And there you have it: Senate republicans have scuppered the Detroit bailout. Automotive News [AN, sub] reports that democratic Senator Harry Reid has thrown in the towel at the the eleventh hour (literally). “”We have not been able to get this over the finish line,” Senate Majority Leader Harry Reid said after 10 p.m., following daylong negotiations to broker a deal among lawmakers, automakers, auto workers and other interest groups.” AN clearly identifies the United Auto Workers as the gordian knot that could not be unpicked. “But few could have predicted the final stumbling block: A dispute over when UAW workers would consent to have their wages reduced to match those paid to nonunion workers in U.S. import-brand factories. ‘We are three words away’ from an agreement, said Sen. Bob Corker, R-Tenn. He said workers wouldn’t accept a 2009 deadline for the parity demand.” And why would they? They’ll get less of a “haircut,” and more power, in bankruptcy court. Meanwhile, GM released a statement on the bill’s failure…
“We are so screwed.” Just kidding. (Not.) “We are deeply disappointed that agreement could not be reached tonight in the Senate despite the best bipartisan efforts,” GM said in its official uh-oh. “We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis.” Chrysler mega-dittoed. So, what now?
There is hope amongst bailout boosters that The White House will relent and tap into the Troubled Asset Relief Program (TARP) program. Others believe that the Fed can act independently.
Meanwhile, Senator Reid moved to distance himself from the debacle. “Reid said he dreads what will happen on Wall Street on Friday. ‘It’s not going to be a pleasant sight,’ he said. He also said the failure of negotiations will mean a ‘a very, very bad Christmas’ for many Americans.”
[NB: The text of the original blog was amended several times to keep pace with events.]
96 Comments on “Bailout Watch 283: UAW Balks; $14b Bailout Bill D.O.A....”
Back to TopLeave a Reply
You must be logged in to post a comment.
You can also login using Facebook Connect.
![Test Drive: 2011 Hyundai Sonata Y20 [Korean-Spec]](http://images.thetruthaboutcars.com/2009/10/YF_NF_thumb.jpg)
I hope this doesn’t turn out to be one of those, “be careful what you wish for…” moments. But I still think this is the right thing to do.
A dispute over when UAW workers would consent to have their wages reduced to match those paid to nonunion workers…He said workers wouldn’t accept a 2009 deadline for the parity demand.
Is this what you call shooting yourself in the foot? It would appear that they have nobody to blame but themselves.
So, what now?
Ni Hao! Just kidding…maybe?
In all seriousness, I still feel that Detroit is going to get their money, from TARP, perhaps, is what I’m hearing. I still feel as though we’re getting a ‘good show’ and tax payers are doubtless going to be subsidizing these knuckleheads.
Based on the early market reactions I think that this is absolutely a “be careful what you wish for” moment.
I don’t think anyone following, or even involved in, this situation has an accurate concept of exactly how large this financial crater will get.
It appears we will soon find out.
Happy Holidays!
I still don’t get it.
In what bizzaro world do we live where the notion that “American workers MUST cut their wages” is a unifying principle for a political party, over which they are willing to risk the next Great Depression?
The fact that people who make $15/hr have been convinced to aim their class jealousies at people making $30/hr, instead of the Alan Fishmans and Bernard Madoffs of the world….
.
http://en.wikipedia.org/wiki/Alan_Fishman
.
http://news.yahoo.com/s/nm/20081212/bs_nm/us_madoff_arrest_9
.
…must be considered one of the great propaganda coups of all time.
I agree…no one should be “forced” by Big Bro to have their wages cut. BUT, when you are a dog on all fours begging for a teat, sometimes the teat holder asks for ridiculous things.
It all comes down to: How much do you want the milk?
But in these most-uncertain times, with global greenhouse gases causing polar caps to recede on Mars, this is probably all for the best.
A soap opera with the 3 blow-hard Jet Setters coming to town (Oh, BOY!!), a repeat in which they play the “humble” card and drive the actual junk they produce…and all the revolting questioning on C-SPAN….and the Congress who stuffs a bill with, among all things, pay raises for Federal Judges…
…I am so HAPPY this “Bill” was rightfully flushed down the toilet where it belongs.
