Big Three CEOs Flew Private Jets to Plead for Public Funds
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PostPosted: Wed, Nov 19 2008, 1:26 pm EST    Post subject: Big Three CEOs Flew Private Jets to Plead for Public Funds Reply with quote

Hmm... I wish the government would bail out my 401K. I can drive my own car to D.C. to plead for help.

Big Three CEOs Flew Private Jets to Plead for Public Funds

By BRIAN ROSS and JOSEPH RHEE
November 19, 2008

The CEOs of the big three automakers flew to the nation's capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.
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http://abcnews.go.com/Blotter/WallStreet/story?id=6285739&page=1
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PostPosted: Wed, Nov 19 2008, 1:47 pm EST    Post subject: Re: Big Three CEOs Flew Private Jets to Plead for Public Funds Reply with quote

The big three failed to realize the SUV markets were declining and have been over the top in terms of management and cost for many years. Then you add in the unions who simply bankrupted the companies with their pay structures, overtime, retiree health care, Defined Benefit and vacation policies it crippled the companies. As someone who knows people working in Detroit I can attest that the workers are heavily compensated, but most take the view that the union will protect me. So you have people making a lot of money on the line, but not thinking of tomorrow. It's sad, but it helped to cripple the companies.

Truthfully, if the unions were not so in bed with the Democrats, there would be no rush to bail them out. They'd be like any other big business. US Steel and Pan Am went out and they were goliaths. When AMC collapsed the government didn't rush to their aid. Let them go bankrupt and restructure.
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PostPosted: Wed, Nov 19 2008, 6:46 pm EST    Post subject: Re: Big Three CEOs Flew Private Jets to Plead for Public Funds Reply with quote

No question labor costs are the most critical problem the Big Three have, which is why bankruptcy is essential, even with any government deal. Those deals need to be broken and started from stratch. And if labor won't accept that, these companies need to go away and we should focus any aid instead of incentives or measures to get the foreign auto companies to build more in the U.S. This is more realistically achievable.

That said, the Big Three's decision problems run much deeper than the SUV. For the most part they are still stuck designing cars that appeal to the minority of car buyers in the country. 80% of us live in Coastal states near major urban markets. But they keep making cars that primarily appeal to the small minority that live inland and in smaller, more rural comunities, or appeal to the lower economic tiers of the major markets. They churn out a lot of models that I only ever see as rental cars because no one who lives in a major market would buy them. They are so insular in their thinking that it is ridiculous. They fundamentally don't get it and haven't for 30 years, straight. Even now, with gas back to $2/gallon what are they doing? Starting up production on the SUV and Truck assembly plants again. I wish I was kidding but its a fact.

I personally favor no deal. Force them into Chapter 11 protection and let the chips fall where they may. But if we do assist, it should be with major conditions, including still forcing them through a government-managed Chapter 11, forcing a radical shift of management, forcce them to scrap all labor contracts, force them to dump all the poor performing brands (goodbye GMC, Poniac, SAAB, etc.) and submit to a hostof government-controlled conditions. The problem is organized labor can't let this happen and they more or less own the Democratic Party (and I say this as a Democrat). I would be the death of Unions for the most part in the country if all the Auto workers contrcts were nullified. So inevitably Democrats and probably Obama are going to push for a deal that doesn't include scraping the contracts, which means a deal that is doomed to still lead to the failure of these companies or worse our need to regularly pump cash into them. And if we do the latter then let's just call this what it really is, not a bail-out but a fancy Welfare program for the auto workers, only one with better benefits that virtually any of us taxpayer contributors have.
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PostPosted: Fri, Nov 21 2008, 12:42 pm EST    Post subject: Re: Big Three CEOs Flew Private Jets to Plead for Public Funds Reply with quote

There is no doubt that the auto union must end. If they want the car companies to exist at all they need to be able to compete. There were so many factors that got the US automakers to this point and its almost too many to list. If the car companies would have embraced the teachings of Deming earlier perhaps they would be more profitable? Or perhaps the perfect storm of their problems are resulting in their demise. They need to go through bankrupcy no doubt about it (well at least GM, maybe Chrysler too). If they dont then their problems with being competitive will just continue.
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PostPosted: Fri, Nov 21 2008, 5:00 pm EST    Post subject: Re: Big Three CEOs Flew Private Jets to Plead for Public Funds Reply with quote

This business plan idea of pelosi's is a cover your ass move. The deme are still planning to give them a bailout, and I bet noajor change to union relationship will be in the plan.
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PostPosted: Fri, Nov 21 2008, 10:26 pm EST    Post subject: Re: Big Three CEOs Flew Private Jets to Plead for Public Funds Reply with quote

The Big 3 have their problems and I am not close enough to the details to know if they deserve a government bail out, but I do think it is important to note that the last time the Big 3 CEOs made the news for flying their corporate jets to Washington DC was shortly after 9/11 when they met with the President in an effort to save the US economy from crumbling in the wake of that horrible attack. The result was a huge financial risk called "zero percent financing" that looks like irresponsible lending in hindsight, but at the time was the driving force behind stabilizing our economy. I don't recall what the CEOs of Toyota, Honda or Nissan did at that time.

