I have mixed feelings about the bailout in general, but the so called "big three" auto makers in the U.S.~ GM, Ford & Chrysler.
My gut level feeling is- they are privately owned corporations, if they can't run a successful business, then they would have to fold just like any other unsuccessful business.
But this is a complex issue. We only have three US major car manufacturers in our country, and perhaps it is in our best interest to help save them. I am not so much interested in saving them to support the corporate model, as in corporations over people, but the two are tied together. If a company goes out of business, they take with them the pensions and health insurance of all the worker bees, who may have given a lifetime of hard work to the corporation, with the promise and understanding, they would have a pension, and health care after retirement. It is for those people, and all the family wage jobs, and the concept that we should have American made cars in this country- besides Toyota & Honda. We as a country need to pull it together to have our own thriving vehicle manufacturing going on right here in the US.
But the waters get murky, and this is the part of the bailout that bothers me. GM has a lucrative "war profit" account, supplying the military with Humvees. They all are top heavy, the upper execs get paid ridiculous sums of money and get hefty bonus money and perks. In other words, they squander their profits.
Over the years, they seem to have adopted the philosophy that the main goal is to bow down to the almighty shareholder, pulling in a big profit is king, and cutting corners is the way to get there. US autos have become an inferior product, with low consumer ratings, and a shorter lifespan than foreign made cars. They really missed the boat on Hybrids, and energy efficient vehicles that are sippers rather than gas guzzlers.
Meanwhile American Express credit card company asked the government if they can declare themselves a "bank", in order to get a piece of the bailout pie. Somehow, I think credit card companies have devised every method possible in which to make profits. 24% interest rates, steep fines, and fees. Do we really need to give them a $3 billion dollar bailout? The more money that goes to these bailouts ,means the less money available to help deal with the foreclosure situation.
If the big three are to be bailed out, it has to come with a no more business as usual mandate.
Where do you stand on this issue?
12 comments:
I am with you very abilvilant....( sp)...very confused..I would like to know more...here on the news they said that unless the Bailout aids the auto industry that it will effect existing pension plans and healthcare in the severance packages...that is concerning, because it has longterm consequences for thousands....also I had heard that 3 million will be effected if the top three fail...so I am confused...the wallstreet bailout WHO did that aid ? no mainstreet workers..and we were led to believe that mortgages /the failing housing market would be aided...so far I have not seen how workers or homeowners /renters have been aided at all...so homes nor jobs have been protected or aided...
and Paulson has been changing the rules and we have seen NO transpaperency...just more of the same shenigans.....that got us in this mess....
I think Paulson needs to come back for some more hearings and answer some BIG questions about WHO and WHAT is aided and the actual structure...and the Process needs to be Accountable and transparent..if that is not possible- time for Paulson to be removed...
( and I am hoping and praying that he is one of the first that Obama sends packing...)
With the american auto industry, it's really Hobb's Choice, damned if you do, damned if you don't.
Forget "bailout". I think if it's structured as a "loan" with strings attached (many, many strings), I support it, mainly because of the jobs, but also because it's a chance to get them back on track in producing affordable non-gas-guzzlers.
It's not exactly true about their employees losing pension benefits, however. GM, like most big corps, is included in PGBP (pension guarantee benefit program) which is kind of like FDIC for pensions. The retiring emp'ees would get less than promised, esp if they'd chosen to invest heavily in GM stock, but they would not lose their pensions altogether. Part of GM's pension bene's incl health care for life. That alone should bring universal health care up front & center for discussion. If we had a national health care program, while it may not be as expansive as the one GM orginally promised its emp'ees, it would reduce GM's most costly portion of their emp'ee pensions.
I see this as a chance to reform the auto industry, from top/down and bottom/up. And while we're at it, let's get real fair trade laws enacted. Free trade is killing american industry here. We need to take care of our own first, and do business with trading partners to meet OUR standards.
HI E~ Obama explained it this way in last night's interview--The bailout money is keeping more banks from total collapse. But you are right Paulson is too slick & not transparent in his doings & dealings & methodology.
Chances are we will NOT see that till Obama is in office, but by then the $700 billion would likely be gone.
Obama said he wants to see a significant part of that $$ going to work out a program that saves more people from foreclosing- providing a way to renegotiate their loans & keep their houses.
