Bailout Watch 150: What's Bad News for GM is Good News for GM
The Detroit Free Press finally gets it. “GM’s report Friday will be so dismal that the federal government will be forced to decide whether the U.S. auto industry will survive, people familiar with the situation told the Free Press.” Don’t be fooled by the “people familiar” routine. This is the Freep’s editorial team acknowledging GM’s acknowledgement that they’re fucked. Without federal aid, they’re done. The fact that Mssrs. Wagoner, (GM) Nardelli (Chrysler), Mulally (Ford) and Gettlefinger (UAW) are meeting with House Speaker Nancy Pelosi today, the day before GM announces its Q3 bloodbath, is hardly a coincidence. Nor is the unprecedented timing. For the first time in recent history, both GM AND Ford will reveal their respective meltdowns on the same day. The basic idea is simple enough: if the news is bad enough, SOMETHING MUST BE DONE! Throw in Barack Obama’s victory and you have a perfect storm of federal teat sucking.
“President-elect Obama understands you can’t have an economy that doesn’t make things,” Sen. Debbie Stabenow, D-Mich. pronounced in her usual, profoundly misleading way.) And as we predicted, the cheerleading Freep joins the parade of pundits quoting the highly suspect Center for Automotive Research report that claims “if the Detroit automakers cut U.S. operations by 50%, 2.5 million jobs could be lost in 2009. Of those, 250,000 would come from automakers, 800,000 would come from suppliers, and 1.4 million other jobs from a ripple effect.” It’s all coming together nicely, provided you aren’t the taxpayer footing the bill.
All of this talk about the unions hamstringing GM begs the issue. If foreign manufacturers have such a pricing advantage over domestic manufacturers then switching to off-shore divisions would be called for. GM, for example, has had positions in Isuzu, Subaru, Suzuki (I believe), Daewoo, Holden, Fiat, Opel, Vauxhall and Saab. They build vehicles in South America and China. They assemble V-6 engines and other parts in China as well. Geez, they even cross-manufacture with Toyota, in the U.S.! In other words, they have quite an extensive foreign portfolio of their own to draw on. So I think all of this talk about unions is really a diversion to mask the real problem- bad products resulting from bad product decisions. As a matter of fact, I think that the real problem lies in an amazing statistic I had read a while back. Honda has 5 times the number of engineers that GM has! No wonder the execs at GM would rather coast than develop new products. They may not have any other choice.
They want to go broke to shed the unions and benefits packages.
I wonder how long the rest of the world will continue to loan us cash to do idiotic things like prop up disasters like GM? Fact is, all this bail-out of the Ivy League Alumni gang is utterly dependent on Asians and Arabs lending poor Uncle Sam some coin. What if the United States Treasury has its bond auction next week and no one shows up? Lady Liberty checks start bouncing like tots on a trampoline, that's what. Only option at that point is to go down to the Federal Reserve and by law (!) command the Federal Reserve to buy these increasingly junk-like bonds. Of course the Fed doesn't have any cash, so then they have to print some...ahhh, Zimbabwanomics. We're fuc*ed.
I will be satisfied if when they hand out the bailouts, every big three exec except for Jim Press, Bob Lutz, and Alan Mulally gets fired.