Bailout Watch 174: Left and Right Agree: No Blank Check For Detroit

Edward Niedermeyer
by Edward Niedermeyer
bailout watch 174 left and right agree no blank check for detroit
It’s something of a long-running joke among local editorial writers that everyone cribs from either the New York Times or the Wall Street Journal‘s editorial boards. The two papers tend to lead opinion on either side of the spectrum, with the mainstream left taking its cues from the Grey Lady and free-market business types following the WSJ. If this theory still holds true in these ideologically confused times, the worm has certainly turned on the bailout. Both papers are running prominent and well-reasoned editorials against the bailout, from Thomas Friedman on the left and Paul Ingrassia on the right. Taken with the recent bad news from DC, this editorial one-two punch may just mark the high-water point for pro-bailout momentum. Though Thomas Friedman has generally been pro-market compared to many center-left commentators, his progressive credentials are well established. Or at least were before the Iraq War ( Friedman Unit, anyone?). Anyway, in his latest column the author of the Lexus and The Olive Tree makes no bones about his lack of sympathy for Detroit’s self-made hell. Friedman recalls listening to ChryCo CEO Bob Nardelli angling for retooling loans a few months back, arguing that the handout was not a bailout. Friedman’s reaction? “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation? If we give you another $25 billion, will you also do accounting?” And though it would have been nice if Friedman had made his views a little clearer at the time, he now has nothing but scathing criticism for Detroit’s congressional enablers. “The blame for this travesty,” reckons Friedman, “not only belongs to the auto executives, but must be shared equally with the entire Michigan delegation in the House and Senate, virtually all of whom, year after year, voted however the Detroit automakers and unions instructed them to vote.” So where does Friedman go for the next step in this mess? Directly to cross-town rivals, the Wall Street Journal, and former Dow Jones exec Paul Ingrassia.Ironically, the free-market advocate Ingrassia believes that some form of government intervention is probably unavoidable for political reasons. If that can’t be stopped, he believes in a tough-love approach to any assistance. “In return for any direct government aid, the board and the management should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp GM with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others, and downsizing the company. After all that, the company can float new shares, with taxpayers getting some of the benefits. The same basic rules should apply to Ford and Chrysler.”This worked for airline restructuring, argues Ingrassia, and it’s the only well to prevent what he calls “pouring taxpayer billions into the same old dysfunctional morass.” If political pressure creates an irresistable force for some kind of bailout, Congress had best heed the words of these two opinion leaders. There’s simply too much at stake to not. [thanks to MgoBLUE for the links and the link between the links]
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  • Think Think on Nov 12, 2008

    America is Sick innovation has been replaced with stagnation. knowledge has been replaced by willful ignorance. Optimism has been replaced by pessimism. Can do attitude has been replaced with every excuse in the book. Foreign car companies have Unions Foreign car companies have factories in North America. The quality is better the mileage is better the design is better. During WW2 we turned Cadillac factories into tank factories in months. American car companies make the fuel efficient cars now in Europe there are models in Europe ford makes that get 40mpg The excuse Car companies give that "we cant possibly make fuel efficient cars here it will take Years is Utter BS". Perhaps having board members on oil companies and Car companies has something to do with it. You cant give bail out money to companies with 1000s of vps presidents board members who have managed there companies into the ground money to do it again; if they want tax dollars it should come with strings you must produce vehicles to x fuel efficiency standards all trucks run on diesel or turbo bio diesel HYbrid trucks. People who think less regulation is the key to innovation How did that work for you? America already produced an electric car pulled it out of service destroyed the cars and the blue prints for them. Not a big secret battery companies that have invented technology for lighter more powerful batteries have been bought out by car companies to prevent the innovation of more fuel efficient or zero emission cars. The Morgate industry and wall street innovated new ways to sell and package the same morgate 25 times so by the end it wasn't really worth anything because it required the other 24 packages it originally came out of to all increase in value to give each subsequent made up package have some kind of value but what the morgate was worth was just the 1200 bucks joe blow paid each month on his morgate and the subsequent 23 made up morgate mutual funds or bond like packages could have been worth 100 times that its phony money, buying and selling the same debt over and over again. The cost was calculated to be somewhere far less then 300 billion to just give every home owner money to pay there morgates which would have stoped the foreclosure crisis and bailed the companies out at the same time; but we have spent 700 billion to bail out the companies that screwed up and instead of pumping that capital into the financial markets to bring up business they used that capital to monopolize and buy up other banks its complete insanity. If you think free market is the answer with no regs then let GM die only the strong survive and someone will come and take there place. If you want to blame the unions because they wanted health care and it costs too much meanwhile other car companies that are foreign do the same but kick our butts who is really to blame. Anyone who's 401 k has disappeared can tell you hmm maybe it would have been a good idea to regulate some of those financial instruments it turns out if you let someone do something that will hurt a company long term but you make a quick buck up front people take the quick buck. Design a better car no excuses. You do not get to retain control and keep your job managing a company if you can not keep it running hit the bricks.

