Wednesday, December 03, 2008

More Big 3 Bull$hit

I just watched Keith Olbermann interview Michael Moore regarding the automaker bailout.

Some thoughts:
• I agree that the white collar financial crooks from New York were met with wonder and open pocketbooks when they arrived in Washington D.C. begging for cash. I wonder if they drove or if they flew down in private jets. And why wasn't that reported.
• I agree that the blue collar manufacturing crooks from the Midwest were met with scorn and closed pocketbooks when they arrived in Washington D.C. begging for cash. Making money from money is good, but making money from making things is bad? There is a huge disconnect here.

Then Michael Moore went on to make a point that I had to verify because it seemed so outrageous:
• Total General Motors stock market capitalization is $2.991 Billion (according to Morningstar)
• Total Ford Motors stock market capitalization is $6.808 Billion (also according to Morningstar)
• Chrysler is privately held by Cerberus
• The "Big 3" are asking U.S. taxpayers for $34 Billion

Yes, that's right, we could BUY their asses for less on the open market for half of what they are asking!

I stand behind my previous post stating that the American public should get big discounts on cars for their money.


Doralong said...

I'd settle for a fuel efficient, affordable vehicle that would actually LAST..

Alan said...

The money that they're worth today doesn't count the money it would take to actually run them.

We give far more in subsidies every year to farmers. No one complains about that. We gave 700 billion to banks. People seem OK about that. But ask for 3% of that figure for the auto industry and that's the line that must not be crossed? Seems odd to me.

I wonder how many folks who are against these loans to the auto industry are in favor of government stimulus packages that would involve spending government money on infrastructure improvements in order to put people back to work, sort of a WPA for the 21st century. After all, that's actually giving money away, rather than just making loans, to states who should have kept their own infrastructure up over the years. Hard to be consistent and be for one but against the other, it seems to me.

Y | O | Y said...

Alan--In the other post I referenced, I tried to come up with a solution that would make every one happy with the auto situation. We definitely can't let them fail!

If, rather than give them money directly, we subsidized the purchase of the cars with HUGE tax breaks (larger breaks for higher MPG cars), that would keep the assembly lines humming, let them make money, lower our dependence on oil, keep the employees working and money flowing into those households and towns. The taxpayers, who are going to pay anyway, would get discounted cars!

Anonymous said...

Someone suggested in a letter to the editor here that the OIL companies should bail out the auto industry, since they're flush with cash these days and have a definite interest in keeping the roads filled with gas-guzzling American cars.

Alan said...

The subsidy thing could work if Americans actually used them to buy more fuel efficient cars. I'm not sure there's any evidence to support the notion that, on average, the American auto buyer would do that.

My guess is that if we gave folks some money to buy a car, we'd see a lot more Hummers on the road.

Maybe that isn't the case. But what loans offer that subsidies do not is interest. If these loans get paid back with interest, the taxpayer may actually end up making money off the deal, as they did with the Chrysler bailout of the 1970s.

Y | O | Y said...

Alan--I was thinking that one would get $10,000 for a car that gets 35 mpg; $7,500 for 30 mpg; or $5,000 for 25 mpg. This would be designed to benefit us all and to promote those high mileage cars. And, for $34 billion, there would be more credits then they can ever produce.

I'd say not to make it Big 3 specific since this is to primarily benefit the American worker and those that built factories here shouldn't be penalized. Maybe set it up so that the car is assembled in a U.S. factory of X% (75%?) American content.

Set a time frame and grandfather in a few...December 1 to February 28. These details and the amounts could be worked out with the automakers to guarantee long-term industry health.

I'm not sure what would happen on March 1st...this program would pull a lot of sales into the earlier period but maybe the economy would be in better shape by then. It could always be extended, maybe at lower credits.

peter said...

why not merg the big three intoGFCM anduse the best of all three toforma super corporation