News > Politics > Bail The Shit Out Of Detroit

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TUESDAY NOVEMBER 18 2008 6:00 AM

Its time for America to get its bailout on again. Detroit has turned into a giant bag of ass and we need to do something about it. They want 25 billion. I say we give it to them. Why? Because Im a socialist? Nope. Because we are heading toward a deep, deep recession and the last thing we need is to lose 3 million jobs.

A study just published by the Michigan-based Center for Automotive Research (CAR) predicted that three million people would lose their jobs in the first year after such a Big Three meltdown, swelling the ranks of the unemployed by nearly one-third nationally and leading to hundreds of billions of dollars in lost income.

So, we can pay for it with a bailout, or pay for it in unemployment insurance, welfare and an increase in crime.

Oh, I know. The car companies are complete fuck ups. No argument here. While the right wing continues its rant that this is the fault of unions, Im going to actually go with the facts. The mistakes of the auto companies were made at the top. They were made by throwing their weight behind cars like the Hummer, while Toyota was going with the Prius. While Detroit was cranking out Explorers and Escalades, Japan was whipping out the Civic Hybrid. Most of us crazy liberals just sat back watching the retarded actions of both government and the auto companies with depressed amusement. Yeah, I wrote government. Bush is very responsible for the current state of the auto industry because he gave massive tax breaks to people buying Hummers and refused to up standards. What we are seeing now is the result of a fantastically shortsighted and heinous energy policy. But, then, what has Bush touched that has not turned into a flaming pile of shit?

Our retarded Republican friends would like everyone to think the auto companies are in this position because of unions. Uh huh. Right. The workers are at fault for the collapse of the company. Thats usually how it works. Please ignore the facts.

In its contract last year, the UAW made painful concessions, adopting a two-tier wage structure, such that new employees make just $12 to $15 an hour. The move is projected to bring the American manufacturers in line with their Japanese rivals' non-union labor costs in the near future.

In addition, the union has taken responsibility for providing retiree healthcare, thereby eliminating one of the last remaining competitive disadvantages for the American manufacturers' unionized workforce as compared to their Japanese rivals.

The horrible, horrible union has done its part to save the company, so shut the fuck up, you incredible idiots. The estimated cost of health care for each GM car is $1,500. Considering most other countries have universal health care, our auto industry is starting in a hole, which just happens to coincide with the profit difference.

But, the right wing is against health care, so we cant do that. And we cant have unions. And we cant save the car companies with a bail out. Sorry, we just have to let em fold and put 3 million Americans out of work. Then we will not pass an extension for unemployment and they will have to become criminals to survive. Then we will put them in jail where they belong. Fucking criminal assholes.

Automobile companies are in bad shape because they made bad choices. They went for the short sighted big buck, the one that would make them the most in the moment, you know, like all those financial companies we just bailed out. Except, the car companys actions were stupid instead of criminal. And now they are getting hammered byright, the credit problem which was created by a lack of regulation on Wall Street. Companies like GM survive on credit. They need it to pay the companies that produce the parts they use to make cars. With no credit, the whole thing collapses. And its the reason we cant allow GM to declare bankruptcy.

GM won't be able to file Chapter 11.

But GM can't build cars without parts, and it can't get parts without credit. Chapter 11 companies typically get that sort of credit from something called Debtor-in-Possession (DIP) loans. But the same Wall Street meltdown that has dragged down the economy and GM sales has also dried up the DIP money GM would need to operate.

That's why many analysts and scholars believe GM would likely end up in Chapter 7 bankruptcy, which would entail total liquidation.

Sweet. Total liquidation. That should be awesome for any future wars we have to fight. We dont need those companies to produce equipment for our forces or anything.

What everyone also seems to be missing are Detroits advances. The companies are actually turning the corner, and in some cases possibly moving ahead of Japan.

So far, the results are promising. According to the most recent Harbour Report, the benchmark guide for manufacturing prowess, Chrysler's factories now match Toyota's for the most productive, while both Ford's and GM's are improving. (A Toledo Jeep factory was actually named the nation's most efficient.) Consumer Reports now says Ford's reliability is approaching that of perennial leaders Honda and Toyota, whose ratings actually slipped last year. In late 2010, GM will introduce the Chevrolet Volt, a plug-in hybrid that can go 40 miles without gas, and the Chevrolet Cruze, a compact that relies solely on gas but that gets 45 miles to the gallon. The Volt would represent a rare leap ahead of the Japanese, who never embraced plug-in technology with the same enthusiasm.

No bailout means kissing the Volt and possibly its technology good bye.

"Maybe those engineers get rehired, maybe not," says Case Western's Susan Helper. "But you lose those working relationships; you lose all the time invested. ... [People] don't really have a sense of the things that have to get put in motion, when you have ten-year planning horizons for new engines. When you disrupt that, it's very costly."

Sounds awesome. The Volt has been in development for a decade, so lets toss it out the window. Its totally what we need with peak oil staring us in the face and companies like Tesla falling apart because of the credit crunch.

Or, you know, we could go with the free market plan. Lets see how that would play out.

1. GM files for Chapter 7 bankruptcy
2. GM's Chinese partner, SAIC, buys much of GM (Buick, Chevy, Cadillac)
3. GM/SAIC starts importing Chinese-made Buicks and Chevys, undercutting Toyota's cost advantages
4. GM/SAIC owns the Volt technology, requiring US firms to lease it if they wanted to use it.

Sweet. Theres your free market at work. Im sure the right wing would love our car companies and their technology being owned by the Chinese. Right? Hello?

