Over the past few weeks we’ve shared plenty of opinions on the big three, bailouts, foreign carmakers, and bankruptcies, but today I thought I’d share some opinions from some of our friends around the blogosphere.
The Bush administration is finally considering bankruptcy as an option for the automakers. I have previously written about the Big Three and the bailouts so you’ll have a pretty good idea how I feel about the issue if you read those articles. A loan to these companies would just push their eventual bankruptcy further down the road.
Many people have said that sending the automakers through a bankruptcy would be a horrible thing for the economy. 3 million people would lose their jobs, or so they say. That number is calculated based on all 3 companies completely stopping manufacturing for the whole year, which simply isn’t the case. A bankruptcy that was organized by the federal government is a much better solution than just giving them 15 billion. With the huge amounts of debt they currently have along with the terrible contracts they agreed to with the UAW, these companies aren’t going to suddenly turn profitable because of a small loan.
Bankruptcy is the best option for these companies simply because it will give them a real chance to turn things around. I realize that people will be hurt by this. More people will be hurt in the long run if we simply prolong it. Let them fail. Then we can help them pick up the pieces.
From what I can tell foreign auto makers, who do a substantial amount of their business in the U.S., have remained silent on this bailout for their American counterparts. The confusing part here is that I would expect the foreign auto makers to be up in arms. They certainly provide enough jobs in the U.S. that their voices will be heard just as loudly as the Failed Three. So why aren’t they complaining about the bailout and salivating at the chance to significantly reduce the competition?
The bailout of the Big Three was shot down in the Senate. The UAW refused to lower their wages (which are currently about $69 an hour including benefits) until 2011. That was not good enough for the Republicans and a few Democrats in the Senate. They wanted to bring the wages down in line with that of the Japanese automakers in 2009. Their American workers are getting paid around $48 an hour including benefits.
A few weeks ago I wrote an article about the potential automaker bailout. Well, now the only real question is who will be appointed to the “car czar” position. It’s sad really, that the taxpayers are going to be on the hook for another 15 billion in bailout money. Apparently that is the amount that Congress thinks will save GM and Chrysler. Ford says they have enough cash to make it though 2009 as long as the other automakers don’t fail.
The United States government has been giving away cash faster than they can print it these days. They just extended the bailout of AIG to $150 billion. Now President-elect Obama, Speaker of the House Nancy Pelosi, and Senate Majority Leader Harry Reid want to send money to Detroit to bailout the “Big Three.” GM, Ford, and Chrysler are all burning lots of cash these days, and after the $700 billion bailout to the banks and Wall Street they decided to hold their collective hands out and see what happens. To be honest, I don’t blame them one bit. However, I think that it is ridiculous that the American taxpayer continues to foot the bill for these terrible businesses that can’t seem to take care of themselves.