I also believe there are strong scientific, economic and military reasons to have at least one viable American auto manufacturer.

JD
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PostPosted: Sat, Nov 22 2008, 9:32 am EST    Post subject: Re: Big Three CEOs Flew Private Jets to Plead for Public Funds Reply with quote

Guest wrote:
This business plan idea of pelosi's is a cover your ass move. The deme are still planning to give them a bailout, and I bet noajor change to union relationship will be in the plan.


The CYA audacity of the year is the Bush Administration. First he expresses no interest to help them at all. Then as pressure mounts from the public for some kind of aid, his administration figures out how to trick the public into thinking he is helping them while really serving his anti-environment agenda by saying instead that Congress should convert the $25 billion in aid available to the Big 3 for fuel-efficient vehicle development and simply drop any fuel efficiency requirement. This is not really more aid since they were already counting on this money anyway. So its their way to not give aid and to again thwart any effort to reduce our oil dependency long term. Bush hates the environment and loves oil. But the classic cap of all this is that when Congress refuses to take the bait on his transparent non-aid-but-continue-to-kill-the-environment move which would only encourage the automakers to continue to invest in product out of step with public demand as they steadfastly have all these years, his spokesperson blames Congress for refusing to take action to help the Big 3. What a joke. He has always loved this lie whenever he doesnt want to support legislation he has the Republicans propose some fundamentally different alternative that is a non-starter then when Congress doesnt capitulate to it, as he knows they wont, he refuses any compromise at all then blames Congress for inaction. Somehow his utter refusal to compromise on a workable solution is not inaction but if Congress doesnt do exactly what he wants its inaction.

Hes the biggest loser in the history of the office.
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PostPosted: Sat, Nov 22 2008, 12:51 pm EST    Post subject: Re: Big Three CEOs Flew Private Jets to Plead for Public Funds Reply with quote

After we bailout the banks, insurance, then auto, it will be the airlines who will be lining up in the queue for a handout. The point of chapter11 is to allow a company to reorg. As the weaker companies fall or get merged, the rest get stronger. Why was it that there was talk about auto mergers just prior to flying to Washington this past week, But then the CEOs saw an opportunity to ask for a bailout and the merger talks ceased.

The free market should be a correcting factor for the industry, as the unions are also key contributors to the US auto crisis and only a bankruptcy would allow the industry to reemerge stronger and compete globally. The US incentives should be to the consumer to help buy efficient cars, stimulating the right behavior (and implementation of Business Plan) not bailout money. The best business plan would be rewarded to the US auto companies that can deliver on the most efficient products, not rhetoric on capitol hill.

I do expect the democrats to agree to an auto bailout in the end. This business plan is just one of the hurdles and more public media flogging will be expected of the 3 CEOs before the politicians feel they are safe to vote YES on the bailout.

I would only fund 2of3 makers with the strongest balance sheets for 1 year. And then incent the demand side of the equation to ensure a successful implementation of these CEOs plans. Incent consumers for buying >50MPG cars will have the market identify the successful manufacturer and maintain momentum.

If the democrats are intent on giveing another bailout to the 3 CEOs, then the big3 should be giving a % of the company to the USgov in exchange for a 1yr investment and funding of the new plan. We should even offer this to the reorged company in Chapert11 as well. Then the market will determin who implemented the right strategy and business plan over the next year.

We do need to keep some auto makers in the US, just as we need to have some US airlines, and insurance, and steel makers, etc but we cant bail everyone out. I guess both sides of this argument want the same end result, a soft crash .vs. hard - its the implementation of how to enable it that differs with the two parties.
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PostPosted: Sat, Nov 22 2008, 1:39 pm EST    Post subject: President-elect outlines recovery plan, warns worst may be yet to come Reply with quote

WASHINGTON - U.S. President-elect Barack Obama said on Saturday that he was crafting an aggressive, two-year stimulus plan to revive the troubled economy, warning that swift action was needed to prevent a deep slump and a spiral of falling prices.

"If we don't act swiftly and boldly, most experts now believe that we could lose millions of jobs next year," Obama said in prepared remarks for the weekly Democratic radio and video address.

"We now risk falling into a deflationary spiral that could increase our massive debt even further," he said. ...



http://www.msnbc.msn.com/id/27854138/
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