  • Psarhjinian Psarhjinian on Nov 13, 2008

    That's a nice chart. Pity that extremists on both ends tend to see everyone who doesn't agree with them as an extremist of the opposite persuasion.

  • Analoggrotto By the time any of Hyundai's Japanese competitors were this size and age, they produced iconic vehicles which are now highly desirable and going for good money used. But Hyundai/Kia have nothing to this point that anyone will care about in the future. Those 20k over MSRP Tellurides? Worn out junk sitting at the used car lot, worn beyond their actual age. Hyundai/Kia has not had anything comparable to the significance of CVCC, 240Z, Supra, Celica, AE86, RX-(7), 2000GT, Skyline, GT-R, WRX, Evo, Preludio, CRX, Si, Land Cruiser, NSX etc. All of this in those years where Detroiters and Teutonic prejudiced elitists were openly bashing the Japanese with racist derogatory language. Tiger Woods running off the road in a Genesis didn't open up a moment, and the Genesis Sedan featuring in Inception didn't matter any more than the Lincoln MKS showing up for a moment in Dark Knight. Hyundai/Kia are too busy attempting to re-invent others' history for themselves. But hey, they have to start somewhere and the N74 is very cool looking. Hyundai/Kia's biggest fans are auto Journalists who for almost 2 decades have been hyping them up to deafening volumes contributing further distrust in any media.
  • Bd2 Other way around.Giorgetto Giugiaro penned the Pony Coupe during the early 1970s and later used its wedge shape as the basis for the M1 and then the DMC-12.The 3G Supra was just one of many Japanese coupes to adopt the wedge shape (actually was one of the later ones).The Mitsubishi Starion, Nissan 300ZX, etc.
  • Tassos I also want one of the idiots who support the ban to explain to me how it will work.Suppose sometime (2035 or later) you cannot buy a new ICE vehicle in the UK.Q1: Will this lead to a ICE fleet resembling that of CUBA, with 100 year old '56 Chevys eventually? (in that case, just calculate the horrible extra pollution due to keeping 100 year old cars on the road)Q2: Will people be able to buy PARTS for their old cars FOREVER?Q3: Will people be allowed to jump across the Channel and buy a nice ICE in France, Germany (who makes the best cars anyway), or any place else that still sells them, and then use it in the UK?
  • Tassos Bans are ridiculous and undemocratic and smell of Middle Ages and the Inquisition. Even 2035 is hardly any better than 2030.The ALMIGHTY CONSUMER should decide, not... CARB, preferably WITHOUT the Government messing with the playing field.And if the usual clueless idiots read this and offer the tired "But Government subsidizes the oil industry too", will they EVER learn that those MINISCULE (compared to the TRILLIONS of $ size of this industry) subsidies were designed to help the SMALL Oil producers defend themselves against the "Big Oil" multinationals. Ask ANY major Oil co CEO and he will gladly tell you that you can take those tiny subsidies and shove them.
  • Dusterdude The suppliers can ask for concessions, but I wouldn’t hold my breath . With the UAW they are ultimately bound to negotiate with them. However, with suppliers , they could always find another supplier ( which in some cases would be difficult, but not impossible)