Skip to main content

Calling the Shot...

Today the newspapers were free in Detroit. Not on the web, I mean free. Paper.

They picked a helluva day to give away papers. Everyone had one in their hand today. The big red letters jumped off the page:
I have to agree with James Lileks who sent this out on Twitter today:
Maybe I’m old-school, but “President fires CEO” looks as wrong as “Pope fires Missile.” Does not compute.
The President has warned that filing bankruptcy may be necessary for GM and Chrysler, but I think this is just hot air, at least as far as GM is concerned. I mentioned that a Green American auto market is a pipe dream back in 2008 before the first bailouts, but I'll sum it up here.

Here are the options:

Option 1) GM can build more inexpensive fuel-efficient green cars
Option 2) GM can preserve UAW jobs, contracts, and legacy commitments
Option 3) GM can be profitable

Pick two.

The math doesn't work out any other way. It is an impossibility.


Option #1 is pretty much a given under the current administration and Congress. CAFE standards and a near religious-like zealousness amongst the Democratic party base has pretty much settled this issue. So it largely comes down to a choice between Option #2 and Option #3. That choice is between continued bailouts of GM, or GM filing bankruptcy and shredding its union and dealer contracts (mostly union).

Anyone here think that given the choice between 1) destroying one of the nation's largest unions or 2) shelling out taxpayer money to prop up a failing business, President Obama will choose to let the UAW go down? I didn't think so.

The dismissal of Rick Wagoner is just a distraction. The Obama Administration needed a head on a pike to show to the bailout-weary masses. They had to talk tough with threats of bankruptcy to sound credible. What they did was shovel $6 billion more dollars into GM, and throw a sacrificial lamb to the angry mob. This bought them another 60 days, during which time they hope that some of the bailout/stimulus/TARP/TALF/TARPII/Geithner-printing-a-trillion-dollars-quantitative-easing fatigue dissipates, and the mob gets tired of toting those pitchforks and torches around.

At which time, they will trot out a restructuring plan that looks a whole lot like the one they have on hand, tell us all that it's a lot better now, and fork over more taxpayer money to GM. All without having done anything that will allow GM to emerge from this as a competent, competitive corporation.

I don't like the options any more than you do. I *live* in this town. I know a lot of UAW workers. Just about everybody I know is bound to the auto companies in some way. Dear friends are out of work. Many more have moved away. To say that these people are "hurting" right now is a shameful understatement. But in the long run, setting up GM as a permanent ward of the state is not a viable option. I'd like to believe that Chapter 13 restructuring is really on the table, and that *some* of the American auto industry and its jobs may be preserved, but I can't really believe it.

The current administration will instead put GM on life support, injecting wasted bailout after wasted bailout, until the voters demand that they pull the plug. Who knows how many billions of dollars on down the road that will be, and what kind of irreversible damage will be done by then to the American auto industry.


  1. P.S. Ford is cooling it's heels on the sidelines, hoping that GM really does go through some sort of massive restructuring/bankruptcy. Once the UAW and GM's dealer network is forced to take a massive haircut (the kind that leaves scars), Ford will be an indirect beneficiary of of the new terms on the market for labor.


Post a Comment

Popular posts from this blog

COVID-19 and the Tools We Need to Re-open Wisely

There's a lot of graphs and stats that the news is throwing at people right now. So much so, that you can get information overload trying to make sense of the statistics that have meaning. To quote my old Econometrics professor, "There are three types of lies: 'Lies', 'Damned Lies', and 'Statistics' ". I should also lead with the caveat that I'm an engineer and data nerd by trade, but I'm not an epidemiologist. I welcome feedback from those who have more experience than I do. The most important question we're trying to answer (at least here in Michigan), is "How are we doing?", and "When can we reopen our economy?". With respect to those questions, here's my take on the most important data, and some caveats about what these data are telling us. The four most cited data in news stories are: Total Number of Cases Daily New Cases. Total Number of Deaths Daily New Deaths This post will talk about #1 and #2

The Re-Opening Experiment

We should remind ourselves that, this Memorial Day weekend and the weeks that follow, we are subjects in a grand experiment to see how good we are at social distancing as stay-at-home orders are being slowly lifted. The state's stay-at-home order was never meant to keep you, individually, safe from infection. It was meant to keep hospital's safe from being overwhelmed by too many of us needing them at the same time. In Michigan, the daily new cases of COVID-19 are higher today than they were when we locked down in late March. We are testing whether or not we can open up (with all of our new precautions and protocols) without spiking the rate of spread, but make no mistake: it *is* an experiment, and we *are* the test subjects. Please don't get careless as things start to open up. We need to get our economies back on track, but we are still a long way (and a vaccine away) from being out of the woods. Stay vigilant, folks. Wash your hands. Wear a mask. As has always been the

What Advice Would You Give Your Younger Self?

An old friend recently reached out to me (and presumably others) and asked us what advice we'd give our younger selves, particularly at ages 20, 30 and 40. After writing my response to him, I thought it worth posting myself as well.  The substantive bulk of my response to him follows: ----- The difficult thing is that I really wouldn't change a thing about who I am, so any call for advice feels a bit like a time-traveler scenario where my advice to a younger self would affect the outcome of my present life, and I'm not sure I'd risk it. My experiences shaped me, including the glaring mistakes, and I wouldn't trade places today with anyone on Earth. But, for the sake of argument, let's assume the Many-Worlds Interpretation of quantum physics here, and thus assume I won't mess my own (present) life up. Wibbly-Wobbly. Timey-Wimey. It is also important to note that the question is "What advice would you give your younger self?". The a