Archive for the ‘auto industry’ Category

Detroit’s Auto Industry, Failure’s a Done Deal

November 18, 2008

“Nothing,” said a General Motors spokesman last week, “has changed relative to the GM board’s support for the GM management team during this historically difficult economic period for the U.S. auto industry.” Nothing? Not even the evaporation of almost all shareholder value?

By George F. Will
The Washington Post
.
GM’s statement comes as the mendicant company is threatening to collapse and make a mess unless Washington, which has already voted $25 billion for GM, Ford and Chrysler, provides up to $50 billion more — the last subsidy until the next one. The statement uses the 11 words after “team” to suggest that the company’s parlous condition has been caused by events since mid-September. That is as ludicrous as the mantra that GM is “too big to fail.” It has failed; the question is what to do about that.

The answer? Do nothing that will delay bankrupt companies from filing for bankruptcy protection….

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/17
/AR2008111703101.html?hpid=opi
nionsbox1

*******************

By Martin Feldstein
The Washington Post
Tuesday, November 18, 2008; Page A27

The Big Three U.S. automakers need more than an injection of $25 billion from the federal government. Because of their ongoing losses, they would burn through that money in less than a year and would soon be back for more.

General Motors, Ford and Chrysler can make excellent cars, but they cannot sell them at prices that are competitive with the prices of cars produced in the United States by Toyota and others or with the prices of cars imported from Europe and Asia. The basic reason is the labor costs imposed by union contracts.

The Big Three pay much higher wages than production workers are paid in the nonunion auto firms and in the general economy. And the health-care costs of current workers and retired union members are an enormous additional burden.

The simplest solution is to allow GM and the others to file for bankruptcy. If the companies file under Chapter 11, they would be able to continue producing cars, and the workforce would remain employed while the firms reorganized. The firms would also be able to get short-term credit under bankruptcy protection.

The bankruptcy court could require the unions to rewrite contracts, bringing wages down to levels that would allow the firms to compete and therefore to maintain employment. Scaling back employee and retiree health benefits would further improve price competitiveness and allow better cash wages. The firms’ bondholders and other creditors would have to take losses. Shareholders’ fate would depend on how firms responded to this restructuring.

Read the rest:
http://www.washingtonpost.com/w
p-dyn/content/article/2008/11/1
7/AR2008111702917.html?hpid=
opinionsbox1

Obama-Pelosi Stimulus May Fail to Reignite Economy

November 17, 2008

President-elect Barack Obama and House Speaker Nancy Pelosi may throw as much as half a trillion dollars worth of stimulus at the economy — and have little or no growth to show for it.

The forces arrayed against recovery, including the credit contraction and cutbacks by consumers, are so powerful that they may overwhelm the record sums of spending and tax cuts being discussed in Washington. The only consolation, economists say, is that without the stimulus, things would be even worse.

By Rich Miller, Bloomberg

Speaker of the House Nancy Pelosi speaks during a news conference ...
Speaker of the House Nancy Pelosi speaks during a news conference on Capitol Hill.  Democrats in Congress Monday launched a new multi-billion dollar drive to save the US auto industry, but the White House warned against draining funds from a huge finance industry bailout.(AFP/Getty Images/File/Brendan Smialowski)

“It’s hard for me to imagine we’ll have a return to positive growth before the fourth quarter of 2009, even with a $500 billion stimulus,” says Barry Eichengreen, an economics professor at the University of California, Berkeley. He sees the unemployment rate rising to 9.5 percent in early 2010, from 6.5 percent now.

The first dose of fiscal medicine might come within weeks, following the return of Congress today for a lame-duck session, and would focus on stepped-up government spending. The balance, including a tax rebate, would come after Obama assumes the presidency in January.

Mark Zandi, chief economist at Moody’s Economy.com in West Chester, Pennsylvania, says the economy may contract 2 percent next year without a package of at least $300 billion. With it, “we could get growth pretty close to zero,” he adds. That would still be the worst result since 1991.

A `Bolder’ Approach

“The breadth and potential depth” of the crisis call for a “bolder” approach, Obama economic adviser Gene Sperling said in congressional testimony Nov. 13. A package costing $300 billion to $400 billion “should be the starting point….

Read the rest:
http://news.yahoo.com/s/bloomberg/20081117/pl_bloomberg/aez
5fruymj4q;_ylt=Ak9FS0yn8CqAZ9eabFQuVA2s0NUE

Commentary: Say no to the auto bailout

November 13, 2008

General Motors, Ford, Chrysler and the United Auto Workers union are pouring millions of dollars into a lobbying campaign for a taxpayer bailout.

The money devoted to influence peddling in Washington would be better spent on improving quality and finding ways to reduce a bloated cost structure, but both management and UAW have decided that fleecing taxpayers is a better option.

