Obama Pushes for $50 Billion for Automakers, Oversight Czar

[onehandle]

Source: Bloomberg

Nov. 13 (Bloomberg) -- President-elect Barack Obama is pushing Congress this year to approve as much as $50 billion to save cash-starved U.S. automakers and appoint a czar or board to oversee the companies, a move that would require President George W. Bush's support, people familiar with the matter said.

Obama's economic advisers are now convinced that if General Motors Corp. doesn't get a financial lifeline soon, it will have to file for bankruptcy by the end of January. And if the companies don't get almost $50 billion, Obama will be dealing with the issue again by next summer.

Any czar or board would be patterned after the bailout of Chrysler in 1979 and New York City in 1975. Advisers such as former Federal Reserve Chairman Paul Volcker and former Treasury Secretary Lawrence Summers are said to be telling Obama that the cash is urgently needed now.

Congress would have to act in a lame-duck session that begins next week. Obama would need Bush's backing to pass such a sweeping and costly measure in part because Democrats don't have enough votes to force a floor vote or override a veto. Obama also would need strong support from auto-producing states such as Michigan, Ohio, Indiana, Illinois and Wisconsin to pass such a sweeping and costly measure.

Read more: http://news.yahoo.com/s/bloomberg/ablcucxr33jw

[Soylent Brice]

1. 2 recs and no replies...

interesting...

this should be getting discussed vehemently.

[Soylent Brice]

3. okay, i'll bite.

i think that if they do give them this bailout that it should come with major strings.

if they receive this bailout, they should be forced to start producing green cars only as a long term agreement, say by 2012.

short term, they should be forced to invest a proportionate amount for the conversion to green cars and technology as soon as September 2009.

The move towards green cars with these major companies can be used as an example to other companies in other industries to be prepared to do the same if they are looking for help. maybe this could be used as a tidal wave to jump start the nationwide renewable energy movement more seriously.

my two cents anyways. don't like this at all, but it can be used towards our benefit.

[soothsayer]

11. Someone on tv was saying make them produce fuel efficient cars, and offer

to buy the entire fleet (at a 20% premium) of their first cars that get 50 mpg. Bribe the bastards to do what they should have been doing for the last 20 or so years.

[amandabeech]

20. Let's see. Twenty years. That brings us to 1988.

I've been living in the midwest and the northeast during those years. The only places that I saw many small cars were in Manhattan and among newcomers in Northern Virginia.

Until just recently, the truck and SUV ruled. Second place went to family sedans.

Perhaps the small car market was elsewhere, but I really didn't see that much of it in the areas that I lived in during the time period that you refer to.

Gas prices during the period were relatively low, and lots and lots of people were buying mid-size and up. Toyota and Honda cornered the small car market, although the Escort was a decent, cheap, serviceable and reasonably reliable small car. Even Consumer Reports liked it. GM and Chrysler offerings were not so good, however.

The current run-up in gasoline prices seems to have been to a large extent the result of pure speculation. The present-day demand for small cars is actually pretty short lived. This is not the seventies and early eighties when gas prices were high, or threatened to be high, from '74 to '84 or so. Just about everyone downsized during that period.

I don't expect $1.00 gas again, but its not much over $2.00 now. It may not go up much until this world-wide recession starts to work itself out.

If you want the automakers to make money on small cars absent high gasoline prices, you're really going to have to tax gasoline the way they do in Europe. Do you think that the Euros would be buying all those small cars if gas was cheap there? No. Those who use modern roads would probably buy bigger cars.

The idea that the U.S. would guarantee a base number of sales would help entice the Big 3 into the small car game. It is more likely that the Big 3 will end up specializing in larger vehicles with hybrid engines or other propulsion systems that would greatly improve the mileage for those types of vehicles. Ford might be an exception, however, because their plan is to bring over two small cars that they make in Europe. I've seen pictures, and they have great designs that sell well in Europe where high gasoline prices rule.

It's easy to blame the Big 3, but they try to make cars that people drive on which they can make a profit. Notice that Ford and GM make a lot more smaller cars in other markets, but people here in the U.S. have a history of driving larger cars absent high gasoline prices. Gasoline taxes to keep prices high and oil consumption down are exceptionally unpopular.

Should the Big 3 take all the blame for the failure of government to enact higher gasoline taxes or for U.S. consumer preferences?

I think not.

[WriteDown]

2. I'm for it...

but my stance is well-known. Go Chevy Volt!

[Soylent Brice]

4. the volt

has to be the smartest thing they've done in decades. with that said it unfortunately is still not enough.

there is more that can be done, more that we all can do.

[Occam Bandage]

13. The Volt is not going to be a game-changer.

It will most likely cost over $40,000, pricing it as a high-end lifestyle brand. If history has anything to say, production bottlenecks will ensure that it will be produced in smaller quantities than anyone wants to see. Toyota is releasing a plug-in of its own within a year of the Volt, and Nissan will have one shortly thereafter.

It'll be a subject of great interest, and a great first for American industry, but I'm not seeing this as the vehicular Messiah come to rescue the American auto industry from the double curse of slumping domestic demand and enormous labor costs.

[amandabeech]

21. Perhaps GM will sell the Volt for less than it cost to make it like Toyota did

with the Prius.

The Ford Escape hybrid is also popular. Perhaps a plug-in version will be forthcoming.

Of course, everyone here cheering the demise of the Big 3 must realize that if they don't have cash, they can't continue their current progressive research.

