Say No to the Auto Industry Beggars

Two weeks ago, the heads of General Motors (GM), Ford (F) and Chrysler arrived in Washington on private jets to petition congress for a $25 billion bailout package, and were promptly rebuffed by skeptical senators.

Thursday, they arrived again, but this time in hybrid cars. The price tag for the bailout, though, had risen by $14 billion to $34 billion. I imagine that in two more weeks, they’ll show up on bicycles and ask for as much as $125 billion, which is the amount that Moody’s economist Mark Zandi predicted they would need to survive.

Meanwhile, other industries are gripped by an economically enforced downsizing that seems to be picking up yet more steam. There's no talk of bailouts for retail, transportation, mining, tourism, semiconductor, consumer electronics manufacturers, or any other major sector in decline that's been heard. Why?

The dominant argument for bailing out automotive has been, thus far, the fact that it’s a bastion in the U.S. economy, and if allowed to collapse, will take the rest of the economy down with it. The rest of the economy, if one adopts a sufficiently distant viewpoint, is an entangled mass of self-immolating industries bloated to overcapacity by years of excessively cheap credit.

A period of economic contraction is clearly the natural response, and so watching the efforts of the increasingly mislabeled financial leadership would be hysterical were it not quite so painful.

But now the hearings will continue, and one has to wonder if the ears upon which these pleas from the heads of North America’s auto industry will fall will remain unsympathetic. One could only hope that the sixty-one per cent of Americans who expressed opposition to any bailout for the automotive industry will carry sufficient clout to prevail.

At any rate, Congress winds up for the Christmas break next week, and the logistics of hammering out a deal by then seems unlikely, considering the complexity, scale and scope that such an agreement would theoretically entail. As is oft repeated by congressmen themselves, the process on Capitol Hill is not renowned for speed.

If the companies cannot obtain the relief sought, then most likely GM will file for bankruptcy within the month, we are told. That will create first the opportunity to reorganize under court protection, which would give them the opportunity to raise money through the sale of assets, trim jobs and thoroughly embrace the idea of a crash diet.

Sure, jobs are going to be lost, and that is the only valid argument for a bailout in many of the Democratic minds arguing in support of a bailout. But if those jobs are preserved through an injection of cash as opposed to a requirement for threatened workers’ skills, the question has to be asked – what will change before that cash is spent to return the workers' presently redundant jobs into viable ones?

If there is no future for a certain percentage of the bloated payrolls of automakers, then isn’t it a case of sooner rather than later for those who will need to find employment in a different line of work? Why not just finance tuition and living expenses directly for Americans affected by job cuts? At least that way we wouldn’t be trying to resuscitate a terminally ill patient at great taxpayer expense. This current economic contraction could be used as a period of retraining that would result in a stronger, more competitive work force.

There is some talk of diverting funds from the $25 billion loan package approved as part of a 2007 energy bill that was intended to facilitate the transition to greener technologies in U.S.-made automobiles. Certainly the opportunity is in front of Congress to force that transformation as part of the conditions under which such access might be granted. But to squander that money on life support for the Big 3 would be tragic.

Finally, we need to consider the implications for American Democracy in resorting habitually to bailouts when our privately capitalized industries, paying dividends to shareholders for years, expect to be subsidized in supreme socialist fashion when mismanagement and economic cycles cause profitability to wane.

It is disingenuous and an affront to the American people when Bush decries further regulation and oversight of industry as too much interference with free markets, and then dispatches billions in rescue dollars to select corporations because they are “too big to fail”.

The only thing at this point that appears too big to fail is the disconnect between responsible financial leadership and the ham-fisted shotgun thinking permeating our present global “leadership”.

Comments

[Corey M:]

James - you don't seem to understand a key point about filing for Ch. 11. While I can accept an argument that this might help G.M., it would be at the expense of their suppliers. The suppliers would not be paid, which would drive many thousands into bankruptcy themselves. Due to the interconnected nature of the auto industry, a series of tier 1's closing ship would result in a lack of parts for all the auto makers, not. This would halt the production lines within a week or so, due to the JIT nature of auto manufacturing.

2008 Dec 07 09:41 AM

[John D:]

So you think it would be better to put 2.5 million more out of work because you think you could run a billion $$ corporation better than you can write??

2008 Dec 07 09:47 AM

[ddd1612:]

Then why have we-thetaxpayers bailed out the companies owned by people in suits?
AIG - to $205 billion ++++ and growing?
Goldman Sachs +++
All the banks and Financial institutions?
Because the head of treasury is from GS/Wall Street?
This TROJAN has inserted a virus in the US Treasury that ensures that Wall Street has privatized the US treasury.
How many more jobs are we going to lose?
Sure, the big 3 have not made investments in fuel efficient cars ... but was pressure not brought on Govt (by the Oil lobby) to prevent legislation to make the big 3 do this?
8 years of this current administration has put us back 40 years and we will be paying for all the costs to clear up this mess for the next 40-100 years.
Stop this madness!!!