A taxpayer bailout would be a terrible mistake. It would subsidize the shoddy management practices of the corporate bureaucrats at General Motors, Ford and Chrysler, and it would reward the intransigent union bosses who have made the synonymous with inflexible and anti-competitive work rules.

Perhaps most important, though, is that a bailout would be bad for the long-term health of the American auto industry. It would discriminate against the 113,000 Americans who have highly-coveted jobs building cars for Nissan, BMW and other auto companies that happen to be headquartered in other nations.

These companies demonstrate that it is possible to build cars in America and make money. Putting them at a competitive disadvantage with handouts for the U.S.-headquartered companies would be highly unjust.

A bailout also would be bad for General Motors, Ford and Chrysler. The so-called Big Three desperately need to fundamentally restructure their practices. More specifically, the car companies need to endure some short-term pain in order to restore long-term viability. But that won’t happen if politicians raid the treasury.

From CNN

Read the rest:
http://www.cnn.com/2008/POLITICS/11/13/mitchell.
auto/index.html

Congress isn’t waiting for Obama

November 13, 2008

Lawmakers are unveiling plans to expand health coverage and curb global warming. And Democratic leaders have called a lame-duck session next week to discuss an auto industry bailout.
.
More than two months before he is sworn in, Barack Obama already is facing a Congress busily asserting itself on the timing and details of the president-elect’s agenda, including major issues like healthcare and economic policy.

By Janet Hook, Noam N. Levey and Peter Nicholas
The Los Angeles Times
.
Committee chairmen are unveiling legislation to expand health insurance coverage and curb global warming. Democratic leaders have called a lame-duck session next week to consider an auto industry bailout. And other economic stimulus measures may be enacted even before Obama is inaugurated.

Read the rest:
http://www.latimes.com/news/nationworld/
nation/la-na-agenda13-2008nov13,0,3893199.story

Did Obama’s Staff Inappropriately Release “Private” Details of His Talk With President Bush?

November 12, 2008

The Drudge Report, the Associated Press and the New York Times are quoting segments of the “private” Oval Office discussion between President Bush and President Elect Barack Obama, quoting Obama aides.

The quotes started from the Obama side soon after the Oval Office meeting.  Yesterday the White House added some detail.

A President-Elect putting pressure on a lame duck president seems inappropriate, unnecessary and a breach of protocol.  One side’s aides discussing details of the agreed upon provate discussion? Ditto.

But this may just be part of the routine activities of the Kabuki Dance that is a time-honored part of the transition of a new president…..

See:
http://www.drudgereport.com/flashbol.htm

President Bush and President-elect Barack Obama meet in the ...
President Bush and President-elect Barack Obama meet in the Oval Office, November 10, 2008.(White House photo by Eric Draper/Handout/Reuters)

***********************

By Jackie Calmes
The New York Times

The struggling auto industry was thrust into the middle of a political standoff between the White House and Democrats on Monday as President-elect Barack Obama urged President George W. Bush to support immediate emergency aid.

Bush indicated at the meeting that he might support some aid and a broader economic stimulus package if Obama and congressional Democrats dropped their opposition to a free-trade agreement with Colombia, a measure for which Bush has long fought, people familiar with the discussion said.

The Bush administration, which has presided over a major intervention in the financial industry, has balked at allowing the automakers to tap into the $700 billion bailout fund, despite warnings last week that General Motors might not survive the year.

Obama and congressional Democratic leaders say the administration has all the authority it needs under the bailout law to extend assistance.

Obama went into his post-election meeting with Bush on Monday primed to urge him to support emergency aid to the auto industry, advisers to Obama said. But Democrats also indicate that neither Obama nor congressional leaders are inclined to concede the Colombia pact to Bush, and may decide to wait until Obama assumes power on Jan. 20.

Read the rest:
http://www.nytimes.com/2008/11/11
/us/politics/11auto.html?em

******************

WASHINGTON (AP) – Aides to President Bush and President-elect Obama are revealing a bit more about yesterday’s wide-ranging discussions in the Oval Office.

Among other things, Obama pushed for the government to take urgent action to help struggling automakers. Aides say Obama also raised the idea of an administration point person on autos. They say that official’s role would be to improve the long-term health of the auto industry.

Aides to Bush say the president remains open to helping U.S. automakers.

There’s also word that the two discussed the need for more economic stimulus spending, which Obama favors. Bush has stressed that his main priority for any postelection action by Congress is approval of a long-stalled free trade agreement with Colombia.

White House press secretary Dana Perino said, however, that there’s no implied “quid pro quo.” She said the president mainly discussed the overall “merits of free trade.”

(Copyright 2008 by The Associated Press. All Rights Reserved.)