Aye, there’s the rub. Who says they can do a credible job of this? Does anyone believe the process won’t be filled with cronyism and political favoritism? Why not just go whole hog and have the Federal government buy and run GM, afterall $6 billion will take the whole thing. It could be part of the Department of Transportation.

During the middle peak years of the Vietnam War, when GM was selling a million Impalas per year, that operation was costing us ~$29B annually. In 2008 dollars, that’s about $191B annually today. We got to the moon on a total expenditure of ~$26B in 1965 dollars, or about $171B if all things were equal today. We tabbed a $1 Trillion economy for the first time early in the first Nixon administration, and now have an over $14 Trillion dollar economy, about 3X the size of our 1970 economy in 2008 dollars. We have less than twice as many people in the country than we had when crossing that milestone. So we’re much richer today, current economic uncertainties notwithstanding, although we were the world’s largest creditor nation then. Even $75 Billion for Detroit is minor money if it is combined with the operating and managerial corrections to reinvigorate and preserve the huge manufacturing foundation of domestic automaking. So let’s stop carping about the money. Money isn’t the issue.

What happened to the successful communitarian elements of American society that were staple to our culture in the middle 50 years of the 20th Century? Well, that’s a book-and-a-half all by itself. But really, if we as a country can’t accept the problems of Ohio, Michigan, and half a dozen other states as our own, we will be lost in a continuing wave of disposable human capital and corrosive political disenchantment. The purists making the economic arguments are always blind to the politics of human endeavor. Like the hard-liners who rail against federal aid to cities to stabilize neighborhoods ruined by foreclosure, the Calvinists here would rather see at least fifteen years of direct misery for perhaps 40 million people than pitch in to mitigate and repair. The economics of letting the housing bust cut deep and wide are theoretically sound, but the politics and sociology of that vortex are disastrous. No one gains from viable neighborhoods undermined by graffiti, criminal squatters and blight. Well, simillarly, no American gains from the willful destruction of the domestic auto industry. $25, 50, 75 Billion are cheap compared to the consequences of allowing the industry to crater.

So sure, of course let’s give Detroit a hand. Just not absent strings. With the possible exception of Mullaly, the CEOs have to go. But that’s not the government’s job, it’s the BoD’s. So the money coming in accompanies the exit of every sitting Director in all three companies. We don’t want the cozy boards nor Congress hiring new management. The Feds have to recruit and appoint new boards, who in turn will have to hire new CEOs immediately, who will in turn bring in new teams along with choosing whom among the incumbent executives stay or go. They’ll have to get creative, to expand the talent pool and entice in able leaders. Have at it.

The new CEOs, and the teams they bring with them, will have to commit to measurable goals, with target objectives beginning the first quarter. Strategic objectives on 1 – 3 year timetables; tactical quarterly objectives that move the companies forward and toward strategic goals. Each company will need a leader who will elevate performers and stifle or eject poseurs, pretty much in real time.

Meanwhile, Americans must find their communitarian tradition, at least to the extent of abandoning unreasoned resentment of domestic car companies in favor of giving preference to competitive Detroit products. Even in a recession market, the aggregate automotive purchases of the American people can reflate the Detroit 3 through purchasing. Today, there are enough competitive products so that most buyers have to make no practical compromise to find quality-comparable D3 machinery. Example: Genesis or CTS? With a car as good as the Cadillac, it’s nearly unbelievable that anyone could question where their self interest lies. For that matter, what Williams describes he likes about the Genesis can be had in a Buick. Do you want to avoid a loan, loan guarantees, a Federal handout? The best way to stave that off is to buy one of the genuinely good D3 automobiles next time you’re in the market.

