GM slouches toward bankruptcy, despite bailouts

When President Bush began the bailout of GM and Chrysler, it was with the idea of keeping them out of bankruptcy and savings the millions of jobs that these companies directly and indirectly create. President Obama continued this policy and has given out multiple extra bailouts to the companies in the meantime. He even managed to get GM's CEO fired in the process.

What it is the result of all of this expensive government intervention? Bankruptcy for GM as well as Chrysler. And, of course, Chrysler sold to Fiat, an Italian company who will likely ultimately move the jobs to Italy. We're right back where we started. GM is even talking about leaving Detroit entirely, despite the fact that one of the MAJOR reasons given for the bailout was to save the struggling region.

Are we finally ready to bite the bullet and admit the bailouts were a mistake?

I'll miss Pontiac

From here

A Car Company Pays DOWN Debt

A largely unreported fact amidst the madness of Chrysler and General Motors, is the many steps Ford has taken to stay out of government bailouts and to show their strength. Yesterday, Ford actually paid down its debt rather than looking for a bailout to accrue more of it.

Ford used $2.4 billion in cash and 468 million shares of its common stock to buy down $9.9 billion in debt, reducing its leverage by 38 percent.

"By substantially reducing our debt, Ford is taking another step toward creating an exciting, viable enterprise," Ford chief executive Alan Mulally said in a statement.

One can't help wondering if soon the "Big Three" automakers will be reduced to the "Big One." Hopefully, the president will do as much to reward Ford for doing the RIGHT things, as he has done to punish GM for doing the WRONG things.

Too Much Truth is Painful

Did Calvin and Hobbes foresee the Auto Bailout?

Judge for yourself. But it seems eerily prescient to me.

Is Congress becoming irrelevant?

When George W Bush announced loans to automakers from the TARP program, after Congress failed to pass a bailout, I asked the question why Congresspeople were praising the move. If the President can bypass Congress in something like this, why not bypass them altogether? Now, George Will is asking whether Congress has essentially become irrelevant for the foreseeable future of government.

Congress' marginalization was brutally underscored when, after Congress did not authorize $14 billion for General Motors and Chrysler, the executive branch said, in effect: Congress' opinions are mildly interesting, so we will listen very nicely -- then go out and do precisely what we want.

Friday the president gave the two automakers access to money Congress explicitly did not authorize. More money -- up to $17.4 billion -- than had been debated, thereby calling to mind Winston Churchill on naval appropriations: "The Admiralty had demanded six ships: the economists offered four: and we finally compromised on eight."

If the use of TARP funds is not challenged in the Supreme Court, then Congress will simply have given up and we may well be on our way to a dictatorship. Or at least an Empire.

Bush bails out the Automakers

You know the Auto Bailout. You know, the one that Congress - the only body entrusted with the power to make law and spend money - turned down a week or so go? Well, the Executive Branch - you know the body entrusted to enforce law and protect the citizenry from foreign threats but NOT make law - has put it into practice by tapping the Wall Street Bailout fund. Anyone want to speculate now as to why the Treasury Department refuses to say who got loans from this fun? My guess: it was used to bail out only a few banks, but make loans to all other parts of the economy that taxpayers would be furious about.

Here's hoping SOMEONE in the next 4 to 8 years can restore a Constitutional government in the USA. Because the way things are being run right now, the cart is definitely before the horse.

The Ghost of HUAC Haunts Michigan

I can't believe anyone would use this kind of language in a time of turmoil and trouble in the economy. If she were my governor, I'd be talking Recall.

"It is unacceptable for this un-American, frankly, behavior of these U.S. senators to cause this country to go from a recession into a depression," Granholm said during a radio interview Friday morning.

Negotiations over an agreement to assist Michigan's Big Three stalled last night in a 52-35 vote on a procedural motion to bring up the package for a vote. Republicans largely opposed the bill after it failed to win concessions from the United Automotive Workers union on wages and benefits.

“It is such an unbelievable stab at workers across the country,” Granholm added. “You give this big bailout to these financial institutions–don’t ask a single question, they can do what they want–and then you lay the blame for the auto industry, which is a victim of this financial meltdown, on the backs of the people who are working on the line.”

