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What's Good for Cerberus Capital Managment Is Good for America
Disclosure first: I live in Southern California, and I'm almost certain they don't sell American cars here. The cops drive Crown Vics, but only to give the criminals a sporting chance to get away. Makes the freeway chases last longer. Good for ratings.
I guess I've rented American cars. I drove a Dodge Intrepid around Rhode Island one summer, and appreciated how much it handled like the aircraft carrier for which it was named. I drove an Oldsmobile Intrigue in Montreal a few years ago, and the most intriguing thing about it was the way it didn't start the second day and they had to tow it back to the airport.
The only actual autoworker I've ever met is the guy who wrote Rivethead, and he probably wasn't typical, at least I hope not.
I'm sure most autoworkers are the salt of the earth, though. Hard-working patriots from Bruce Springsteen songs, with only the occasional moments of existential doubt over unplanned pregnancies and brothers who ain't no good. Nothing that staring at a river wouldn't fix.
Only a tiny, tiny fraction of them are former death camp guards.
I'm all for good union jobs with health insurance and pensions. If you work hard you should be able to send your kids to school and eat, even when you're old. I thought that was the American Dream, before it got replaced with the right to stockpile ammo.
To sum up: Autoworkers are aces with me. And so are cars. Very useful for getting around.
That said, there are only two reasons to save an American car company: Nostalgia and nativism. And neither of those is a very good reason.
What do we even mean when we say, "the American auto industry?" Honda has been making cars -- like my Civic -- in Ohio since 1982.
Do we mean American capital? Because that's just silly. Capital flows freely. Or it used to.
So why is Honda on its own, while GM is our problem? Both have American workers and American customers. (Well, Honda has customers.) Is it because GM's founders were white, or because its management is native born? Do we owe the Ford family reparations for something I missed? Is this really how we operate?
I'm not saying nostalgia and nativism don't have their place. Lou Dobbs gives me the creeps, but lots of people like him. The worst thing about the automotive industry bailout is that it's insincere. It's preying on our nativist and nostalgic attachments to things that don't exist anymore.
There's no such thing as Chrysler. It doesn't even have any stockholders to save. If the bailout passes, your money will go directly to the hardworking men and women of something called Cerberus Capital Management, L.P.
Cerberus, named for reasons unknown after the mythical three-headed dog that drags souls to hell, is one of the world's largest private investment firms. By its own account, it has $25 billion under management in funds and accounts and significant investments in more than 50 companies that, in aggregate, generate more than $60 billion in annual revenues worldwide.
Including:
A Japanese bank called Aozora
A Japanese real estate company called Showa Jisho
A Japanese golf course company called Kokusai Kogyo
An Israeli bank called Bank Leumi
A German bank called Handel und Kredit Bankhaus
A reinsurance company called Scottish Re, with headquarters in Bermuda
A British TV rental chain called Boxclever
Telacris Biotherapeutics, which seems to make things out of blood plasma, or into blood plasma or something
A defense contractor called IAP World Wide
Bushmaster Firearms
Remington Arms
Panther Arms
Alamo Rental Car
250 Burger Kings
655 Albertson's
7 television stations
$30,000,000 worth of Mike Myers' "The Love Guru"
65,000 apartments in Berlin through GSW Berlin GmbH
Maybe you or your congressperson has a nostalgic attachment to some of those things. I don't.
Maybe Cerberus Capital Management L.P. should sell some of them, if they really need cash to stay in the minivan business.
Maybe they should stop using Chrysler to shake down the United States Treasury, like using a less-loved relative in a wheelchair to cut the line at Disneyland.
Read More:
Should the Government Bail Out the Big U.S. Three Automakers? HuffPost Bloggers Weigh In
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"Another remaining hang-up was over ensuring that Cerberus, the private equity firm that owns Chrysler LLC, would reimburse the government if the auto company defaulted on its loan, said a congressional negotiator who spoke only on condition of anonymity because he was not authorized to disclose details of the emerging deal." -- Julie Hirschfeld Davis and Ken Thomas, Associated Press Writers
Great food for thought in the article, but there are other companies to consider other than Cerberus and Chrysler in this mess, such as the thousands of suppliers that provide parts and services for Chrysler. Also, in Greek mythology Cerberus didn't drag souls to hell, it only guarded the gates of Hades to keep the souls in and the living out so it's a little misleading to imply that Cerberus is dragging the economy to hell.
"Nothing staring at a river wouldn't fix."...brilliant
Wow, the UAW must be working overtime to refute this argument. Let the market decide the worthiness of the not quite as big three.
