Detroit Bailout -- Let ExxonMobil Foot the Bill
Listening to the auto execs this week, hat in hand testifying in front of Congress, you'd think it would have offered a humble moment for them to come clean and own up to their mistakes. But no, they continue to deny any responsibility for the mess they are in. Instead (oh how convenient) they blamed their problems on the current collapse of the economy! That denial alone should exempt them from any "bridge loan."
The best idea I've heard in the last few days comes from an unlikely source, the actor Ashton Kutcher on the Bill Maher show, who repeated the suggestion that the auto industry go meet with the oil industry - their partner in crime - and ask them for a bailout. At least we know ExxonMobil can afford it.
And while we're on the subject, the one piece of good news today is that John Dingell may finally be on his way out as head of the House Energy and Commerce Committee. He had what, like 30 years to get this right? And all he did, over and over again, was enable Detroit to do nothing. It's time to let Henry Waxman assume this important role, particularly since global warming and energy will be the central focus of the committee's upcoming agenda. We can't afford to let Dingell's brand of obstruction stand in the way of real progress any longer.
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I remember back in the 70's when we were sitting in line for hours sometimes to get gas on our assigned days, 60-minutes did a segment on upgrading a car (I think it was a Ford Fiesta), to which they made some very simple changes to the engine (I believe bored-out was one of the terms) and the thing got 60+ miles to the gallon. Never saw that hit the market! Why not? The oil companies MUST have been involved in the design side of the Big 3 making sure we wasted as much gas as possible. They should bail them out now that they are failing, but they won't.
"Boring out" is making the cylinders larger and therefore increasing displacment. Larger displacment usually uses more fuel....small block and big block engines...which uses more fuel?
Best news I've heard all year.
The auto companies are guilty of lots of things that got them into their financial predicament - paying a descent wage for days work - enough to raise a family on, keeping their promises to their retirees and working with the unions - unlike most of their competitors.
Their upper management is paid too much - but this excess is society-wide and is applicable to all industries and especially applies to entertainers and athletes.
This financial and credit crisis is worldwide - they didn't cause it, they are suffering from it just like everyone else. Most of their competition gets much more help from their governments than they do.
These companies are suffering as much from bad timing as anything else. Fuel efficient products are just a year or two away.
If the oil companies did loan them the money, as suggest ed- Ashton Kucher would be the first one complaining about the collusion - with folks like you catching on the next day.
I am a liberal progressive. I do not want to see the job losses that would result from the collapse of the American auto industry. Rather than a bale out, I would prefer to see a buy in by the federal government; accompanied by a forced corporate restructuring that would include brand new management (and no golden parachutes for the out going) and substantive joint ownership by the workforce (think Schumacher and the British coal industry). Such a buy in would better enable the rapid retooling needed to change our auto industry from the petroleum based internal combustion engine to electric vehicles; bypassing the need for congress to force this inevitable, by otherwise very slow process. The cost of the buy in and retooling can come from the 700 billion emergency funds, and all American citizens (not just tax payers, but children too) should receive shares in the restructured auto companies. These shares can be scheduled for active trading after the companies become profitable again. The environment, the auto workers, Amercian citizens, the government, our national security: everybody wins (except the oil industry).
That would cut their sales by 90%. We would lose all are investment and they would be out of business in 12 months.
Oh, I forgot, Americans only want the 20 mpg SUVs that Detroit and the oil industry want us to want. Change is bad. Drill baby drill.
Where did you get your number? A hat?
I have an excellent solution. Force everyone that needs a new car to buy a domestic car. That will provide the revenue to produce cleaner cars. As you do this also madate shut down of 20% of the gas stations each year. Also force everyone who owns a gasoline car to send them to the graveyard in 5 years. So, in 5 years then there will be no gas available and only electric cars. You ask where will the electricity come from? It will come from wind, solar and geothermal only. That will not be sufficient so it will reduce the number of cars. Then people have to move closer so they don't have to drive. Perfect - ordinary people will be living in communes while the few rulers like union leaders, congressmen and company heads will drive electric cars. What a wonderful world!!
