By on May 19, 2009

One hundred billion dollars. Small change? Not even for Bill Gates. For $100 billion you could give 400,000 students an Ivy League education. If we’re talking about a quality state education, we’re looking at closer to two million graduates. That’s absolutely massive. Amazing . . . and think of our long-term GDP growth? Now consider our current spending on Detroit Inc.

For all that money. All that purchasing power that should never be “printed” in the first place. We’re supporting a failed business model and prolonging our recession for years to come. The Best and Brightest realize that certain companies no longer make competitive products. But instead of encouraging them to pursue their legal remedies, we are forced to throw money at them. Why? Well unfortunately squealing pigs attract fellow swine. The swindlers always file Chapter 11 in the end anyhow. But this time out they receive the spending restraints and full support of our modern day politicians.

Does this need to happen? Hell no! This isn’t about a worthy cause. Unless you count bankruptcy lawyer fees, financing second-rate cars to second-rate buyers, paying the unions to make four wheeled money pits, and awarding golden parachutes to those already with the gold. Everything money wise is being done with the sole exception of building great product to benefit those who simply don’t have the intelligence to do it. Some of you may believe that a new and better company will come out of it all. I don’t.

I know when a company’s culture offers little more than stinking fish. I’ve seen it for years. The dealer auctions (you’re not invited) will be holding hundreds of thousands of these products, and the loss amounts will be staggering. The auctions alone will need to buy and build lots from several miles away just to simply hold it all. You’ll end up paying for that too. You won’t get anything in the end but the bill. Who should you thank?

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30 Comments on “Hammer Time: A Whorific Ending...”


  • avatar
    SpeedRacerrrrr

    Well, at least the girl is nice looking.

  • avatar
    apt34

    In Florida, that $100b could provide 6,666,666.66 engineering degrees for a resident going to UCF (state university).

    It’s hard to imagine the size of such an amount… until you plug it into a calculator. It’s mind boggling.

  • avatar
    findude

    Cynics here inside the Beltway would be quick to identify all this bailout/bankruptcy charade for what it is: more evidence that the three branches of government are as subject to the ALIPA as they always have been.

    For those of you who don’t know: ALIPA=Accountants and Lawyers Income Protection Act.

  • avatar
    ajla

    Well yeah, but…

    40 miles without using a single drop of gas!

  • avatar

    Who should you thank?

    While I think Bush punted to Obama, who is radically changing some things, ultimately I blame Richard Shelby and the Southern Senate Republicans. They had an opportunity to craft some legislation with oversight and benchmarks and instead, driven by Shelby and others’ desire to cripple the UAW to favor the transplants, killed the legislation and punted to Bush, who had the statutory authority.

  • avatar
    HEATHROI

    at least with the girl theres a happy finish.

  • avatar
    blue adidas

    A hundred billion? Where did that number come from? Jeesus! Whose money do they think they’re playing with? And what’s the payoff? If it’s to sustain the domestic auto industry that’s been inherently busted for thirty years, then screw ’em! If automakers (and the overcompensated hillbilly parasitic assholes that comprise the UAW) can’t find a way to be flexible and maneuver according to competition and consumer demand, then maybe they just need to go away. There’s always the Japanese, Germans, Indians, or Chinese who really WANT to build… ahem, CARS for christsake. And someone will find a way to deliver what we need without a financial injection of ten or a hundred billion freakin dollars. I want domestic automakers to survive. But nostalgia over a mythical moment in American automotive history is not worth billions.

  • avatar
    quasimondo

    So what would the remaining $600B provide?

  • avatar
    educatordan

    Somebody ought to get a lap dance out of this….

    How many distressed mortgages could have been saved? I like the idea someone had in a previous posting of just giving every employee of these companies a million dollar check and let them go out of business.

  • avatar
    mattstairs

    The political, ironic twists and turns of this are so fascinating.

    What Corker, Shelby, et al wanted last fall has now come to pass. Managed bankruptcies for GM and Chrysler, with the Feds providing the DIP financing. Competitive labor agreements as part of the deal.

    Last fall, all we heard from Big 3 defenders was (in Granholmesque breathy tones): “Oh no, we can’t have that, BK will destroy these companies, no one will buy a car from a BK company, they can restructure out of court, etc.”

    Obama comes in, appoints the PTFOA and sees for himself what a first class clusterfrick GM and Chrysler are in, and concludes that BK is the best (only) solution.

    Unfortunately, the 6 month delay in filings comes at the cost of billions of “bridge loans” that will never be paid back. Billions of dollars taxpayers could have saved had the BK option been taken when it should have last fall.

