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Bankruptcy for Detroit

I am getting the sense that Congress was never really serious about handing over 25 billion more dollars to the Three Stooges Motorcar Companies, in addition to 25 billion already requested. Not surprising, since despite several visits by auto executives to Congress in the past year, not one has made a convincing case that their companies are competitive or responsible, and therefore there is no evidence to support a belief that they would be properly accountable or trustworthy with the money. Not one executive had a plan to explain how they would become truly competitive again; it was clear to everyone that this money was not going to address the true causes of the automakers' current crisis. There was (and is) the very real possibility that giving taxpayer money to these companies might be the worst possible course of action.

So, having slowly begun to comprehend that even D.C. is not keen on continuing to enable a very bad habit in Detroit, the automakers have begun the predictable whine and rant. In general, they are trying to make folks believe that if they do not get the money they want, they will file bankruptcy, and this would result in "dire" consequences for the nation (a word used often in the past week by the suits). Personally, I tend to bristle at extortion attempts and that is exactly what this amounts to; "buy our lousy cars and subsidize our worthless industry, or you'll get hurt". Hey, I'm sure that kind of thing works great at UAW meetings, but it does not work with honest people who earn their money through ingenuity and effort. For one thing, History has killed off companies and industries with no mercy over and over again in the past (remember when we were a world power in Textiles? Remember when the dominant personal transportation was horse-drawn carriage? Anyone still pay for home ice delivery to stay cool in the summer?) Adapt or die boyo, and GM/Ford/Chrysler have not adapted to reality in our lifetimes. They have ramped up the advertising, but along the way they have managed to forget the triangle of business strategy - you cannot compete unless you offer the best price, the most desirable features, or the highest quality. LoserCars of Detroit have managed to blow opportunities and one-time advantages in all three categories. Detroit had about a two-decade window where they could have done the things they needed to do to revive their mojo, but instead they chose to stay on the same reckless course and hope they could fake out the world. Right about now, no choices are left save the desperate.

So, on to bankruptcy. For a lot of people, bankruptcy means the end of the road, and that could be the case for one or even all three of these companies. But let's first look at the other options.

- continued -



Frankly, there are a lot of reasons why it would be a very good thing for these companies to file bankruptcy. Look, the prime directive for any company, is to make a profit. That's because no matter what good things you want to do, you cannot do them unless the company first insures its survival. And if you look at these automakers, the first thing that jumps out at any accountant is the huge debt and liability they carry. I looked through GM's 2007 Annual Report, for instance, and despite 181 billion dollars in sales and revenue, GM lost 38.7 billion (before accounting principle changes - GM changed its accounting principles three straight years). Net revenue was down 12% from 2006. And this was 2007, before the credit crunch of 2008 hit. What happened, basically, was that GM was so loaded up with debt and long-term commitments for things like pensions and multiple brand lines and dealership locations, that even in a good year it could just tread water; when things went bad they went really bad. Straight-forward accounting for GM shows operational losses for at least four years, and again that's before we count 2008. The basic reason GM is in a panic, is because they have no idea how to sell more cars, and they have no way to to substantially cut costs. From what has been reported, Ford and Chrysler are in the same shape. All three companies are locked into contracts with stakeholders who refuse to give an inch, even if the alternative is the company's dissolution. The most likely reason for this, is that the creditors do not believe that these large companies would actually fail. Therefore, two sound business reasons exist for moving towards bankruptcy: If the creditors come to understand that the company is going to file for bankruptcy, it is in their best interest to work out a way to avoid bankruptcy for their customer, and if bankruptcy cannot be avoided, a reasonably objective judge and standardized process exist to provide guidance and a background.

The most desirable chapter for filing would be Chapter 11, or reorganization. Frankly, that is the minimum action needed to make these companies face up to the fact that they simply have no effective business plan. For example, what is GM's "base" product? These guys so over-specialized that pretty much all of their vehicles are for a niche market. Sure, they have basic sedans and such, but does any of them strike you as their core product, the way the Honda Accord or Toyota Camry does? Not even close. GM does not even have a core brand line ... fuhgeddaboudit. The only fix worth talking about, involves rebuilding everything, nothing held off the table. And it looks like only a bankruptcy could make that happen.