Also.... not only does Paulson need to go, but anyone in the Bush admin needs to exit as well.
Safe to say that is not going to happen under the Bush regime ~ not even on the radar.
DK~ Good to know it would not be a total loss for the worker bees.... but if anyone comes up with the short end of the stick, it will be the workers. Still I would trust government guaranteed fund protection programs as far as I can throw them right now. I just feel like if there is a loophole or problem, GM or any of them will just shrug & say Ooops! the healthcare for life thing did not work out & is not a part of the pension guarantee program.... and the fat cats will walk away with lots of cash. Stranger things have happened (Enron).
They need to bring back the electric vehicle.
People loved them, but they were squelched by big oil.
Any money going to the bailout HAS to be *hyper regulated* with super strict rules. No business as usual.
I know Fran, the PBGP is probably no more solvant than FDIC, which is to say they have amassed a reserve pool that could be easily wiped out by a few large claims. Enron pensions which were totally tied to Enron stock performance which shouldn't even be allowed. The fact that GM stock is near worthless about now will impact GM emp'ees pensions that are heavily invested in GM stock which may be a majority of the defined benefit crowd. The defined contribution crowd always had a choice in where their pension $ gets invested, so I hope they were smarter about diversification.
Yes, the reliable electric car is way overdue for the big 3! The Chevy Volt, promoted as a revolutionary plug-in, was due out 2010 but has encountered major problems. Toyota has said they "could" do a plug-in, but why should they when their hybrids are selling so well. I think that is very short-sighted. T. Boone Pickins is promoting electric for cars, but natural gas for trucks because batteries cannot supply the power needed for an 18-wheeler. Makes sense to me.
Did you read Neil Young's idea for the auto industry? It was in HuffPost. His idea was to keep our auto jobs going building the shells of cars while they retool everything for hybrids & plug-ins. According to him, the shells will be the same, so that might be a way to bridge the gap without losing too many jobs. I dunno. Somehow I picture big parking lots full of empty car shells waiting for engines that never arrive, or rusting while waiting for consumers to have enough cash to buy new cars. Just like in the late 70's, I think resale cars will be kings for awhile because of the affordability factor.
well that's my additional 2-cents. That and $2.00 will almost buy you a gallon of gas.
GM had the EV1, they had a test pilot where they were leased only. These were real cars w 4 wheels & people loved them. They wanted to purchase them when the lease was up, but GM refused & took the vehicles to the scrapyard. It must have been pressure from big oil to not step on their toes/market. Why else get rid of a product people were happy with???
GM has the ability to make a functional electric car right now....they are just choosing not to.
Plus I remember reading about a retired engineer who tinkered with his prius to make it run 110 miles to the gallon by adding more batteries & tweaking a few things. This was not theoretical, he actually made it work.
The problem is there has been no incentive, or mandate to make it happen.
Yes Toyota should be ashamed they are not rolling out better mpg vehicles just because they are at the top of the market.
US auto makers need to not just do as well, but they need to surpass what foreign auto makers with even better product. Stop bowing to the shareholders, and make quality products with better mpg & electric cars.
$2-- a gallon of gas or a cup of coffee?
If you supported bailing out Wall Street criminals to the tune of $700 billion dollars on credit, many with ties to the Bush administration and even members of the Bush family, then you can't do a 180' and say the Big Three Automakers aren't eligible for help.
Manufacturing is one of the pillars of the U.S. economy -- it's as Main Street as you can get. Please tell me how AIG, Lehman Bros, and AmEx are anymore Main Street than Ford and GM?
The fact of the matter is, one-in-ten American jobs is tied to Detroit. Let me repeat: one-in-ten American jobs is tied to Detroit. If you're genuinely worried about the economy, the Big Three Automakers must get Federal help during this recession.
Hi Christopher~ I did not support the Wall Street Bailout & the more I hear of Paulson's antics, the more skeptical I am .
But the big 3 bailout is a loan to be paid back, and if they are throwing out money, as you say, the auto industry may as well be in the mix.
Plus if they go down we lose an entire industry, and as you say, the domino effect of all the related businesses that go down with it.
The only thing I wonder about, is if we are at the beginning of the recession- and I do think it was suppressed for the election, the big 3 might still suffer because people w no jobs, home foreclosures, who lost pension & or retirement funds, will not be buying new cars.