The past few weeks, I’ve toured the mass market import auto sector, partly out of periodic interest and partly as a result of travel and rental cars. It would be so much easier to come to a different conclusion, but nothing about the Toyota Camry boosts my confidence in the objectivity of the American automotive consumer, when the Taurus, Fusion, Malibu and Aura exist. Even the Impala. The Toyota can’t match any of them on handling and confident dynamic behavior. Depending on the point of perspective, the Camry’s aesthetic contribution to the American road ranges from bland to baffling to bizarre. The interior is not worth a competitor emulating. The drivetrain has no specific trait to recommend it other than being generically acceptable. And that’s just one model that they happen to sell about half-a-million of. The Corolla’s appeal is mystifying at a product level adjacent to even the Cobalt and certainly juxtaposed to Focus. The Tundra pickup shudders and wallows where an F150 or Silverado are damped, stiff, and sure-footed. Every Toyota I’ve seen over six months old, with silver-painted plastics in the cabin, has scratched or flaking silver paint. If a Detroit automaker fielded a penalty box interior like the Prius’, it would be reviled here. And I use Toyota merely as the most prominent example. The Honda Accord, while clearly the Camry’s superior, suffers from increasingly generic traits, generation over generation bloat, and once-bland styling that’s heading in the direction of untethered. The powertrain redeems it. Perhaps the Civic alone warrants claim to setting a standard in its category. Certainly there are desirable cars made elsewhere that are preferable to comparable products from the Detroit 3, but the volume sellers aren’t making the case that Detroit can’t build exceptional cars. They’re suggesting that no one can.

If you are an American not willing to buy a car from GM, Ford or Chrysler *and* you’re unwilling to have a relative few of your tax dollars peeled off to assist the recovery and preservation of American automaking, that’s your prerogative, and certainly you’re within your rights to oppose assistance. But you’d be wrong to assume that avoiding Detroit’s cars and denying them capital assistance means you won’t be paying for their demise.

Phil

So, if they do something stupid, we respond by doing something even more stupid? Yeah! That will show them.

And what happens if they respond with something even dumber?

… Billy Ford, whatever his faults, did begin the drive for better quality that is now showing up in independent consumer surveys (i.e., Consumer Reports and Mr. Karesh’s site). Alan Mullaly hasn’t been at Ford long enough to have had an impact on these results.

Second, he was smart enough to recognize the ROOT of Ford’s problems – its culture of corporate infighting and unwillingness to think outside the Detroit box – and bring in an outsider who would shock Ford into changing. Compare this to the actions of GM’s Rick Wagoner, who hired Bob Lutz to reform the vehicle development processes and improve styling, but hasn’t let him really reform the corporate culture. …

Let us not forget that Bill Ford named Jacques Nasser President and CEO of the Ford Motor Company. Nasser arguably did much more to damage Ford’s market position and corporate culture than Alex Trotman did with his Ford 2000 re-org. Recruiting Alan Mulally was a masterstroke, but IMO it doesn’t compensate fully for Bill Ford’s role in saddling the company with Nasser and sitting idly by while Nasser drove Ford into the ditch.

So, its okay if the USA federal goverment bails out Mega mortgage companies and multinational car companies? Not to mention the oil company incentives.

But by god don’t give me socialized medicine so Joe Average. They might be a healthy workforce..

Sounds like a two tier Free Enterprise to me.

The U.S. has provided less help and marketplace intervention to its home-based companies than European countries (especially France and Italy) have provided to theirs.

Steven Lang: If their government subsidizes health care and other related costs then we should make them pay a surcharge on their products that can go directly to the health care of our citizens. There’s no sense in the Big 3 even trying to compete when they in essence have a cost disadvantage of nearly $2000 per vehicle.

Detroit is getting its butt kicked by the transplant operations, all of which must offer health insurance coverage to employees on their own.

The Japanese government isn’t paying for the health insurance coverage of Honda workers in Ohio.

The advantage that the transplant operations of the Japanese and Koreans enjoy is more realistic health care coverage for employees, and limited health care coverage for retirees. The domestics signed contracts with the UAW decades ago that provided virtually unlimited health care coverage for retirees, at a time when there wasn’t much that could be done for the problems the Social Security crowd routinely face. Now we CAN correct those problems but at a huge cost. And the UAW knows that nationalized care isn’t going be nearly as generous as what members enjoy under the current plan. (The U.S. already has nationalized care for senior citizens – Medicare.)

Not once has the UAW agreed to allow retirees to be shifted from the company plans to Medicare, even though this would bring about huge cost savings to the automakers.

Why?

Because the UAW knows that its members will receive less generous coverage under Medicare than they do under their current plans. UAW leadership isn’t stupid.

Steven Lang: No, what enabled Nasser to get into power in the first place was the Ford’s family feud with Alex Trotman who actually did a very good job of managing the company.

