"What the critics of an auto bailout don't get" -- Ron Dzwonkowski, DFP columnist

[Bozita]

What the critics of an auto bailout don't get
BY RON DZWONKOWSKI • FREE PRESS COLUMNIST • NOVEMBER 16, 2008


I certainly get the fear, anger and frustration around here over an economy that's on a downhill run with no bottom in sight. But I don't get the knee-jerk opposition from some people, especially in Michigan, to federal help for the auto industry -- not when you consider what Washington is already doing for other businesses and, more important, the deep, far-reaching consequences of one auto company failure, much less three.

Michigan would be ground zero for that economic catastrophe, the fiscal equivalent of Hurricane Katrina. Nobody in good conscience can want to see that happen, to see that much pain inflicted on that many people. And if you think the $25 billion or so the industry needs in tide-over cash to 2010 is expensive, it's way cheaper than a single month of tiding over all the former auto workers who will be jobless and hungry when their unemployment runs out. And don't forget their kids, blameless in all this.

Nobody in Michigan can think they won't in some way be affected, whether by a job loss or a customer loss or the closing of a favorite restaurant or the hikes in all kinds of government or school fees to offset lost taxes or even the end of special programs at church because the collection basket has gotten so much lighter.

Look, no matter what Washington does, the auto industry is going to keep shrinking to its right size, and Michigan is going to keep becoming a smaller state. That's OK if it's also a better-educated state with decent jobs in new kinds of fields. But if the contraction happens all at once, this state will be set back for decades, forever known as America's boneyard. How's that for a license plate slogan?

You can be philosophically opposed to government intervention with market forces, but the Republican administration in Washington tore down that wall a few months back and now has, with assent of the Democratic-controlled Congress, pumped hundreds of billions of dollars into insurance, mortgage and financial firms to keep them afloat.

The cash the auto industry needs to bring its new models to market is a small fraction, maybe 4%, of what the government has OK'd for Wall Street firms that don't employ a tenth as many people as the car companies. Put another way, what the auto industry needs is about three months of what American taxpayers are spending in Iraq, a country that now has oil revenue flowing and a budget surplus.

more...
http://www.freep.com/article/20081116/COL32/811160392/1068/PRINT

[MichiganVote]

1. Spot on. And for all of you who want to dump the GM pensioners-bite me.

And no, I do not have a pension w/GM.

[acmavm]

6. It's not just you pensioners we have to support. It's the men and women

who work for the companies that sell parts and supplies to the Big Three. It's for the Big Three workers who didn't have a friggin' thing to do with company policy but who showed up for work every day in America's last industry in this country. It's for the families of the workers who have as much right to expect help from this government as do the families of the thugs who blantantly gamed the system and made bets on mortgages the didn't exist. Bets that they WOULD FAIL.

[MichiganVote]

10. I agree.

[kentuck]

17. Also, it's the little guy down on the corner....

that stands under the umbrella of his one-man hot-dog stand. He always manages to be there on the corner so the workers can come down and get one of his world-famous chili dogs for lunch. Where will he go if they no longer show up?

And the young lady that waitresses down at that corner bar. All the guys stop by there after work and have a couple of beers. They tip well. That helps her to feed her two kids, which is sometimes hard to do as a single Mom. Where will she get another job to make up the difference??

[MichiganVote]

18. Sure. She will go to Walmart and make poverty wages, she'll be told to put her kids on Medicaid,

she'll work odd hours making childcare impossible and her kids will go to school tired, cranky and act out. Then she'll get a call from the school. She can live in a rat hole, eat unhealthy food and take the bus to work or to the grocery store with the food stamps she will qualify for. And when she has an emergency and can't pay the rent a few times she can try to get shelter in Michigan but the homeless have grown so fast, she'll have to rely on friends or family. Or she'll get some guy full of shit to live with her and that's usually a disaster too.

But that's ok b/c God knows those Walmart kids sure do need another billion for their "free" market goodies.

God, I honestly don't know how these people can live with themselves.....

[acmavm]

24. Yes, I was very remiss in ignoring these people when I posted. Because

that is true trickle down economics. The Big Three employess get paid, and the money is passed right on into the local ecomony.

Yes, you are so right.

[madrchsod]

8. and my 22 yr old daughters job..

of all her friends she is the only one that has a full time job that pays 13 plus and full benefits. her employer furnishes a physicians assistant for free! she works for one of the oldest parts supplier in america that just was put on the list of stocks not to by and recommended not to insure. they make parts for the top European and Japanese cars and trucks.

depress the automotive stock and buy as soon as the bail out goes into effect...buy low and sell high...

[madrchsod]

2. yes three months and we do not have the will

to save hundreds of thousands of jobs and tens of billions in wages. econ 101...military expenditures is not one of the four principals of wealth

[MamaDem]

7. This is what I've been saying, albeit not quiet to articulately...

"way cheaper than a single month of tiding over all the former auto workers who will be jobless and hungry when their unemployment runs out. And don't forget their kids, blameless in all this.

