The first thing to realize is that not a dime should be wasted on Chrysler. It's a dead man walking- its product development capacity was already being gutted by Daimler, and Cerberus has finished the job. There's nothing there to save.

I notice that Ford is in pretty good shape financially. Why are we bailing them out again?

There's nothing there to save

I'd agree that Chrysler is a wreck, but there are tens of thousands of employees, a multi-million dollar network of suppliers, real estate, pension funds, a dealer system, etc. etc. etc. Management may have been venal and stupid, but to say there's nothing there is to wish away a tough policy choice.

jrw, I feel terrible for all those people too- but there's going to be nothing for them to build because there's just no salable future product in the pipeline. I don't see what the government could possibly do about that.

I heard Carl Levin on NPR this morning stating that he didn't think that Ford was going to ask for monies from these funds.

By "provocative," did you mean "idiotic," about that Jeffrey Leonard piece, Steve? And, obviously, Glastris et al require you to flog such dreck.

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JRW - Lett's do what Pharyngula said and retrain them to build high-speed rail.

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JRW, second note: The UAW ain't innocent in all this, either. It stood shoulder-to-shoulder w/Big Three mgmt when corporate brass said "We can't build green cars." (And, St. AlGore went along for the ride, too.)

American unions have usually been as short-sighted and self-centered as American corporations.

What a dumb idea. The problem with GM is that it doesn't generate enough income to cover its costs. So these oh-so-smart professors want to turn over management to a committee of other oh-so-smart professionals who will set goals that may or may not have anything to do with making money. If the company meets the goals, which may or may not have anything at all to do with turning the company into a profitable enterprise with a capital and cost structure that matches its revenues - (all together now, let's prevent Global Warming!) - then it gets more taxpayer money even if it's still losing money. Ridiculous.

What the Government ought to do, which would truly help out GM and Ford, is to repeal the "two fleet" rule. That rule says that cars made by GM in its overseas plants and imported into the US don't get counted in computing GM's average fleet mileage for CAFE purposes. For CAFE purposes, only cars made in US plants - with UAW labor - get counted. The only purpose of this rule is to prevent GM from importing the small, fuel efficient cars that it profitably makes and sells overseas. GM doesn't import those cars because such imports would only steal sales from the cars it makes in the US, making it harder if not impossible for it to satisfy the CAFE Gods. The result is to (a) protect UAW jobs in American factories, (b) punish GM financially, and (c) do nothing whatsoever for the environment.

So long as Congress leaves the "two fleet" rule in effect, you can disregard anything the Congressmen and Senators say about wanting to help the American auto industry achieve profitability.

So, the Washington Monthly suggests a mail-in rebate for car buyers, and the New Republic manages to list the one thing the taxpayer might actually want to buy, economical cars that fight global warming, as an optional extra.

Compared with the "liberal media" the car companies don't seem to be doing that badly.

Look around you- what do you see? That's right- car dealers stretching to every horizon and more new cars on the road than we can wear out in a decade. Talking about the pain and suffering isn't going to change the fact that we have too much of this. Way too much.

Nor is the sobbing of the liberals helpful to the people they think they want to save. Instead of crying and offering hankies, liberals should be pointing out that most of the auto workers are highly skilled people working with complex and very productive machinery, and the auto unions are highly evolved and very necessary social institutions to mediate relations between workers, who are people, and companies which aren't.

Unfortunately, liberals appear to be largely ignorant of what workers do on a production line, or what unions do in industrial relations. We will, perforce, become post industrial, as apparently most of us no longer have any clue about how "industrial" might work.

Well, stay tuned for more goofy ideas from any body who ever had a radio die in their Detroit car and more pointless hand-wringing about the supposed ten per cent of us who depend on the auto industry. Maybe the Chinese will realize that the Volt might actually be a good product that just needs a bridge loan to make it to the showrooms. That, at least, is a solution with a relatively modest cost that a good salesman might be able to sell.

At the risk of offending some (and committing the definite sin of a strained comparison), a bailout of Detroit will be - politically - the Democrats' tiny little bloodless Iraq war. By that I mean that Dems will be pursuing some noble ideals but execution of the plan will fail spectacularly (even without invoking the staggering incompetence of the Bushies). I simply see no way that throwing money at big complex companies will work. That is not ideology, but, as I see it, pragmatism.

