Posts Tagged ‘The Big Three’

Kevin Carson on this cognitive dissonance within conventional wisdom. (more…)

Freedomain Radio host Stefan Molyneux on the misdirected outrage of the working class in this economic crisis leading to ill-informed embrace of the State.


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If I’ve said it once, I’ve said it a million times over the last month: GM isn’t too big to fail, they’re too awful to succeed.

I could rant on forever about how asinine it is to loan $25B to Detroit considering the GM is only worth $2.99B with a cash flow in the red by $5.79B and Ford is only worth about $6.81B with a cash flow a little over $7B. Anyone with half a brain can see that the numbers and laugh their ass off at the request of $25B to three companies who couldn’t sell a bowl of Ramen to a homeless person because they’d charge $10 for it.

The value of GM and Ford have actually double over the last two weeks since I first wrote GM’s request of $25B, so what do they do yesterday? Ask for less, right? After embarrassing themselves with products too expensive to make that no one wants to buy, borrowing $25B in Oct. ’07, and coming back a year later for another $25B, the three blind mice went to DC and rattled the tin cup wearing shoes that just might cost more than my desktop and asked for $34B. But, this time with plans to present before Congress, displaying a somewhat lesser sense of entitlement:

The key points of GM’s 30-page plan are:

— A systematic review that will shrink or dump four vehicle brands — Hummer, Pontiac, Saab, and Saturn. GM will then plow the bulk of its funds into new models and marketing for Chevrolet, Cadillac, GMC trucks, and Buick. Those brands make up 83% of GM sales.

— Reduce the total number of vehicle nameplates (the name of a particular vehicle, such as Chevy Malibu or Saturn Aura) from 63 to 40.

— Renegotiate GM’s $66 billion of debt to drop it to $30 billion.

— Open the existing labor pact with the United Auto Workers in an effort to rewrite job-security provisions such as the JOBS bank (which guarantees 75% of pay for laid-off workers) and get more workers out of the company so GM can bring in new hires at half the pay. That would cut GM’s labor costs by $4.5 billion a year.

— Get cost parity with Toyota by 2012.

— Show how GM’s product line is changing from being heavily dominant on trucks to having more passenger cars and crossover SUVs.

Chrysler and Ford offered few actual new cuts, claiming they’ve already cut deeply. Chrysler, for example, has cut its head count by 32,000 people since 2007, including 5,000 who left last week. It has cut employee programs ranging from leased-car subsidies, to company 401(k) matches, to tuition reimbursement. Salaried retirees have lost life insurance benefits and workers are paying more for health care.

Ford has made similar cuts, and said it is selling off its five corporate jets. It plans to cut CEO Alan Mulally’s salary to $1 a year if it draws down the government loans.

Interesting little sideshow, but upping the request to $34B while the United Auto Workers (UAW) are granting concessions like health care trusts and wages and execs claiming that bankruptcy isn’t an option, these suits just strengthen the case for nationalizing the auto companies.

Better yet, nationalize them and auction them off.

Or, how about the UAW who thinks that striking before the suits have to step into DC for a $25B loan can be a good idea, but (who I must say) are equipped to handle the workers’ health care in trust, represent millions of workers, retirees, and their families run the auto companies as a new corporate entity. In this case, the workers would split the shares evenly as opposed to how they’re currently shared regressively. These workers would be responsible for making quality products and contracting consultants to help those products sell. If they fail, there’s no big bad suit in the sky to whom they can pass the buck of blame.

I don’t blame the UAW. From what I’ve seen and read, they do a phenomenal job of representing their workers and if anyone’s ever met an auto worker in Detroit, you know the pride that these men and women take in their jobs. The New York Times’ grossly distorted report of the workers making $70/hr. has been debunked over and over, but since The Gray Lady is the “paper of record,” the sheep scream, “Baaaaaa.”

In this rare moment, I will tip my cap to Keith Olbermann:

Mr. Olbermann is exactly right.

Nationalizing Detroit would be another disastrous case of government failure like Fannie Mae and Freddie Mac. The fact is that the State is worse than corporations at prosperous production because where corporations act irresponsibly knowing they’ll get a bailout from the Nanny-State, the State knows they can just print money for their corporation — reaping more illegitimate authority over people — while the rest of us pay the grossly regressive hidden tax on every dollar the Federal Reserve prints and hands over: inflation.

Not to mention that the State meddling in the private market with a stake in hand-picked corporations’ performance is the definition of fascism.