Obama should step in to assist automakers, Levin says

[Truth Teller]

Source: Detroit Free Press

President-elect Barack Obama should step in to sort out how to help out the struggling auto industry, U.S. Sen. Carl Levin said Sunday.

Democrats in Congress support a plan to use some of the $700-billion rescue approved for the financial markets to help the auto industry.

Others, including President George W. Bush, want to take $25 billion in federal auto loan guarantees for retooling domestic auto plants to make more fuel-efficient autos and convert it to a bridge loan for domestic automakers.

"I want him to offer his assistance. He is a person who can really bring people together," Levin said on CNN's "Late Edition" on Sunday morning. "Everyone agrees that there's got to be a plan. The disagreement is the source of the funds. And that disagreement can't be allowed to stop us."



Read more: http://www.freep.com/article/20081124/NEWS06/811240345

[sui generis]

1. Here's how you fix banking and manufacturing:

Don't let the motherfuckers get that big.

Period. Econ 101. When you hear somebody say "that institution is too big to let fail" YOU HAVE BEEN HAD.

Ding, thank you for playing.

[Psephos]

17. Ok, sounds good, now back to the question of how what we should do here in 2008 n/t

[blue_onyx]

2. Obama has pledged his support to the US automakers

I'm sure he'll assist in developing a good plan because we all know Bush isn't going to do much to save the auto companies. I think the US auto companies may have to wait until Obama is president before they get assistance.

[sui generis]

3. well it's clear that if we let them go bankrupt

the pension plans will either not pay out or only pay out pennies on the dollar. It won't hurt the fatcats as usual, but the people who scrimped and saved and put every penny they had into retirement that would get screwed.

I say, guarantee the pensions, and let the companies go under. We have been blackmailed, and not dealing with it effectively means that the auto industry will continue to make limited model plants and then shut them down when a model goes out of production because it's too expensive to retool.

When main street screws up, they lose their houses, cars, checking accounts. When wall street screws up they lose nothing. If Obama doesn't find a way to make this hurt without hurting main street, then he will have demonstrated the naivete that many people feared.

I'm hoping he's tougher and more innovative than that.

[blue_onyx]

5. Letting the companies go down isn't a viable option

This would have much more of a dramatic effect than most think it will. Obama knows this and it's why I think he'll do all he can to help the US automakers.

Politically, it's the right decision too. If the industry fails under Obama's watch and he doesn't do anything to help them, he will lose Michigan, Indiana, Ohio, and probably Pennsylvania too, making re-election much more difficult.

[sui generis]

8. that answer has nothing to do with economics though

saving companies as a political strategy can backfire too.

Realistically, they aren't going to go under because of the extended effects on raw materials and other manufacturing pre-assemblies and all the related work that is developed specifically FOR the auto industry.

But the other side of this realism coin is, it's time for those asswipes in charge to wake up and run their damn businesses like businessmen, and not like a free for all.

I do not believe that Obama has to "not help them" but we have to provide rational, accountable help, and not just a blank check, and the stick still has to be there. If they fuck this up, we guarantee their pensions and adjust.

Business abhors a vacuum, much more so than mother nature.

[blue_onyx]

9. My economic point was...

that not saving the auto companies would result in horrible consequences. From the Detroit News:

"Every direct job at an automaker in the United States creates five more jobs. Two of the five are related to suppliers or dealers; the other three are spinoff jobs at businesses where auto industry workers spend their paychecks. The next closest industry to autos is high-tech, where each job creates a total of four, including spinoffs, he said. By contrast, one Wall Street position creates a total of about 2.5 jobs, yet Congress expedited aid to the financial services sector this year."

The economic impact of letting the Big 3 "go under" would devastate the country, making the recession far worse, and cause a depression in Michigan and other "rust belt" states.

