The Cavalry Rides to the Rescue
In the old Westerns the U.S. Cavalry always rode into rescue the besieged wagon train or town just at the last moment, just when all were giving up hope. Well, George Bush, former owner of the Texas Rangers, likes to think of himself as a cowboy. So, maybe he had that western motif in mind when he chose to step in at the last moment and provide relief for the US auto industry. Of course, we're not out of the woods, but this is at least a reprieve for an industry that had been making important strides both in quality and in productivity.
About 17 million is in the pipes for GM and Chrysler. Ford has not asked for money, just a line of credit should it be needed. That line hasn't been extended, but it should survive fine until a new Congress and administration is in office.
I know that many in my new community will be breathing a sigh of relief, though many will not be working for the next month or so. But by idling the plants, the inventories can be drawn down, and perhaps some retooling be undertaken.
So, Merry Christmas Detroit!!!
About 17 million is in the pipes for GM and Chrysler. Ford has not asked for money, just a line of credit should it be needed. That line hasn't been extended, but it should survive fine until a new Congress and administration is in office.
I know that many in my new community will be breathing a sigh of relief, though many will not be working for the next month or so. But by idling the plants, the inventories can be drawn down, and perhaps some retooling be undertaken.
So, Merry Christmas Detroit!!!
Comments
As I reflect on the backlash, I think most people feel that the auto unions are simply 10 years behind the rest of the world. I work for the same company my dad did.. while he retired with a nice pension, I will be lucky to have a job long enough for pension. He had a nice severance, the current plan seems to change every year.. smaller. And so it goes... Relating to another recent post.. maybe we are seeing the death of the corporations and is that a bad thing? In some ways yes.. but maybe in other ways no.
-Chuck
In the long run, these companies will be much leaner, employing fewer people. The problem is, nationwide, we are siply not producing enough decent paying jobs. IN our move to a service industry nation, people who once would have made it into the middle class with manufacturing jobs are forced to subsist on Walmart wages -- not enough to buy a house, travel, just subsist.
That may be the future, but is it a very positive picture?
As for the long run.. thats a great question. My fear is we have been living on a lie, but no one knew it. Thanks to credit and leverage, we were able to buy way more than we could afford while dreaming of better days. Now that credit is gone, the music has stopped.
What must we do? Well, I think we need to push innovation and technology. Focus on technology and opening up over seas markets. Rather than simply buy from the Chinese, see what we can sell to them. The great fear is we do the opposite, we build up walls and try to take of our selves. Then we realize we don't have the internal demand to support our stuff.
Just my random thoughts..
-Chuck
I think we need to understand that this isn't just about Detroit. Toyota and the rest are experiencing just as deep cuts in sales. They will have to cut back. In California, due to the rise in gas prices they were selling huge numbers of Priuses. But with the steep decline in gas prices, are you willing to pay a steep premium to drive a Prius, when you can drive a Fusion or a Malibu, get near 30 miles per gallon or more and pay thousands less.
As for Detroit. Chrysler is an interesting issue. It's in the most precarious position, because it doesn't have much in the way of small cars nor is its safety ratings on the same level. And, yet due to its smaller size it might be the quickest to turn around. I read somewhere that Chrysler might want to look into diesel. Diesel engines get better mileage, and with new technology burn much cleaner. Indeed, the majority of European cars are diesel and there is less interest there in hybrids. Each of the companies might want to pursue different directions. I think fuel efficiency and fuel alternatives are here to stay as issues. The question is, can the companies make the turn around fast enough. What we forget is that many of these "foreign" competitors do get financial support at home that our government isn't willing to provide.
I personally am confident that our home based companies will make the transition. If not, then there's something wrong with America!
So, yes, GM and Chrysler have to make adjustments--but this long overdue change in the U.S. healthcare system would save the industry--and much else.
But Bob.. you are right on. American car manufacturers are better off going specialized and diversified vs head to head. Utilize the local manufacturing to produce cars more tooled to the market vs the broken mass production model.
-Chuck
The U.S. spends a greater portion of GDP on healthcare than any other industrial nation--but much of it is wasted in our horrible system. We are 37th in quality of care according to the World Health Organization and our infant mortality rate is now like that of 3rd world nations.