2008 Dec 07 09:53 AM

[hoffman23:]

Did we really need to keep Citibank afloat? Wouldn't somebody take them over? How about that $200 million deal with the NY Mets for the sign on the new stadium? Do that taxpayers really need to own AIG? Where was that "private financing"? All you Wall Street morons who think that only your "industry" is the life blood of the country just really don't get it. If you idiots had stopped bundling all that bad loan paper and marked it up as "AAA", we wouldn't have this mess. If you Wall Street morons had stopped lending to all those 25 year old oil futures traders, the price of oil wouldn't have gone to $150/bbl. The ruination of the auto industry is because you finance morons screwed it up, then had Paulson bail out your sorry asses, and then blame GM for not making the cars you want. Who do you think makes those " limo's and big SUV's you take home from work every night at the taxpayers' expense. And by the way, Where were you a year or two ago, speaking these "golden words"? Another MBA who majored in "hindsight".

2008 Dec 07 10:07 AM

[Mister Jimmy:]

James West is a "financial advisor". You know, a part of that wonderful industry that brought the current economic cataclysm upon the U.S. and the entire globe. Now he recommends that a good portion of the "real' economy collapse because of it. Yet another example of the type of myopic thinking that's brought us to brink of another Great Depression.

2008 Dec 07 10:08 AM

[hoffman23:]

And, please don't let me forget. GM makes more models that get over 30 MPG than any other manufacturer. The Tahoe Hybrid gets better mileage than a Camry. America buys pickups, and GM gets better MPG than any of the others. One more rant. Richard Shelby, that idiot from Alabama, never mentions the Hyundai and Mercedes plants in his state, bought and paid for by the citizens of his state, who then passed that cost onto the Feds. And how about all the beneficial aid given to the foreign manufacurers in the way of health and pension benefits, not to mention "protectionism" by blocking import of our cars into their markets. It's time you did some research before you do some writing.

2008 Dec 07 10:17 AM

[V. Jones:]

Thank you everyone for 'spanking' Mr. West. I'll take him out behind the woodshed as soon as each of you finish-but take your time. By the way West, Mark Zandi, Chief Economist and cofounder at Moodys, also believes the U.S. Auto Industry deserves a bailout. He felt the consequences of not doing so would be "catastrophic" and result in a cost "that was not even in the same universe" as the bailout. Further, Paul Krugman. the 2008 Nobel Prize winner in Economics, also believes the Big Three should be helped, even if it only delays their eventual bankruptcies, as the economy can't survive the loss of millions of jobs in its present state. Did you get your degree from one of those schools you send $19.99 and a SASE???

2008 Dec 07 10:57 AM

[User 314622:]

I think GM was doing better this year but the banks missed eveything up and got money from the taxpayers then stop loaning people money for cars and houses. So from my looking at things it was the banks that got more things missed up so don't blame the GM and the rest of the car guys.And the banks got a blank check from uncle sam and that was tax payers money.So open your eyes and look around!!!!!!!!!!!!!!!!...

2008 Dec 07 11:30 AM

[Tiedofthis:]

Well, Mr. West you seem to believe let the companies fail that have led themselves to failure. In that scenario wouldn't we the taxpayers just let wall street fail, and all of the banks that are in financial trouble. You are just another one of those one sided people that thinks only their part of the economy is important. Are you one of the brilliant individuals that thought oil should go to $200 a barrel to make even more money off of the American people with higher gas and heating oil prices. Besides I am supposed to think your article is well researched when you can't even add $14 billion to $25 billion in your second paragraph. Well you say no to the auto industry beggars, I bet you weren’t saying that when congress at first did not approve the $700 billion to save wall street and the financial institutions that got them so far in debt that they were on the verge of failure. I bet you agree with the multi-billions for AIG who by the one does not manufacture anything, who I don‘t think could explain in one paragraph what they actually do. You think allowing more job losses more in unemployment benefits, maybe more on welfare is a better solution then LOANING the automakers $34 billion dollars which is a far cry from the $700 billion that was given to wall street and bankers. Heck even $134 billion in loans is far better then giving away $700 billion. Remember it is a loan for the automakers not a bailout, wall street was bailout that we the taxpayers will be paying off for GENERATIONS and you don't seem to have an issue with that.

2008 Dec 07 12:00 PM

[dennis san ...:]

james,you can't even do math. 25 + 14 = 35 ??????????you are just a wealth of info.

2008 Dec 07 12:07 PM

[htm:]

After reading hundreds of articles bashing the domestic auto industry, (and never replying to a single one), I can't help but see that the "bashers like Mr. West" don't have a single clue about the manufacturing and the structure of supplying the most important part of this country's economy.
I have spent my entire 35-year manufacturing career in Management, working with a World Class Tier 1 supplier.
I have first hand experienced the quality problems of each of the domestic Big 3. In the same breath and thoughts, I can also see the transformation that has taken place in the last several years for improvements to the quality issues that each have faced.

