Bailout Watch 161: Off the Rails and Off the Hook. Or Not.

by Robert Farago

November 11th, 2008 8:58 AM

bailout watch 161 off the rails and off the hook or not

Detroit News columnist Daniel Howes is just coming around to the idea that Detroit’s automakers are about to collapse, bringing about the reckoning that any open-minded journalist could (and did) see twenty years ago. And Danny’s pissed. At us. “It’s easy, sitting behind a keyboard, to type, ‘no one’s too big to fail’ or ‘let ’em file Chapter 11′ or ‘serves ’em right.’ It’s especially easy if you and yours don’t have to endure directly the jobs lost, tax revenue gone, pensions halved, health care benefits denied, dealerships closed, supplier lines shut down.” Is this how Detroit thinks of its current predicament? Fortress Detroit? That they’re somehow blameless victims in all this, and America actively WANTS them to fail? Apparently so. “But autoworkers, salaried employees, retirees, even executives, are people, too. The nasty Schadenfreude heaped on this dismal situation says more about those doing the heaping than those who go to work each day, do their jobs and play by the rules.” Danny goes for an “if… then” close…

“If Detroit as we know it is to be over — and I think it may be, even with federal help — its automakers and the UAW will need to change even more radically than they already have: fewer brands, plants and dealers, more flexible work rules, smarter marketing, better products.” Excellent point– you know, if the scribe had made it ten years ago. Or three. Or last year. Still… “Otherwise, the feds only would be delaying the inevitable — with taxpayer money.” Thanks for finally giving those of us living outside the center of the world a look in.

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4 of 16 comments

Bozoer Rebbe on Nov 11, 2008
Forget anecdotes. I’d like to see some data on that. Robert, Sure it's anecdotal, but as has been said, the plural of anecdote is data. derm81 isn't the only one who's noticed that it's not just the domestic car companies who get dissed in comment threads. You can find remarks hostile to Detroit the city, Detroiters, Michigan and Michiganders on many automotive blogs including TTAC and you don't have to be a Big 3 cheerleader to notice them. As moju pointed out, Michiganders intimately know the flaws of our local industry. We know about UAW featherbedding (remember when schools used to teach terms about union excesses? Not likely in today's AFT/NEA monopoly schools) and we know about clueless managers and executives that care more about their power and fiefdoms than they do about good product. That being said, we also don't want to see our region die and become an industrial Appalachia (with apologies to my fellow Americans in Appalachia). Obviously the anti-Detroit (as opposed to anti Big 3) attitudes are not in the majority, otherwise, as you point out, any bailout would be a political no-starter, but they are prevalent enough that I'm not the only Detroiter who gets the impression that there are a lot of folks out there who disdain my hometown, my state, and my neighbors. Most people are not happy with the Wall Street bailout, but you don't see the anger at Wall Street like you see hot anger at Detroit. People don't seem to be saying that they'll never buy and sell stock again, like they do about Fords or Chevys. Obviously there are differences. Wall Street executives are pretty invisible. I'm sure more Americans know who Rick Wagoner or Bob Lutz are than John Mack (Morgan Stanley ceo)or Lloyd Blankfein (Goldman Sachs ceo). Also, while people are concerned about their investments, 401Ks and pensions, they are not as physically tangible as a car. You may think about your investments, but you drive your car. If there's a problem with your car, you feel the pain immediately whereas an investment decline doesn't hit home until you sell the asset at a loss. Politics and ideologies aside, there is palpable fear here in Michigan about the collapse of the auto industry. Sure, that's self interest at play, but I think other Americans ignore the effect that implosion will have on them. During the financial crisis, we've seen mention of the difference between the financial markets and the "real economy". If Detroit completely craters, there's a strong possibility that it can bring down much of the real economy with it. The folks who disdain Detroit and think it will have no impact on their lives if GM/Ford/Chrysler disappear are whistling that tune as they pass a marble orchard.

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Kevin on Nov 11, 2008
The US government is also bankrupt. You do not know what "bankrupt" means. The U.S. gov't has no difficulty acquiring the cash to meet its obligations. When it sells bonds they are oversubscribed by a factor of 4. Plus it has the unusual ability to simply change its obligations to fit the cash on hand. Plus it has the unusual ability, in a pinch, to create as much money as needed out of thin air. Must be nice.

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Robert Farago on Nov 11, 2008

Bozoer Rebbe : Sorry, but I don't see it. The only "hate" I see towards Detroit emanates from two sources: 1. Radical environmentalists who vilify The Big 2.8 for building SUVs when they should have been building something more socially responsible. (Given that millions of Americans BOUGHT these SUVs, I hardly think the consumers themselves "blame" Detroit for providing them.) 2. Customers who got BFed by D2.8 dealers. In this case, my "gut" (if that's the way we're rolling here) tells me they blame the manufacturer concerned, not Detroit as a whole. And probably not the workers whose jobs, jobs, jobs the bailout seeks to protect. So how many of these anti-Detroiters exist? No clue. But I'd be willing to bet dollars to donuts that it's not a large percentage. Hey! If we're going to spend $50b bailing your asses out-- OK, our collective asses out-- how about spending a couple of hundred grand on an independent poll? Or maybe a mil on a PROPER INDEPENDENT STUDY of the effects of a bailout on the U.S. economy. In any case, it's NOT ALL ABOUT YOU. If there IS an anti-bailout backlash, it's about Washington. Not Detroit.

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Usta Bee on Nov 11, 2008

Actually, alot of people do hate the unions and partly blame them for the automakers downfall, so "probably not the workers" in #2 above isn't quite true. But it's not just a hatred for automakers' unions, it's union people in general. Usually when I hear people badmouthing unions it boils down to: 1. Overpaid for the work they do. 2. Overpaid for the job skills or education they have. 3. They have too much benefits, healthcare, and pension compared to other non-union workers. 4. They're lazy, and having things like job banks where you get paid even though you're not working is too much like unionized welfare. I'd add some more, but I think all this typing is giving me carpal tunnel sydrome. I think I'm going to have to go down to the union office and apply for disability now. ;)

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