The car execs are whining that they would not be allowed a DIP (debtor-in-possession) in a bankruptcy. To which I answer, too freaking bad. I mean, companies do not deserve favors when they file bankruptcy, what they need to do is find their humble place and go along with the court. There's not a single top executive at any of the "Big Three" who should be pulling down a paycheck these days, and if they are just now beginning to understand the scale of consequences for their screw-ups, well change their diapers and tell 'em to shut up and stay out of the way. If they have to file bankruptcy, they'll get a chance to plead for DIP, and if they cannot make that case then that proves the bankruptcy was overdue anyway. Chapter 11 with a competent trustee in charge could be the best thing to happen to the industry in half a century.

But what if Chapter 11 does not work out? Well, then we look at Chapters 13 or even 7. Yes, that means the companies go away as we know them, but it also means that the parts are sorted out and someone else acquire the means to make their own major automaker. There are plenty of groups with the means to create a successful corporation for making cars and trucks, and the infrastructure would be right there. The new company (or companies) could pick from optimal factory sites and equipment, a deep talent pool for design and manufacturing, and within two or three years a truly competitive and effective auto manufacturing industry would be reborn in America. It's happened in other countries, so it can just as easily happen here. Quality cars at good prices with solid opportunity, the only losers being those unable or unwilling to work under the new company's terms.

That's really what this comes down to, you see. The new company would not be much different from what we see now, except that the new company's directors could avoid the mistakes of the past. They could avoid making open-ended commitments that would kill future generations, they could find a functional agreement with unions that made best use of the skills and pride of union workers, while avoiding either side becoming the pawn of the other. The new company could focus on a few models, well-made and suited to the customer base, instead of drowning in more than a dozen nameplates. The new company could franchise dealerships in a way that keeps its cash flow free for business, and develop new products in line with sound business principles. But it starts with tearing down the wreckage that is the current corpse of American auto making.

Why will bankruptcy work? The short version is, because we need it to work. I work with companies which have filed bankruptcy, and what happens is one of two things; the company falls completely to pieces, or it gets its act together. In the first case someone else picks up the pieces and makes them work in a new way, and in the second the company bears up under what amounts to business boot camp and it clears out the trash from its past performance. This works because of three basic forces which work together - the company remains extant in terms of its people and product, the creditors find it is in their best interest to help the company survive and succeed, and the public finds the product is worth its money. Once the shock of a bankruptcy filing eases, the people generally realize they can still make things work, but they need to be more flexible.

And what if it does not work? In the last century, there have been many automakers. Prominent names included Studebaker, Packard, Deusenberg, and Hudson. Those names died out because they could not compete, and maybe it's time for Ford, GM, and Chrysler to join them. If they do go, rest assured that someone will fill the demand for quality American-made cars.


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Comments (47)

Oil's about 66% down in jus... (Below threshold)

Oil's about 66% down in just a few months. I think it's time for ExxonMobil's CEO to head for DC for a bailout, they're certainly too big to be allowed to fail.

Given Mulally's short tenur... (Below threshold)
Mike:

Given Mulally's short tenure at Ford, what is the basis for your opinion, "There's not a single top executive at any of the "Big Three" who should be pulling down a paycheck these days..."

Just curious.

Mike, short answer would be... (Below threshold)
DJ Drummond:

Mike, short answer would be the testimony to Congress from these guys this past week.

Use the bail out money for ... (Below threshold)
Andy T:

Use the bail out money for the DIP financing. Problem solved.

Bad idea, Andy. So bad tha... (Below threshold)
DJ Drummond:

Bad idea, Andy. So bad that even Harry Reid knew to leave that one alone.

Given Mulally's sh... (Below threshold)
Eric:
Given Mulally's short tenure at Ford, what is the basis for your opinion, "There's not a single top executive at any of the "Big Three" who should be pulling down a paycheck these days..."

The fact that none of those geniuses were smart enough to fly coach yesterday, makes me question their competence to run those companies.