My employer supplies the domestic, transplanted imports and foreign manufactures with parts that are critical to the powertrain of each of their vehicles. GM, Ford & Chrysler are as stringent (and many cases more) on all aspects of quality as any of the foreign brands.
The Big 3 have all the needed tools to produce world-class vehicles and they have proven it for some time. (I don't ever recall seeing a foreign vehicle dealership that doesn't have a service department along with towing vehicles to bring in the ones that breakdown). The Big 3 have a great group of workers, but the workers are going to be the biggest part of the success equation to make this economy start clicking along. The UAW will have to become modern and up to date in their request and realize that they are a production based group, not an irreplaceable group of scientist and inventor's who demand an above average benefits package after being paid very well for the work they have performed.
As Americans, we can't ignore the help that’s needed for this industry. I would agree to oversight, but only if Wall Street would open the blinds to the windows of banking that seemed to have sparked this mess in the beginning.

2008 Dec 07 12:17 PM

[scott h:]

this gjy is a real moron how about the bailout money to the banks and what they have done with it go back to getting your online degree west

2008 Dec 07 12:17 PM

[mark_this:]

Fix the Legacy Employee cost and you'll fix US auto problems, and get rid of accountants running Companies and install someone with Vision. Starting thinking long term instead of short term.

2008 Dec 07 12:20 PM

[Class1warrior:]

What the government could give the American automakers is a contract to build something with that money. For example, 100,000 wind turbines, or 100,000 hybrid-electric-CNG powered small busses. That would keep the factories open, the employees working and paying taxes, and the government would get, in return, physical assets that would benefit the entire country. And it would avoit thousands of additional unemployed workers, defaulted mortgages, lost income taxes, and social disruption.

2008 Dec 07 01:03 PM

[menhab:]

When I first came to this country, even as a foreigner, I had allways purchased American made cars. I remember coming to the US for vacation in the early 70's and was always excited that I could buy American goods as it was a symbol of quality made products, today not so much and yet there are industries out there that would like to make quality products but cannot compete with the foreign companies. Even today as an American I still drive American cars (Ford/GM) sorry never had a Chrysler. I have watched the system allow foreign cars to be imported over the years and had no issue with having competition, however I do believe there should have been a higher import tax and a higher sales tax for those wishing to buy the foregn cars. While the Government allowed Free trade and the importation of these foreign products then obviously they should foot the bill as they were just as much a part of this. I really do not condone the buy out, but then where else do we go from here, we just can't continue printing money and using tax payers dollars to bailout all big businesses. HOW ABOUT BAILING OUT THE AMERICAN HOUSEHOLD. Haven't heard anything about that, after all it is our tax money. Should we be part of it? It surely would take more than a $600 stimulus check to do so. As you can see that didn't help. Let me just end by saying HOW ABOUT A $100,000 TO $200,000 STIMULUS CHECK FOR EVERY TAX PAYING HOUSEHOLD.

2008 Dec 07 01:07 PM

[Class1warrior:]

As to the authors points that seem to be taken straight from talk radio, there seems to be no shame in publishing propaganda and outright lies and deception. I suspect the real motive behind this author and many talk show hosts is to destroy the unions and the middle class that the unions helped to create.

2008 Dec 07 01:09 PM

[Big governm...:]

Yes! Yes! More taxpayer money down a black hole! Wonderful! Let Barney Frank and Christopher Dodd run the whole shebang! They did wonders with Freddie and Fannie, didn't they? I think free market capitalism is a quaint notion that should be relegated to the ash heap of history. It is time for the fascists and socialists to rise up and take control of everything they can. Only bureaucrats in Washington should decide what businesses should succeed or fail and how those businesses should operate, what wages and benefits they should provide and what products they should produce. This will be utopia for all. Rejoice!

2008 Dec 07 01:18 PM

[303820:]

WE LIVE IN A COUNTRY WHERE IGNORANCE AND STUPIDITY RULES...
IN A COUNTRY WHERE THE SO CALLED EXPERTS TELL US THAT THE PROBLEMS ARE CREATED BY THOSE (UNION WORKERS) THAT STILL HAVE THE BUYNG POWER TO KEEP THIS COUNTRY GOING..... THOSE HYPOCRITS THAT MAKE MILLIONS BY JUST STOOTING THEIR MOUTH OFF AND SAYNG NOTHING....THOSE HYPOCRITES THAT THING THE ONLY WAY TO FIX THE PROBLEMS IS TO LOWER OUR WAGES AND STANDARD OF LIVING...THOSE THAT THING THAT IF WE WORK AT WALMART WAGES ALL PROBLEMS WILL GO AWAY.
THOSE THAT WANT US TO COMPETE WITH SEN. SHELBY'S FOREIGN TRANSPLANTS WHERE ACTUALLY THEY SHOULD BE COMPETING WITH US....LAST TIME I CHECKED THIS IS USA NOT JAPAN OR GERMANY OR KOREA.

2008 Dec 07 01:20 PM

[PeteK:]

People, please, Most Americans love GM and loyal to it.
The reason is that it is hard to see it down the drain and
the UAW still treats GM like their Slave. Look back history,
Many Big industries were destroyed by unions. They are the
subject of discussion. Aim at that.