GM, Ford, and Chrysler…best of luck, Buds! This Bud’s for YOU!!!
Have I told you…lately…that I love you?
Have I told you…there’s no one else above you?
You fill my heart with gladness, …take away all my sadness.
…Ease my troubles and my blown head-gaskets…that’s what you do.
direct foreign investment…
how much is the RMB worth these days??
;)
Well, now that the writing’s no longer on the wall, but the wall has been knocked down …
Which of GM’s plants and assets are worthy of salvage, and how?
Should it be broken into independent satellites? Does one resuscitate the broken giant? Or create a cluster of model/function focused operations, acting independently, serving different functions.
In other words, cross-platform synergies be damned. Let each brand be the best at what we need, not what GM wants to sell.
2009+ will be glorious* years for automotion. It will be reborn, and we will no longer have to tap our fingers while forced to watch the slow-motion self destruction of GM.
Hmmm. I’m suddenly optimistic again.
*not often one gets a chance to use the word glorious!
“GM and Chrysler will fall apart today, as credit agencies (default) and the stock market (delisting for GM) exact the necessary penalties.”
Why delist GM at this time? I’ve apparently missed a news story or two. Some background, please.
The fact that people who make $15/hr have been convinced to aim their class jealousies at people making $30/hr, instead of the Alan Fishmans and Bernard Madoffs of the world.
Very good question. The lower class has been suckered into rooting for the disenfranchisement of the middle class, while the upper class just keeps going up and up.
Don’t believe me? Have a look at the income levels of the 50th and 98th percentile now, and about forty years ago.
Truth: Everyone is losing sales and money, but only the U.S. companies don’t have a cash cushion. One big reason: Foreign-based companies don’t have U.S.-size legacy costs,
Another reason: When US companies build up a cash cushion, Wall Street sees it as “their” money and immediately demands that the company buy back stock or pay larger dividends.
I remember that Chrysler (pre-Daimler) had built up a multi-billion dollar “rainy day fund” with the explicit thought that they would need a “cash cushion” for the next downturn in the market. Some corporate raider (Kirk Kirkorian?) saw that cash as a cow to be milked and threatened to use it as collateral for a leveraged buyout.
As I recall, there was a significant proxy fight and Chrysler ended up paying some form of “greenmail” to make the raider go away.
I think the most appalling thing about this is that a better deal (one that was more palatable to both sides) could be reached because Congress has to go on break…
Just out of curiosity, has anyone else’s job already gone on holiday?
Mmmm. No mention of pay cuts for management? What about replacing the lousy management that got GM into this mess?
Just say’n…
GM has won numerous awards for its current crop of cars, including two straight North American Car of the Year awards and top accolades from Motor Trend, Consumer Reports, and, most important, Car and Driver.
What a puff piece. A single GM platform has won reliability awards: the W-Body, which as well as being reliable as a rock, is a retrograde fleet-queen in terms of performance. Everything else is solidly average, or slightly worse than.
COTY is a marketing award and means nothing as the criteria to win it applies only to cars that are “new”, not necessarily “good”. So is C&D’s 10Best, which has everything to do with what C&D likes and/or receives ad revenue for and nothing do with actual performance. Note that there’s several “10Best” cars that are earning third or fourth place in C&D comparos despite winning that shill of an award.
Ford, maybe. But Ford doesn’t spend nearly the ad dollars that GM does, do they?
Truth: Everyone is losing sales and money, but only the U.S. companies don’t have a cash cushion. One big reason: Foreign-based companies don’t have U.S.-size legacy costs, which include things like retirees’ pensions and health care, because of things such as nationalized health care.
Oh, so bleeding marketshare and failing to develop a strategy and viable business model for the past twenty-five years have nothing to do with it then? Or continuing to fail to better consumer confidence, when even Hyundai (the Pony/Stellar/Excel company) has turned their image around? Or that those foreign companies, because of nationalized health care, also pay a higher level of corporate and personal income tax?