Sending tax money to a three headed dog may save more American jobs than GM - "General Motors to Invest $1 Billion in Brazil Operations -- Money to Come from U.S. Rescue Program"
http://www.laht.com/article.asp?ArticleId=320909&CategoryId=12396
Once again, whose jobs are we trying to save?
The author of this article is a worthy disciple of Herbert Hoover's Secretary of the Treasury, Andrew Mellon, who according to Hoover (after Hoover had left office) had said as the economy was going into the great depression:
“Liquidate labor, liquidate stocks, liquidate the farmers, liquidate real estate. . . . [That] will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people”
People with that kind of mindset are part of the problem, not part of the solution.
GM has made big strides to meeting a lot of the goals (quality, fuel efficiency, streamlined cost, better time to market) that it has been criticized for. Meanwhile, lost in the discussion is the fact that the Japanese and every other import is being subsidized by the respective governments, as health care and pension costs are the responsibility of the government in practically every car-producing society. So GM is losing because they are supporting the American model. Unless this country wants to become a massive service economy with low-paying jobs and few primary jobs (those jobs that cause other jobs to be created to support their existence), we do need to come together to figure out how to compete in manufacturing, especially in cars. The US should be exporting more manufactured goods to correct our enormous trade imbalance. By the way, I've lived in France for several years, where everyone (ok, at least half of the population) drives crappy French cars, because they understand as a populace that there is nothing wrong with supporting your own society.
Let's have FULL discoture. What is this guy's occupation? Is this another priviledged investment manager, like the last one who wrote an article favoring letting the auto companies go down?
If the auto companies go down they will pull many other businesses down with them. This will cause the loss of 1 - 3 million jobs, and in many cases they will lose their health insurance. Therefore letting the auto companies go down will make the recession significantly worse and the unemployment significantly higher than if they will be if the auto companies are rescued. So there is a lot more than nostalgia and nativism involved here.
Incidentally I drive a Chevrolet Blazer and previously drove a Ford Taurus and both have performed very well.
(Sorry environmentalists, but I had a very compelling reason for needing the Blazer.)
Barak Obama has proposed a stimulus package that will create 2.5 million new jobs. The auto companies going down will more or less wipe out the benefit of this by causing a roughly equal amount of jobs to be lost.
Funny Honda's Marysville, OH Auto plant does not produce Civics...
What has gotten no attention is that the Cerberus Chairman is former Bush Treasury Secretary John Snow. In 2006, he joined Cerberus - just two short years ago.
When Cerberus bought Chrysler I thought they were completely nuts. As a casual observer, the aquisition made no sense. Purchase a portfolio of products completely out of step with American tastes?
Now I get it...
Chris, why should we bail out banks and not car companies? Personally I don't want to bail anybody out. But, if we are going to bail out banks and insurance companies we should also be helping car companies, truckers, retailers, etc. What did the government do to kill the business of banks and insurance companies? I know what government did to kill sales of cars, trucks and even retail stores. I think we have an obligation to them. Please explain our obligation to the banks and insurance companies. By the way, I am not an auto worker. I am just a tax payer trying to look out for my grand son's best interests.
If we do not abolish free trade every thing else is a waste of time and money.
LET THE BIG 3 DIE ---
IT WILL COST THE FEDERAL GOVERNMENT $100B THE FIRST YEAR IN PENSIONS AND HEALTHCARE ALONE.
LOST TAX REVENUE WILL BE $200B IN ONE YEAR IF ALL THE DEALERS FAIL.....
Make the sound financial decision; provide LOANS with carefull oversight -and for GOD's sake quit comparing the Big 3 to AIG and the financials... (The auto companies haven't gotten one dime yet and the hate-mongers in congress and the public have already condemned what they "might " do with the funds-- like AIG!)
Q and A for the California green crowd:
Q-Who owns and runs the lagest gas guzzling truck plant in the US?
A- Toyota ---plant in texas
Q-Who built the newest gas guzzling truck/giant SUV plant in the US?
A-Nissan -in Tenn --produces the Titan and Armada
Q-What state buys and has registered more gas burning vehicles than any other US state?
A-Calif. -(you guys should outlaw cars people can walk to work-right?)
We should also stop the flow of subsidized water to LA, SF etc. Why do I pay taxes in Michigan so Californians can get cheap water? Start paying market rates.
Stop the hate.
Yes the US autos haven't made the best decisions over time.
But most of the bad decisions that have tanked the US economy are Washington's doing: Dumb trade policy, healthcare inaction, congress sat by when the speculators drove oil to $150/bbl, banking fiasco...
Now is the opportunity to fix some of Detroit's ills....put them on the right track and keep a huge tax base in the US
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