Let Them Eat Bankruptcy Court

I’m not surprised that the U.S. automakers’ letter to Santa Congress won’t be answered this year with a gift bailout of a few billion under the Big Three’s tree.  No one should be surprised at that.

First, an embarrassed Congress is rightly suffering buyer’s remorse over the pig in a poke bailout for the financial industry a few months ago after being sucker punched by the Decider and Treasury Fool Paulson.  After allowing some $350 billion to be sent into an abyss with little to show for it, it’s a slam dunk case that Congress would now posture over the chump change the automakers are bleating for.

Second, I’m convinced the Republicans have done some shrewd political calculating this time around. With the financial industry bailout, it was a Republican administration literally begging for it. (Newsweek reported that Paulson dropped to one knee and pleaded with Pelosi to get the bailout through the House. What an overacting wussy he is!)  So between party loyalty and some bribery, the House Republicans allowed the bailout to go through after initially stopping it.

The automakers are a different story.  The Democrats dreamed this bailout up.  So the Republicans have a lot more freedom to just say no, especially since it may pay off for them politically.  And after being repudiated at the polls in November, the GOP needs some morale building.

By taking a tough stand now, the GOP can gain some political points for when the automakers come back  after January 20 to a Democratic administration and a Congress very much dominated by the Democrats, who I believe will push through a bailout in some form.  And if an automaker bailout passes next year, the Republicans can hope their pivotal role in the financial industry bailout will be overlooked.

I hope, but am not confident, that the Democrats will have the good sense not to approve a bailout unless the Republicans buy into it, which I believe they (Republicans) will not do.  Just as the financial industry bailout has been pretty impotent, I don’t believe an automaker bailout will succeed in anything more than postponing bankruptcy for a few months since the unions will not make wage concessions.

Anyone who believes the automakers can come up with a feasible recovery plan within three months has been inhaling too much too long.  The automakers have had three decades, since the Chrysler bailout in 1979, to reorganize. And look where they are today…  looking for a handout.

That’s why I say – let them eat bankruptcy court.  Because failure is an opportunity.

Bankruptcy will allow the automakers to get away from that average $75 per hour wage and benefit package it pays production workers.  Is it any wonder the Big 3 have a tough time being profitable with that kind of competitive disadvantage?  The automakers can abandon the SUV models for all the green models they want but when their labor cost is $75 per hour compared to the $47 per hour that Toyota and other foreign automakers pay their U.S. workers, then  it’s time to do the math.  Maybe the union won‘t work for $46 an hour but I think a lot of folks will conclude that a $46 an hour package is a great deal for a job not requiring a college degree.

The unions had an important and essential role in history.  But the autoworker unions are dinosaurs, trying to preserve a way of life that’s not sustainable because we ar no longer the only economic engine in the world, as was the case after World War II.   As a taxpayer, I won’t support them through a bailout. If they want to take their employer into bankruptcy, that’s fine with me.

The Republicans failed us with the financial industry bailout. Let’s see if the Democrats can do better…

Advertisements

7 responses to “Let Them Eat Bankruptcy Court

  1. Wow! You and Fakename are on the same page today. As a former member of the CWA, I don’t agree with you about the union. The UAW did it’s job getting the best pay and benefits for it’s members. Management failed because they make cars people don’t want to buy.

  2. By the way, do you know whether or not GMAC is involved in the mortgage business?

  3. Lol, I swear I did not read this before posting my auto bailout post. It just seems that Anarchist and I think alike. It’s almost scary!
    I’ll save my anti-union post for another day, but in general, unions were a good and necessary thing in the 1930’s. Now they are about to take themselves from $75 an hour and lifetime benefits to zero dollars per hour and zero benefits. How good can that be? I think they are just too short-sighted to believe it will actually happen.
    I’ve seen this kind of thing in action. I used to live across the street from a grocery store, my home away from home, like Publix is today. The butchers went on strike, and the store closed. End of strike, end of employment.

  4. There’s a big difference, I think, between CWA and UAW with regard to the specific competitiveness issue of those two industries. I’m not anti-union, but I think the UAW is too short-sighted.

    Yes….Fakename and I appear to be in some sort of “zone”…lol! I’ll blame our radical past!

    As for GMAC, I think t only finances autos…but maybe it “diversified.” Why?

    Sorry for the late response..I was in Panama City this weekend. That may be the topic of next week’s post….

  5. I think I’ll post about guys pulling my hair 🙂

  6. Seems like I heard that GMAC owns Ditech and I wonder if they were involved with subprime loans?

  7. Why should we not bail out the auto industry. After all we have bailed out every other corporation. I think we as individuals should incorporate so we can get some free money because you know they will never pay it back or even adhere to the rules relating to getting the money that is the “Democratic” way. And we are about to get at least 4 years of those polices since the congress has been Democratically controlled for the past two years and now the Prez will also be in the hands of the Democrats it will be like the Republicans in reverse. Get ready for tax and spend polices. Oh yea. I say revolution we need a good old barn burning and lets start at the top.

What say you?

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s