Money Morning
From Money Morning:
By Mike Caggeso
President-elect Barack Obama is asking a Congressional lame-duck session to approve $25 billion to $50 billion in rescue aid for Detroit’s crumbling auto industry.
He also wants to appoint a czar or board to oversee the auto industry’s rescue and reconstruction, Bloomberg reported.
Both are steep requests that would require nationwide support – from Michigan state officials all the way up to President George W. Bush. Without 60 seats in the Senate, Democrats would need a few Republicans to cross the party aisle on the vote, should Congress draft and approve legislation by the end of next week’s session.
The calls follow the disastrous earnings reports last Friday from Ford Motor Co. (F) and General Motors Inc. (GM). Ford posted a $2.98 billion operating loss for the quarter ended Sept. 30 and let 1,500 salaried employees go in that time. General Motors reported a third-quarter operating loss of $4.2 billion. The company said it plans to cut 30% of its salaried workforce, but in reality, job cuts at the automotive giant could be much deeper.
Michigan’s other auto titan, Chrysler LLC, is also in bad shape. Like its two peers, it asked to be included in the government’s $700 billion bailout plan.
All totaled, the three automakers employ more than 200,000 Americans, and support millions more U.S. workers indirectly through suppliers and dealerships.
Their collapse could ultimately cost the economy more than 2 million jobs total. And that doesn’t count the estimated 1 million Americans – including many retired autoworkers – who rely on the U.S. auto companies for pension and healthcare benefits.
Multiple Conflicts and Outcomes
The question of whether or not the U.S. government should bail out Detroit’s Big Three is shaping up as the last major issue of George Bush’s presidency and the first major test for President-elect Obama, whose plan to rescue the U.S. economy played a large factor in his election.
At their meeting earlier this week, Obama pressed President Bush on delivering an assistance package to the auto industry. Bush said he’d support aid in exchange for Democrats’ approval of a free-trade agreement with Columbia, the London Times reported.
Bush also agrees with Treasury Secretary Henry M. Paulson that the auto industry needs a lifeline, but it shouldn’t come from the $700 billion allotted to rescue the financial industry.
And it could be one last showdown between Bush and House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.).
Congress Democrats have already begun pushing legislation to help automakers. Meanwhile, GM said outright that it could run out of cash by the end of the year if the downward spiral of falling sales and consumer demand continues.
“The auto industry is too big to fail,” Nariman Behravesh, chief economist at IHS Global Insight Inc., told Bloomberg. “While the Obama administration can wait until Jan. 20 to address other matters, on this one they need to move quickly.”
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This article has 14 comments:
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User 298053
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1 Comment
Nov 14 03:15 AMI could see government intervention regarding pensions for employees who have been victimized, but the Michigan auto industry is not the victim. We strengthen the economy when job growth is provided by companies that have earned their success. We weaken the economy when we prop up businesses that fail due to incompetence. We weaken ourselves when we allow our government to punish success and reward failure.
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Roy M.
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355 Comments
Nov 14 03:19 AMSeems many of the #1 American industries need bailout
one way or the other. Think back what happened to the
Steel, Airline, Automakers and what caused their downfall.
Ask 10 people, 9 will point at the unions. 8 will point at ceo
etc. Look at Boeing, the union just finished Striking against
Boeing, Share-holders lose money, Boeing may lose future contracts
and delay delivery. Who knows, Boeing maybe next for bailout a few
years down the road.
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punk_ash
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123 Comments
Nov 14 04:18 AMWe need Steve Jobs running the big 3. Is Steve the only smart guy left in the world...
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The hand
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768 Comments
My Website
Nov 14 04:32 AMwhat is the goal? too big to fail? protecting citizens from harm? minimizing loss? a political payback? what precedence are we setting? do we care?
we are really screwing with capitalism here. there will be unintended consequences. i guarantee it.
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Roy M.
