Forget about bailout money. It’s time for President Obama to hand out some tough love to those automakers!
Ken Thomas and Tom Krisher of The Associated Press report Obama will announce a new aid package for General Motors and Chrysler within the next week or so and says the auto giants need to make “pretty drastic changes” if they want to save their industry in the long run.
“Obama gave a preview of his administration's approach to fixing the struggling U.S. auto industry during an online town hall meeting Thursday, promising additional aid only if the Detroit change its ways and receives concessions from stakeholders,” Thomas and Krisher write.
"We will provide them some help," Obama said. "I know that it is not popular to provide help to auto workers — or to auto companies. But my job is to measure the costs of allowing these auto companies just to collapse versus us figuring out — can they come up with a viable plan?"
"If they're not willing to make the changes and the restructurings that are necessary, then I'm not willing to have taxpayer money chase after bad money," he added.
Hmmm….not willing to have taxpayer money chase after bad money? What does B.O. think he’s doing with the banks?
All told, Chrysler and General Motors have received over $17 billion in bailout money since December and are requesting billions more. A presidential task force set up by Obama “has been meeting with industry officials and studying restructuring plans submitted by the companies to put them on the path to long-term profitability through tough concessions.”
"Everybody is going to have to give a little bit — shareholders, workers, creditors, suppliers, dealers — everybody is going to have to recognize that the current model, economic model, of the U.S. auto industry is unsustainable," Obama said.
Although the president believes the auto companies brought about many of their own troubles through mismanagement, he says it is vital to preserve the industry for symbolic and employment reasons. It is estimated that some 3 million American jobs would be lost if the car manufacturers were allowed to go out of business.
According to Thomas and Krisher, “The government can recall its loans to GM and Chrysler if they fail to sign deals for debt restructuring and other concessions from stakeholders, including the United Auto Workers union, by March 31.”
So when does the newspaper industry get a bailout? Seriously, should the government help the automakers in the name of preserving an important American institution and keeping many citizens employed, or should the automakers be allowed to pay for their mistakes and go out of business?
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Here's my $.02. If the government is going to get involved in any of this, they need to break these businesses up. We've gotten to the point where so many smaller companies have been eaten up to become fewer ginormous companies that it is a big deal when one of them fails. If it's a larger amount of smaller companies, it won't be a big deal if some of them go under.
ReplyDeleteThe most maddening thing I hear is that the auto companies would "go out of business"
ReplyDeleteBunk.
No business that big, with that kind of assets, would go out of business and cease operating. They would go into Chapter 11 bankruptcy, which get the power of the courts behind their being able to restructure their operations, cash flow, debt levels and other obligations to enable them to become a viable, profitable business again.
That means unsustainable long term debt could be forgiven by court order, labor contracts dissolved, partnership contracts dissolved, and anything else the court would determine is unsustainable restructured in some way.
Some very large US businesses have gone through that process, including some very big airlines, and are doing fine today.
Bankruptcy is really the best way to bring about a resolution to their troubles.
But the labor unions don't want to re-negotiate their contracts, and the banks don't want to lose money to bad debts and the Corporate Execs don't want to lose their jobs.
It just amazes me that corporations that actually produce wealth (a real value-added product) and their employees are treated like shit in Washington while the worthless non-productive financial arms of corporations are sucked up to as if they were some kind of gods. The suggestion that we allow the auto companyies to go the way of the Dodo and depend on the rest of the world for our autos is a step down a road we should not take. Next it will be the last of the steel companies and aluminum companies. Soon after that we will be ordering our tanks, planes and ships from Europe, Asia and China. Hardly the way to independence.
ReplyDeleteGee, Oldfart, once again you don't READ my post.
ReplyDeleteMy point isn't that the auto companies go the way of the dodo, but that they would have the legal protections of the bankruptcy laws to reform and restructure their debt and obligations to become actually profitable again.
Of course, that would cause the auto workers' unions to lose those VERY profitable contracts, but hey, at least most of their members would still have jobs.
R - I wasn't really responding you your post. In fact I had no problem with your post whatsoever. I was reacting to the attitude of Congress and this Administration and, in particular, anti-union Republicans, when it comes to the auto companies or any other producer of goods that is unionized.
ReplyDeleteSorry, it's been a looonng week. Got a new floor and have been moving crap around from room to room so much I forget what room it went in in the first place!
ReplyDelete