    Now, some of the hardliners like Corker have gone soft, seeing that plants/jobs in their home states are at risk.

    Meanwhile, the “evil banks on Wall Street” that took the TARP money want to pay it back. I don’t support the banks reckless behavior and subsequent bailouts either, but at least some of them are paying the taxpayers back.

    Other bizarroworld fun:

    Ralph Nader is defending GM shareholders.

    The Detroit 3 say CAFE standards are attainable.

    FIAT has all kinds of assets that are “better than money” (WTF?) that it wants to use to buy up Opel.

    What next? You can’t make this stuff up.

  • avatar
    mtypex

    “What next? You can’t make this stuff up.”

    It’s a thrill-a-day. What will AutoExtremist have for us in the morning?

  • avatar

    *I think that at least part of the Bailout is about Staggering the Economic Crises in time, so they don’t all happen at once. ->No perfect storms.

    So for me, you can thank the people who wrote the Community Reinvestment Act, the people who repealed all the banking laws like 50:1 leverage instead of 2:1 and CDSs which had been illegal, you blame the greedy short-term-thinking mortgage/cdo/cds writers and the guys re-securitizing the debt and fraudulently rewriting junk ratings up to AAA.

    ie:The guys who created the sub-prime/cds/mortgage/banking crisis.

    Because (though I suspend my idealistic thinking when it comes to politicians and bankers) if you threw a Chrysler+GM crisis at a ~reasonably healthy economy, then there would be -at least some bit- more of a chance those 2 Co.s would be allowed to go exactly where the free market drove them.

    Every s$%theel remotely connected to Detroit continuing to get more than market rate should thank their lucky stars for the repeal of the regs and a new admin making its bones; -otherwise: Straight[er] to the crapper!

  • avatar
    barely.working

    Here’s the whole reason behind this mess

    Really what we’re seeing here is a decade of binge purchases and excess being flushed out of the system. The huge appriciation that occured this decade in price of several key items, namely housing and vehicles, was artifical. It wasn’t about creating assets, it was about making money off of boring someone else’s money and obfusicating who really owed what to whom.

    A lot of what is happening to car manufacturers is of their own devices. Even the imports have a share in the blame on this one. Who really thought that selling 16 million vehicles a year was sustainable? Next time you’re out, drive around and look at the age of the vehicles you’re sharing the road with. If you live in a typical neighbourhood, I bet between 2/3rds to 3/4ths of the vehicles out there are less than 10 years old and probably 1/4th to 1/3 are less than 5 years.

    The auto industry is going to be in a funk for a long while, but it will (hopefully) become stronger because of this.

  • avatar
    RedStapler

    With 100B we could have bought 4 Million nicely optioned Prii, 4.7M Insights or 3.3M Hybrid Escapes. How many jobs would we have crated with 10 plants running flat out to produce these cars?

    GM could very well be the single biggest destruction of value in the economic history of the US. When I take to silly work rules I’ve seen in dealing with their parts distribution system and realize that every GM facility in the US is just a inefficient it boggles the mind.

  • avatar
    TonyJZX

    i can’t blame the imports for riding the wave

    if there’s money to be made on 16 million sales, why not make it while you can?

    you can’t even blame GM for that – they haven’t made any money since 2004?

    there’s an old saying… if it rains champagne you go outside with a glass

    smart people go out with a bucket

    GM went out with a fork

  • avatar
    Dynamic88

    Damn. Hammer Time death watch one. It’s become political instead of being about selling cars.

    BTW, Richard Posner has a new book out. I haven’t had time to read it yet, but from the reviews he seems to believe we are in a depression, not recession, and that the economy will not self-correct out of this depression. Posner is both a judge and an economist, and he’s been around a lot longer than the Obama admin.

  • avatar
    Detroit-X

    There will be a story on the evening news from time to time. The promo before the commercial says: “Amazing, stunning, HUGE amounts of money spent on this idiotic government project! Next!”

    Then after the break, they say that the project costs like $1.1 billion or whatever, and I think:’Phhht! GM is burning that every month. This isn’t news.’

    We need a new law in this land: No more companies allowed to be “too big to fail.”

  • avatar
    Steven Lang

    Dynamic88, most of what I write under Hammer Time that appears to be ‘political’ originates from what I actually see at the auctions and the retail market.

    If you want to know my views well…. sorry. I don’t hold strong political views due to the fact that I don’t see politicians solving any of our problems. I believe balanced budgets should be mandatory (neither party has exercised this) and that most social issues should be resolved in a court of law rather than Congress (ditto).