I heard a comparison--
GM has 7 brands-Chevy, Saturn, Hummer, Buick, Cadillac, Pontiac, GM
Toyota has 3- Lexus, Scion, Toyota
Toyota uses interchangeable parts & frame designs.
The big three are going to have to be smarter, follow the methods of their successful competitors.
Still on the news last night, I heard speculation that even with an infusion of $25 billion, they would be back in the same position - edge of bankruptcy, by spring- because of the recession.
How did Bush-o-nomics work for our country?
Hi Fran,
When I say "you," I don't mean you specifically but anyone and that means many bloggers, politicians and others, who were duped by the Bush/Paulson/Frank/Bernanke/Pelosi scare tactics that basically said a depression was about to happen if AIG and Lehman wasn't rescued.
This was utter nonsense. If anything, the economy is much worse off today than it was two months ago.
I have no problem forcing Detroit to retool their business model and making an infusion of $25 billion (roughly 28% the amount of the Wall Street bailout) conditional on this retooling.
But the fact remains, America's manufacturing base is in serious trouble and the Big Three Automakers represent a huge piece of the picture. Contrary to what some think, Detroit makes many very good, competitive, safe, high-mileage cars that hold their own against Toyota and Honda. Don't believe me -- read the annual, April auto edition of Consumer Reports.
When we got rid of out tiny Toyota (after 12 excellent years) we purchased a Ford Escape. I wanted to do something to support America and American jobs. It's a splendid, small SUV and after 2 years, it remains a joy to drive.
Hi Christopher~ thanks for the clarification- I did not support the bailout- it raised all kinds of red flags in my mind....
• The hurry & immediate demand, allowing no time to really think it through.
• Paulson declaring the need for *total immunity*???
• The lack of scrutiny of illegal doings
• No restrictions on perks and crazy spending
Considering the loss of an entire industry & the $ impact on the economy are major considerations.
The questions is will it be enough to keep them from eventually going into bankruptcy?
Will the recession continue to hit the little people hard, with job and home losses so the bailout would be a moot point?
No matter how creative we try to be--Jobless, homeless people are not in the market for new cars.
Hi Fran,
I saw you posted detailed Ford executive salary data on DCap's blog, so in keeping with that spirit, I will repost here what I posted there vis a vis Wall Street CEO salary.
Wall Street compensation dwarfs Detroit CEO salary. I find it extremely interesting and arguably criminal, that the American taxpayer was strong-armed into swallowing the Paulson/Bernanke/Frank/Pelosi clap-trap about the need to "immediately act" on the bailout, all the while, these same Wall Street firms who helped orchestrate the bailout had sufficient monies to pay out these obscene salaries.
- Lehman Brothers Inc. Chairman and Chief Executive Richard Fuld received compensation valued at $22.1 million in 2007. Fuld realized about $40.3 million in 2007 from exercising stock options and $26.5 million from vesting stock awards.
- Goldman Sachs Group Inc.'s Lloyd Blankfein, the highest-paid CEO among the investment banks, received a $68.5 million pay package.
- AIG's CEO Martin Sullivan earned $14 million dollars in 2007 but his 2008 termination or severence pay upon his firing as AIG CEO was $47 million dollars (two years pay)
What plagues me is, George W. Bush has numerous family friends and family members, employed as executives at both Goldman Sachs and Lehman Brothers. I have to conclude if he had cousins and nephews at Ford and GM, the White House (lame duck or not) would be far more enthusiastic about helping Detroit.
The CEO pay scales are jaw dropping. Who needs that much money? Especially, when they claim the company is about to fail. That's insane.
Caught a clip on the news yesterday of Congress railing the Big 3 CEO's - each one flew in on a private jet plane. One congressman asked "Have you considered downgrading to first class, so you would be demonstrating that you *get it*?"
Later spokespersons said they fly on private planes for "security reasons".
There was no tightening down of the very wide financial beltstrap & that is why the bailout is wrong.
Before ANY company can make a bailout request, they should have a cap on salaries and suspension of stock dividends & bonus $ until the bailout LOAN is paid back. These companies & people have to get real with financial realities. I will cry no tears if they have to sell their summer homes in the Hamptons to make ends meet.
I would like a home in the Hamptons.
Nothing large or ostentatious. Just a 2/2 bungalow.
Is that too much to ask???
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