Parsing the President's verdict on Detroit is like trying to find rays of hope in a death sentence.
"While Chrysler and GM are very different companies with very different paths forward," Obama said today, "both need a fresh start to implement the restructuring plans they develop. That may mean using our bankruptcy code as a mechanism to help them restructure quickly and emerge stronger."
Fresh start? Stronger? Chrysler is being pushed toward a merger with Fiat, while GM is given a 30-day reprieve and a shove toward restructuring by working with "creditors, unions and other stakeholders."
The President's gift for euphemism, as in his Afghanistan announcement last week, is once again putting an optimistic gloss on hard realities--Detroit as we know it is in terminal condition.
The government will provide working capital for a while and back the car makers' warranties to keep sales from falling off a cliff, but there is nothing in today's brief bailout to justify Obama's uplifting statement:
"This industry is, like no other, an emblem of the American spirit; a once and future symbol of America's success."
If that's true, the country is heading the way of Detroit, and the stock market will just have to face that fact.
Showing posts with label Detroit bailout. Show all posts
Showing posts with label Detroit bailout. Show all posts
Monday, March 30, 2009
What's Good for General Motors...
As news sinks in that President Obama has, in effect, fired the head of GM, it recalls that half a century ago President Eisenhower asked the man in that position to help him run the country.
When Ike picked Charles E. Wilson as Secretary of Defense in 1953, Congress wanted Wilson to sell his GM stock, which he reluctantly agreed to do. But when asked if he could conceive of making a decision adverse to the corporation, Wilson said yes but added that he could not imagine such a situation "because for years I thought what was good for the country was good for General Motors and vice versa."
Now, in an era when the auto industry is dragging down the US economy, the Washington Post reports, "The Obama administration has forced the longtime head of General Motors to resign and said yesterday that it would withhold additional federal aid to the auto industry unless the ailing companies undertake changes they so far have been unwilling or unable to make."
As the President promises to make Detroit "much more lean, mean and competitive than it currently is" in return for more bailout billions, there is the mirror image of unease about the symbiotic nature of that relationship.
The White House's willingness to take over GM is in sharp contrast to its hands-off approach to the banks in the plan to make toxic assets disappear. Does anybody in Washington know more about making cars than making loans?
After four stormy years of trying to modify and unify the Armed Forces, when Charles E. Wilson stepped down, Eisenower said he had managed the Defense Department "in a manner consistent with the requirements of a strong, healthy national economy."
Can Obama find someone to reverse the process now?
When Ike picked Charles E. Wilson as Secretary of Defense in 1953, Congress wanted Wilson to sell his GM stock, which he reluctantly agreed to do. But when asked if he could conceive of making a decision adverse to the corporation, Wilson said yes but added that he could not imagine such a situation "because for years I thought what was good for the country was good for General Motors and vice versa."
Now, in an era when the auto industry is dragging down the US economy, the Washington Post reports, "The Obama administration has forced the longtime head of General Motors to resign and said yesterday that it would withhold additional federal aid to the auto industry unless the ailing companies undertake changes they so far have been unwilling or unable to make."
As the President promises to make Detroit "much more lean, mean and competitive than it currently is" in return for more bailout billions, there is the mirror image of unease about the symbiotic nature of that relationship.
The White House's willingness to take over GM is in sharp contrast to its hands-off approach to the banks in the plan to make toxic assets disappear. Does anybody in Washington know more about making cars than making loans?
After four stormy years of trying to modify and unify the Armed Forces, when Charles E. Wilson stepped down, Eisenower said he had managed the Defense Department "in a manner consistent with the requirements of a strong, healthy national economy."
Can Obama find someone to reverse the process now?
Friday, December 12, 2008
The Confederate Senators From Japan
In killing the Detroit bailout yesterday, Republican Leader Mitch McConnell of Toyota joined his colleagues Dick Shelby of Honda and Bob Corker of Nissan in upholding a basic American principle: Blame all economic woes on greedy unions.
After shoveling billions out the door for Wall Street bastions of free enterprise, McConnell expressed the worry that “a government big enough to give us everything we want is a government big enough to take everything we have.”
There is enough fault in the failing auto industry to go around--management, labor, shareholders and consumers--but taking cheap shots at the health and pension benefits of organized workers as the root of it all is a perfect example of what the great journalist Murray Kempton described half a century ago:
“There is a certain kind of politician who stays safely in the hills during a battle and then comes down and shoots the wounded.”
McConnell and his coterie of Southern senators, including Louisiana's David Vitter and South Carolina's Jim DeMint, all represent states with foreign-owned, non-union plants that would benefit from the disappearance of the American auto industry, no matter how much havoc it would wreak on the country as a whole.
Now these patriotic stalwarts are turning away from the Bush Administration they supported all through a disastrous foreign war to show their independence in the last days of the lame-duck hunting season by playing to the prejudices of constituents who barely reelected some of them last month.
The rest of the politicians in Congress and the White House will no doubt find a way to throw General Motors and Chrysler a temporary life-preserver, but certainly without the help of the union-busting senators from Japan.