If the Big Three believe th... (Below threshold)
geminichuck:

If the Big Three believe they could revive their companies with another $25B loan, then there is a solution: Apply for loans from banks that are getting the $700B line of capital. If they qualify (ie, are more worthy than other applicants), then they can get loans - if they cant qualify then some form of bankrupcy is their only option left. Why doesnt congress tell them to go see the bankers? - taxpayers have already been forced to make that money available to revive the economy!

I overheard a suggestion th... (Below threshold)
_Mike_:

I overheard a suggestion that sounded interesting...

Perhaps the UAW's pension fund should bankroll the bailout. I haven't been able to locate the size of the fund... but did find that there was a retiree healthcare trust that was recently (2007) setup with $54 billion from the automakers.

Well, congress had no probl... (Below threshold)

Well, congress had no problem voting to authorize war in Iraq and spend $572 billion dollars so far, bomb the Hell out of that nation during "shock and awe" and create a cycle of death that has killed 1,288,426 in Iraq, and millions of refugees, or to vote for a $700 billion bailout, largely for big banks or AIG, but now congress may drag their feet to spend just 4% of that total to help save up to 3 million American auto-related jobs. Some priorities in our congress.

Paul, your comment is so of... (Below threshold)
WildWillie:

Paul, your comment is so off the wall and uneducated, I will leave it alone. ww

Paul, there's a perfectly g... (Below threshold)
DJ Drummond:

Paul, there's a perfectly good topic here. We'll cover 'hysteria and paranoid delusion" some other time.

It's interesting Paul how y... (Below threshold)

It's interesting Paul how you assigned no blame to Al Qaeda for "create[ing] a cycle of death that has killed 1,288,426 in Iraq" and how you blame our troops for the "millions of refugees"

Just to be fair, I mean.

BTW, were you in favor of the $700B bailout? And if not, do you argue that main street can survive without wall street?

Dumping more money into the... (Below threshold)
Ray H.:

Dumping more money into the automakers will only postpone the inevitable. They need major changes and $25B will not make those changes happen. Between being strangled by retiree benefits, 7x's the number of dealerships in the US as foriegn dealerships and way to many car brands, they are beyond fixing as things stand now.

hooson - "Well, congre... (Below threshold)
marc:

hooson - "Well, congress had no problem voting to authorize war in Iraq and spend $572 billion dollars so far, bomb the Hell out of that......"

Yeah well whatever...

And you had no problem saying this over at "blue"..."It is highly likely that nothing, not even a large multibillion dollar bailout of the American automobile industry will guarantee the survival of General Motors, Ford or Chrysler for too many more years."

Despite the many factual errors in that post you are pretty much in lockstep with this post.

Yet despite your general agreement, you chose to go once again on another patented and long-winded (and off-topic) rant about Iraq.

Nitwit!

DJ, my real problem is that... (Below threshold)

DJ, my real problem is that congress seldom has any problem spending billions for war or bombs, but when the lives of 3 million American jobs are in the balance, then the foot dragging really starts for a mere $25 billion which isn't a great deal of money.

Bankruptcy is a scary alternative because GM may not survive it intact and buyers would lack confidence spending $20,000 or more for a car from a brand where parts or service may not be available before the car is even paid for.

I've seen companies like Studebaker and American Motors into similar tailspins, and the car brands just didn't survive.

Marc, I personally believe that the $25 billion may not be enough to make the American auto industry survive just as I wrote on BLUE. But for this small chunk of change it's worth a try because the stakes are so high here. You and I are the car guys here, and I hope you value the survival of this industry as much as I do. I've been spending time calling my legislators and stating my case with them.

I too brisled at the crude ... (Below threshold)
glenn:

I too brisled at the crude blackmail attempt by the auto moguls. Then I thought about it for a while and sent my congressman a letter demanding a bailout of my very own. If I don't get a handsome check by tomorrow, Saturday at the latest, I'm going to strangle a puppy. Slowly.

All three companies a... (Below threshold)

All three companies are locked into contracts with stakeholders who refuse to give an inch, even if the alternative is the company's dissolution.

