Bailout Watch 143: Dallas Morning News Ed: "Enough is Enough"

bailout watch 143 dallas morning news ed enough is enough
“Yes, the auto industry is big. And important. But Congress shouldn’t dole out more taxpayer dollars to save firms that missed opportunities to help themselves.” And so begins The Dallas Morning News‘ editorial advising its readers that Motown should be left to its own devices. The News is home to one of automotive journalism’s genuine gems: writer Terry Box. Box has always been loyal to his readers’ best interests; this editorial has his fingerprints all over it. Be that as it may, Motown may wish to point out that Texas is home to Toyota’s massive– and now underutilized– Tundra factory. Of course, it’s also the state where you’ll find GM’s Arlington plant, once-proud maker of the GMC Yukon, GMC Yukon XL, Chevrolet Suburban, Chevrolet Tahoe and Cadillac Escalade. No matter how you slice it, The Lone Star state has at least one dog in this fight. Make the jump for the rest of the ed [thanks to peakwarehouse for the link].

“Rick Wagoner, GM’s audacious chief executive, wants the federal government to invest $3 billion in a merged GM-Chrysler, take over about $3 billion in pension obligations and buy another $4 billion in commercial paper to keep the newly combined automaker flush with cash. And he wants the money to come out of the $700 billion that Congress recently approved to rescue financial institutions.

Gee, Rick, why not ask the Treasury to pick up the lunch tab, too?

The demise of these companies would come at a terrible time for their workers and the economy as a whole. By some estimates, more than 2 million jobs would disappear, and the federal government would inherit massive pension obligations if the automakers landed in bankruptcy court.

But both automakers have known for years that this day of reckoning was coming yet steadfastly resisted the long-term manufacturing and cost-cutting decisions that would have made them leaner and more competitive with foreign automakers. They repeatedly opposed attempts to improve fuel-efficiency standards and placed the lure of short-term profits from oversized gas guzzlers ahead of their long-term health.

To add insult to self-inflicted injury, the industry’s latest request for federal welfare comes barely a month after the government agreed to loan them $25 billion to retool factories for fuel-efficient cars.

A bailout would not solve the automakers’ problems. Standard & Poor’s Ratings Service predicts that the companies would still be on life support. Both are bloated and aren’t making cars that Americans want to buy. Although onerous, bankruptcy would finally force the automakers to address the market and financial realities.

A government commitment to prop up the automakers would squander good taxpayer dollars on a bad deal. Enough is enough.”

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  • Bloodnok Bloodnok on Nov 03, 2008

    given i wouldn't part with my hard-earned to acquire a d3 product, why should i part with my taxes to support those products? it's totally unlikely that $25b + $10b + $?b will ever result in the d3 making anything i'd buy so why am i expected to piss away this money? time for another tax revolt, methinks. i've been trying to find a soapbox app that would allow me to send this message to my congress critters ...

  • No_slushbox No_slushbox on Nov 03, 2008
    SexCpotatoes: I was oversimplifying things a bit - the equity is that of both Cerberus and other large investors from the island of Manhattan – Cerberus is kind of like a very high fee mutual fund for institutional investors. My point was that this GM-Chrysler merger is just another Wall Street bailout. It is not about jobs in the heartland and it will not save jobs in the heartland. In the Chapter 7 the pension obligations will fall on this agency: http://en.wikipedia.org/wiki/Pension_Benefit_Guaranty_Corporation , basically the pension version of FDIC. Like the FDIC it is self-supporting and does not rely on taxpayer money. Chrysler is an LLC, and would likely be sold to GM under that structure, which means that the owner, whether Cerberus or GM, will have no personal liability for any Chrysler obligations unless special circumstances cause the court to pierce the veil ( http://en.wikipedia.org/wiki/Pierce_the_corporate_veil ). I don't particularly think that Cerberus should be held personally liable, unless they did something like "Siphoning of [s]corporate[/s] LLC funds by the dominant [s]shareholder[/s] member", but if Chrysler is insolvent or becomes insolvent then Cerberus should lose every cent that they and their backers invested.

  • FreedMike I don’t know if I buy into the “they’re coming for our cars” stuff - they’ve been saying that for a long time now - but I wouldn’t argue with one word of this review otherwise.
  • Oberkanone It's not a Jimny! Would be nice if we still had a selection of Suzuki auto in the US. Sidekick was simple and affordable.
  • Dave M. I will say this generation styling has grown on me; previously I thought the Fiat version was far better looking. Miatas have always been pure joy to drive.
  • Kendahl A Tesla feature has been free, periodic, over-the-air, software updates that add new features or improve existing ones. Owners brag that their x-year-old car is better today, because of the updates, than it was brand new. Will Tesla start charging for these updates after a few years? Teslas hold their value very well. I suspect losing free updates will do serious damage to that.
  • BklynPete When I was a kid, the joke about Nissan choosing the name Datsun goes like this:Nissan execs were uncomfortable with the World War 2 connotations of their name in the North American market. Seeing how successful VW was over here, they went to VW's most-recent German ad agency. The Japanese told the Germans they needed a new name. The Germans agreed. They asked the Nissan execs when they wanted a review of potential names. The execs said two weeks. The German ad people said, "dat soon?"I will be crucified.
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