This needs to be done swiftly and with very strict conditions and oversight.

[Faygo Kid]

3. Michigan is beautiful, and I say that from Maryland.

Michigan is achingly beautiful. The Lakes are spectacular. I love Michigan.

http://www.leelanaucellars.com/

[blue_onyx]

13. Yes, the lakes are spectacular

and they may be the key to our future. Fresh water is the MOST important resource and we have the largest concentration of it in the world. The article said Michigan will continue to get smaller. That may be true in the near term but you never know what will happen down the road. Population trends change. Based of the population trends from 30 years ago, Michigan should have 15 million people today, not 10 million. The growth out west may become unsustainable due to the fact much of it is occurring in the middle of the desert. I believe Michigan does have a bright future but will have to make it through a few more hard years.

[GrizzlyMan]

4. Does anyone know what kinds of cars they are "bringing to market"?

My ONLY issue with a bailout is I fear they are just going to keep rolling out gas guzzling SUVs, 300s and Mustangs and we'll be right back where we started once that money is spent.

Why can't the ingrates who run these companies understand that in the age of peak oil, they have to adapt to the times? Why can't they at least make some effort at foresight?

[madrchsod]

9. ford is building three models from europe in the usa

along with a new engine plant..gm has the electric car coming up when they can build enough batteries. they also will continue to build flex fueled cars and trucks until the next generation of fuel systems are developed. there will always be a market for suv`s and trucks in the usa and they will be more fuel efficient. Chrysler is in big trouble because they do not have the research money to build new engines. Chrysler may end up being bought for it`s jeep and van division. their cars suck and should be put out of their misery.

the specially cars fuel consummation is a drop in the bucket because these cars will basically never be driven.

[GrizzlyMan]

12. At $40k the Volt isn't going to cut it

Nobody is going to buy that car when they can buy a 20k hybrid from Honda and Toyota.

[yodoobo]

23. They will be selling the same cars in 3 months

That they were selling 3 months ago.

It takes years to overhaul a product line.

I'm not opposed to a bailout. If we can do $700b for wallstreet, surely we can do $25b for detroit.

However, I don't think we can sustain the auto industry for the number of years it will take them to

1) Revamp the entire line of cars.

2) Make them reliable and desireable.

It'll take 10 years for Detroit to stand on its own again. Can we sustain them on life support that long?

[Tansy_Gold]

5. I'm not philosophically opposed to government intervention

What I *am* philosophically opposed to is government enabling of a status quo.

MANAGEMENT has to be changed. It wasn't LABOR that made bad decisions, and it sure as hell wasn't the retirees. Management knew it had to fund those pensions and benefits, and it didn't. Management needs to pay. But more than likely it won't. Instead, we will.





Tansy Gold

[oceanman]

20. What I *am* philosophically opposed to is government enabling of a status quo.

Amen to that. Why should we the taxpayers be obliged to giveaways to the same management team that ran the bloody companies into the ground because of their bad decisions in the first place? If these fools were actually as smart as they thought they were they should have seen at least a hint of what was coming. Its not like the need for better fuel efficiency or better emission standards is anything new, they've been fighting this stuff tooth & nail for years - which now leaves them at a major competitive disadvantage. They screwed themselves for short term profits. If we're going to bail out the companies, then we should also require the replacement of the boards and management teams. This goes for the financial institutions as well.

[spoony]

11. I loved reading "On Point" this morning

For those who don't know, that's the op-ed section in the Detroit Sunday paper, and today it was filled with detailed, thoughtful articles just like this one. Plus a sharp cartoon drolly noting that if we changed our name from Detroit to Baghdad, the government would be showering us with cash.

[blue_onyx]

14. But one thing creeped me out

Nolan Finley actually wrote an article that made sense. It scares me when I agree with him.

[spoony]

15. Lol, that just means that it's soooo obvious that even

Finley could figure it out.

[Bozita]

16. Two daily papers could never survive in a Big 3-free Detroit

Nolan knows.

[marew]

19. I had three lemons in a row from US auto companies.

Major problems, major headaches! Three brand new cars in a row with defective and/or rusted parts. Stuck in traffic too many times to count, hours and hours and hours in dealership waiting rooms. Sorry, the way US auto makers treated me, I can't care about them. Two of the cars were very expensive. I now buy only Toyotas. What a difference! I think it was unAmerican to KNOWINGLY sell me defective products. Loyalty goes both ways. They didn't care about me. I don't care about them.

[Mumble]

21. I had 2 lemons..

...and completely agree with you. Never again will I buy an American car. Whenever I went in for service I was treated like dirt. Don't bail them out and let GM, Ford, and especially Chrysler die the sooner the better.

[marew]

22. Also heard from the wife of a now deceased Detroit auto worker

that when one of the workers wanted to purchase a vehicle, a note was posted on it as it went through the assembly process TO MAKE SURE EVERYTHING WAS DONE RIGHT! The rest of us got no such consideration. The rest of us just don't matter.