2008 Dec 07 01:31 PM

[Jangus:]

IT'S A LOAN!!! I'm tired of hearing bail-out, hand-out, referring to them as beggars, etc. It's a LOAN!! Chrysler was given a loan before and it was paid back, a lot of us have low interest loans from the government- student loans, etc. This is GM and Ford- Our American Auto Makers- Let's help them out. This American doesn't want to see our auto makers go bankrupt. Really, this country wastes a lot of money on some stupid stuff that never gets paid back. I believe that these companies will survive and pay us back. Let's help them out.

2008 Dec 07 01:34 PM

[303820:]

TENQ:
tell me how unios destroy business, give me details.
did the unions destroy ENRON? Did the unions have anything to do with KMART filling bankrupsy two time whithin 10 years?did the unions cause the collapsing of our banking sistem?are the unions shipping our good payng jobs over seas?

I'll tell what the problem is....competition....f... slave labor country...competition that we'll never be able to compete with unless we lower our wages to their level...would you like to work for $1.90 an hour?(mexico) or $120 a month (china). and i'm not talking automobile industry only, every thing else...we inported1.1 millin tons of pipes from china last year at a cost below of what the material would cost in this country. so lets blame the unions and glorify those that are lowering our standard of living....

2008 Dec 07 01:36 PM

[PeteK:]

ddd 1612;
You forgot to mention the 4 years of Carter, and 8 years of Clinton.
These 2 planted the seeds of failure that you see now.
History cannot be ignored. Blind-barking shows your ignorance.

2008 Dec 07 01:44 PM

[Class1warrior:]

As an auto insider, I can tell you that the average worker can cost the company a lot. However, the people who can throw real money away are the ones who squander billions of dollars on their cowboy schemes and product plans. If you want to find out who have brought the auto companies to their knees (begging as you artfully put it), you better start looking at the board rooms, the ill-conceived product plans, and the wreckless attempts at empire building within the senior management ranks. Just don't try to blame the workers for the sins of the executives, the graduates of the Ivy league business schools. They learn how to gamble big money.

2008 Dec 07 02:24 PM

[Konsta:]

25+14 is not 34, obviously
for GM to file chapter 11, the US government would need to provide Debtor in Possession financing, because GM will not be able to get that from any other source. That seems like a logical was to proceed. Another way is for the government to take on legacy health care costs of the big 3, health care should be free anyway, so this would be a step in the right direction.
The reason the democrats are reluctant on the bankruptsy idea is that don't want to piss off the unions by voiding UAW contracts. I think they should void the contracts, if the government is truly intends to make these companies viable.

2008 Dec 07 02:33 PM

[Class1warrior:]

Speaking of viability, all of the automakers, Japanese included, have capacitized for the expected annual sales of something like 15 million vehicles. Total capacity in the industry is about 20 million, including the newly constructed transplants. If auto sales were at 15M, the Detroit companies would be making money. But people aren't buying cars due to the economic turmoil, and they aren't buying trucks due to the inflated gas price shock of the last year. This is the part of the equation that cannot be blamed on, or controlled by, either the auto execs or the UAW or the salaried employees.

So let's get the economy back on track, car sales back up to 15 million, and the bridge loans will be paid back with interest. Economic repair and stabilization is something that the new administration intends to do. (With a healthy dose of regulatory reform of the financial industry.)

2008 Dec 07 02:46 PM

[fcountry:]

You know something...it isn't JUST Mr. West that seem to be trying to CRASH the whole Auto Industry...with his " Tongue lashings" ...it seems to be the whole Seeking Alpha Team.
Just pay attention the next time that you read all your headlines...most of the articles that I read about "Anti- (AMERICAN)Automotive Industry" is coming from Seeking Alpha.

Instead of "unbaised reporting" as journalist are supposed to be...they sure seem to be determined to undermine The AMERICAN AUTO Industry, and the AMERICAN WORKERS that are such an integral part of it.

It sure makes me wonder why...

Just pay attention...you will see.

It is blatantly obvious to me.

2008 Dec 07 02:54 PM

[303820:]

WARRIOR!
Part of the problem with the big three is that we allow the transplants to come here and we have to compete with them at lower wages and no benefits (30% of their workers make$12 an hour, they are so called temporary.) since this is usa... our land...should they not be competing with us? with our wages and benefits? and what ever the capacity is...in my opinion for every one of them ...one of ours shuts down.

2008 Dec 07 03:12 PM

[car_guy:]

While there is no need to repeat the many factual and logical errors in the article that have already been discussed, I do want to make an additional illustration of just how little Mr. West understands about this industry and his supposed expertise, precious metals.