That alone is why there is no DIP financing available. DIP lenders are smart; they require some evidence of mangement lucidity before they lend. As DJ mentioned in the comments, even Harry Reid can see this, but imagine for a moment just how bad ,how disengaged, how far removed from reality an industry must be to have their political party, which is in control, turn their back on them.

There has never been a clearer case for bankruptcy. And there is substantial precedent (in fact, an ocean of it) that current management should not be allowed to remain as a debtor in possession. A trustee should be appointed to administer these bankrupt estates. It's done every day in bankruptcy courts across this nation.

Quite possibly the best I'v... (Below threshold)

Quite possibly the best I've heard this issue explained so far. And I agree 100%

~T the D
http://thedrunkelephant.blogspot.com/

PaulYou obviously do... (Below threshold)

Paul
You obviously don't understand the first thing about bankruptcy, but that's no surprise.

What is interesting is that you, a liberal, obviously care nothing for the families of employees in the airline industry, textile industry, steel industry, metal bashing industry, machine tool industry, chemical industry, paper industry, meat packing industry or the many other industries that were bankrupted from the 1970's until present.

The sum total of those jobs lost dwarf the auto industry, but apparently, those industries didn't have hundreds of millions of union dollars to buy a place at the congressional hearings we watch today. They simply went the way of the market and, subsequently, either out of business or significantly restructured.

What's particularly irritating about liberals like you is that, like petty dictators, you pick and choose your victims as opposed to applying widely ditributed justice for all. Liberals like you Paul love the tyranny of the moment, the power of the immediate cause, because it gives liberals like you power.

If you actually cared about jobs in a particular industry you would have been out front on this before, but, alas, that was not the politically expediant thing to do then for, say, the machine tool industry in the Clinton era, heh?

People want their pound of ... (Below threshold)
jpm100:

People want their pound of flesh no matter the consequences. People in this country have become petty.

Game over.

People want their pou... (Below threshold)

People want their pound of flesh no matter the consequences. People in this country have become petty.

The people in this country are becoming wise to the fact that sacred cows always have a cost associated with them.

For example, the folks in my neighborhood want to know why their employer (Toyota) should have to compete with a competitor, literally just down the road (Ford), that gets federal subsidies to operate a plant that they (my neighbors) could operate for 40% less cost. That's what they will be facing if the Big 2.5 bailout goes through.

This isn't complicated for the fact that foreign owned auto makers have set up shop in the US to show what a poor excuse for mangement the domestic owned auto industry is. My neighbors don't require the expert opinions of MBA's and Economic PhD's to reduce this problem to what it really is. They just look at their own work experience and paycheck while working the line at Toyota (or Honda, Nissan et al) and come to a conclusion.

The fact that there is some push back from Reid and Pelosi is the reason why GM and Ford shares are trading at less than 5% of where they were a few years ago.

That is the definition of "game over".

Heres the bottom line, glob... (Below threshold)
glenn:

Heres the bottom line, globally Toyota has for all the lines of cars they manufacture, 7 firewall stampings. GM is buying 7 kinds of toilet paper in the US alone. With a 40 year background in manufacturing I know who is going to win this fight.

I think the fact that $50 b... (Below threshold)
Baron Von Ottomatic:

I think the fact that $50 billion from the government will only delay the failure of Detroit's automakers through next year is proof enough they need declare bankruptcy and completely restructure.

Add to that the inevitable CAFE/alternative fuel strings attached to any bailout by Pelosi/Waxman and Co. and their failure is a given. They'll get their money, though. Congress likes nothing more than giving away other people's money to well-represented beggars who reliably launder the funds and send them back to politicians during campaign season.

Change we can believe in.

HughS, I guess you must be ... (Below threshold)
jpm100:

HughS, I guess you must be one of those people who believe the assembly plant is the end all and be all of making a car. Its the final step in a long process.

Regardless my point is proven. Because it helps your homies, you are rushing to dick over several other states. But you lack such a grasp of the situation, even your token 'transplants' are in jeopardy if the US companies go under.

jpm100 HughS... (Below threshold)

jpm100

HughS, I guess you must be one of those people who believe the assembly plant is the end all and be all of making a car.

Actually, I don't believe that. And I think I do grasp the situation.