My humble opinion is that the government should do a pre-packaged sort of bankruptcy for GM. Basically, bankruptcy allows GM to cut the fat that needed to be cut yesterday, and government involvement (that is, cash) can help keep them running while they do what needed to be done ten years ago. Oh, and fire the board and the top management. Chrysler should probably be liquidated. Ford is probably OK.

I know that it will hurt, but the problem is, it is too late to prevent the hurt. Instead, we should manage it.

humbly,

Nice rant, serial- and I'm not (just) being snarky, I agree with much of it. But- what are your proposed solutions?

(The Volt, by the way, might also just be vaporware. There are at least colorable grounds for suspicion on that point.)

The root of the problem is that the auto industry is structured to be profitable only on high production volumes.

When sales drop (they have literally stopped) the cost of maintaining production overhead is staggering.

GM and Chrysler don't have the capital on hand to carry them through the downtime. Apparently Ford, Toyota, Nissan are better positioned to take their lumps in a down market. (For awhile anyway... if the economy goes full depression and lasts for years, all bets are off.)

Take a drive by a Toyota or Nissan dealership. Their lots are glutted with inventory too, especially in the bigger, more expensive models.

So what happens if you restructure GM to be more effecient, drop 'brands' etc. Effeciency = fewer jobs, exactly what you are trying to prevent.

We are caught between a rock and a very hard place.

Apparently Ford, Toyota, Nissan are better positioned to take their lumps in a down market.

One of these three is not like the others...
Ford is hemhorraging money (and its remaining cash on hand is mostly the proceeds from its mortgaging its assets to the hilt a couple of years ago) and its path to bankruptcy seems slow only compared to GM's. Nissan is probably in pretty bad shape as well. Toyota, on the other hand, will survive the depression easily, they're loaded down with cash.

Just one point about their "solution":

The solution mentions retraining workers with some basket of remaining money if the automaker fails to meet their obligations two quarters in a row and is then directed to start to do the "el foldo".

Retraining for what jobs? The GOP and Bush administration has been flopping that dead fish out there for a long time - "Just go out there and learn a new job, folks! It's easy!"

Nah. That was an option back in the 1990s. It isn't worth a damn, even before the meltdown caused everyone to start stuffing nickles and dimes in mattresses.

The workers are going to be f**ked, and we all know it.

It's curious that everyone in the country knows more about running the car companies than the guys who are actually doing it. And maybe they really do.

This is an opportunity to drag the auto makers kicking and screaming into the 21st century, and to demand that they develop the electric car as a fully practical alternative to the internal combustion engine powered 20th century vehicle.

In return, Obama should pull a JFK and guarantee the development of a battery that will power passenger vehicles for 400 miles between chargings within ten years, with an investment infusion of twenty billion, fifty billion, or whatever the experts say it will take. We got to the moon in eight, and we can certainly do this.

But it won't happen. Nothing of substance is going to change. We are stuck with the 20th century gas, coal, oil and clunky automobile industries for the foreseeable future. The only way out is an Apollo project, and we absolutely won't do that.

"Toyota, on the other hand, will survive the depression easily"

Yes. So far in this recession Toyota is still making a profit, just not as big a profit as before.
Ford has slightly more cash than GM, and has got further along in designing decent cars, getting value from global design efforts (Volvo and Mazda),
and improving quality and reliability.
If there hadn't been a deep recession right now,
Ford might well have turned the corner.

GM just seems to be a huge mess - they're 4 runs down in the ninth inning, and their "plan" to get
back in the game is to try to hit 4 home runs.
Not impossible, but the odds are very heavily
against them.

"In return, Obama should pull a JFK and guarantee the development of a battery that will power passenger vehicles for 400 miles between chargings within ten years, with an investment infusion of twenty billion, fifty billion, or whatever the experts say it will take. We got to the moon in eight, and we can certainly do this."

This is crazy. People have been working their asses
off on battery technology at least since laptops and cellphones became popular, and there just
isn't a silver bullet. You're up against difficult issues of chemistry and physics,
compounded by the need to work over a wide range
of temperature, and not explode even in a crash.

If you throw a lot of money at a research project,
then just maybe you might get a research prototype
that meets the specs but at a prohibitively high cost. But if you want a practical cost-effective
solution, I'm pretty sure Toyota is working damn hard on it and I don't know why you think the US
government could do it better or quicker.

