Nationalizing Detroit

Wall Street Journal ^ | November 10, 2008

[Zakeet]

In the Washington mind, there are two kinds of private companies. There are successful if "greedy" corporations, which can always afford to pay more taxes and tolerate more regulation. And then there are the corporate supplicants that need a handout. As the Detroit auto makers are proving, you can go from being the first to the second in the blink of an election.

For decades, Congress has never had a second thought as it imposed tighter emissions standards on GM, Ford and Chrysler, denouncing them for making evil SUVs. Yet now that the companies are bleeding cash, and may be heading for bankruptcy, suddenly the shrinking Big Three are the latest candidates for a taxpayer bailout. One $25 billion loan facility has already been signed into law, and Senator Debbie Stabenow (D., Mich.) wants another $25 billion, this time with no strings attached.

Speaker Nancy Pelosi and Senate Majority Leader Harry Reid met last week with company and union officials, and they later sent a letter urging ... cash from the Troubled Asset Relief Program (Tarp) on the companies.

[Snip]

We hope Messrs. Bush and Paulson just say no. The Tarp was intended to save the financial system from collapse, not to be a honey pot for any industry running short of cash.

[Snip]

A bailout might avoid any near-term bankruptcy filing, but it won't address Detroit's fundamental problems of making cars that Americans won't buy and labor contracts that are too rich and inflexible to make them competitive. Detroit's costs are far too high for their market share. While GM has spent billions of dollars on labor buyouts in recent years, they are still forced by federal mileage standards to churn out small cars that make little or no profit at plants organized by the United Auto Workers.

[Zakeet]

Article's conclusion: If our politicians can't avoid throwing taxpayer cash at Detroit, then they should at least do so in a way that really protects taxpayers. That means handing a receiver the power to replace current management, zero out current shareholders, and especially to rewrite labor and other contracts. Anything less is merely a payoff to Michigan politicians and their union allies.

[Armando Guerra]

Reminds me of Reagan’s old line about the government’s philosophy: “If it moves, tax it. If it keeps moving, regulate it. If it stops moving, subsidize it.” Sounds very applicable here.

[grellis]

If you would like to be added or dropped from the Michigan ping list, please freepmail me.

Bailout thread for 11-10-08

[Tripleplay]

Please add me to the “Ping” list.

[Tripleplay]

Sure, we have spent 3 trillion bailing out investment banks,banks,insurers,fannie,freddie,homeowners,foreign bond holders, etc., but 50 billion to rescue the auto industry is against our capitalist principles!

[LiberConservative]

The union thugs have their hands out in return for their votes. The “big” 3 are going to get their bailout.

[ken21]

bad management and unions caused the problema.

let all 3 go down, and drive hondas, toyotas, etc.

new auto co’s would rise to the occasion,

w/o unions.

unions suck. they get more wages for less work, and we’re stuck with their communist politicians.

[RichardW]

Add me, please.

[grellis]

Too many of our RINO legislators kissed our capitalist principles goodbye long, long ago. JM2C, but I can’t see $50bln rescuing one automaker, let alone three.

[Westlander]

What’s even more bizarre is the messiah has Jennie Grandtheft on the ‘economic advisory board of the office of the president-elect’.