The managements of the the major domestic automakers have led their businesses to ruin. The assembly plants are where the final cost accounting plays out. And it's ugly.

As for my homies, jpm100, did you ever think about where they worked before they found jobs in the auto industry? Have you read my comments above? Apparently not.

My homies worked in small machine shops, fabric manufacturers, the steel business, farms,coal mining, tobacco farming, local construction (carpenters, rough and finish), electronics and.....God Forbid, IBM, where they were all laid off, bankrupted or RIF'd ( Reduction in Force).

That's why they don't tear up in front of Congress when things get really tough. They've been there, done that. jpm100, there are thouands of towns across th US that have been utterly decimated by local industry failures. They are long gone and, apparently, based on recent news reports and comments like yours, long forgotten or never noticed.

Here's a tip. Go read a book. The Reckoning. By David Halberstam (he's Liberal Safe Reading, by the way). He foretold this whole sordid ending a long time ago, when GM had 55% market share and owned the world. Now that they are at around 20% and no one in the world will get near them it should be required reading; and, something tells me that some folks in congress are in the book club.


As far as the 'ripple' affe... (Below threshold)
_Mike_:

As far as the 'ripple' affect, yes people to whom GM is a customer will be affected.... but there are thousands upon thousands of those vehicles on the road (I own one). Those vehicles will still be in operation and there will still be money to be made from servicing those thousands and thousands of existing vehicles... even if someone doesn't pick GM up intact.

I will say that I wouldn't be buying another one from them at this point... bailout or no.

(interesting data point on the number of firewall stamps)

hooson - "You and I are... (Below threshold)
Marc:

hooson - "You and I are the car guys here, and I hope you value the survival of this industry as much as I do. I've been spending time calling my legislators and stating my case with them."

Oh wow, look. You actually commented on topic rather than a rant about the war. SHOCKING.

As for me being a so-called "car guy," and so? Yes it's true I author three different auto racing blogs. Yes it's true I spent ten years working the assembly line at a Ford plant.

It's also true I feel they can all screw themselves.

All three have spent the better part of 2 decades pandering to the U.S. public and it's insatiable desire for gas guzzling SUV's. (gas guzzling SUV's that were a direct result of gov meddling with it's nonsensical CAFE standards I might add.)

Chapter 11, despite the nutjobs that claim otherwise, does nothing but put creditors on the sideline while all three reorganize.

If they can't reorganize screw'em. Let'em sink.

You can go back and forth f... (Below threshold)
MPR:

You can go back and forth for a long time on the merits of a bail out or a loan or whatever. What kind of like sticks in my throat though is that the UAW pours millions into electing liberals that raise my taxes and regulate my business and make it harder to stay in business. I find it hard to feel too much sympathy for the state of Michigan and others that voted in a President and Congress that will send this country into an economic down turn like the Cater Presidency.

My homies worked i... (Below threshold)
jpm100:
My homies worked in small machine shops, fabric manufacturers, the steel business, farms,coal mining, tobacco farming, local construction (carpenters, rough and finish), electronics and.....God Forbid, IBM, where they were all laid off, bankrupted or RIF'd ( Reduction in Force).

That's why they don't tear up in front of Congress when things get really tough. They've been there, done that. jpm100, there are thouands of towns across th US that have been utterly decimated by local industry failures. They are long gone and, apparently, based on recent news reports and comments like yours, long forgotten or never noticed.


I couldn't give a shit if it was "liberal safe". But I guess you feel better if you stamp it with a label and dismiss it. In fact I have nothing but contempt for the wave of Big Government republicans that have seized the Republican party.

But, unilateral free trade is as mad as unilateral disarmament was. It got its full swing with Carter, BTW. As exampled when he forgave the dumping that finished off the electronics industry.

But because your area get tossed a cookie out of the deal, you're all for it. Enjoy the cookie while it lasts.

Seems to me GM's down to it... (Below threshold)

Seems to me GM's down to its last crumbs, jpm100 - and they won't be able to buy another cookie for a while unless WE cough up the money.

$700 bil for this, $200 bil for that - pretty soon you're out of money for more cookies...