After shoveling billions out the door for Wall Street bastions of free enterprise, McConnell expressed the worry that “a government big enough to give us everything we want is a government big enough to take everything we have.”
There is enough fault in the failing auto industry to go around--management, labor, shareholders and consumers--but taking cheap shots at the health and pension benefits of organized workers as the root of it all is a perfect example of what the great journalist Murray Kempton described half a century ago:
“There is a certain kind of politician who stays safely in the hills during a battle and then comes down and shoots the wounded.”
McConnell and his coterie of Southern senators, including Louisiana's David Vitter and South Carolina's Jim DeMint, all represent states with foreign-owned, non-union plants that would benefit from the disappearance of the American auto industry, no matter how much havoc it would wreak on the country as a whole.
Now these patriotic stalwarts are turning away from the Bush Administration they supported all through a disastrous foreign war to show their independence in the last days of the lame-duck hunting season by playing to the prejudices of constituents who barely reelected some of them last month.
The rest of the politicians in Congress and the White House will no doubt find a way to throw General Motors and Chrysler a temporary life-preserver, but certainly without the help of the union-busting senators from Japan.
Friday, December 05, 2008
Post-Partisan Depression
With Democrats ascending, the wordplay in Washington is improving even if the economy isn't. Pressuring Barack Obama to be more aggressive, Congressman Barney Frank said yesterday, "At a time of great crisis with mortgage foreclosures and autos, he says we only have one president at a time. I'm afraid that overstates the number of presidents we have."
He also chided the President-Elect's policy of reaching across party lines: "Having lived with this very right-wing Republican group that runs the House most of the time, the notion of trying to deal with them as if we could be post-partisan gives me post-partisan depression."
No worries about an excess of wit or a partisanship gap, however, on the part of Democratic Congressional leaders Nancy Pelosi and Harry Reid, who sent George W. Bush a gotcha letter on the Detroit bailout, urging him to use "the TARP funds, or to work with the Federal Reserve to make available assistance through its existing lending programs, or both."
Translation: We can't or won't do anything until our man takes over the White House, so if the situation gets worse, it's your fault if you don't do something but, if you do, we get credit for pushing you into doing it.
When President Obama is finally in charge, he will have more than one kind of partisanship to overcome.
He also chided the President-Elect's policy of reaching across party lines: "Having lived with this very right-wing Republican group that runs the House most of the time, the notion of trying to deal with them as if we could be post-partisan gives me post-partisan depression."
No worries about an excess of wit or a partisanship gap, however, on the part of Democratic Congressional leaders Nancy Pelosi and Harry Reid, who sent George W. Bush a gotcha letter on the Detroit bailout, urging him to use "the TARP funds, or to work with the Federal Reserve to make available assistance through its existing lending programs, or both."
Translation: We can't or won't do anything until our man takes over the White House, so if the situation gets worse, it's your fault if you don't do something but, if you do, we get credit for pushing you into doing it.
When President Obama is finally in charge, he will have more than one kind of partisanship to overcome.
Thursday, December 04, 2008
Beating Up on the Big Three
Hard times bring out the worst in everyone, and politicians and the public are venting their unhappiness on Detroit automakers with a vengeance.
In a new poll, six out of ten Americans oppose using taxpayer money to save General Motors, Chrysler and Ford after Congress' trashing of their chief executives for flying to Washington in separate corporate jets to ask for billions in bailouts.
This week they are arriving in hybrid cars with restructuring plans, but the lame-duck Congress is not inclined to relent even as the President-Elect expresses hope for "maintaining a viable auto industry" while stressing the need for "a more serious set of plans" for restructuring.
Even the Wall Street Journal is urging "tough love" for Detroit but, behind all the posturing, there is the reality that allowing the American auto industry to crash and burn would make a failing economy even worse than it already is.
As they debate the specifics of reform this week--more fuel efficiency, union concessions, fewer dealerships--members of Congress should stop taking cheap shots at the automakers' chief executives and start negotiating and taking responsibility for their terms of surrender to the economic crisis.
Unlike the financial houses that are being propped up with much less pressure to mend their ways, the auto industry actually makes something besides money.
In a new poll, six out of ten Americans oppose using taxpayer money to save General Motors, Chrysler and Ford after Congress' trashing of their chief executives for flying to Washington in separate corporate jets to ask for billions in bailouts.
This week they are arriving in hybrid cars with restructuring plans, but the lame-duck Congress is not inclined to relent even as the President-Elect expresses hope for "maintaining a viable auto industry" while stressing the need for "a more serious set of plans" for restructuring.
Even the Wall Street Journal is urging "tough love" for Detroit but, behind all the posturing, there is the reality that allowing the American auto industry to crash and burn would make a failing economy even worse than it already is.
As they debate the specifics of reform this week--more fuel efficiency, union concessions, fewer dealerships--members of Congress should stop taking cheap shots at the automakers' chief executives and start negotiating and taking responsibility for their terms of surrender to the economic crisis.
Unlike the financial houses that are being propped up with much less pressure to mend their ways, the auto industry actually makes something besides money.
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