A couple of problems with the Volt:

1. Getting it to market depends on breakthrough developments in battery technology that may or may not be forthcoming. If they aren't, there's no car there.

2. Even assuming they get the batteries where they want them, it isn't clear that this automobile configuration is the right one. The natural market for a strong hybrid is green types, who will want a practical everyday car (think Prius). But that's not what the Volt is - it's a sporty roadster. Will buyers in that market go for an unorthodox ultra-green offering? And what about practically-minded people in the market for a Prius? Will they buy a sports car instead?

I think there's a big danger that even if the Volt isn't vaporware, it'll just not sell. If so, chalk up another epic fail for GM management.

Even assuming they get the batteries where they want them, it isn't clear that this automobile configuration is the right one. The natural market for a strong hybrid is green types, who will want a practical everyday car (think Prius). But that's not what the Volt is - it's a sporty roadster. Will buyers in that market go for an unorthodox ultra-green offering?

In the abstract, my wife and I might by a car like the Volt, to replace our Chevy Aveo, since we already have a Prius as our other car, so the "utility" car would be the Prius. OTOH, we probably wouldn't buy it the first year it was on the market, in any case.

I think there's a big danger that even if the Volt isn't vaporware, it'll just not sell.

Given how much the Volt has been advertised well before it is available, I've always thought that the purpose of the Volt wasn't to sell itself, it was to get people in multicar households who might be inclined to buy a hybrid now to buy some other GM car instead and plan to buy the Volt as their next car.

(Much like, prior to the volt, GMs ads about their "coming soon" Hydrogen Fuel Cell vehicles were intended to do.)

This is a lesson in corporate subterfuge:

"Give us money or American jobs will be gone"

Corporations should not be allowed to hold our government hostage.

I think many here are missing the real situation.

GM could have the Volt appear in the showrooms tomorrow and it still wouldn't matter. (In the sort term anyway).

The immediate problem is that the economy is dead. The debt that fueled it for the last 20 years is tapped out and locked up.

That said, I did see a new car on the street this morning though, first in quite awhile... it was a bottom-end Kia.

CHANGE: Radical and Fundamental. That is the solution here. There are simply not enough jobs for all the people who will need and want jobs. The infrastructure of society needs to change radically, both within our own minds and externally. Most people, today, do not understand radical change. They think that spending more money on the same old stuff is the solution. Clearly, that is not going to help. Balance is needed here, and there is no solution that is suggesting balance. Fewer people and a progressive perspective of how to care for and nurture the population we have, the planet we have and the resources we have. As I have said here and elsewhere: we are one, interdependent ecosystem and there is no separating one from the other. War, poverty, disease are all symptoms of imbalance. Until we address the root cause(s) of these imbalances, we will continue to create new ways of expressing the imbalance.

I do not have THE answer; what I offer is not a new, unique approach to today's problems. Einstein said that the solution to the problem cannot be found at the level at which the problem was created. We have to expand our perception and perspective and think/feel outside the box.

Obama is a welcome interim leader; he cannot do it alone and we all must step forward with ideas to advance our thinking within a community of caring people.

I am committed to Oneness through Justice and Transformation
peace,
st john

"Corporations should not be allowed to hold our government hostage."
Posted by: Zli on December 2, 2008 at 11:58 AM

Tell that to Hank Paulson, David Rubin and Citibank.

I love people like serial catowner who achieve a smug, snarky tone settling scores with various strawmen, all the while failing to propose anything of value.

Fill us in, oh wise catowner, on your solution, which I'm sure avoids any "pointless hand-wringing" about the people who work for the car companies. I'm confident you're tough enough to withstand the suffering of other people. We know that because you've been strong enough to deal with a bad car radio.

Me? I think we have to start with the notion that these companies cannot be allowed to simply fail and go away. The destruction would be too great. Some sort of federal bailout with strings attached, whether the strings are economic, environmental, or whatever, has to be the way to go. And obviously, huge changes in what Detroit makes and how they make have to happen. Something else? Let's hear it.

my daughter recently wrecked our Honda Fit. The insurance company tells us that they are going to total the car. Buy the way the car really held it's value. I have to replace the Fit. I might buy two. Or maybe one Fit and a Versa. I sure don't want to spend $30,000 for a new American car right now.