[Auggie]

5. No choice, IMO. Meanwhile, we should all try to BUY AMERICAN!

[Soylent Brice]

6. word!

[soothsayer]

10. including Japanese cars that are (better) made in America!

[Auggie]

14. There ARE American cars made by American companies receiving good

reviews in reliability.

[AndyTiedye]

17. There is Even ONE that Gets Over 30 MPG combined EPA

GM doesn't build it. Ford does. It's not a car, it's an SUV.



They have been building the Escape Hybrid for 4 years now.
It is still the only hybrid they make (the Mercury Mariner and
the Mazda Tribute hybrids are essentially the same car, built
on the same Kansas City production line).

If they can get 30+ MPG from an SUV with the aerodynamics of a brick,
what mileage could they have gotten by putting that hybrid powerplant into a car?
Seems to me they could have gotten into Prius territory if they tried.

And what was GM doing while Ford was developing the Escape Hybrid?
They were repossessing all the EV1's and sending them to the crusher.


GM has got to make some big changes.
They need the Volt, if only to show the country that they're not still in the Stone Age.
They need more than that though. A lot more.

[amandabeech]

22. SUVs were selling like hotcakes, and the Escape was the only one in that market.

I wish I had the dough for one. I just bought a gently used Taurus. It's really quite good, and suits my current needs.

Right now gasoline is cheap, so I wouldn't expect Ford to put the hybrid plant in the new Taurus or the Fusion.

As you probably know, Ford is planning to manufacture two of its smaller Euro models here. If gasoline goes back up, they'll sell. Otherwise, I'm not so sure.

If they don't sell, then I hope that Ford will look at a hybrid mid-size. That is, if the market for the Prius holds up and Ford thinks that folks considering a Prius can be convinced to sneak into a Ford showroom.

Maybe Ford needs to come up with a new brand covertly so that folks who wouldn't be caught dead in a U.S. car as a matter of principle would be fooled.

[uppityperson]

7. It will take massive cooperation and work to make this work.

On the other hand, letting the auto industry fall leads to many other companies who provide stuff to them falling, and then since all those people are broke and can't buy food/etc, those companies will fail, and on and on and on.

Huge groups need restructuring to make sure that this doesn't happen again. I wonder if we will get back to (wobblies?) the gvt giving minimum wage jobs to people so they have work, have minimal money to pay to others to keep on going.

[blue_onyx]

8. Thankfully Obama will be our president

I'm very glad he understands the seriousness of the problem. I hope the plan he comes up with (it's pretty much up to him since Bush clearly isn't going to do anything) allows all the auto companies to survive but also help create greens cars. Maybe this plan to save to US auto companies could end up being a "Manhattan Project" type plan but for green vehicles. This would be helpful economically and environmentally.

[Kokonoe]

9. WOW, Obama will save General Motors on his first day.

Not a bad start.

[Occam Bandage]

12. My support would depend entirely on what type of oversight goes along with it.

A $50B infusion alone (or accompanied by the type of gentle fingertip-pressure guidance politicians like to call oversight) isn't going to make GM any more sustainable.

[Mz Pip]

15. Tom Friedman had a good column

on his opinion of an auto industry bail out. I hope Obama reads it.


http://www.nytimes.com/2008/11/12/opinion/12friedman.html

[customerserviceguy]

19. It's an interesting read

but it sounds like right-wing solutions to the problem.

I was especially amused by the idea to call up Steve Jobs--Apple still (in spite of clever advertising) has a microscopic share of the computer market, the only reason they still survive is that they figured out how to make a particular brand of MP3 player trendy, and managed to con people into buying their music collections all over again. Remember when we repurchased our LPs as 8-tracks, then as cassettes, then as CDs, and now as MP3s? At some point, we have to run out of stupid, and enough folks will figure out how to stop the madness.

Detroit has to come up with a marketing method that respects the consumer, not one that depends on a vehicle hanging together just through a six year financing, or worse, a three year lease, and then relying on selling hyper-expensive parts and servicing.

[amandabeech]

23. I wish that he'd been as hard on Wall Street.

You can sure tell who his friends are and where he lives.

He makes a few valid points, but his prejudices are clearly showing.

My view is that it's hard to sell that many small cars here if gas prices are low, and to sell very expensive, but fuel efficient, larger vehicles as well.

Cafe standards are the only way to get mileage up absent high gas prices, and I do fault Dingell.

However, I fault Schumer and the northeast delegation for a lot of the failure of regulation on Wall Street, and the Chicago folks for the problems on LaSalle Street.

And of course, he hates unions. How many unionized workers or their family members does he know? Does he ever think of Henry Ford's radical idea that people should be paid enough to buy the products that they make, whether those workers reside here or abroad? I'll stop now before my blood pressure goes through the roof.

[Quantess]

16. I'm disappointed by that.

It's corporate welfare on a grand scale.
:thumbsdown:

[amandabeech]

24. I hope that you opposed TARP as well,

and that on principle, you will oppose any loans or other help to any other industry for as long as you live.

Also, I hope that you will encourage all of your friends to consider the resumes of all those Michigan ex-pats without prejudice when they show up where you are looking for work.

I also hope that you will welcome with delight the building of more auto factories in forests and farmlands around the country and the building of new electrical plants, housing, schools, sewers and shopping to support them, since all that stuff in Michigan will be abandoned and folks will still buy autos.

Isn't it great to build new brownfields? How about one near Portland or Eugene?

[goforit]

18. Let them file for bankruptcy. It will force them to revamp!!!