I live in Houston and my wi... (Below threshold)
WildWillie:

I live in Houston and my wife made the point of saying all the Enron employees that lost their retirement and jobs should get bailed out first.

Paul Hooson, please stick to just stating your vast resume and leave the heavy lifting to others.

I believe our leaders are mandated by the constitution to defend our country.Hmm! Now I gave you a clue figure it out. I read the constitution and I did not find where I had a right to an automobile or a job. Funny huh? ww

Why would anyone give money... (Below threshold)
Dee:

Why would anyone give money to Chrysler after hiring Nardelli? That guy ran Home Depot into the ground and took his multi million dollar golden parachute with him when his ass should have been literally kicked out the door with only his name plate in hand.

Flying in on the private jets was genius and I think solidified Americans against bailing these jokers out. Also too, I think you better get ready to see business ramp up against the union check card issue too. Can't you see a TV ad showing GM, Ford and Chrysler and the announcer asking if people want their businesses to end up like these guys? I think this whole episode makes card check even tougher to pass.

The big three are finally g... (Below threshold)
Stan25:

The big three are finally getting their comeuppance, as my grandmother used to say. They have broken or taken over other car companies to keep their monopoly in the car world. I for one will be glad to see them totally fail. Then maybe, someone will finally get a chance to make a decent car. What is needed is a man like Tucker, who had the foresight to make a good car, but was eventually forced out by the big three, because of competition he was giving them. Another thing that I like about this whole mess, is that the UAW will be finally given their walking papers.

Let's not forget that the n... (Below threshold)
Sharon:

Let's not forget that the new administration wants "card Check" so more workers can be forced to unionize their industries out of existence by demanding more than companies can afford to pay to be profitable. As a self employed individual whose income is down 50% in the slowdown, I love government wanting to take more of my money so that fat cat union workers can continue to make $80/hr with the world's richest medical and retirement packages. I didn't hear one word about union givebacks to keep these companies solvent.

"...and within two or three... (Below threshold)
hyperbolist:

"...and within two or three years a truly competitive and effective auto manufacturing industry would be reborn in America..."

I think that timeframe is overly optimistic, DJ, but otherwise I agree with you. I wonder, though, why you think unions ought to be part of the long-term solution. Toyota (in Canada, anyway--I would assume also in the United States...) pays high wages for high quality workmanship. The Japanese understand that the best way to avoid systemic problems that unions have caused for the Big 3 is to preempt employee demands (high wages, benefits, etc.) in order to maintain a position of bargaining strength. Tough people to work for, but hey, if you want to make $80,000/year on an assembly line, why should the work be easy and the expectations be low?

Shame that jpm's not thinki... (Below threshold)
apb:

Shame that jpm's not thinking this through.

Simple fact is that there's always demand for cars, and the big 2.5 are part of the supply. In the short run, simple reorganization will not cripple their supply chains - it will probably dent profitability.

In the long run, if the big 2.5 go bust, their supply chains WILL be needed elsewhere to pick up the slack in supply. You'll also have a pickup in skilled manufacturing to retool the supply chain to provide their products to the non-big 2.5

My problem with the Wall St... (Below threshold)
Gizmo:

My problem with the Wall St. bailout is that there weren't enough disciplinary mechanisms imposed. Handing Henry Paulson $700 billion to play with is not exactly a plan. The guy made a $800 million killing at Goldman Sachs, and he is Dubya's appointee-- and we're supposed to feel condfident that he's going to do the right thing? There should have been a tough-minded oversight board created to manage the process.

So, lets let our hate for t... (Below threshold)
bigduke:

So, lets let our hate for the union movement, a movement that has done more for every working american in this country, union or otherwise, then every republican that ever drew breath combined, including Lincoln, put oh about 3 million americans out of work. I am sure the cost of supporting 4% of our GDP AFTER we let it die will be much less then 25 Billion.

We give out 700 Billion no freaking questions asked, and because clowns like Drummond here see a great opportunity to be a union buster, now they want to ask questions.

Pathetic!

