Big Fat Story
‘We wondered if we were just being set up.’
In a battle for government funds that pits those who shower in the morning against those who shower after work, the union lost this round. Bailout talks fell apart after Republicans insisted that wages reach parity in 2009. The UAW’s Ron Gettelfinger was wary of GOP negotiator Sen. Bob Corker’s offer. “We wondered if we were just being set up,” he said. The union said it wanted a deal for wages that were competitive with those paid by the foreign transplants. The GOP's hard stance drew some barbs. “Corker and these other great patriots want to allow these Japanese companies to dictate the wages and benefits that American companies pay their workers. It’s despicable,” railed The New Republic.
Photo: Carlos Osorio/AP
"We simply cannot ask the American taxpayer to subsidize failure."
Bailout-weary Senate Republicans were resistant to a deal to rescue Detroit. A bailout was seen as delaying the inevitable for the Big Three, which trail their rivals in all sorts of metrics. "We simply cannot ask the American taxpayer to subsidize failure," said Sen. McConnell. The argument drew a sharp retort from House Speaker Nancy Pelosi. “The consequences of the Senate Republican’ failure to act could be devastating to our economy, detrimental to workers, and destructive to the American automobile industry.” But the poor shape of American-made cars has dried up some sympathy for the Big Three and left many angry, including Flint-born Michael Moore. “I drive an American car. It's a Chrysler. That's not an endorsement. It's more like a cry for pity,” he wrote for the Daily Beast. Polls show Americans divided over the bailout. A Dec. 6 to Dec. 8 Los Angeles Times/Bloomberg survey found 47 percent said the government should rescue the automakers, while 42 percent said it shouldn't.
Photo: Alex Wong/AP
The bailout isn't dead yet. By Friday morning, White House Press Secretary Dana Perino said Bush will "consider other options," including the $700 billion financial rescue package managed by Treasury. Politico reported that Vice President Cheney had told senators Thursday that it could be "Herbert Hoover" time if the bailout failed, which it did several hours later. But the longer it takes for a plan to come into being, the more GM's condition deteriorates, economy bloggers at Naked Capitalism note. Meanwhile, GM, which employs 5,500 people around the UK, is in talks with the British government to secure cash to allow it to continue operating
Photo: Lawrence Jackson/AP
Can Anything Save Detroit Now?
Senate Republicans killed a $14 billion rescue of the American auto industry, threatening one or even two bankruptcies in Detroit with a wide-ranging impact that could jeopardize up to 2.5 million jobs. The fate of the rescue now lands on the desk of a lame duck president.
Automakers at center of web of U.S. manufacturing.
What everyone fears is the domino effect of a bankruptcy at GM or Chrysler. A vast network of suppliers support the automakers, as well as foreign automakers in the U.S. and a myriad of other manufacturers. Estimates of job losses range up to 2.5 million in the event of a Big Three failure. Automakers are already squeezing suppliers. The New York Times reports General Motors and Chrysler owe their suppliers a total of roughly $10 billion for parts that have been delivered. G.M. has held off paying them for weeks, and Chrysler is paying in small increments.
Photo: Jing Aiping/AP
Share prices of carmakers and associated industries fell sharply overseas as fallout spread from the Senate's rejection of a bailout. Hopes Treasury will step up where the Senate failed kept U.S. markets steady. "Everybody knows that a failure will badly hit the economy and financial markets. That will need much bigger stimulus packages to avoid more shocks," said Lim Ji-won, an economist at JPMorgan Chase. The failure of the bailout plan sent Asian markets reeling overnight, with shares in Toyota, the world's biggest carmaker, losing a tenth of their value.
Photo: Henny Ray Abrams/AP
The cash position at GM and Chrysler seems to be deteriorating by the day. Without aid, they’ve now said it’s not clear they car survive to an Obama Administration. Both have brought on bankruptcy experts to prepare a filing. But is rebuilding the business under Chapter 11 a real option? Will anyone buy a car from an American automaker now? In its submission to Congress, GM said that market research showed more than 30 percent of consumers who had considered buying GM cars but ultimately decided to buy another brand cited the possibility of GM bankruptcy as their top reason, ABC News notes. "It seems like we went from a mid-2009 estimated running-out-of-money to the end of December in a heart beat," said Edward Altman, a finance professor at New York University's Stern School of Business.
Photo: David Zalubowski/AP
Partner Sites: Expedia| Hotels| Hotwire| Urbanspoon| Vimeo
This comment has been removed by The Daily Beast's editors.
I think time will show that letting them fail is a huge mistake.
if we keep bail out every derelict company , we will end up holding all failed business in a bundle , a wrecking yard of worthless commodity .. worth nothing , then what?
the UAW need to be dissolved and workers need to be paid as all other car manufacturers work force .. perhaps even less until they become worthy to in the market
I am definitely of two minds. The Republicans by refusing to fund this particular bailout are simply trying to bust the unions, so that is the worst part of this. On the other hand, they are operating under antediluvian rules and the "Big 3" have had chance after chance to get this right and every time, they've blown it. Who in their right mind would buy a Hummer or an Escalade (hybrid or not), or a Navigator? Short term profits were all they cared about and now the whole country and millions of hardworking people are going to suffer because of their cynical shortsightedness. GM used to know how to build electric cars that would go 100 miles on a charge. Where are they now? Crushed, in a landfill somewhere. So, in many ways, they deserve to have a stake driven through their hearts to put them out of their misery. Their products and business models are so over. I am not at all sure that giving them "survival money" is the thing to do. I guess we shall see.
Let me ask you a question. Would you buy a car from a company that in all probability will be going bankrupt in the future? How many chances do they get to get it right? Lets see some new blood in the business. These people have been draining the American public for years. Closing factories on a whim and opening them up again in Mexico or overseas. Not loyal to their employees and not loyal to the American people.
I've given this alot of thought and I think the best thing to do is to give them the money so that they can operate and to require them to take their businesses through Bankruptcy Court. I don't see why we are ignoring the Judicial Branch. Going this route, with everything out in public, even Media coverage of every word spoken, every agreement reached, would provide the public with a greater understanding of the problems inherent and the risks involved. The Bankruptcy Proceedings, if held locally, would provide a ripple spur to the local economies at a time when they need it most. Turn this into a Media Circus as much as possible and learn from the lessons that come out of it. It'll help the local economies, it will help the Nation's Voters understand, and it will help the auto companies simply because of the embarrassment of it all. It seems to me to be the proper balance of both what is needed and what can be gained.
This comment has been removed by The Daily Beast's editors.
Thank you.
As a first time user, your comment has been submitted for review. It can take anywhere from a few hours to a day or two for your comment to be reviewed, depending on the time of week and the volume of comments we receive.
Please log in to leave comments.