Bailout Watch 157: Uh-Oh
Senate Majority Leader Harry Reid has cast doubt on the lame duck Congress’ ability to ram through another multi-gajillion dollar bailout economic stimulus package– upon which GM’s hopes currently reside. Automotive News [AN, sub] reports that the Nevada Democrat reckons that the dems have no chance of passing “a very robust, bold stimulus package” before the new team hits the field. At least not without those pesky Republicans lining-up behind it. AN correctly concludes that this is a septic tank full of Not Good for Motown– especially as GM has just publicly declared that they’ll be out of cash by December (a fact curiously absent from AN’s coverage). “The Detroit 3 and the UAW last week asked congressional leaders to include in the legislation $25 billion in loans for retired autoworker health benefit trusts, called VEBAs. They also want the bill to prod the Treasury Department and the Federal Reserve into releasing other federal money as ‘bridge’ loans to get the automakers through the current economic crisis.” Reid’s run the numbers and… “Until the first of the year, I still have a one-vote majority in the United States Senate,” Reid told CNN. “I’m senior enough and experienced enough to know that you can’t do something with nothing. I need votes.” And here’s the kicker: “The leader specifically mentioned only increased unemployment compensation benefits as a priority in a stimulus bill, not aid to automakers.”
People don't want to buy their cars NOW, much less after a chapter 11, and even bailout money won't change that fact. A bailout will only slightly delay the inevitable. With the way the economy is going people realise that they don't NEED a brand new car every 2-3 years, that was only a luxury. People are now holding on to what they've got, and maybe now they realise that if modern cars can last up to 200,000 miles what's the point of trading one in for a newer model in 2-3 years time. Maybe the brand new one will have some I-pod connectivity gizmo they don't really need, big deal. I think what pisses people off the most with talks of the bailout is the amount of money that unskilled UAW members are getting paid to slap cars together. Bring up the topic of bailouts and that's one of the first responses you hear. Unskilled union members are getting paid more than some college graduates, for an automaking job that requires no experience or education at all. Not only that but the unions want healthcare coverage, pension plans, and they want job banks where they can sit around and still be paid if their not working. Given the way the economy and job market is in the world people are having a REALLY hard time feeling sorry for the automakers, and their overpaid workers. If the automakers would have had some balls in the past they would have told the unions to go f*ck off, and they wouldn't be in the current mess their in with healthcare, pension, and legacy issues. The union members want to make white collar middle class wages for a blue collar job. You could find people to do their jobs for half the money.
If the jobs the UAW people do are so easy and pay so well, why don't all those super college grads take the jobs? They would rather do something else for less money? They're too lazy? They can't stand the drudgery? Must be some reason there somewhere. The last time I went through an assembly plant, that plant had just gone through a buyout of longer term employees and had hired lots of new people. The tour guide, a retiree from the plant, told me that a substantial percentage of the new hires quit after a week or three. The 2.8 did very well in the truck and SUV markets, and those products were built under the same UAW contracts in force in the car plants. Maybe the problems was somewhere other than the assembly workers. As for the bailout question, this country is in for a massive adjustment of attitude and expectations. It won't happen overnight, so a bailout or two might be necessary to prove to all concerned that it isn't the answer. We've been on a credit bender for years that has juiced the markets across the board: cars, houses, restaurants, etc. So I don't think we'll be buying cars at the 16+ million or so rate we have been, and we already had too much capacity. There's going to be lots of suffering in this downturn, so those who take pleasure in the suffering of others will be on a long-term high.
Matt51, If the repubs balk (and honestly a little later even if they don't), and the Big3 goes bankrupt, large numbers of voters currently beholden to organized labor, may find their future employment prospects tied to more pro competitive policies in the future. Which may well be advantageous to the GOP.
stuki, Even if that is the case, the Republican brand has still been damaged beyond belief by W., and it'll take a miracle for them to defeat Obama in 2012. Will they get it? We shall see...