality isn't as bad as it used to be. Particularly troubling for their prospects is that they lost 17% of the light truck market between 1995 and 2005. Light trucks have been keeping them afloat so far, with no net loss from 1980 to 1995 with a relatively minor dip in between. I don't think there's an underlying viable business without radical changes, and even then the damage to their brands may be too severe to recover from.

|11.19.08 @ 4:51PM|#

The solution is, of course, flying cars. Let the Japanese compete with that!

|11.19.08 @ 4:54PM|#

"The solution is, of course, flying cars. Let the Japanese compete with that!"


Or electric cars. There are a few start ups that are producing pretty interesting electric cars. I think we are only a few years away from having the battery technology to make them affordable and practicle and really cool. But why take the lead in tommorow's industry? Why not spend billions propping up yesterday's?

Gilbert Martin|11.19.08 @ 5:23PM|#

"I have an even better plan: We use the bailout money to bomb the Japanese into submission. We did it once, and we can do it again! How dare Japanese auto companies compete with red-blooded American auto companies!"

That would be about the only way to bring back the conditions that allowed the big 3 and the UAW to get away with what was essentially an oligopoly for decades.

Many people seem to think that the post WW 2 era of corporate paternalism and job security is supposed to be the norm and the erosion of that in recent years is an anamoly that needs to be corrected.

In fact it is that period that was the anamoly caused by most of the world's developed countries - except for the United States - being smashed to pieces by the war.

Miggs|11.19.08 @ 6:54PM|#

News From Kentucky. Front page story; it's a little long but you will be entertained.

That maybe the greatest news article I've ever read. I almost fell out of my chair laughing at some of the slide show pictures. Thank you for sharing that gem, sir.

|11.19.08 @ 8:19PM|#

I sorta agree with Matt. The big 3's offerings have not been to the same quality of Japan's or Germany's, but part of that was due to trying to lowball on cost when they had so many liabilities. Legacy costs have been the albatross around the big 3's neck for the past 3 decades and they've never really solved that issue successfully and with the rising healthcare costs, the big 3 cannot keep their head above water anymore. However, I don't think a bailout of any reasonable amount will get the big 3 over the hump. Their only hope is to find a way to shed these costs and have their suppliers do the same thing.

Debatable|11.20.08 @ 4:52PM|#

We have had a few people wondering "How does keeping American money paying American workers harm American consumers?" I'm surprised how many people don't understand. I thought that this is a no brainer.

http://www.thats-debatable.com/2008/11/big-three.html

|11.21.08 @ 4:15PM|#

At the most, I would support government-sponsored bankruptcy, but with conditions that severely punish the CEOs and other upper-level management. It's absurd for taxpayers to share a debt while executives walk away with more money than the majority of tax payers will ever see.

Dr. Tantillo ('the marketing doctor') did a post on his blog yesterday, criticizing GM from a branding perspective:

"This is anti-marketing at its worst. Like with some of my other 'favorites' (i.e., Microsoft), it is an approach that is only possible when you are so big that you can grow by bullying and then, once wounded by the changing marketplace and competition, take a very long time to bleed to death. GM and Detroit have been bleeding to death for a long time." Tantillo's full post

With the poor management and lack of innovation that these companies have shown, there is no reason to think that they will do better if given a second chance. If anything, they will have learned that when your company is big enough and your salary is fat enough, you really can't fall.