    In fact, I would love it if we had a political party that would only vote on fiscal issues. Period. The social sphere enables a lot of the nastier sorts to control the levels of government in ways that I personally despise.

    The fact that we now give politicians de facto blank checks and plenty of face time with lobbyists, speaks volumes for our current society’s lack of restraint and responsibility. That needs to change. But it obviously goes far beyond the scope of ‘Hammer Time’.

  • avatar
    GS650G

    Nice undercarriage on that, and the car as well.

    Cars cost too much. Period. While other goods and services got cheaper and better, cars got better and more expensive. Driven by the background costs, cars became an ever increasing expense.

    The used car market thrived too. Longevity and reliability made used cars a better deal. With the implosion will come great deals on cars that no one can afford.

  • avatar
    Airhen

    It’s straight out of Atlas Shrugged.

  • avatar
    mel23

    “The Road Not Taken.”

    We can bitch and complain all we want about the $B spent bailing different factions, but we can’t know what would have happened, at what cost, if we’d have allowed the actions of the crooks, the incompetents, and bubble-crazy general public to bring us down suddenly. I frequently read that allowing Bear Stearns to collapse was a huge mistake. Notice that no other large financial entity has been allowed to go down in a similar way. My guess is that we’d have no operating domestic auto industry at this point if we’d have allowed GM and Chrysler to fail suddenly; the suppliers would be dark. And this might well happen anyway.

    I don’t see any way in hell that Chrysler will start up again. GM well might resume operation on one lung, and Ford’s return to health takes a lot of faith IMO.

  • avatar
    NickR

    Stop posting pictures of my wife.

  • avatar
    ZoomZoom

    Detroit-X :

    We need a new law in this land: No more companies allowed to be “too big to fail.”

    We do. It’s called antitrust legislation. But it hasn’t worked. Probably because it was designed by government.

    Nice looking girl.

  • avatar
    mel23

    It’s called antitrust legislation. But it hasn’t worked. Probably because it was designed by government.

    Designed by government subject to campaign contributions (=bribes) at every stage of specifying the legislation and enforcing or not enforcing the laws. We keep voting the same crooks into office and keep getting the same results and keep making the same complaints. We are the problem.

  • avatar
    geeber

    Steven Lang: We’re supporting a failed business model and prolonging our recession for years to come.

    I thought that only Neanderthal right-wingers said things like that…

  • avatar

    I still don’t get this. Why are people arguing for a company infrastructure capable of producing 10 times more cars than they sell? This is a failure of management, pure and simple. They lacked long range planning, and the workers (and dealers) pay the price for their lack of foresight. This isn’t new.

    Oh, if only they had entered bankruptcy earlier, with a bigger bankroll to allow the reemergence sooner, and with fewer dealers and brands. They might have a future in 2018 if they had.

  • avatar
    ZoomZoom

    mel23 :

    We keep voting the same crooks into office and keep getting the same results and keep making the same complaints. We are the problem.

    Indeed we are. We are dumbing ourselves down with every new election.

  • avatar
    Robert Schwartz

    The interesting question is will all of this wasted money buy anything. I believe that the last Chrysler and Dodge vehicles have rolled off the line, and we will never see another of those marques. There is some chance that Jeep may be resurrected in the distant future.

    I am fairly sure that GM will not survive C11, and I doubt that any of their vehicles will survive in the US, all though SAIC will probably continue to build Buicks, and may export them to the US.

    Jetzt ist Alles verloren.

  • avatar
    Dynamic88

    Dynamic88, most of what I write under Hammer Time that appears to be ‘political’ originates from what I actually see at the auctions and the retail market.

    With respect Mr. Lang – For all that money. All that purchasing power that should never be “printed” in the first place. We’re supporting a failed business model and prolonging our recession for years to come. – is not something you see at auctions. It’s your personal opinion.

    I’m not going to argue opinions with you, I’m just pointing out that this “episode” of HT didn’t really have much to do with used car auctions.

    HT is is far and away my favorite feature of TTAC. You are of course entitled to your opinion that the bailout is a waste of money, and your further opinion that the recession is being prolonged by the bailout – but it’s not as if we don’t already get that several times a day here on TTAC. HT is like a breath of fresh air – focusing on the reality of the used car market.

  • avatar
    Juniper

    I agree with Dynamic88
    This should be in editorials so we can ignore it.
    Please bring back the real Hammer Time. (without fake handguns)
    But I do appreciate the picture. of the car too.

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