Many say they should run their business better. Certainly, the US auto companies have made huge mistakes. But what about the burdens we place on them such as providing health care. In addition to this, we have horrible trade policies that put our country and companies at a disadvantage. For example, in 2005, South Korea limited the number of vehicles US companies could sell there to 4000 and yet we allowed them to sell as many as they wanted here. Not exactly fair trade is you ask me.

The reason the auto companies need a bailout (a LOAN, really) is because they can't get loans on their own. Consumers also can't get loans to buy their products. So the auto companies can't money through loans or through selling their products...they're stuck. This is why they need money to get through the credit crunch...a credit crunch created by the financial institutions we DID bailout.

I believe the auto companies must be helped. Yes, there should accountability. The thing that bothers me is, where the hell was this accountability before Congress started throwing 700 billion to the financial institutions. Even as we watch how horrible the 700 billion bailout is going, Congress does nothing to fix the situation. Why billionaire hedge fund managers were given a blank check and yet the auto companies treated with such indignation is beyond me.

[sui generis]

11. well I work on the C-level side of the business

and I can tell you we is arrogant entitled sons of bitches. If there is a way to take advantage of sentiment and still ship jobs overseas, steal pensions and deep fry live puppies and kittens, these people wouldn't hesitate to take the money and run.

They're not accountable. They're playing the Ford Pinto game. They've estimated that the risk of not getting a bailout was worth not proactively restructuring their business on first forecasts over a year ago, and now they really don't have to do anything materially different, or give up frying puppies and kittens before afternoon golf with green fees paid by the remains of their employee pension plans.

We are being FAR FAR FAR too generous. If the problem is trade imbalance, then solve the problem. If the problem is consumer credit, then give consumers credit. If the problem is manufacturing orders and jobs then stop allowing these asswipes to outsource manufacturing.

I don't see that we're going to change any of those things after we bail out the automakers' shareholders. Woops, did I say that out loud?

[bdamomma]

4. oh Senator Levin, the Pres. Elect has not been sworn in yet.

ask George and see what he will do. Ha!!

[uppityperson]

6. HOW should he step in, WHAT can he do as a private citizen?

Would mrbush listen to him?

It is cold outside today, Obama should make it warmer so my tomatoes don't freeze.

Obama isn't President yet, and I doubt mrbush would listen to him anyway.

[Truth Teller]

7. Fair question

You could argue his status a PE might give him the clout to forge a compromise. But he's got the crisis as a whole on his plate, and efforts and compromises necessary to get it through under Shrub may not be worth it.

[KakistocracyHater]

10. Force the big 3 auto"makers"

to be headed by Tesla & other electric car/diesel makers, or else=nothing. Tesla need cash & a production machinery line, gm, ford already have those BUT won't use them; it should be painfully clear that electric persoanl cars are the FUTURE. Few workers would be fired, & only the ceos & other idiot execs would be pisssed.

[WriteDown]

12. Tesla....

was a house of cards. I wouldn't trust those guys to run a dry cleaning business. The Chevy Volt is already coming out in 2010.

[KakistocracyHater]

13. you don't know what you're talking about

http://www.lincvolt.com / I'm talking about a small group of leaders who knew ahead of the majority of us which direction to head in, you're talking about their small start-up's lack of money & honey PR.

[WriteDown]

14. "Who knew ahead" ???

And started a non-viable business selling 100K cars with loads of technical problems. I see no upsides.

[KakistocracyHater]

15. Gm "knew" ahead

& purposely destroyed what must have been somehow forced on them; as did the electric cars mentioned by F Scott Fitzgerald in the 1920s & the electric car driven by Consuelo Vanderbilt in England. Diesel "knew" ahead of them that an engine that farmers could put aside (for bio-diesel) some of their own crop & not have to rely on outsiders for oil. But, golly, not allowed ANY missteps or mistakes, inventions tend to need to be retooled a bit in the making....

[KakistocracyHater]

16. Levin is such a follower

if he has to look to Obama-who has 50-something days; why doesn't he do something about putting the autoWORKERS to work & let the ceos fall by the wayside?