Oh no, it can’t be GM’s management. Of course not. After all, they must be the smartest guys in the room–after all, we’re only paying them more than an order of magnitude more than their equivalents at Toyota.
Truth: Really? Really? Of course they do. The Detroit Three currently offer, among others, the Ford Focus, the Chevrolet Aveo and Cobalt, and the Dodge Caliber, and for decades before that, consumers were offered everything from the Ford Falcon to the Plymouth Valiant.
So, only three or four cars, all of which are solidly mediocre. Real incentive, there. Detroit has always treated the economy car as something they’d rather not make, designed from scraps to meet a minimum margin; the Japanese, Koreans and Europeans treat them as a weapon in their arsenal, one that they use to hook buyers early.
After your first Aveo, are you really going to go back to Chevy? Because you can bet Honda Fit, Toyota Yaris and Nissan Versa buyers are going back.
My message to Steve Smith and others: stop supporting GM’s management. Stop coddling their bad decisions and giving them excuses for not competing. And most of all, stop writing puff pieces on their behalf as it does nothing for them and makes you look like a paid shill.
It was all a nonsense anyway. GM’s “worst case” and Chrysler’s near “worst case” were based on a 2009 of 11.5 to 12m unit year.
GM’s “worst case” had them $40b underwater at the end of 2009 with their current market share of 12m units, with >$30b (???) of bailout.
Toyota’s further 2009 production forecast downgrade of yesterday would seem to be a 10-10.5m year, blowing an Atlantic iceberg size hole in Titanic GM’s bailed out turnaround “plan”.
My personal opinion is, that a few days of volatility to shake out the gamblers, a realization that the US dollar has weakened (more expensive car imports favoring Ford & Chapter 11 GM), and FINALLY some certainty in this matter might see people considering cars again.
(Obama’s Jan 20 stimulus will be needed as well).
Remember that Ford does have credit available and will not be going Ch. 11 anytime soon. If all of GM & Chrysler’s market share stays “American” and buys Ford we will still have a very strong American automobile manufacturer. Business is business. The weak companies fail and the strong survive. This is not the end of the US Auto Company, just an evolution.
Looks like GM and Chrysler are finally headed to bankruptsy court. Hope they’ve already stopped production of horrible models like the Chrysler Sebring. It’s a shame to waste any space in the automotive market on total crap with so much extra production capacity available to make reasonably good cars.
More attack on the middle class by the government. Why are we trying to commit societal suicide. Does the government hate this country that much?
MattVA :
December 12th, 2008 at 8:08 am
I think the most appalling thing about this is that a better deal (one that was more palatable to both sides) could be reached because Congress has to go on break…
Just out of curiosity, has anyone else’s job already gone on holiday?
The only ones I can think of are auto workers working in plants that produce cars nobody wants. Think Mitsubishi’s Normal, IL, plant, amongst others.
You know what chaps my ass? The UAW is unwilling to take wage cuts to keep their jobs when the economy is swirling the bowl yet they still want a handout for Ford, GM, Chrysler, and themselves. The latest pegs most of the UAW workers getting (with benefits) around $70/hour.
I’m a skilled worker without the UAW (or the auto industry) and I’d damn sure take a pay cut if that is what it took to keep my job or stay employed. Hell, a pay cut for the UAW rank and file would probably still end up being more than my salary+benefits. I’ll be frank and say shortly after the bubble burst in 2000 I had to take a 8k a year pay cut to get back into the workforce in a timely manner. I wasn’t going to sit around and mope and pray for uncle sam or anyone else to bail me out. I’m finally slightly above that level now, but I worked for it, not begged for it when the times were tough.
Count me in for giving a standing ovation to the Republicans on capital hill for putting a stop to this nonsense.
200k-min: Well put. Ford should be in pretty good shape if they maintain quality controls.
The Big 3 are the canary in the coal mine.
Just a reflection of the US economy which is going into a downward spiral. Doesn’t really matter if they payoff the UAW.
The context for this fulcrum upon which the bailout bill hinged is this: The UAW was not seen as having enough skin in the game. They simply had not cut in the ways that the D2.8 had with regard to spending.
