Running on Fumes
by Vera H-C ChanNov 17, 2008
- 30 Votes
America's love for the automobile has not, in recent years, extended to its native automakers. Lured by sexy fuel economy and come-hither reliability, drivers have flocked to Japanese manufacturers like Honda and Toyota, which in turn have set up permanent roots in the U.S. of A.
Now Detroit's Big Three are running on fumes, especially General Motors, and they want taxpayer help. As the Senate Banking Committee holds hearings this week on the different ways to handle yet another possible financial meltdown (especially the so-called "multiplier" effect, noted below), folks are finding themselves divided over the notion of pulling corporate giants out of an economic ditch.
One thing there's no shortage of—opinions. After all, as the Wall Street Journal spells out harshly, the manufacturers got into "the crisis weakened by mistakes of their own doing. The Detroit Three depended for more than a decade on profits from gas-guzzling sport-utility vehicles and pumped up sales with cheap credit..." However, the AP reports that the "house of cards" involves not only GM, Chrysler, and Ford, but also many auto suppliers and parts companies.
So in the Buzz, who advocates the bumpy road to financial ruin or the taxpayer repossession?
For the Bailout:
• Democratic members of Congress (including Barack Obama) and at least two Republicans, who want to impose conditions in order for the Big Three borrow from the Troubled Asset Relief Program.
• In a worse-case scenario, Center for Automotive Research predicts a 2.5 million job loss if 1.5 of the Big Three's "manufacturing capacity" went kaput.
• United Auto Workers president Ron Gettelfinger says the fault lies not in the auto makers' problems, but in the economic stars ... so now's not the time to ask for UAW contract concessions.
Against the Bailout
• Bush administration and Treasury Secretary Henry Paulson would rather that Congress take from the $25 billion Energy Department loans intended for "fuel-efficient technology."
• Senator Richard Shelby of Alabama—more importantly known as the Senate Banking Committee's ranking member and the key to the money strings—called the fossil fuel-burning companies a collective "dinosaur."
• The former president of Ford Europe advocates the government be "the banker of last resort" and an industry "shake-out."
It Depends:
• The "Deal Professor" at the New York Times asks a lot of questions about who the bailout really benefits (the private equity firms that own the automakers?), how many people GM actually employs, and executive perks.
• Neil Young's solution, which can be seen on NPR, details the involvement of something called Transition Rollers.
No takers for this idea... yet: Get Chevron or Exxon to delve into their record profits and create a Big Buddy program for the automakers.