The decline of our middle class means that there are fewer and fewer people who can afford a $40,000 Volt even if they existed. There aren't many people who can afford a $35,000 Silverado either. The stupidity of the folks who thought consumers would buy forever as we sent their jobs overseas is now obvious. Too bad a lot of people still refuse to connect the dots. Consumers = people with jobs. The better the jobs the better the consumers. Our real estate is all tapped out.

Finding a solution to the Big Problem is hard. Finding solutions to the components isn't quite so hard.

#1- a "GI Bill" for veterans of the auto industry.

#2- beef up alliances of midwestern universities to find products auto suppliers could make and somebody else would buy. For example, windmills need ball bearings, which leads to

#3- direct spending building windfarms and electrical distribution facilities. Building a few mistaken windfarms would still be smarter than building millions of mistaken gas hogs.

#4- begin building our three most likely high-speed rail corridors. Encourage former autoworkers to re-educate for skills like environmental sciences (EIS will be needed), electrical engineering, etc.

#5- direct federal payments to states administering ADC, Medicaid etc

#6- amnesty for imprisoned drug users. Shrink the prisons, expand the universities. Michigan should not be spending more on prisons than it does on higher education.

#7- bankruptcy for GM so the problem with dealer franchises, multiple badges, inventory overstock etc etc can be settled and people can eat their losses.

Basically, the party's over. It did not turn out that what was good for GM was good for the country. Time to move on. We need to seriously restructure our product line and productive capacity. There are too many people involved to just give them severance checks and suggest they look for work in Atlanta.

If the price point on the Volt is $40,000 they may as well not bother bringing it out. Without HELOC's no one is buying the thing at that price.

I for one am tired of hearing about JD Power and initial quality. The problem is not the first thirty days, it's the first ten years.

The problem is not the first thirty days, it's the first ten years.

We tend to hear only anecdotes from pissed-off owners. There are also plenty of stories like mine.

If a company missed its goals for, say, two quarters in a row, the committee would then provide only enough funds to prepare for liquidation or nationalization

If this plan could be implemented without the UAW convincing the gubmint to "move the goalposts", I'd be satisfied.

I think they'd fail. I'd LOVE to be wrong. It's not a lack of ability either. It's profound inertia perhaps fed by woeful management. I can't say. I just see that Detroit has been getting the beatdown for decades and they haven't seen fit to evolve. If they haven't, isn't it reasonable to suspect they CAN'T?

Just how much business are you willing to lose before you start developing new ideas. Zero percent financing doesn't cut it.

Tell that to Hank Paulson, David Rubin and Citibank. Posted by: Ron Byers on December 2, 2008 at 12:08

I felt that America did just that with the unprecedented number of calls to Washington not to support the initial bail out.

Maybe bailing out the stubborn US car manufacturers will positively impact the recession, but when does taxpayer "bail-out" become taxpayer "extortion"? These guys are in trouble because they refuse to move with the times.

When they came for the manufacturers,
I did not speak out;
I was not a manufacturer.

When they came for the service industries,
I remained silent;
I was not a service worker.

When they came for the hunter-gatherers,
there was no one left to speak out.

We cannot turn out backs on our manufacturing base. Gen. Clark makes the case that it is a security issue.

Abandoning our manufacturing base, people who make real tangible objects, while simultaneous throwing billions at ethereal, fabricated bank products makes absolutely no sense.

Me? I think we have to start with the notion that these companies cannot be allowed to simply fail and go away.

I don't think we have to start with that notion.

That may well be the conclusion of reasoning that starts with analysis of what the problems would be if they were allowed to fail with no government action to mitigate the impacts; OTOH, it may not, as the best way to mitigate the impacts may not involve stopping the companies from failing.

At any rate, even though there may need to be special case "bailouts" as part of the response if keeping the companies from vanishing is necessary, the conceptual model should be one of bankruptcy: the companies being bailed out have failed, and the government is intervening to mitigate the social costs of that failure, which may include maintaining the existence of the corporations as such. The idea cannot be to protect the stockholders and decisionmakers of the corporation from consequences, but to mitigate the social costs to others that would result from unmitigated collapse.

I just see that Detroit has been getting the beatdown for decades and they haven't seen fit to evolve.

Because any time a major automaker in the US is in significant trouble, because they are "too big to fail", they have been able to count on government bailouts with few strings. Consequently, there has been no real motivation to change.