Automaker Fear Mongering
Looking For Handouts, While Throwing Punches
First Wall Street told us the sky would fall if they failed. Financial CEO’s with they big dollar salaries and perks galore told the federal government if they didn’t give them money, the entire economy would collapse. Going against public opinion, the government decided to hand out billions of dollars of taxpayer money to prop up Wall Street. We now find ourselves on the other side of the bailout, and not much has changed. Expect for companies like AIG who could afford their all expense paid business trips, Wall Street continues to grind along.
Not only did the sky not fall, but Black Friday sales were up this year!
Now it’s the automakers turn to strong arm the nation. Their first trip to Washington did not go well. They were sent packing as nothing more than greedy CEO’s looking for a handout. As one leader said, “They arrived on Capital Hill in their private jets with a tin cup in their hand.” Not only did Capital Hill not buy it, but the nation has not bought the song and dance either. A recent CNN poll reveals that once again the majority of the people in the nation are against any kind of bailout. Of course the automakers are quick to say it’s not a bailout. They say they’re looking for a loan. But, if one were to check their credit report, I would say it doesn’t look good and therefore their credit rating number is rather low.
Of course we know what that means, if you have a low score, you don’t get a loan.
Do You Remember The Edsel?
When Ford put the R.I.P. sign on the Edsel did that mark the demise of the car company?
It’s amazing to think that the automakers have been around for years. Many cars have come and gone. Some good, some bad. Of course it was always the same old story – If this car goes away, it marks the end of the auto industry as we know it! – Maybe that’s a good thing. After all, the auto industry as we know it today needs a radical overhaul. It’s also amazing to think of the fact that many in the NASCAR world cried foul when Toyota entered the racing series. “How could this be!?”, many exclaimed. Something as American as NASCAR now has a foreign made car on the track? But, when you looked beyond the screaming and yelling, it’s interesting to note that the only all American made car on the track in NASCAR these days are the Toyota cars!
That’s right folks. What are known as the Big Three Automakers outsource much of their work. But, Toyota, the so-called foreign car on the track, is 100% made in America. With that in mind, maybe the so-called big three need to bring their work back home and truly support the American worker.
Chrysler Says – “We’re Taking The Economy With Us”
They show up on Capital Hill claiming hard times. They show up in their big jets with their tailor made suits saying “We’re broke.” Do they think we’re stupid? Apparently so. They also think we have a short memory. After being sent home with hat in hand and told they were silly to say they were broke, now the CEO’s say they’re broke because of how they traveled to Capital this week. Instead of using the big company jet, they used planes, trains and automobiles. Sorry guys, but you blew it the first time around. The only reason you didn’t use your company jets this time is because you went home red-faced and embarrassed the first time around.
Of course making matters even worse, now the Big Three are showing up using bully tactics too. Jim Press, the Vice Chairman of Chrysler said yesterday, “If just one of the Big Three go belly-up, it will plunge the U.S. economy into a depression.”
Give me a break!
Since their first tactic didn’t work, it appears now they’ve resorted to scare tactics. For whatever reason, we live in a world where many people use scare and fear tactics, instead of really working through the problem. The automakers did not arrive at this point over night. It’s been years of union control, bloated budgets, and overpaid CEO’s gouging not only the company, but also the public, that put them in the financial place they are now. CEO’s of the same bully companies are now saying they will work for a mere one dollar next year. Big whoop! Maybe they should give back some of the money they’ve gouged from the U.S. people and the companies. If they can afford to make just one dollar for the year, they’re obviously greatly overpaid for what they’re doing. Just what are they doing? Obviously they’re not running the companies well.
Is Bankruptcy All That Bad?
Now I know many jumped on the bankruptcy rage a few years ago to get out of a multitude of bad decisions. In many states it’s harder to file for bankruptcy, and that’s a good thing. Too many people were filing for bankruptcy simply because they over-extended themselves through dumb decisions. Bankruptcy is not to be taken lightly, it is very serious. However, in the case of what we call the Big Three Automakers, would it be a bad thing? I’m going to say, probably not. Why do I say that? Because bankruptcy forces a company to restructure and emerge on a firmer financial ground.
Now, with this in mind, lets consider what’s going on in the auto industry today.
When Capital Hill turned the auto industry down in their first hand out bid, the automakers were sent packing and told to re-tool their plan. Suddenly, instead of using private jets, the CEO’s opted for a John Candy/Steve Martin Planes, Trains and Automobiles adventure back to the Hill this week. Hopefully, Capital Hill won’t buy it. Let’s face it, if we learned anything from the AIG bailout deal, these CEO’s probably have their private jets warming up on the tarmac now.
It’s also interesting to note that two other things happened when they found out they may not get the free money. As already mentioned, the so-called poor CEO’s said they will take a salary of just one dollar for next year. But, even more amazing, the hard nosed United Auto Workers Union, the same union that has auto industry workers making an average of $70 an hour, have suddenly said they will make some concessions.
Why is the Union suddenly changing it’s mind?
The Auto Workers Union knows if the automakers file for bankruptcy, they are out the door. That’s right, when a company files for bankruptcy, and forced to re-organize, the Union disappears. Suddenly not only are some of the over-paid workers out the door, but the over paid union head pencil pushers are out the door too. Of course they’re suddenly going to try to play ball. But, don’t believe it for a second. If the bailout money comes, it will be business as usual. The only difference will be instead of only gouging the consumer on the car lot, they will be gouging the consumer through taxes too.
It’s time to put an end to all the bailout madness. The bubble of over-indulgence had to break sometime. Just like gas prices finally came down when the oil gouging bubble popped, so too will the automaker bubble break. It could be on the verge of the breaking point now. Will it topple the economy? I don’t think so. Will the economy feel some ripples? Of course. But in the end, just as old models faded away, and new models emerged, the economy, and the car industry, will roll down the highway just as usual. With any luck, it will actually emerge stronger.
Just my two cents,
Dr. Rus