So how does this change the symbiotic relationship GM has with the UAW? I mean, symbiosis only works if both organisms benefit…UAW is now seen as the reason GM [might] have to declare bankruptcy. Intersting times.
More attack on the middle class by the government. Why are we trying to commit societal suicide. Does the government hate this country that much?
Yes.
Well, it depends. An empowered middle class is one of the very few defenses people have against government going runny. If you look at countries where things have gone truly sour, you’ve a split between rich people, who have the ear of the government, and the poor, who are too busy trying to survive. A middle class makes this kind of plutocracy difficult to pull off.
Not that the UAW doesn’t deserve scorn, but there’s a distinct lack of similar concessions or even questions asked about why management and oversight have been so terribly bad. Seeing government advocate it is really telling: instead of asking “Why shouldn’t everyone be making UAW wages?” it “Gotta keep the serfs in-line!”
The UAW hasn’t been the ones responsible for failing to develop viable business plans, or devise products that people will want to buy, or work to acknowledge and shed the “perception gap”. Pinning it on them is perverse mix of luddite jealousy and class warfare.
Maybe it’s time to start a ‘White House Watch’ because from now until at least January 20th, the White House is the last hope for the Big-3 to get any money this year by releasing some TARP funds.
Over the last few months I have watched the White House Press releases go from ‘ well, the Big-3 have to get more competitive‘ to ‘ we can’t let this industry go down’….once again Americans only seem to react to crisis, never planning…although you got to admit, the Big-3 have been asking for help with health care, pensions and wages for over a year and no one in the White House or on Capitol Hill listened. So here we are today.
Orian wrote:
You know what chaps my ass? The UAW is unwilling to take wage cuts to keep their jobs when the economy is swirling the bowl yet they still want a handout for Ford, GM, Chrysler, and themselves. The latest pegs most of the UAW workers getting (with benefits) around $70/hour.
First of all, you know that $70/hr figure is bogus.
http://www.factcheck.org/askfactcheck/do_auto_workers_really_make_more_than.html
Second, why does it particularly “chap your a$$” that UAW is refusing to give away any more than they already have?
Why are you not focusing your outrage on the Wall Street fat cats who were given, not loaned (as the Detroit 2.8 are asking) and are using that money for executive bonuses, shareholder dividends, and luxury retreats?
http://www.bloggingstocks.com/2008/10/09/aig-takes-122-8-billion-of-taxpayer-money-enjoys-luxury-resorts/
Can someone explain to me why blue-collar greed is evil and rotten and needs to be stamped out, but white-collar greed is just dismissed as “that’s the way things go”?
@Ed S.: how about mutually parasitic? If one party gorges (or slacks off) they both suffer.
I smell a setup: would the UAW capitulate to Republican Senate demands? Uh, no. Said Senators didn’t want a bailout, and set demands they knew wouldn’t be met.
Flashpoint :
December 12th, 2008 at 7:53 am
Lie 6: People aren’t buying domestic-brand vehicles because they are of inferior quality.
Truth: That perception lingers, but it’s no longer the case. They aren’t buying domestic-brand vehicles because people aren’t buying anything. According to major independent research, GM and Ford cars are virtually identical in quality to Japanese cars. GM has won numerous awards for its current crop of cars, including two straight North American Car of the Year awards and top accolades from Motor Trend, Consumer Reports, and, most important, Car and Driver.
Even if you were right (and I still have my serious doubts about it), the important thing here is the PERCEPTION of the public, and perception is sometimes as important as the product (ever wondered why your cereal comes in a colourful package and not in a plain brown nasty box?). For decades, the Big 3 built a reputation for lousy product quality. Now, they (might) have improved their products, and you want everybody to jump and buy them right away? It would be tantamount to a serial rapist that after his conviction spends 3 months working for the local church and then asks you to date your daughter. What would you say?
C: “We don’t think you UAW guys have dedicated to cutting your wages enough, but we don’t really have the time at the moment to talk about it again. We’re going on vacation.”
