President Obama announced Monday that struggling automotive giants General Motors and Chrysler will be given a "limited" period of time to "restructure in a way that would justify an investment of additional taxpayer dollars."at the same time that I know that the government is spending $970 billion to buy up worthless mortgages in the hope that one day, maybe thirty years from now, they might be worth something (and then we can auction them off for pennies on the dollar!).
The US autoworker is about to take a giant kick in the metaphorical balls. What makes me cry is that, while I just read a whole lot about how bad Joe Finance has it because he might lose his million dollar bonus at AIG, I imagine I am about to read a whole lot about how Joe Autoworker had it coming because he wanted health care after he retired. Fuck. Fuck, fuck, fuck.
I'd also like to note for the record, before we get too far down the fuck road that Obama defended the AIG bonuses because there were in a legal contract, and here he is saying that UAW must again "restructure" its contract in order for the industry to get more bailout money.
Of course, when one looks across the aisle, what do we see? Fuck stick and Lex hero Senator Bob Corker. Here is a guy who looks at a situation where the auto industry is coming to the government begging for money to stay afloat and the government says, sure we'll give you the money, as long as you make some changes to your business (especially if you can figure out a way to fuck your workers, because worker fucking is fun for everyone) and this asshat sees the heavy boot of communism come crashing down on American capital.
Sen. Bob Corker, R-Tennessee and member of the Senate Banking Committee, said this is a "major power grab" by the Obama administration.God bless the people of Tennessee, but do they really look at the situation with the US auto industry, and one imagines the firing of Rick Wagoner, and see a totalitarian government interfering with the fine, fine businessmen at GM? How can they vote for this guy?
"This is a marked departure from the past, truly breathtaking, and should send a chill through all Americans who believe in free enterprise. I worry that in one fell swoop we've lost our moral high ground throughout the global community as it relates to chastising other countries that use strong arm tactics to invade on private property rights," he said in a statement.
Lord the hate feels good, now I know how Vader felt.
But back to the sadness. Is there anyone who reads this blog thinking Obama is doing well? Are we still cutting him slack? Anyone ready to cut the line? I'm getting very, very close and having a harder and harder time believing that it would have been all that much worse under McCain. Especially when I read shit like this.
Goddammit, I so wanted to have something to believe in.
9 comments:
I totally agree with the spirit of your post. And huge amounts of money flowing to the financial sector because we have to take their word for the fact that failing to do so will bring the whole system down... well...
But an endless stream of money to keep GM afloat is a) easier for laymen to understand, and b) laymen in general don't think it's a good idea.
The sad fact is that thirty years from now, mortgages (or the properties seized via foreclosure) may very well be worth money. Can the same be said for the holdings of GM? I can't say I have a lot of confidence in the automakers to be a successful business any time in the next five years. And unless they are Chrysler-GM, a subsidiary of the United States of America (which also seems like a bad idea), I don't see how we can justify five years of financing their operation.
Obama's people looked at GM's restructuring plan, and said, "Nope, we don't think this will work. Try again." Do we have confidence in their judgement? Personally, it ranks a tiny smidge above my confidence in GM's judgement.
Over on Das Bellman, I've made the case that there might be a case to be made for massive subsidization of the U.S. auto industry in the short term for systemic reasons and maybe even in the long term for national security reasons. But people are not explicitly making those cases, so it's starting to seem like very very expensive farm subsidies, but for cars.
I know that the money is supposed to trickle down to your blog's peeps, but I'd rather see every dime put into creating a healthcare safety net and something like the GI bill for autoworker vets, rather than propping up zombie car companies that will just screw your unions a few more times.
Jason,
Points well taken. I do think that it would be possible to have a unionized American car company, but it would need government-run health care and a complete retooling. Maybe billions to tide the suppliers over until the operation could get up and running. That said, the auto plants turned from cars to tanks rather rapidly. I have the feeling that a lot of the problem is a lack of imagine in GM and Chrysler. I get the sense, from looking at their cars, that imagination and innovative thinking are not well-rewarded within these companies.
Money would really trickle down to us, rather it is just frustrating to hear the President say one thing about the finance industry and something completely different about autos. AIG may be too big to fail and GM not, but it might be nice to have some explanation of why.