The bailout needs to happen, but unlike the idiotic one we just gave to Wall Street, it should come with strings. First, fire every asshole working at the top of these companies. Get em out. They are idiots and have been fighting against regulation and EPA standards that would have pushed them in the direction of profitability today. Fuck em. Bring in someone who is innovative and has actually made a lot of money, like a Bill Gates or a Steve Jobs. Make standards and new regulations part of the bailout deal. We have been at a political standstill for years because of the many lawmakers beholden to automakers and their employees. Now it is time to get what should have been done years ago done.

Of course, the right sees this as a way to destroy one of Americas most powerful unions, so they are against it. Youll see a lot of the assholes who voted for the Wall Street bailout saying this is a bad idea because they want to kill the union. They are okay losing 3 million jobs for ideology. Meanwhile, they cant handle the idea of universal healthcare and love spending shitloads of money in Iraq. They are amazing idiots. If you support the Iraq War and all it has cost, yet argue against a bailout, please explain to me why I shouldnt be able to shit down your throat. Because I dont see any difference between you and a toilet.

FearTheReaper is a writer, actor and stand up comedian. Check back each Tuesday, Thursday and Saturday for more from FearTheReaper and read his blog, Stop All Monsters.

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Comments

Stiles

Oakland, CA

November 2002

NOV 18, 2008 06:48 AM

Good article. Your linked article raises some grave consequences for letting GM go under:

But if you're an American hoping to make all of your energy use more efficient, the huge downside is that American companies that wanted to use that technology would have to lease it from SAIC (in the same way that a lot of the US-produced hybrids lease technology from Toyota, which is one of the reasons they're not profitable); if the Chinese government (which owns a chunk of SAIC) wanted to allow you to lease that technology.

At precisely the time the Obama Administration was emphasizing greening our economy and developing the energy technologies that will move us energy independent, we would be all-but giving away some of the technology that is closest to mass production capability. We could still develop those technologies--but much of those sunk costs would be lost.

Those pundits saying that a GM reorganized after bankruptcy would be much more efficient are right--insofar as it would make dealer structure more lean and produce smaller cars with margins that make them profitable. But it might well utterly devastate the US assembly industry in the 5 to 10 year timeframe. And it would be a terrible setback in efforts to develop the technologies to make our economy more energy efficient.

So beyond losing developed and ready for market electric-car technology permanently to the Chinese - tech the US has already spent hundreds of millions of dollars and decades perfecting - we would give the Chinese a huge dealer network and the most recognized brand name in the auto industry. The Chinese would then gradually move Chevy and Buick production to China, undercutting every other automaker's costs, including nonunion Japanese plants here in the US.

This is a once-in-a-lifetime deal for the Chinese and a disaster for America if GM is allowed to go under.

theaceface

Los Angeles, CA

March 2007

NOV 18, 2008 07:00 AM

This should have been done years ago. The city of Detroit in general is at its lowest morale point ever. If the government focused all this bailout effort on the working man instead of stockbrokers, it might be a small pat on the back for Bush before he gets the hell out of office.

VioletRed

Ferndale, MI

October 2004

NOV 18, 2008 07:35 AM

detroit is fucked. no doubt about it.

mk700c

Ann Arbor, MI

December 2003

NOV 18, 2008 07:53 AM

Greetings from Detroit; it took me a while to respond to this as I first had to raise an old timey fire brigade to douse some house fires while twiddling handlebar mustaches.

As a lifetime resident of the area (the great J.J. Walker once noted when he heckled me from the stage of Improv Vegas that "You're white. You're not from Detroit. You just drive through it to get to the airport), I'm fully aware of just how deep the Auto Industry's roots are under all of our feet - not just in Michigan, but the country.

That said, there are three things that should be looked at as a bottom line to this "bailout," that, whether you're liberal, conservative or mormon, are irrefutably a good idea.

1. The cost to current social services, unemployment etc. for three million autoworkers (the number is actually much higher, when you count the suppliers that would instantly go under) for the first year would cost the taxpayers more than triple than the $25B bailout. Just do the division; $25B / 3M = $8,300 per worker. That won't even cover the first quarter of unemployment benefits. If they're denied benefits and end up on the street, well, have you seen Beyond the Thunderdome? Well, that's what Detroit looks like now, imagine it with 3M more homeless.

2. Auto workers buy American cars. When you watch a car commercial in Michigan you hear the same phrase at the end, "$$$ for A, Z, D customers." That may sound foreign to most of you, but those are employee pricing plans from the big 3. Henry Ford's original motivation for developing mass production was so that the people who build the product, can afford to buy it. That's held true, and over the years the big three has owed much of their sales to auto workers buying a new Chevy every year, and one for their daughter on her 16th birthday. These people love American cars, and they buy a lot of them. As the automakers moved jobs out of the country, they didn't take into account that they were also losing sales.

3. This whole idea that cash and economics obey the laws of gravity is ridiculous. Republicans are still preaching the trickle down theory? Really? Listen, I'm a rich guy , from a wealthy family, and I love tax cuts for the middle class. Rich Guys need to realize that it's the poor people who buy all your shit. Even if the tax rate on the wealthy had to be raised to 49%, it would still make sense to give the money to the bottom - because they would buy from the rich at 51%. Obviously, that's an extreme, so what's the problem with being taxed at 33% so that the poor can give it back to me at 67%? Sounds awesome to me.

Now if you'll excuse me, I have a riot to participate in.