Okay, let me summarize your... (Below threshold)
James Limbaugh:

Okay, let me summarize your brilliant thinking here, Dummond:

  • People who earn their living by the sweat of their labor in automobile manufacturing plants are not honest.
  • If they weren't such dishonest parasites they would be earning their money through their ingenuity and effort -- like, say, brilliant hedge fund managers.

And speaking of hedge fund managers, let me share three simple words with you, Dummond: CREDIT DEFAULT SWAPS. These ingenious "investment vehicles" are the fruit of Randian-Friedmanian deregulatory zeal -- and the underlying cause of the present economic meltdown. They call it an "investment vehicle" because your betters use it to drive off with all of your money, Dummond.

Two final words, Dummond: "Atlas Sucks." Objectivism and market deregulation are a proven failure, not unlike this laughable, embarrassing blog.

Another rude assessment fro... (Below threshold)
LaMedusa:

Another rude assessment from a dishonest shill. Deregulation wasn't the problem, it was the liars promoting it.

James, that delightful tira... (Below threshold)
hyperbolist:

James, that delightful tirade aside, do you disagree that in the context of our globalized economy, the American autoworker has priced him/herself out of work? Such would seem to be the case; and, insofar as the UAW are uninterested in being realistic about wage, benefit, and pension expectations, would you not agree that it is the UAW standing in the way of its members' prospects for future employment within the automotive sector?

I'm pro-union in principle and agree that they are responsible for much (or all) of the 20th century improvements in workers' rights. However, their uncreative approach to bargaining (more money! more money! more money!) is one of the reasons the Big 3 now stand less of a chance for success in the global marketplace than Fiat, Renault, Hyundai, and even Tata.

"Another rude assessment fr... (Below threshold)
elphin:

"Another rude assessment from a dishonest shill. Deregulation wasn't the problem, it was the liars promoting it."

The whole point of laws and regulation is to protect us from liars, cheats and scoundrels. The free market alone can't. So, although I doubt you realize you agree with the "shill", your logic actually supports him.

Um, LaMedusa, proper regula... (Below threshold)
hyperbolist:

Um, LaMedusa, proper regulation would have prevented the house of cards being built up and its subsequent collapse. He's right about that.

Funny heres a BUSINESS WEEK... (Below threshold)
feckless:

Funny heres a BUSINESS WEEK article from last year about how the UAW has given concessions to bring costs down to equavalency with the Japanese:
http://www.businessweek.com/bwdaily/dnflash/content/sep2007/db20070926_079529.htm

And here is the ECONOMIST stating that unions do not negatively effect productivity:
http://www.economist.com/blogs/freeexchange/2007/02/do_unions_increase_productivit.cfm

But by all means let the Chinese buy up the best assets of the Big 3.

And as for the southern GOP senators, do they think foreign manufacturers will keep making cars in this country if there is no domestic competition to force what is basically a PR move?

If the Big 3 dissolve, Vokswagon, BMW, Toyota and Honda will recamp south of the border so fast it will make Mitch McConnel's head twist right off.

Fire (and prosecute) the executives that chose to make SUV's and underfunded pensions etc, but protect the workers and the industry.

The American auto industry ... (Below threshold)
Uh, Clem:

The American auto industry isn't in trouble. New plants built in the South by Toyota, Hyundai, Mercedes Benz, and the like are doing well. It's the companies in the firm grip of the United Auto Workers union that are in trouble. Let them stew together in their collectively bargained juices.

The whole point of... (Below threshold)
LaMedusa:
The whole point of laws and regulation is to protect us from liars, cheats and scoundrels. The free market alone can't. So, although I doubt you realize you agree with the "shill", your logic actually supports him.

I don't support people who just fly by to insult the bloggers without reason. My logic is against his method of making a point. I don't care what he said. It's crooks who do hold not just the auto industry hostage, but I wouldn't listen to the insulting James Limbaugh any more than I would listen to any blowhard on the MSM. James, your approach doesn't help anything. And if you weren't just a shill making a sarcastic
drive-by, I wouldn't have said anything. elphin, tell the crooks in the union what you think, because I don't care about your dream world.

byrski itoma... (Below threshold)
ipod:

byrski itoma




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