It's not a matter of whether or not we can afford universal healthcare. It's a matter of priorities. We can afford what we deem essential. We have to decide that the health and well being of our citizens outweighs subsidizing the lifestyles of CEOs at AIG and comerades, plus the military-industrial-media complex which drives us into one war after another.
Obama sees at least part of this, but I want to push him further on universal healthcare. His plan wasn't good enough months ago (and is not why I voted for him): In light of the current crisis, his plan is a band-aid over a huge wound. Only a Single-Payer plan is big enough for the current crisis--and will help Detroit and the rest of us recover.
There is already such a bill moving through Congress, H.R. 676, but I fear it will die in the senate (where all good health reforms die in this nation). It simply merges Medicare and Medicaid and expands them to cover everyone. Insurance companies can offer supplementary insurance (since things like plastic surgery would only be covered for things like burn victims) and life insurance, etc. But the huge HMOs would have to downsize--as everyone else profits.
This would also help to save family farms from losing out to agribusiness, help small businesses and start ups, help stem the mortgage crisis (as people wouldn't have to choose between medical bills and the mortgage), etc.
I'm happy W gave this bridge loan. I have vowed to only "buy American" until the Big 3 are solid, again, and I continue to push for greener, more fuel efficient vehicles (even as I use public transportation to commute to work). But I am preordering a GM Volt, now.
But the longterm health of the Big 3, and the UAW, depends on universal healthcare--as does America as a nation. We are very much in danger of collapsing into a 3rd world country--one dangerously filled with nukes, at that! But crises are also opportunities and I pray that Obama will be bold enough to make those changes--and that the GOP will not obstruct them.
First, the tax the rich mentality is a little "pie in the sky". Remember the windfall tax on oil? Well, there aren't any windfalls to be had at $35 a barrel. Goldman Sachs eliminated bonuses on either 6 or 8 of the top ranks, to cheers of everyone. WELL.. until New York said it will lose $175 MILLION in taxes! New York most likely has the greatest concentration of "wealthy", yet they are having a MAJOR budget shortfall.
Technically we already have universal health care. If you have a gunshot wound, you will be treated at the hospital regardless of insurance, but I know your point. Most doctors will tell you that the quality of doctor will go down if the government is involved due to the massive wage decrease. You also have to be ready for major reductions in quality of care.. ie, shared hospital rooms, etc.
The major issue is.. just like you can't let the Big 3 to fail b/c of the economy, you can't put in place a major entitlement program on a weakened tax base. By taxing the wealthy, you are further burdening the people you need to get you out of the mess by investing and speculation in new business.
My bottom line objection is simply this... what major program has the government done will? Social security is going broke. Medicare is a disaster, I can go on and on..
-Chuck
The same is true for other companies. In fact, more than 50% of all U.S. companies use an army of tax lawyers to pay NO TAXES AT ALL. And Goldman-Sachs has moved enough offshore at tax havens that it will pay 1% in taxes this year--while STILL giving executives tons of bonues, etc. and pocketing our tax money bailout (that came without strings) and doing nothing with it.
About the Wall Street Bailout, America was punked and ripped off.
And, Patterson to the contrary, taxing the wealthy is the only way to save NY's shortfall. They did it during the Depression and can do it, again.
But I was placing more emphasis on cutting the bloated military budget, especially the nukes and Star Wars programs and ending the Iraq War. That will save billions.
But the initial costs of universal healthcare will be large, no question. It will only be after the economy recovers that we can pay for it and pay down the national debt, etc.
Nobel Prize winning economist Paul Krugman (who has been warning of the impending meltdown for years--and who SHOULD have been Obama's Treasury pick) has confidence in Obama's economic recovery plan. IF Congress doesn't strip it down or the Senate GOP block it, he thinks that by late '09, the bleeding will be stopped and '10 will be a year of recovering growth.
Of course, the problem is that Dems are likely to lose seats in the mid-term elections of '10--making Obama's continued work harder. He's going to have to have visible progress on other fronts in '09 in order to keep the public patient on the economic front. He's inherited quite the mess. Digging out will take time--but the American public traditionally gives GOP presidents longer honeymoon periods than they do Democratic ones. I pray this time is different.