The Auto industry is easily the largest consumer of platinum and palladium since it is used extensively in the emissions controls of every vehicle. They are also one of the top consumers of gold for safety system electronics and other equipment. The solution Mr West advocates would shut the entire industry down for up to a year in North America because the decline of the US 3 would take down their suppliers who would cut off supply to their Asian & European customers. This would stop ALL auto production in North America for up to 1 year. This is detailed in a study by the Center for Automotive Research (cargroup.org). This is because you simply cannot build a car without every single one of the over 10,000 parts in each vehicle. The supply chain is shared by all of the companies so it will not take many failures to bring the entire system to a halt. This effect would last for up to a year as the remaining OEMs & suppliers redistribute their tooling. Therefore, there would be a huge temporary drop in demand for gold, platnium, paladium, and a variety of other precious materials, to which Mr West is oblivious.

He just wrote an article saying that gold is going to take off. If he gets his way and GM & Chrysler go chapter 11, he will be amazed at how wrong he will be.

2008 Dec 07 03:24 PM

[briacal:]

I made two previous comments about this topic;first I said that the car makers should be helped but with strings attached to that help. The second time ,I expressed that,in my opinion, the UAW are a group of hard working people.I put the blame for the downfall of Ford,General Motors ,Chrysler and the total finanancial disaster of the U.S.economy on the shoulders of the many many national and international groups who specialize in big scams while getting ready to blame some innocent people for their crimes [the UAW in this case],I am a very old man now; when I was a teenager, one of my teachers gave me the responsability to read two books written by two different american writers.In one of the books,the author was predicting that the bloodiest revolution would take place in the U.S.A.in the year 2000 and the coal miners will be blamed for it.Looking at the events that have been unfolding during the past 15 years,I wonder if that was just an accidental prophecy or a huge masterplan in order to bring the U.S.A.to its knee by the year 2000 and place then the blame on someone or something.Have a good 2008 because we don't know what to expect in 2009

2008 Dec 07 05:14 PM

[tiredofyourbs:]

Mr. James, you make money by gambling others money on Wallstreet. You do not create anything, you do not contribute to the society. You have been a Monday morning quarterback spitting at people who pass by. Have you ever consider being walking in someone's shoes?

I do not want to provide a counter argument to the venom you just spew. I would like to know how much money you make by selling snake oil? What is it that you provide? What have you really achieved and contributed to the society?
Have you realiased that Wallstreet created the financial crisis? At least the auto companies are not crooks. They probably have been slow, entangled in politics, dealers, suppliers, UAW and so on. So some clean up and they will be on their way.

2008 Dec 07 05:26 PM

[Byallmeans:]

James
There is absolutly nothing natural about thios economic contraction you idiot. Unless letting the thugs of wall street act like like drunk gamblers in vegas natural economics. Note to self: Remind me to never subscribe to this individuals market finance newsletter. Given that statement he made I would be better off consulting Ronald Mcdonald.
Just how short the market are youat this time? Inquiring minds want to know.

2008 Dec 07 05:51 PM

[Byallmeans:]

I think the plan the government plans to put forward to clean up the domestic auto industry. Specifically the financial burdens they have been trying to unwind for the last ten years in an orderly fashion but were unable to do so because of legal ramifications is the right thing to do not only for the industry but for the country as a whole. It will provide the least damage to the country economically while maintaining its manufacturing capability. James if you can't see that you are a certifiable Moron of the highest degree.

2008 Dec 07 05:55 PM

[Byallmeans:]

By the way Mr West your a canadian as is apparent from your website. Now if you referring in your article to a canadian auto industry support loan thats your business but you should stipulate so. If your referring to the USA then STFU. You have no business interjecting yourself into a U.S. Matter. This is the problem with the web and comments on the web. You never know what the source is. I have a serious issue with foreign entities interjecting themselves into U.S matters outside of foreign affairs and its a rampant issue. American people, you need to always question the source of opinoins on the web concerning matters in your own country. Other countries have a vested intrest in damaging the U.S economy to advance their own means and country. China for one has a massive policy of trying to skew US pilicies and politics to advance their own intrests only to do so annoymously under the guise that your reading the opinion of a U.S. Citizen.

And by the way Mr West gold will take a serious hit in the evet of a US domestic automobile collapse from the gold used for module and harness connectors to the reduction in microprocessor volume and the gold used to plate the pins on them. Not to mention the massive decline that would occur in jewelry sales due to an exxessive fall in personal comsumer spending.

2008 Dec 07 07:29 PM

[Miken:]

What is it about a "Wall Street" person that makes them think they are an expert at ANYTHING!!!! Wall Street and Congress have more to do with this mess than anybody at GM.

Who is going to have hearings grilling the guilty congressmen that let Fannie Mae and Freddie Mac get out of control while taking campaign contributions and loans from the very criminals that they were protecting.

If you want some interesting reading, search Wikipedia for Christopher Dodd and Richard Shelby and read their bio's. We have crooks running this country! And just about the time you begin to have a little bit of confidence again, Maxine Waters opens her mouth and you're back in the toilet again. These people have no clue what they're doing.

If there's any good to come out of these kangaroo court hearings it's the exposure these morons are getting. I think Rick Wagoner ought to demand the resignation of the entire Senate Banking Committee.