This entire situation is nothing short of disgraceful. It’s the most ashamed I’ve ever been of our government, media, and popular opinion. First we make everyone hate us, now we’re just giving them a clown show to make fun of.
Obama had better hire Tom Cruise or something, because good old fashioned hard work just isn’t going to cut it.
There will be a bailout. This is interim political maneuvering.
The Republicans want to look like anti-labor hardasses so that their constituents won’t give them the boot. Republican voters do not like the bailout, and the red state Senators need to like as if they are putting up a good fight.
The UAW leadership is looking at the wrath of its membership if it just rolls over and agrees to the deal, when they just signed a contract that goes through 2011. Having a bit of an implosion in the markets will give Gettelfinger something that he can point to, so that he can support the cuts while saving face with his members.
Corker hinted last night that they were close. That was a chess move, too — he is using these hearings to gain clout for himself. As it turns out, he was a lead negotiator for the Republicans and clearly wants a deal, but he has to hold the party line on the union assault.
We’ll see how it goes down, but something will go down. Either the White House will fly in for the rescue or they’ll sort out a new compromise. This ain’t over yet.
Chrysler is toast. GM will (continue to) withhold payments to suppliers in order to stretch their cash into early January when the new Congress is sworn in. GM production will be drastically disrupted due to pissing contests with their supply base, but with dropping sales and the mountains of inventory sitting in parking lots around the country it won’t matter. I’d also look for a potential TARP infustion of cash within the next few weeks.
Eric,
Go back and RE-READ my comment. I stated that figure was salary PLUS benefits.
My comment was this: The latest pegs most of the UAW workers getting (with benefits) around $70/hour.
That’s where I got that figure and that is still higher than what I presently make with my benefits combined with my salary.
I don’t agree with the white collar greed either, however the UAW has fully operated as a hostile parasite on the Detroit 3 and now that their backs are against the wall they refuse to work to save their employer (or host if you will). It’s very poor to go ask for a handout without making concessions yourself. There’s a reason most manufacturing has fled the US for other countries – labor cost.
And for what it is worth I certainly hope a very large number of Wall Street and Detroit 3 executives find themselves with jail terms for the damage they have done.
Luscious-
“Have I told you Lately”
I love that Rod Stewart song. It’s a real tear-jerker. My daughter played it for “her song” at her wedding.
http://www.cnbc.com/id/28193063
US Treas apparently ready now with the cash – and maybe no strings attached!
Hmmm… anybody else see a well orchestrated conspiracy here?
@Pch101 and @RF:
Serious question, can Bush direct the Fed to spend money? I thought it was independent?
Then second question, can Bush personally direct taxpayer money be spent? Does the TARP bill give him that power, and/or does a President have the right to spend treasury money in ANY manner without Congressional or Senate approval? Could he just go and BUY Cuba for example? How could he just “send” money to private corporations with an enabling Bill?
Might be my Australian misunderstanding.
Finally, Chapter 11. Give the UAW full ownership.
You know, capitalism is pretty simple.
Make products at quality and price levels that are competitive and profitable. American manufacturers do some great design and, sometimes, the quality is acceptable. But the cost they pay for labor – the overall COST, not just the wage – precludes them from competing profitably. So they need to reduce their costs of labor.
Pretty straight forward.
I haven’t read any reports of workers in foreign-owned American assembly plants complaining about slave labor or poor working conditions. The manufacturers (Toyota, Subaru, M-B…) know that poor working conditions and overworked (non-management) employees increase benefit cost so they want safe, happy and healthy workers.
I doubt there is an American who wants any of these companies to fail (save Cerberus board waiting to liquidate Chrysler for cash). That said, Americans always vote with their wallet. Few of us, I expect, will pay more for similar quality…unless the brand we’re buying is of massively gland-growing cachet.
And which of the Big 2.8 brands has ANY cachet after being dragged through this mud?
Can someone explain to me why blue-collar greed is evil and rotten and needs to be stamped out, but white-collar greed is just dismissed as “that’s the way things go”?
Remember that the public was also against the Wall Street bailout. Quite frankly, the American people have been the one group that is consistent through this whole financial/economic mess.