My family started car pooling because of oil prices and the war for oil. Then we decided we needed fewer cars and sold some. Maybe we will move in together too.
Unions are killing the big 3 period. Oil had a brief spike for less than 6 mos and is now below 2005 levels. Gas prices are not the problem. LEGACY costs are. PAying your employees 40% more than your competition is not good business. Bust the Unions before they bust the U.S.
Why are "legacy" costs being paid today? Why didn't the Big Three start setting money aside for future pensions when they were making profits in the past?
The management of the Big Three is to blame - not the unions. Both parties negotiated in good faith in bad times and in good. It's not the fault of the retirees that the auto makers are having a hard time funding retirement benefits. It's not the union's fault that health care costs have risen.
Gas prices since 2005 killed the trade-in value of SUV's. People can't afford to unload SUV's until the loan is paid off. Cars aren't selling because consumers that have purchased SUV's since 2003 can't get financing to buy new ones.
I completely agree with the writer that the auto executive are not without blame. They are called "management" for a reason. And I agree that worker salaries might need to be moderated but I also agree that auto workers deserve a decent living. Whatever happened to the day when a young man could go out after high school, get a job in an auto assembly plant and through hard work support a family. We simply need to return to the day when work is valued rather than perpetuating this notion that the only work that counts is that performed by individuals in suits. We handed $150B to AIG (suits people) with virtually no questions asked. We can (and should) keep the companies afloat with short-term-loans. Afterwards, additional funds would only be advanced in accord with an acceptable plan. Perhaps we could contract with GM to develop an electric car that meet certain state-of-the-art objectives; we could contract with Ford to undertake the development of a car that incorporates fuel cell technology; chrysler could be commissioned to improve upon hybrid cars that run on alternative fuels and and perhaps some other energy source.
We do this all the time with defense contractors; Why can;t we step forward and save this American treasure.
AIG gave 80% of a viable company and business model back as collateral.
AIG still has assets that they can sell, unlike the big 3. However, I can not support AIG bailout either.
Letting the dinosaurs go under may actually FORCE our nation to concentrate on alternative forms of energy.... including for cars. US auto has been SLEEPING AT THE WHEEL for the past 30 or so years and has done noting innovative...but fed the oil companies.
Maybe the big oils should scratch the auto industry's back now.
Let's look at all the industries and businesses that would not exist without the automobile. Without cars we would not need gasoline, highways, bridges, parking lots; there would be far less urban sprawl with all the suburbs and malls and gas stations. Fertile ground for some taxes to repay the car companies for what the car made possible. In addition, we have subsidized agriculture, oil and mining for better than 80 years; a few bucks to the car companies, in the form of a loan, does not seem remiss.
Oil is used in thousands of things. Everyday plastic items, electronics, etc.....it's also still needed for airplanes and cargo ships. Oil would still be in high demand even if we had ethanol/electric cars. Oil companies don't owe a thing to three auto companies with an ever decreasing global market share.
Ethanol production from corn takes in more energy than it produces. It is the most egregious subsidy to special interests in the corn producing states egged on by misinformed environmentalists.
While it is a cute idea to let the Oil companies bail out Detroit, not giving the Big 3 financial assistance is tantamount to an economic danger the rest of the county has little idea of, and will absolutely push us into a depression. Think thing are bad now- you ain't seen nothing yet. 3 Million unemployed, this is no joke.
The is a reason Republicans are against the bailout, is because they want to see Obama and the Democrats fall, and bankruptcy of this magnitude would be all it would take to push it over the edge, and Obama is strongly in favor of a bailout. I consider Obama a smart person, he obviously knows which way the wind is blowing. Too bad fellow progressives, with their own personal agendas don't. While agree there are mistakes that have been made in Detroit in the past, now is not the time for crucifixion . This will be the first test to see if we as progressives have any unity, or if we are divided. From the looks of things we are divided, and the Republicans will find the crack and eat our lunch again.