I would have to disagree here…Trotman’s Ford 2000 plan disrupted the company. The automobiles (not the trucks) developed during his watch were not great success – at least, not in North America.

Ford’s problems have been structural, starting with the inordinate amount of power enjoyed by Finance – led by the late Ed Lundy – within the company. Lundy was the only one of the original Whiz Kids to make a career at the Ford Motor Company, and in many ways, he was as powerful as any member of the Ford family or any Ford CEO.

The Finance mentality had a death grip on the company. (This thinking is one reason that Ford has been too slow to update its passenger cars – the company wasn’t making money on them, so the case for their updates was difficult to make, so the cars were left to rot, and then the updates that were approved were done on the cheap, which meant that Ford kept losing money on the cars, which only increased the reluctance to spend money on them…)

The company was also wracked by constant infighting and turf wars among department heads.

Billy Ford, whatever his faults, did begin the drive for better quality that is now showing up in independent consumer surveys (i.e., Consumer Reports and Mr. Karesh’s site). Alan Mullaly hasn’t been at Ford long enough to have had an impact on these results.

Second, he was smart enough to recognize the ROOT of Ford’s problems – its culture of corporate infighting and unwillingness to think outside the Detroit box – and bring in an outsider who would shock Ford into changing. Compare this to the actions of GM’s Rick Wagoner, who hired Bob Lutz to reform the vehicle development processes and improve styling, but hasn’t let him really reform the corporate culture.

Mr. Ford’s greatest strength is his willingness to step aside and let someone else do what he has not been able to do, and support him all the way. Having his “name on the building” certainly hasn’t hurt him in this effort. He deserves credit for having the humility to recognize his limitations and step aside for someone who can get the job done. At the same time, only someone with the last name of “Ford” could recruit an Alan Mullaly and then signal that this guy better be supported or else.

This alone may have saved the Ford Motor Company.

Compare this to GM, where no one wants to make any real structural changes, and the Board (the entity that is supposed to force change, and would do so at Ford if there were no Ford family around) appears to be living up to Ross Perot’s description of them as “Pet Rocks” (which may be an insult to Pet Rocks everywhere).

Dr. Lemming: Thus, the prospect of an Orwellian permanent war against the world could be seen by the Not So Big 2.8 as manna from heaven. After all, landing massive government contracts may very well be a lot easier than restoring the trust of the American car buying public in Detroit iron.

It’s not 1941 anymore. Military hardware is so specialized and high tech that Detroit cannot simply shift production from F-150s or Corvettes to military equipment.

Note that the current Iraq war has hardly fattened the coffers of Ford, GM and Chrysler.

If anything, war HURTS the Detroit auto makers by increasing volatility of oil prices, which makes their prime profit center – light trucks – a lot less attractive to most consumers.

The picking should be particularly good if a McCain administration carries on the “cash and carry” mentality of the Bush years, where everything in sight has been privatized and fiscal controls on contractors have been remarkably negligent — particularly for big donors to the Republican party. You’d have to go all the way back to the McKinley administration, which historians have dubbed “the era of good stealing,” to find such systemic and flagrant corruption as can be found in the Iraq occupation.

I don’t say all of this to incite an argument about the Bush administration but to merely suggest that Detroit has much to gain from the election of either candidate. Obama may be more inclined to offer some type of bailout package, but McCain’s aggressive foreign policy could be equally lucrative. The only question: Guns or butter?

I’m sorry… but this is the danger of a neo-conservative agenda.

China is interested in money first and foremost. They have already learned the historical lesson which is that if you want to take over a country, you either…

A) Put your people there and give them preference in all forms of trade. They are already doing this throughout the world.

B) Buy out their currency and/or assets so that they in essence work for you. Again, this is already happening.

China’s not interested in losing trillions of US dollars that it already holds because without it, they can’t satisfy their own social security obligations. The ‘one child’ policy effectively made their entire pension and health care system unsustainable without a strong influx of foreign currencies to pay for it. They also have a lot of challenges with managing their own country, not to mention the relationships with their neighbors who are far more bellicose than the US.

Venezuela and Cuba are glorified banana republics with tinpot dictators who are far more fearful of the US than we are of them. A war with either of these countries would be an absolute suicide for both these countries. Somehow I don’t see either country being able to mobilize a military that is worth a spit compared to the American armed forces.