I hate how this is somehow being turned into a class warfare argument. It has nothing to do with that. This is about propping up failed business. It doesn’t matter if it’s an insurance company, major bank or automobile manufacturer….corportate welfare is corporate welfare. Wall Street was in DC crying that they must have a bailout, well, they got theirs and the DOW proceeded to keep falling off a cliff. I expect nothing different if the 2.8 get their bailout ~ their mkt share will keep sliding into oblivion and will require countless more bailouts.
The irony is that the UAW is responsible for killing this bill, when they’re the ones with the most to lose. I’m with Orian, if my employer was facing bankruptcy I’d shure as shit take a pay cut over unemployment.
Serious question, can Bush direct the Fed to spend money?
It’s not the Federal Reserve, which is semi-autonomous, but the Treasury’s TARP funds, which Congress gave to the Treasury to use as it sees fit.
The Federal Reserve and Treasury are separate. “Feds” is a slang term for the federal government; the Fed is the Federal Reserve, which technically isn’t part of the government. The Treasury is a department of the government, and is governed by a member of the President’s cabinet.
As I type this, Gettelfinger is giving a press conference. He’s playing the role of defender of his people, which is what he gets paid for. This bailout is SO going to happen…
Eric_Stepans: In what bizzaro world do we live where the notion that “American workers MUST cut their wages” is a unifying principle for a political party, over which they are willing to risk the next Great Depression?
One in which elected officials do what they are supposed to do – listen to their constituents. In case you’ve forgotten, the Republican base was actually AGAINST the Wall Street bailout, which is why it failed to pass the first time. They are against this one, too (and still steamed that the Wall Street bailout passed despite their opposition).
And please note that the failure of Chrysler and/or GM will not bring on another Great Depression. The first one wasn’t caused by the failure of numerous automobile companies, and the failure of one or more will not bring on another one.
The Dems know that a $14bil loan will get GM – about – to inauguration day +1. Then Obama could swoop in with a massive package of socialist relief and it would be more highly applauded than the hostages being released the day RWR came into office.
But, while the Dems, would then guarantee themselves union bloc votes for generations, Americans would have to pay the burden of supporting a non-competitive industrial base.
Better to take the pain for a short-bit, then carry it through the next generation.
Is the UAW *really* at the heart of the Detroit 2.8 problems.
For the time being, lets accept the $70 labor cost figure vs. the transplant average of $50.
According to the Harbor Report, the Detroit 2.8 and the Japanese transplant all average about 30 person-hours per vehicle assembled.
So, Detroit labor costs = $2100/vehicle
Transplant labor costs = $1500/vehicle
Are you telling me that a difference of $600 per vehicle (on an average transaction price of $25k, or about 2.5%) is what is making or breaking the Detroit 2.8?
I call B.S.!
Orian :
December 12th, 2008 at 9:49 am
Eric,
Go back and RE-READ my comment. I stated that figure was salary PLUS benefits.
It’s still false. The $70 an hour is not just salary+bennies. It’s salary+bennies+retiree costs for other people. No UAW worker get “stuff” worth $70 an hour.
The irony is that the UAW is responsible for killing this bill, when they’re the ones with the most to lose. I’m with Orian, if my employer was facing bankruptcy I’d shure as shit take a pay cut over unemployment.
This is what doesn’t match up for me. I’m thinking, (a) something very fishy is up, or (b) the UAW leadership is so out of touch with reality and the rank-and-file that they’re sacrificing the entire organization in a possibly-futile, very desperate attempt to hang onto their bargaining power.
Weren’t the Big 3 and the UAW telling Congress that the new contract reduced wage expense to very close to the transplant level? If that was so, why would the UAW have a problem exactly matching that level? Me thinks there are a shitload of perks in that contract they don’t want to give up..
PeteMoran:
Buying Cuba would be a much better investment than putting the big-3 on life support. That’s some prime tropical land.
As an Australian you have more understanding than misunderstanding. Compared to America your country is more politically close to Britain, which participated in the failed British Leyland experiment. And your country is more geographically close to India and China, where the remnants of British Leyland ended after years of government support killed the companies.