Here's what I would do if I were in charge:

Recently in the news, the General Motors, Ford, and Chrysler CEO’s have been to Washington to testify regarding their request for Federal loans. During the course of these meetings, several suggestions have been put forward to help the automakers save money. It occurs to me that, with the U.S. government being $11 trillion in debt, they may also make good use of the helpful hints. For example:

1. Require the Senate Banking, Housing, and Urban Affairs Committee led by Senator Christopher Dodd (D-Connecticut) along with the House Financial Services Committee headed by Representative Barney Frank (D-Massachusetts) to prepare a plan that will eliminate the debt and present it to the American people by December 8, 2008. This plan will detail cost containment initiatives as well as revenue enhancement plans that will eliminate the debt. It should detail the plan at three different GNP levels and a sensitivity analysis at each level. Should they fail to produce a plan that accomplishes the above, they will immediately resign and be replaced by the entire cast of High School Musical 2.

2. All government housing will be eliminated including the White House and Number One Observatory Circle ( the Vice President’s residence) and replace them with foreclosed property made available by the collapse of Fannie Mae and Freddie Mac while under the watchful eyes of the committees led by Senator Dodd and Representative Frank.

3. Until the debt is eliminated, the following actions will be in place:
a. Each congressional member in the House and Senate will receive $1 per year for their services. Each congressman would be allowed 1 administrative assistant, and if that congressman were re-elected, that administrative assistant would receive a $1 bonus.
b. The very generous congressional retirement plans will be taken over by the PBGC and the payment levels be determined by the standard guidelines that are afforded to all Americans.
c. All preferential parking at the Washington airports and government buildings will be eliminated.
d. The generous health care plan available to congressional members will be replaced with a new PPO administered by Dr. Jack Kevorkian. Another option might be just to wait for the government sponsored health care plan proposed by President Elect Obama.
e. The congressional dining rooms will be eliminated and replaced by food courts with Burger King, McDonald’s, Taco Bell, and especially for Senator Shelby (R-Alabama), the 15th Catfish Plus franchise.

4. All speechwriters would be eliminated to save cost, besides we want to hear what the actual congressional members want to say.

5. The U.S. governmental air travel fleet will be liquidated. This would include Air Force 1. Instead, all government travel (including international junkets) would be scheduled on either Southwest Airlines (excellent on time history) or Northwest Airlines (flies almost everywhere in the world). Any exceptions to the above would have to be approved by a unanimous vote of a committee comprised entirely of all unemployed domestic autoworkers.

6. The ground transportation fleet comprised of large SUV’s would be replaced by Chevrolet Aveos, Ford Fiestas, or Dodge Calibers. Running boards would be added for the brave men and women who serve in the Secret Service protection unit. If larger vehicles were actually needed, hybrid versions of the Chevrolet Tahoe and GMC Yukon will be permitted because of their exceptional city fuel economy (21 mpg). The third vehicles of choice would be Mini Coopers, Camry LE’s, and Accord LX’s since they get about the same city mileage as the GM hybrid SUV’s (honest, you can look it up).

If these types of actions are good for a company with $50 billion in debt, why wouldn’t they be useful for the Federal government which has debt 220 times that amount?

2008 Dec 07 07:57 PM

[fcountry:]

Miken,

I like the way that you think. You have come up with some EXCELLENT solutions.

2008 Dec 07 10:38 PM

[wondergirl:]

I read that even if GM went bankrupt, the judge will most likely rule that GM would still have to pay for their 500,000+ retiree pensions (as judges have done in the past for other companies.)

So, how's chapter 11 going to help GM? I guess Obama will pay for all their medical insuance)....Utopia.

These idiot columnists and talking heads on FOXNews and CNN kill me. I'd like to see them work for 30 years in a factory, bell-to-bell. I bet they think manual labor is a hispanic.

Oh, yeah, and I didn't hear anyone talk about Pelosi's personal JET that she flies back & forth to California every week....who's paying for that? Any other politicans flying around in private jets?....Kerry? Kennedy? I wonder. Why don't we hear about that?

2008 Dec 08 12:26 AM

[Mark from M...:]

Ya know, I have a vested interest on this issue - Grandma draws a widows pension from GM, but after reading and hearing all of this vitriol for a month, I've come around to your side of the fence. Let them fail!

If there's anything you could learn from the last 90 days in the stock market, it's "unintended consequences". I really think I'd like to see how you, and the others spewing hate towards your fellow americans (who happen to build cars) react when all of the big 3's suppliers go under.

You were warned, in no uncertain terms that they would fail if any of the 3 falter, but yet you continue to publish articles about jets, and GM's president stopping for lunch at Quiznos.

The esteemed senator from Alabama would truly love to break the UAW once and for all, and since his party is in process of being run out of washington on a rail, now's a great time to strike. A further benefit for him is those lovely "transplant" operations that build cars in his state, and send any profits back to Japan.

The problem is, the big 3 doesn't really "build" cars any more - at the newest GM plant in Lansing Michigan, suppliers build "everything but the squeal", and deliver it to a GM factory "just in time" for a skeleton crew to snap, pop, and take the credit for "building" a car. GM doesn't even get billed for the parts until they are installed on the car - and a few minutes later they bill the dealer for the car and take the profit for a sale on their books.