Russia wants us to simply stay the hell away from their neighboring countries. The fact that we have our soldiers literally at their borders training their enemies is not a very smart decision by the powers that be. The fact that we’ve also been trying to push our missiles eastward, well into Central Europe, for years now makes our foreign policy a very incomprehensible one. We ought to have our military well outside of the neighboring countries unless we truly do want a war with Russia, which would be pointless and all too brief.

Personally, I see an India/Pakistan or Israel/Iran conflict far more likely in the times to come. Pakistan is rapidly becoming an unmanageable country with nuclear weapons while Iran’s theocracy is literally provoking Israel into a conflict. If the power vacuum becomes too extreme in Pakistan, India may need to act to remove the nuclear weapons which would be far from easy and probably cost the lives of millions. Likewise, the theocrats in Iran seem to believe in their religious dogma enough to make Israel consider a pre-emptive strike, as they already have done with Syria.

These are definitely dangerous times. But the greatest dangers between countries lie well beyond our own doors.

Michigan, Indiana, and Ohio are not irrelevant in an election year…The fed-level political terrorists are trying to buy votes in ’swing’ states with money they steal from all of us using threats of jails and death…Other than votes, the political parasites in Moscow-on-the-potomac do not care if 2.801 lives, or dies.

RF quoted Animal Farm that “all animals are equal, but some animals are more equal than others.” This applies perfectly to socialized medicine. Case in point: Argentina. In Argentina, anyone can go to the hospital/doctor anytime they want, and their care is paid for by the state. And go the masses do, in droves. For every little ache, pain, and headache. Head hurts? Go to the ER. Splinter in your finger? Go to the ER. Toothache? Go to the ER. Etc, etc. Everybody goes for anything as it’s all free. However, if an American ever set foot in a hospital there, they would never go back. I’m talking 4+ people to a room, cockroaches running around, flies everywhere, etc. That is where “all animals are equal.”

“But some are more equal than others” comes in to play at the private clinics. The major insurance companies have clinics set up around the country, and if you do not have that company’s insurance, you do not enter the clinic. Period. If you want good care, in the type of hospital environment we Americans expect, you better have private insurance or it’s not going to happen.

Germany is similar. My family has private insurance here, so when we go to the hospital or doctor, we get special treatment (”but some are more equal than others”). As I understand it, if you aren’t the best doctor, the hospital and our insurance say that you aren’t seeing us. Meanwhile, the masses stay 3+ to a room with no curtains between patients. Better bring your own towel, toiletries and phone card, ’cause none of that is supplied. If you have private insurance, you get better rooms, the best doctors, etc. When they find out you have private insurance, they fall all over themselves trying to help you and get a piece of the pie. (Martin Schwoerer, correct me if I am wrong, but that has been our experience).

I realize, if you are still even reading, this was somewhat off topic, but I can guarantee you that if a universal health care system comes about in the US, the “some are more equal than others” adage will be here in full force. This may be a more palatable option to Americans than a 2.8 palm-greasing, but don’t be so misguided as to think it will be the long term cure.

I have no problem with making other countries hold up their end of a bargain. I do have a problem with what is essentially a socialized medicine consumption tax. You want to punish American consumers with even higher prices as we’re fighting inflation just because another country punishes their own constituents with an unneeded tax? That makes no sense whatsoever.

Once again, another step in the slow descent into socialism that America seems bound and determined to continue. People need to realize that free market capitalism is STILL a good thing, even in a downturn.

Onshore and offshore oil exploration, drilling, and refinery equipment. Pipelines, too, so that we don’t have to truck as much.

Ships for oil exploration.

Defense equipment for preparation for war with China, North Korea, Russia, and possibly Venesuela and Cuba.

Trucking is very costly and inefficient, so we’ll need more barges and trains.

For military defense, we’re gonna need more helicopters, jets, battleships, carriers, tanks, and the ordinance to load them all up, plus equipment and ordinance for the missle shield.

And the most important thing: Some sort of umbrella defense against an EMP strike. Each of the aforementioned countries is already capable of detonating a nuclear device ten miles above nearly any coastal US city.

Nuclear fallout would probably be minimal, but a strong device is not necessary to have a devastating impact to our electronics and infrastructure. Even a weak high altitude strike would set that city (and much of the country) back 50 to 100 years in time.

