Sunday, November 16, 2008

Road Test

Alright, $25-billion here, $170-billion there, pretty soon we’re talking about some real money. Everett Dirkson, the late Senator from Illinois with the beautiful hair and even more beautiful voice, assured himself a permanent place in American history with the model for that analysis.

If we are going to socialize the U.S. auto industry, maybe we should just pick one company, let the others sink or swim. They could draw straws, or at least let’s take them for a road test. Here’s my plan. The Big Three from Detroit meet at some NASCAR venue like the Indianapolis Speedway or Daytona. Bring their best cars. Give each car 10 gallons of regular gasoline (up to 10 percent ethanol allowed). Gentlemen, start your engines. Let them drive around the track at Interstate Highway speed until they run out of gas. The last car still moving wins for its manufacturer the honor of becoming the new taxpayer owned auto maker. The others can live or die by old fashioned capitalism. If they can’t survive, let them go the way of the tyrannosaurus rex. Once the tax-payer buys its own auto manufacturer, maybe the government will be able to regulate gas standards and alternative fuel vehicles enough to give the country half a chance of survival beyond the next holiday shopping season.

If the U.S. Congress comes up with an auto industry bailout, Speaker Nancy Pelosi says the plan would require use of existing funds from the $700 billion Troubled Asset Relief Program (TARP) and have many strings attached, including restructuring company finances, meeting new standards for gas mileage and requiring advanced technologies "to compete in the domestic and global market." What about the SUV’s and big macho trucks Detroit has clung to like they could not see it coming? Democrats also said they would include new limits on executive pay at the Big Three auto companies.

Auto executives, corporate clowns and empty suits to the bitter end, are fear mongering and threatening the loss of millions of jobs, added to an economy already crunched by the credit crash. Detroit’s Big Three also provide healthcare benefits to almost 2 million Americans and pension benefits to 775,000. Many politicians and other free marketers believe America cannot afford a collapse in the car industry. Others think, “Taxpayers should not be on the hook for bailing out businesses that have made very bad decisions and deserve to face the consequences.” According to Cato Institute associate director Dan Ikenson, a bailout will just delay the inevitable. “If all three went down and all the parts’ suppliers went down at the same time, yes we are talking about millions of jobs. But that’s not going to happen. What should happen is one of the Big Three should go down and liquidate. Then prospects for the other two would be much brighter. Quite frankly, the US economy could survive without an auto industry. It’s not going to happen, but we could survive. We would not survive without banks or a credit system.”

Congress already set aside $25 billion to help pay for government-imposed fuel-efficiency quotas. This was before the $700 billion TARP. Now Detroit wants a share of the $700 billion intended to bailout the stock markets. Or was it for the failed mortgages? I get confused. The Secretary of the Treasury keeps moving the shell, and I lose track of the pea. I just hope there is still some of the $700 billion left when these lame ducks limp and quack away.

Copyright 2008 by William C. Cotter


SeriousGacky said...

What exactly are we going to "bail out"? Lend money to make cars that few want to buy? Detroit has too many executives whose primary goal is to line their pockets and finger point.

gayle said...

I worked for Ford 42-years, the good and bad. When I started back in 1965, we were making 52 units an hour, when I retired we were making 78 units an hour. We lost many employees because of automation of the lines. The jobs were manual at first (I lost 30 pounds the first few months after getting out of active duty). The pay was good, but the benefits were what kept me and others at Ford. They needed me and needed them. Now that I'm retired, I'm enjoying my benefits, that I worked for, that the UAW and Ford agreed to. After I retired, some benefits have been changed by Ford or the UAW. Also Medicare has just kicked in for me in Oct., so things have changed again. But the UAW did not put Ford and the others companies in the fix that they are in now, (Ford) decided to build cars that they made large profits on and did not want to produce cars that would benefit form better gas mileage. The top management were people that did not known how to build cars, and the good old buddy system helped to kill the company. They closed the Atlanta plant that has been one of the top plant in the world for quality and production for years, instead of using us as an example of how to help the company ,they closed it.

When we found out about the plant closing, I sent a email to the new CEO (did not receive a response) that if Ford would build a car that people wanted, like a unit that would get at least 35 mpg or more, and cost under $20,000.00 for a family of four, they would be able to sell all that they could build, instead of making all the profits on one unit, (Explorers, Expeditions,Excursions).

Other things.

There are three things that most families do not teach us as we grow up.

1. Some families teach us and take us to churches and the likes. Schools did not. Look how schools are now.

2. Most families do not talk or teach us about money. investing,banking, and real estate.

3. Most, if not all, families did not talk about sex. So we were on our on.

I wish that all of this money, religion, and sex questions could have been taught to us before we left high school.

Most of us back then did not feel that we would live long enough to retire.

Tina said...

The whole situation is so messed that any solution is going to be imperfect. I am concerned about the workers, the suppliers, and the local dealers and their employees.
We're all getting to see why greed is on the list of the seven deadly sins. What Gayle said about the execs not caring about anything but making a profit is a down-to-earth example of that greed. I am hoping that in the Obama administration we will see a return to people in key positions actually knowing something about the job. I still haven't gotten over "heckuva job Brownie."
And, hey y'all, don't forget to vote in the run-off on Dec. 2 unless you want six more years of Saxby in Washington.

Glenda said...

Wesley Clark, posting from Little Rock Arkansas, gave us a little reminder of what else should be considered with this next little bailout: the military. The auto industry in the U.S., whether truly living up to regulations and expectations, do provide the military with vehicles, and other material that, as Clark believes, is contributing "national security". In other words, the military industry that so many citizens depend upon for jobs, insurance, and retirement.

Will the industry be allowed to make it on their own. I doubt it.


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