You are right on target. I live just south of Youngstown and while no one in my family works for the auto industry, our incomes all have ties to it. My parents' small business manufactures assemblies used in tube and pipe mills, many of their customers are exhaust systems producers. They have already seen a steep fall in sales and are set to cut hours.
My family has frozen all non-essential spending. I am all about competition among companies and such, but now is definately not the time to let the big three go under. Repub's are just salivating at the chance to kill the union off for good. Starving, homeless children be damned.
Those jobs that are lost....they will be lost for good. Nothing ever comes to this area. More empty boarded-up houses. More crime and rampant poverty for the rust belt. Anyone that says "Let them be liquidated" Should come on up to Detroit or Youngstown and take a long look around. The area cannot handle another hit.
Great idea and we can also expect some cash from the war profiteers. The Prince family made a fortune from auto parts and sonny boy used it to start Blackwater. Their friend Dr. Dobson can also toss in some. He is so worried about the War on Christmas--he can give us all a Christmas bonus.
The fuel efficient cars you want out of OUR auto industry are only ONE YEAR AWAY from coming to your local GM, Ford, and Chrysler dealership. The Chevy Volt (100 mpg on a 80 mi daily commute), Chevy Cruze, and Ford Fiesta are all scheduled to appear in 2010. The UAW contracts reset to non-union standards in 2010. All the Big 3 are looking for is a bridge loan to get to 2010, when did we stop protecting AMERICAN companies in favor of protecting FORIEGN companies?
I bet you hundred dollars more people will be buying Toyotas in an year and fewer people will be buying domestic cars. So the bailout will just go down the drain. There is a myth that fuel-efficiency is why people buy foreign cars. People buy Toyotas because these are excellent cars and you feel throughout your period of ownership that you have not been cheated. The only way the bailout will work is if it comes with drastic reduction in the cost structure of management, unions and everyone else and getting rid of all sacred cows in these companies. These guys have destroyed their own brands and it will take them a long time not one year to build their brand back up if if they produce good cars. So they need a much lower cost structure to survive these years and put more and more money in their product.
I think that we should help broker a deal for the Detroit Automakers to produce on license some of the exciting electric cars that are either on limited production in small shops or in the final stages of design and testing. Much like Ford building planes and tanks during WWII maybe we can utilize the production capacity of the Big 3 to produce the products that we will need to become more energy independent in the next decade?
Could these massive plants not be retrofit to also build solar panels or wind turbines? I am sure there are all kinds of energy efficient products that could use the cost cutting that should come with Mass Production. Throw in some tax incentives to purchase these products and I think we might help both the economy and the environment.
Then again imagine how bad the Big 3 could mess up alternative energy? I just want to be able to put solar panels on my home or put up a wind turbine for less than it cost me to buy electricity and natural gas every month.
This is a dumb idea. Why would oil companies want to give their profits to auto companies that screwed up time and time again? It's not like there will be less cars, ships, and planes that will need to be fueled if the Big Three go under so it will be no loss to oil companies. There will still be Toyota, Nissan, Hyundai, BMW....for all of whom demand will go up to replace the big three if they fall (of course I hope they can pull it out in bankruptcy though). Just because somebody can afford to loan money doesn't mean they have an interest in doing so and we have no legal authority to force them to.
Can we talk reality here or should we spend more time on Ashton Kutcher?
when push comes to shove, you'll be surprised how much legal authority there will be.
the lack of legal authority was never a problem for the Bush administration and, in a crisis, will not be for the Obama administration either. After all, we now have ample precedence.
Love the idea - at first blush. But, how the oil industry isn't likely to stipulate low emission and energy efficient cars as a requisite - and those are imperatives, as I see it. If Congress does a bail out - they should only do it with serious concessions from the auto makers regarding these issues.
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