Will Democrats Bail out the Big 3?

On my drive in this morning I was thinking... Democrats have been after Detroit for at least a decade about raisng fuel efficiency standards for cars manufactured by the Big 3. One of the first things Clinton did in 1992 was get the Big 3 together and get them on the path to making more fuel efficient cars. GM made the EV-1 and sort of half assed put it out in California and pulled it off the market without much effort in making the technology work.

Republicans, being the free market advocates that they are, were dead set against it... and you have to give them some credit for being consistant in their philosophy now because most Republicans have the mentality that the Big 3 should file bankruptcy to deal with their troubles or simply go out of business.

So here we are with the Big 3 now sucking up to the Dems for dear life. Given the humongous amount of jobs dependant upon the Big 3 and other ancillary businesses that depend on them, my feeling is that once Obama and the Dems take control in January, the first order of business will be to bail them out with an additional $25B. They will use this oppurtunity to impose a "wish-list" on the Big 3 for a good deal of time which just might make them more competitive in the global market. The funny thing is that if the Dems had their way back in the 90's and the Big 3 listened to them, we probably wouldn't be in this mess in the first place.

A lot of my sources tell me that Toyota is about to perform a big ass write off of their own inventory because even though they made killing making fuel efficient cars recently, they were still caught with their pants down with a big number of SUV's on the sales floor when gas went over $4/gal. They don't think they could ever sale them now and a lot of the SUV's they have on lease will loose substantial value on resale as well.

I just think all of this irony is amazing. The Dems warned the Big 3 and even sought legislation to force them to do the smart thing, while the Repubs fought it... and now that the chickens have come home to roost, it's the Dems who are going to bail them out and the Repubs pretty much wants to just let them die.

Any thoughts or comments? should the Dems tell the Big 3 to go to the oil companies for their bailout or should the Repubs soften up a bit?

Your money be gawn!

I certainly hope not. The automakers need to learn how to be more competitive on their own. The Japanese automakers that operate in the US sure seem to be doing just fine and their employees aren't even unionized.

Why not, we're bailing out faster than a crew on a sinking rowboat.

The big 3 have fucked themselves with stupid cars, stupid designs, and stupid union contracts. We should not reward that with billions more for them to piss away on stupid designs, and stupid union contracts.

Of course the dems will bail out the big 3. They have that union labor to repay for the election after all.

Now should they, no they shouldn't nor should Congress have bailed out the banks. But it doesn't matter what the little folks think, they (think) know better.

I certainly hope the the UAW makes more than a few concessions. If not, I don't think any sort of bailout is feasible. Afterall, if the Big 3 file bankruptcy or go out of business, where would they be then?

Most of the union workers would need some sort of government intervention to handle their pensions and benifits anyway... I say weigh the cost of that vs. the proposed bailout and see which one is cheaper.

This isn't a bailout of the Big 3. It's extortion on the part of the UAW.

Let's just call it the Michigan Bailout and be done with it. Places like Texas and Alabama appear to be able to make cars.

More like the taxpayers being asked to finance the UAW retirement, pension and healthcare funds.

Considering the percentage of people that disagree with the bailout in the first place, I'd say that Congress as well as the President have pretty much thumbed their noses at what the people voting for them and paying for them to be there have to think.

Well put.

If the problem is just that the big three can't get the financing they need to restructure in bankruptcy because of the credit crunch and not because the big three are fundamentally insolvent anachronisms, then it would be reasonable for the government to provide the financing. If there are functions of the big three that are too important to allow them to fail--parts production is the typical example given--then, in the event of liquidation in bankruptcy, temporarily nationalize those functions until they can be chopped up and privatized in a way that will keep such functions running and prevent the need to renationalize them in the future.

They'd find jobs in the new Toyota plants that would pop up all over.

Anyway, UAW concessions aren't really the issue here. If they were then the big three would just declare bankruptcy and wipe out the union agreements in court.

Irrelevant. There is nothing in that to justify burdening the taxpayers with propping up a failed model, whether it be in the area of managing the company or securing credit. Let them die, and hope that something more viable will rise from the ashes.

New auto companies without the death-grip of the UAW on their throats, hopefully.

That will come from bankruptcy, breakup and sale of parts.

Which we'll end up doing anyway via the Pension Benefit Guarantee program and Medicare. We can't win.

Sure they will. As long as there's paper and ink at the US Mint, there'll be bailouts.

And let's not forget the biggest bailout of them all, city streets, fifty state highway systems, and the interstate highway system.

I wanna know why the heck we are bailing out the failing Yankee auto industry when we southerner's are successfully working with furriners and making money doing so.

Let 'em burn.

The only way they can become competitive is if smaller companies are allowed to purchase the fragments. Super specialized companies could actually revitalize the economy.

Bankruptcy, breakup and closing of multiple lines are what's needed. It makes no business sense for GM to have 3 car divisions. Ford does not need 3 either.

Keep Cadillac, Chevrolet and GMC, scrap the rest. Keep Ford and maybe Lincoln, and scrap Mercury. Chrysler same thing.

Bust the unions, and renegotiate competitive contracts on par with the Japanese and Asian automakers. Outsource parts.

Then, companies can either invest or buy up the pieces and we might have a functioning car manufacturing industry.

And clean out the deadwood at the top as well. Too many short sighted executives need to go.

http://online.wsj.com/article/SB122688631448632421.html?mod=googlenews_wsj

Well, that was dumb. It misses the whole point. GM can't get the financing it needs to reorganize in bankruptcy in the current credit market. If it could reorganize, GM would declare bankruptcy in a heartbeat. Unless the government steps in to provide financing, any GM bankruptcy will be a liquidation.

^That's the best thing for the taxpayer and the future of the auto making industry in the USA.

There's a good chance. I'm sure the Republicans will be on board too (e.g. McCain and Co.).

Most elected Republicans are no longer advocates of the free market.

Most constituents are no longer advocates of bailouts.

I suppose they would have to burden the taxpayer, anyway. Kinda like the mob has to be burdened, finding rope and matches...

It's coming. GM and GMAC have dropped the bomb on dealers. They're requiring you to maintain 5 million dollars in inventory and to pay that down by 10% every month, so $500,000 has to be paid monthly. That's a 10x increase over what it has been for decades. At the average profit margin, you'd have to move 1,000 cars a month...to break even with GM before paying your expenses. All of it in the face of the worst year for new car sales in three decades.

Both General Motors dealerships in the county padlocked their buildings and terminated their employees this week.