Too big to let fail: The Sequel

Where does it end?


Ford CEO Alan Mulally, Chrysler CEO Bob Nardelli,
GM CEO Rick Wagoner






The "Big Three" American automakers were insisting to Congress yesterday & today that if they don't get an immediate infusion of $25,000,000,000 in taxpayer money, there'd be "severe and debilitating ramifications"; and that "the societal costs would be catastrophic". "It's about saving the U.S. economy from a catastrophic collapse," said GM's CEO, Rick Wagoner. They warned that not forking over the money would "undermine our nation's ability to respond to military challenges", and therefore, it "would threaten our national security." And (most importantly) they'll be out of work. Oh, and the UAW tagged along to add "Yeah, what he said!"




Wagoner explained how the $25,000,000,000 would be used: “We’ll use this bridge to pay for essential operations, new vehicles and powertrains, parts from our suppliers, wages and benefits for our workers and retirees and taxes for state and local governments...". They insisted they need this bailout urgently, just to get thru to the end of this year.







And then what, pray tell? This is November 19th! Six weeks to financial Armageddon, and then what? What will magically change after that? I mean, the Messiah won't take office til the 20th of January, so how will they survive after the $25,000,000,000 is burned thru?





Since they don't recognize the costs of union wages & benefits as a primary cause of their financial ills, do they think the credit-crunch (which they cited as the main cause of their current crisis) will be resolved and the rest of the economy will be back on track by January? That's a little too much optimism to be relying, on as a consideration for loaning $25,000,000,000 to an industry with such an antiquated business model. Or, do they really not naively think the nation's financial troubles will be resolved by then, and this is just the latest installment in public money for them?




Detroit's financial woes began long before the recent nationwide monetary meltdown. And they're due in large part to the manufacturing costs weighing them down as a result of the inordinate income, benefits, and pension plans that the UAW secured for it's members.
Predictably, Democrat Rep. Barney Frank immediately defended the union, contending that it was not any part of the automaker's problems.

When the option of restructuring the various companies' finances under Chapter 11 protection was suggested, Barney Frank responded "We already have too much union busting and too much income inequality for workers". That's alot like the Phillip Morris company insisting that an emphysema patient's smoking habit has nothing to do with his illness.

The research I've done shows a consensus of estimates that the cost to our Big Three is over $2000 (some say $2600) per car for their burdensome union contacts. How can they expect to compete with non-union car companies with those kind of built-in expenses?