Congress is asleep at the wheel, reneging on their #1 responsibility: Ensure the welfare of the homeland, and protect it from enemies both foreign and domestic.

Forget about the execs of GM think of the line workers, healthcare, pensions etc. We pay 10 times what a GI makes for the same service from Blackwater – so don’t start with the inefficiancies of government. So I agree that Seems like paying a few hundred billion in health care and retirement benefits to real live average American citizens might not be so bad, as far as government hand-outs / bail-outs / whatever-outs are concerned…..

The federal government is more bankrupt than Detroit. The only difference is that it owns the electronic printing press and has a big but very inadequate cash flow.

Any Detroit bailout will be with funds conjured up out of thin air; just as Iraq war funding and the other bailouts were.

The result of this nonsense is that we are following in the steps of Zimbabwe and will end up at the same place.

The economy is already straining because of the drain of wealth to pay for high priced imported oil. Moreover the Iraq war which is well into its sixth year of sucking wealth down a rat hole seems unstoppable. Add in the ever increasing interest on the mountain of national debt, much of which is paid to foreigners, and there is little hope of economic recovery. And mortgage interest, credit card debt interest along with car payments taken on in recent years don’t help.

Without wealth to buy the products of Detroit, even if they are competitive, it is not likely that any bailouts will work. Demand for cars will shrink due to unemployment, falling home values and the rising costs of paying for energy and food.

It is all delaying tactics to put off the day of reckoning until someone else has to make the tough decisions that politicians and business leaders of today refuse to make.

Too bad the little people of America will suffer the most from this incompetence. Maybe they deserve to suffer for not kicking out these leaders, buying gas guzzling SUV’s and believing that business as usual can continue in a Post Peak Oil world.

I think, to be fair, a guy named Jacques Nasser kind of pushed FoMoCo off the cliff. He went on a spending spree, buying Think, Kwik-Fit, even a chain of junkyards, yet ironically spent next to nothing on cars, devoting every penny to the truck side of the business.

Bill Ford may have done no favors for his family company, but he did wake up and hire Alan Mulally.”

No, what enabled Nasser to get into power in the first place was the Ford’s family feud with Alex Trotman who actually did a very good job of managing the company.

If it weren’t for the Ford family, Billy Ford and his crew of associates would have never been within seven rankings of the CEO position. Nasser would have likely been passed over as well.

Ford’s crucial mistake was succumbing to “GM envy” in the 1990s by going on a premium brand buying spree. If Ford hadn’t bought Jaguar, Land Rover and Volvo it could have navigated the post-9/11 era much more easily than GM — which probably would have snapped up at least one of those brands. Imagine how that would have worked out.

7) Any product with too many Chinese parts should be required to have a skull and bones on the window sticker. Either that or the face of a 14 year old gymnast.

Or a list extinct species…

And The Fed won’t let a badly run bank fail. Why should they let a badly run car company fail?

Can hardly wait for China to buy-out Bank of America? Or maybe they already have……

The Fed and the Treasury have been throwing money at investment banks for some reason, and we’ll never see that money back as those banks go over.

The automakers say, hey, those companies get free money, what about us?

Where does it stop? How about the video store on the corner? The pizza shop? Let’s just write everyone 5 trillion dollar checks.

It will still do no good, and will only send the gov deeper into debt and dump it on our kids.

Because no matter how much money you throw at decades of bad management, it will only keep them afloat for another few months at best.

And why should poor businesses be rewarded, while good ones are ignored? Who exactly does this benefit?

It is the job of the management of companies to do their own investment in new technologies, just like their competition. It is not their job to survive simply as welfare queens. I have sad thoughts of the propped-up British auto industry of the 1970s.

In this thought, there is no longer any incentive for excellence from the US automakers. Quality is unnecessary, since they no longer have to make money from consumers or competition. They just have to offer Potemkin products and await the free giveaways courtesy of the working stiffs of America.

I think, to be fair, a guy named Jacques Nasser kind of pushed FoMoCo off the cliff. He went on a spending spree, buying Think, Kwik-Fit, even a chain of junkyards, yet ironically spent next to nothing on cars, devoting every penny to the truck side of the business.

Bill Ford may have done no favors for his family company, but he did wake up and hire Alan Mulally.