Let me be clear. "Un-American" is putting your own interests ahead of the Constitution. Let's see, who is doing that in this situation? Senators who are trying to avoid a deficit that we may not be able to afford, and avoid throwing good (taxpayer) money after bad? Or a governor whose political future is tied to getting a bailout, whether her constituents really deserve it or not? Hmmm...

Sorry, governor. The senators are rubber and you are glue...

Auto Bailout dies in Senate... for now

Union bosses refused to consider wage cuts before at least 2011, so the Senate tabled the discussion until January. The auto bailout is dead... for the moment. Democrats and the Bush administration are already hinting that they may simply give the money anyway, from the bank bailout fund.

If Congress is actively asking the President to bypass Congress, what is our legislature for again?

Auto Bailout is Pending

More than anything else, what doomed John McCain's run for the presidency? No, not David Letterman. It was the bailout legislation which bailed out banks with no real accountability for the companies or the regulators. So, what is Congress's first priority after the election? A nearly identical bailout for the auto makers. Despite earlier claims that no bailout would be offered without a clear plan from all automakers.

The amounts under discussion are less than half the $34 billion that the automakers asked Congress for last week. Some economists believe they may need $75 billion to $125 billion to survive in the longer term.

Nevertheless, lawmakers fear a recession will deepen if any of the three giants -- GM, Ford and Chrysler -- collapses soon. But some from Bush's Republican party don't want another rescue plan after a $700 billion Wall Street rescue package that triggered voter backlash in the November 4 congressional elections.

Critics also say market forces, not state intervention, ought to determine the fate of the auto industry.

There is nothing like throwing gasoline on a fire to end a crisis and restore calm.

Congress Does Something Right

Congress finally did something right today. They told the Auto industry that they needed to show how a $25 Billion bailout would transform the industry. This is exactly what needed to happen. Someone had to stand up to the Auto industry and say "OK, you need money now. If we give you money now, what is to make us believe that anything will change and we won't have to give you more money in 6 months?" Bravo congress for getting it right.

Auto Industry Bailout Discussion

I have been reading lots of material on the requested (and perhaps doomed) auto industry bailout demanded by GM and others. There appear to be people of good will on both sides of the issue, so I thought it might be a good idea to briefly summarize the arguments here for Mod-Bloggers, and let our own esteemed thinktank take a crack at sharing their opinions.

PRO-BAILOUT POSITION

The automobile industry has long been the backbone of American industry and thus the backbone of the American economy. Allowing any of the Big Three to outright go bankrupt - or worse be bought out by foreign powers - would be tantamount to surrendering the future of American jobs to outside controls. The Big Three themselves are direct employers of hundreds of thousands of Americans, but more importantly they are INdirect employers of millions more who provide parts, chemicals, electronics, websites, advertising, etc. to these companies. The failure of the American auto industry would put nearly 1/3 of the American workforce out of a job, and thus plunge us into a true Depression.

But luckily, we have a simple solution. Give the automakers an additional $25 billion guarantee on their debts and/or outright loans, to be paid back to the American government. This is a paltry sum compared to the $700+ billion already secured for the economic system, and can br drawn from the moneys already allocated.

ANTI-BAILOUT POSITION

There are reasons why the Big Three automakers are failing, and in particular why GM is on the chopping block. They have failed to adapt to a changing marketplace, and have been insulated in the past from their own failures by a government eager to protect auto jobs at any cost. American automakers are producing cars that no one wants, at a price no one wants to pay. Furthermore, the largest cost for automakers today are unwieldy commitments to Big Labor negotiated during boom times. These contracts can only be renegotiated, by law, when a company is in bankruptcy. Keeping automakers out of bankruptcy and reorganization simply keeps them shackled to business models and debts that they can never get out from under, which would require on-going government subsidies.

But luckily, we have a simple solution. Do nothing. Allow GM and the other automakers - if needed - to go into bankruptcy and reorganization. Let them renegotiate their debts, reorganize their management and workforce, and emerge a stronger company. This requires little government intervention, and no extra outlay of taxpayer funds to accomplish.

What do Mod-Bloggers think? Did I summarize the arguments adequately? Which side do you find yourself agreeing with? Or is there another P.O.V. that needs to be considered? Let us know in the comments section.

All Too True

From Nate Beeler and townhall.com