I'd also point out that he went out of his way to assure purchasers of GM cars that the government will take care of them. He made no such promises to the producers of GM cars.
Not that it matters now, but Bob Corker USED TO BE a decent and fairly moderate dude. In 2006, he ran against Harold Ford, who comes from a seriously corrupt family of Memphis politicians. Ford is also black, so, given these three things, it's no surprise that a majority of Tennesseans voted for Corker. To their credit, it was fairly close (51/48).
Just tryin' to represent.
Hey, I think you may have hit on a solution. BUILD TANKS!!!
on the auto industry, what of the fact that America needs fewer, smaller and more full-efficient cars? restructuring can and should work both ways, and the ultimate goal is a more sustainable (economically and environmentally) manufacturing sector.
so no, don't build tanks!
regarding AIG, I think there is a really complex problem there about it and other companies systemic importance in the tertiary sector as against car makers in the secondary. The direction of economic growth in the whole of the developed world has been going so far towards the former that the very viability of the latter has receded massively. Of course, we can see that hasn't worked out too well.
also, what about the job losses (well below the level of the guys getting the big bonuses) in non-unionized financial services?
I was joking about the tanks (sort of!). Yglesias says what I mean better:
"Long story short, this looks like an economically responsible way to avoid a cataclysmic implosion of these firms at an inopportune moment. But this isn’t going to prevent the conditions facing the population of Michigan from further deteriorating. That state more-and-more looks like it’s going to be the 21st century version of the Great Depression’s Dust Bowl. The most important policy question facing us in this regard thus continues to be what can be done to help the people of the Rust Belt that doesn’t just involved indefinitely propping up shrinking firms. The first step is simply to turn around the shrinkage in the larger economy, but the question will remain even if recovery reaches the rest of the country."
Here's my question. Now that Uncle Sam owns GM, will new manufacturing plants be built in the U.S. rather than overseas? Relatedly, when it comes time to re-tool, will an emphasis be placed on re-tooling domestic plants rather than overseas plants?
I think Jason (and Yglesias) hit on a fairly important point here. Right now, the conversation is kind of stuck on the institutional level. "Let GM fail." "Fuck the UAW." The policy questions are revolving around saving or busting institutions, and quite frankly, I don't know that that's a policy discussion we win.
I'm not paying especially close attention to the news, but I'm not hearing any discussion about what we're going to do with the roughly 10% of the population who are dependent upon the auto industry for employment in some form or another, or what we're going to do with an aging population that has found its means of subsistence yanked away from them.
Leaving aside solidcitizen's very important point about which contracts the Obama administration sees as binding, I think that we need to get our heads around the fact that the American auto industry will likely not exist in its current form and move the conversation on to how we are going to mitigate the economic dislocation this is going to inflict upon a significant chunk of the working (formerly middle) class.
A couple of thoughts, none of them good.
I think that cars will still be made in the US and in Detroit. I think most of the suppliers and their employees will be alright. There is still demand for the cars and there is still demand for cars in the US, they just need to be a few thousand dollars cheaper to be competitive. Breaking the union and dumping the retirees onto Medicare will make the cars a few thousand dollars cheaper.
I wish I could join Gabba in saying that the future of the American auto industry is smaller, cleaner, and more fuel efficient. I doubt that it is. I hate to get into too much American exceptionalism crap, but Americans do have a love affair with cars and the bigger the better. A ton of it is about status. I know too many people who are liberal and nominally environmentally conscious who can find all kinds of reasons that need an SUV, a minivan, and/or a luxury car. Even at the enviro level, the Prius is still the shit, even though there are cars with better mileage or cleaner systems out there. Owning a Prius, to a large degree, is about status.
Back to my point, though. I think GM and Chrysler will be around, after a quick bankruptcy and a complete breaking of the union contract (the union may be around, but not with the contract they have today). Once the retiree pension and health care is off the books, then the prices of GM cars will come down, the economy will bottom out, and they will sell cars again. Possibly with a massive government subsidy of the Chevy Volt to make it "competitive" with the Prius and Civic Hybrids.
There will probably be a lot of bailouts. Local car dealers have a lot of clout at the local and state level, so they will get something. The people who will be truly fucked will be the average worker. He or she will get less health care and no pension, but, hey, at least GM will still be around and American will still be leading the world when it comes to auto manufacture!
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