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Auto bailout - a Friday rant
Posted by: McQ on Friday, December 12, 2008

A statement from White House Press Secretary Dana Perino:
It is disappointing that while appropriate and effective legislation to assist and restructure troubled automakers received majority support in both houses, Congress nevertheless failed to pass final legislation. The approach in that legislation provided an opportunity to use funds already appropriated for automakers, and presented the best chance to avoid a disorderly bankruptcy while ensuring taxpayer funds go only to firms whose stakeholders were prepared to make the difficult decisions to become viable, competitive firms in the future.

Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms. However, given the current weakened state of the U.S. economy, we will consider other options if necessary - including use of the TARP program — to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time.

While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.
There is so much wrong with that statement and that line of reasoning it is hard to know where to start. The assumptions which underpin it are just absurd. Start with the last first - if one thinks that propping up the auto industry will somehow then translate into the companies, stakeholders and especially the labor unions being willing to make "meaningful concessions necessary to become viable", then apparently they didn't pay attention to the UAW's flat refusal to do so last night.

One of the hallmarks of recent financial bailouts has been the 'promise them anything' attitude of the supplicants to get the money and then using the money for everything but the intended purpose. Financial institutions are not easing credit, but instead paying dividends, buying banks in China and rewarding employees. So why in the world would the auto industry act any differently - especially when its bailout comes from the "no-strings-attached" pool of which Paulson has control?

Then there's the claim that throwing money at the auto companies will be the "best chance to avoid a disorderly bankruptcy". "Disorderly bankruptcy"? How could bankruptcy be any more disorderly than the way these 3 companies are conducting business (and with the bailout, will continue to conduct business) at a loss?

As has been put suggested many times, "disorder" can be avoided if a pre-packaged bankruptcy is entered into which quickly restructures and reshapes the domestic 3 into efficient and profitable companies.

And this statement: "Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms."

In a word: Bull. This has nothing to do with economic conditions - normal or abnormal. It has to do with fear and politics. This is from the same administration that touted markets and letting them work to solve the economic problems being confronted when addressing members of the G20. And now, when faced with practicing what it preached, it does the opposite.

Speaking of fear-mongering, this:
A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time.
There is no reason that there has to be a "collapse".

Ford is solvent at the moment and should be made to try to work through its problems or face bankruptcy.

Chrysler should be bailed out by its parent company Cerberus or go under. It deserves nary a dime from anyone else.

As for GM - pre-packaged bankruptcy in which the "auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable" without a dime of taxpayers money and without a stinking "car czar" hanging over their head trying to enforce a political agenda on them.

And for the White House - practice what you preach to others and quit these absurd attempts to avoid the reality of the markets and let them actually work.
 
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Worst GOP Administration ever.
 
Written By: Grimshaw
URL: http://
While the federal government may need to step in to prevent an immediate failure, the auto companies, their labor unions, and all other stakeholders must be prepared to make the meaningful concessions necessary to become viable.
next we will be negotiating with terrorist.
 
Written By: Mac
URL: http://
Grimshaw - Worst GOP Administration ever.

Yep. This is what we get for electing a "compassionate conservative". Bush has done pretty well on international affairs and has been good on the WoT, but he has S-U-C-K-E-D on domestic issues. His natural bent - which should make libs love him but they are too brain-dead to recognize a sympathetic heart when they see it - is to spend money and increase the size of government in the name of "compassion". The current financial mess isn’t his fault, but he’s certainly not taking the right steps to fix the problem.
 
Written By: docjim505
URL: http://
In my fantasy world, the 60%+ of Americans who oppose these bailouts start voting with their wallet by shunning companies suckling at Federal teat, and supporting companies that resist the temptation, even if their competitors do not. In this case, it would mean buying Ford, boycotting GM & Chrysler. There is far greater manufacturing capacity than there are customers. Why wouldn’t rational customers buy from a company that shows a management ability to operate without bailouts? Keep the Ford lines running, shut more GM lines down.

Don’t get me wrong. Ford CEO Alan Mulally did not cover himself or his company in any more glory than the rest of the bozos in either of his two appearances before Congress. But this week, Ford finally got it right, and said they would not Federal money this round. It’s something.
 
Written By: mw
URL: http://westanddivided.blogspot.com/
One of the points we should all agree to have as a hill to die on is that this is without question not an industry bailout. The industry is nowhere near failing. Only poorly managed (read: dealership composition), poorly engineered, and poorly governed (read: UAW) companies are involved. Please let’s all stop allowing "industry bailout" to be the characterization.

I agree with MW that we should remember this should we go out into the world and decide to get a loan from Chevy as they give us a car.

Besides, by what measure can they say we are not in normal times? Perhaps this is normal and we are coming out of positive abnormality. What’s the measuring stick for economic normalcy?
 
Written By: Isaiah
URL: http://

 
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