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355 Comments
Nov 14 06:06 AManything to get elected.
How can they back out now ?
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scrapcongress
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2 Comments
Nov 14 08:51 AMThe hourly rates is exessive. The CEO's compensation OUTRAGIOUS !!!
Just think out the job creation if the wages were lower and a CAP
on all CEO's for every company. Elections day auto works get a paid day off!! OUTRAGIOUS !!!
The need to do major restructure and build green, Green should have started 30 years ago. Our country is so far behind it's unacceptable.
RESTUCTURE MAJOR RESTRUCTURE
And something needs to be done about free trade, What a joke !
It's free for everyone but us. And it's an american made car then them better be damn sure IT"S ALL MADE HERE IN AMERICA !!!
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jackooo
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277 Comments
Nov 14 10:48 AM-
BlueDome
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21 Comments
Nov 14 10:59 AMThe lack of vision at these companies is just mind boggling. They fought seat belts, air bags, fuel efficiency standards, all things that could have been competitive advantages if they were pro-active. All this was done by Management, not unions.
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CLH
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717 Comments
Nov 14 11:45 AMNo money for failure.
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WAKEUP
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507 Comments
Nov 14 03:25 PM-
sr9web
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178 Comments
Nov 14 06:36 PMfrom bankrupt Ford and GM
Rescue from DC may be soon forthcoming
but you sure do not know when
Obama I can hear you a-crying
as you demand some rescue cash
From top-heavy egos serving the Senate -
you need 60 votes pass
(refrain)
The jig is up the fix is in, those votes to be counting
Columbia trade agreement, the pressure is mounting
Never more - no more delay
This might be the end I say, of the union man
Obama, they've been years on the hog
live high up to a man
Bankruptcy's looming as a fast disaster
gonna end that union scam
Obama I can hear you a-crying
as you demand some rescue cash
From top-heavy egos serving the Senate -
you need 60 votes pass
(refrain)
... never more to rue the day of the union man
Obama I can hear you a-crying
as you demand some rescue cash
From top-heavy egos serving the Senate -
you need 60 votes pass
(refrain)
... This will be be the end we say, of the union man
---------------------
With apologies to STYX
www.guntheranderson.co...
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working at ford
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55 Comments
Nov 14 10:23 PMThe real take home pay for the dirty hourly at these companies is less than 30. While that is a great job it is not 150+ thousand that the libs want to raise taxes on. The second great lie is that all union workers voted for o*ama(not a typo). Many of us supported the greatest American HERO. Back to the union pay scale, I use my paycheck to support my church, and as many small business(the real econ engine) as I can. My father retired from Ford a few years back and I remeber growing up without the extras that plague today's children. I don't not wish anyone bad times, but if this fear mongering and money hoarding by the banks and so called college educated idiot bad is all we will have. Our grandparents lived through the GREAT DEPRESSION. It took lots of sweat and really hard work to make it through those years. I this so-called information age, to many people count on someone else to do the dirty work. They lack real skills and nohow to cope on their own. I hope your not as stupid as your screen name makes you look and you may want to learn a real skill.(your opinion will not pay the bills)
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working at ford
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55 Comments
Nov 14 10:33 PMOn Nov 14 10:59 AM BlueDome wrote:
> In my opinion the main problem with unions at GM and Ford is that
> they provide an excuse for management. "Oh, we can't compete because
> of union and health care costs," they say. Meanwhile they make
> poor product choices, allow poor engineering and accept a lack of
> quality. Why not work around the challenges like other companies
> do, instead of whining? It's management that's to blame as much
> as labor costs. There are plenty of people willing to pay more
> for a american made car if it was better.
>
> The lack of vision at these companies is just mind boggling. They
> fought seat belts, air bags, fuel efficiency standards, all things
> that could have been competitive advantages if they were pro-active.
> All this was done by Management, not unions.
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Sharad Mistry
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2 Comments
Nov 15 07:32 AM