Using the TARP funds or any Treasury money to give welfare to the big-3 is blatantly illegal, which is par for the course for our current administration.
rochskier:
The S&P 500 touched 8400 from around 8800 when the bailout failed, before any presidential intervention was announced. It has been down below 7500. The overall market barely cared. Outside of the auto stocks there really wasn’t much reaction.
“A dispute over when UAW workers would consent to have their wages reduced to match those paid to nonunion workers in U.S. import-brand factories.”
Wouldn’t this end up in a vicious circle? One reason the transplant factories pay as well as they do is that they need to come fairly close to UAW wages in order to avoid being organized. If the UAW agrees to match the non-union factory pay scales then the non-union factories are likely to start ratcheting pay down, which the UAW would be obliged to follow. Lather, rinse, repeat.
Also, where is the provision prohibiting state and local governments from taxpayer giveaways to lure automotive manufacturing plants?
Perhaps the biggest labor cost savings the transplants have is that they have very few retirees because they haven’t been in the US for very long.
Using the TARP funds or any Treasury money to give welfare is blatantly illegal
The Congress gave Treasury a lot of autonomy under TARP.
You may not like it and you don’t have to. But to claim that it is illegal is overreaching.
Outside of the auto stocks there really wasn’t much reaction.
You are wrong about this, too. The markets have been assuming that there would be a bailout.
When word came out last night US time that the Senate had reached an impasse, Asian markets dived. When European markets opened a few hours later, those markets also tanked.
The US market overnight index futures also fell, in anticipation of a big hit to the US markets. Those lifted with the announcement this morning that Treasury would throw TARP money at it. If the Treasury announcement had not been made, the market would have likely fallen more than it did, which is why they made a point of making the announcement before the US open at 9:30 am ET.
Regardless of what you may want, the markets definitely want this. And why wouldn’t they? Everybody wants free money, and investors don’t want companies to collapse, regardless of whether they deserve it.
Don’t confuse what you want with what others want. The apocalypse talk may be going a bit far, but common market consensus is that their collapse would have negative repercussions.
For once, I am glad to see the UAW holding ground on this one. Legacy costs, not current wages, are the difference in labor between the D3 and transplants. Gettelfinger should not give on this, especially when there is pork in this bill for federal judge salary increases. Get the management of the D3 turned around (booted), salaries/bonuses brought in line first at the top, then ask the little guys.
@200k-min and Orian:
If you are so concerned about your employer’s viability, why don’t you volunteer for a wage cut?
Why don’t you work for $5.00/hr or $3.00/hr or $1.00/hr?
After all, if they cut their labor costs, they’ll be more profitable and more likely to stay in business. Is that the point of our economy, to make sure that corporations can minimize their labor costs?
@geeber – Normally, I would agree that one or more of the Detroit 2.8 going bankrupt wouldn’t destroy the economy. But we don’t live in normal times. I believe that the ‘chain reaction’ if (most likely) GM topples will send us into a Great Depression-like event (which probably will happen anyway, but why encourage it?)
@200k-min – Re: the class warfare argument
Given the hugely disproportionate government, media and public scrutiny that has been given to a proposed $25 billion loan compared to a $700 billion giveaway, I don’t see any plausible explanation EXCEPT ‘class warfare’.
If we are worried about ‘labor costs’, why are we not going after where the ‘costs’ really are?
http://www.lcurve.org/images/LCurveFlier2003.pdf
But, while the Dems, would then guarantee themselves union bloc votes for generations,
This is a common misconception. The Democrats don’t need to court the unions any more than the Republicans have to court the Christian Right–certainly at the Presidential level. Neither group of voters will ever vote for the other party, so Democrats and Republicans can safely chase the centre. At worst, they risk core voter apathy. In a country with a pitiful voter turnout, that’s not a big risk.
One of the Bush administration’s failings is that he didn’t seem to clue into this and spent a lot of time pandering to the far right when he really didn’t need to.
It’s a little different for congresscritters and senators, especially in non-swing states, but the rule more or less holds. If the US had one or two more political parties, it might be a different story.