The unintended consequence, that you might have known if you had done any research on the subject is, that all of the domestic manufacturers, and the transplants, use the SAME suppliers.

That's right, wall-street boy, they are inbred and cross-connected in a way that ought to make that Senator from Alabama truly proud!

What does that mean for the transplants that are SOOOO much "smarter" than the big 3 beggars? It means when those suppliers fail, the transplants can't get service replacement parts. I know, I know, years of automotive journalism have spewed how "perfect" anything with an asian or german nameplate is, but hear me out - don't they have service departments?

We've set thing up nicely for those transplant makers with these great little laws called "lemon laws" - someone who knows nothing about the auto industry could be excused for not knowing this, but I'll let you in on the secret. Nearly every state has a law on the books that allows 30 days or less for a manufacturer to correct a factory defect. This is a real hardship even in great times - there are several law firms that spew out "buyback requests" by the thousands, and they win them alot, even now!. If a supplier goes bankrupt, it isn't possible to source a new part in even 90 days. Some parts are impossible to reproduce, if the now-bankrupt supplier owns the design.

A failure of the big 3, and their suppliers will be a new GOLD RUSH for these lemon law firms - they're already DROOLING! The neat thing about buybacks is that the Manufacturer has to pay back ALL of the customer's money - the customer got a 24% interest loan, and the dealer sold them the kitchen sink? - no problem, the "deep pockets" of the automaker are standing by. Only the big 3 beggars won't have to worry about that, they're "bankrupt". Who will be hurting? Those "transplants" making all that money!

I wouldn't be surprised at all to see GM bankrupt it's USA operations and continue operating in China and Europe - they can come back after the GOP created depression has run it's course and buy some of those "super-smart" japanese competitors when they're weakened by a 5-10 year slump in sales, since we're in for 10%+ unemployment, probably closer to 25% if you use the old math.

Smart. Real Smart.

2008 Dec 08 12:57 AM

[Alex1937:]

Why shouldn't GM get a piece of the action. After all, the very scoundrels that caused all this, in the first place, got it. And then some. Then let us all sue the present Administration (maybe even the next one), for deriliction of duty. Then add all the Wall Street crooks, the banks (that engaged in neferious practices as well) and the Fed and the Treasury. And lets not forget those Regulatory bozos (Moody S and Poor and the SEC). Of course, some might want to add even the crowd on Capitol Hill, for their part, or lack there of. These people made the USA a laughing clown the world over. America, get used to it. The days being the num.1 Superpower are over, for good. Argentina, here I come.

2008 Dec 08 08:00 AM

[Alex1937:]

Why shouldn't GM get a piece of the action. After all, the very scoundrels that brought this mess about, got it. Then let us all sue the present Administration (maybe the next one too), Wall Street, the banks and the Fed and The Treasury people, no less. We could even add the uncaring and/or stupid crowd on Capitol Hill, who, it seems, greatly excacerbated the problem. Oh darn, I almost forgot the Regulatory Agencies (Moody and the SEC). These people made the USA a laughing clown the world over. America, get used to it. The days of being a Superpower are over, for good. Argentina, here I come.

2008 Dec 08 08:04 AM

[LillyM:]

This is detail perfect! Thanks for taking the time to spell out a reasonable approach. Yes, govt leaders are the issue here, the "bloated, inefficient and arrogant" who never remember that they work for us, not themselves.


On Dec 07 07:57 PM miken wrote:

> What is it about a "Wall Street" person that makes them think they
> are an expert at ANYTHING!!!! Wall Street and Congress have more
> to do with this mess than anybody at GM.
>
> Who is going to have hearings grilling the guilty congressmen that
> let Fannie Mae and Freddie Mac get out of control while taking campaign
> contributions and loans from the very criminals that they were protecting.
>
>
> If you want some interesting reading, search Wikipedia for Christopher
> Dodd and Richard Shelby and read their bio's. We have crooks running
> this country! And just about the time you begin to have a little
> bit of confidence again, Maxine Waters opens her mouth and you're
> back in the toilet again. These people have no clue what they're
> doing.
>
> If there's any good to come out of these kangaroo court hearings
> it's the exposure these morons are getting. I think Rick Wagoner
> ought to demand the resignation of the entire Senate Banking Committee.
>
>
> Here's what I would do if I were in charge:
>
> Recently in the news, the General Motors, Ford, and Chrysler CEO’s
> have been to Washington to testify regarding their request for Federal
> loans. During the course of these meetings, several suggestions
> have been put forward to help the automakers save money. It occurs
> to me that, with the U.S. government being $11 trillion in debt,
> they may also make good use of the helpful hints. For example:<br/>
>
> 1. Require the Senate Banking, Housing, and Urban Affairs Committee
> led by Senator Christopher Dodd (D-Connecticut) along with the House
> Financial Services Committee headed by Representative Barney Frank
> (D-Massachusetts) to prepare a plan that will eliminate the debt
> and present it to the American people by December 8, 2008. This
> plan will detail cost containment initiatives as well as revenue
> enhancement plans that will eliminate the debt. It should detail
> the plan at three different GNP levels and a sensitivity analysis
> at each level. Should they fail to produce a plan that accomplishes
> the above, they will immediately resign and be replaced by the entire
> cast of High School Musical 2.
>
> 2. All government housing will be eliminated including the White
> House and Number One Observatory Circle ( the Vice President’s residence)
> and replace them with foreclosed property made available by the collapse
> of Fannie Mae and Freddie Mac while under the watchful eyes of the
> committees led by Senator Dodd and Representative Frank.
>
> 3. Until the debt is eliminated, the following actions will be in
> place:
> a. Each congressional member in the House and Senate will receive
> $1 per year for their services. Each congressman would be allowed
> 1 administrative assistant, and if that congressman were re-elected,
> that administrative assistant would receive a $1 bonus.
> b. The very generous congressional retirement plans will be taken
> over by the PBGC and the payment levels be determined by the standard
> guidelines that are afforded to all Americans.
> c. All preferential parking at the Washington airports and government
> buildings will be eliminated.
> d. The generous health care plan available to congressional members
> will be replaced with a new PPO administered by Dr. Jack Kevorkian.
> Another option might be just to wait for the government sponsored
> health care plan proposed by President Elect Obama.
> e. The congressional dining rooms will be eliminated and replaced
> by food courts with Burger King, McDonald’s, Taco Bell, and especially
> for Senator Shelby (R-Alabama), the 15th Catfish Plus franchise.
>
>
> 4. All speechwriters would be eliminated to save cost, besides we
> want to hear what the actual congressional members want to say.<br/>
>
> 5. The U.S. governmental air travel fleet will be liquidated. This
> would include Air Force 1. Instead, all government travel (including
> international junkets) would be scheduled on either Southwest Airlines
> (excellent on time history) or Northwest Airlines (flies almost everywhere
> in the world). Any exceptions to the above would have to be approved
> by a unanimous vote of a committee comprised entirely of all unemployed
> domestic autoworkers.
>
> 6. The ground transportation fleet comprised of large SUV’s would
> be replaced by Chevrolet Aveos, Ford Fiestas, or Dodge Calibers.
> Running boards would be added for the brave men and women who serve
> in the Secret Service protection unit. If larger vehicles were actually
> needed, hybrid versions of the Chevrolet Tahoe and GMC Yukon will
> be permitted because of their exceptional city fuel economy (21 mpg).
> The third vehicles of choice would be Mini Coopers, Camry LE’s, and
> Accord LX’s since they get about the same city mileage as the GM
> hybrid SUV’s (honest, you can look it up).
>
> If these types of actions are good for a company with $50 billion
> in debt, why wouldn’t they be useful for the Federal government which
> has debt 220 times that amount?
>
>

2008 Dec 08 11:15 AM

[LillyM:]

This is detail perfect! Love it...I am so frustrated by the "leaders" who tell others how to run their business while disastrously running ours -- and forgetting that they work for us, not themselves. Their loans to Financial/Banks were done without the interrogations and oversight they now demand of the automakers who, unlike the Wall St. and Banking crowd, do fill an important need in the U.S. I have no dog in this fight, no personal connection to the car companies, but I am extremely angry at our Congressional leaders and everyone else who are calling for their downfall, essentially scapegoating the auto companies because Congress handled the Financials so sloppily and ignorantly with such poor results. At least the carmakers can step in should a crisis occur and do as they did during WWII. What could Wall St. do?!

2008 Dec 08 11:23 AM

[CarDealer123:]

I am a Chevrolet Dealership Owner. I was having a really good year until the dredit markets froze and wall street collapsed. The arrogance of you people is beyond belief. I have yet to hear ANYONE working on Wall Street take ANY blame.

Anybody who makes their living on Wall Street and didn't see this coming 4-5 years ago is an idiot or turned a blind eye to it.

The fact is, the mortgage brokers came to the underwriters with bad paper. The underwriters FAILED to adequately assess the risk. This failure to adequately assess the risk was caused by laziness, ignorance or greed. In most of these cases, the risk was known and deliberately mis-represented to investors. You "Wall Streeters" couldn't wait to earn the commissions selling (misrepresenting ) what you knew or should have known were very high risk investments.

In a nutshell, the underwriter's lied and the "wall streeters" swore to it.
And now, all you "wall streeters" want to talk about is where is my next commission comming from.

Well, here's a news flash - NOBODY TRUSTS WALL STREET ANYMORE. That's why no matter how much money the FED puts out there, WALL STREET cannot be trusted with it. That is why the credit markets are still frozen despite the huge infusions of cash.

I guess the really funny / sad thing here is that you guys (Financial Advisor) just don't get that YOU are the ones we don't trust.

I predict that Wall Street will suffer a 20% or more decline in employment in the next 12 months. It will be intersting to see what your MBA in finance is worth in the real world outside of Manhatten.

2008 Dec 08 12:15 PM