Word from the Washington Post is that autoworkers are "angry." Why should they be angry? They've been paid far too much (compared to autoworkers in, say, India) for far too long. Now their gravy train seems to be stalled on a sidling and they want the government to "to something" to get it going again.
It isn't fair for the feds to bail out Wall Street but not Detroit, they say.
Elsewhere in the news, Bloomberg has asked the Fed to reveal what it did with the $2 trillion in emergency loans it passed out. Surely, the money went to the Fed's clients - banks, and financial institutions generally. How? To whom? What were the terms? The Fed wouldn't say. It refused the Freedom of Information Act petition on several grounds.
"Blank check for banks, pink slips for Detroit," is how Gretchen Morgenson explains it in the New York Times.
The UAW has a point, of course. Neither industry should be bailed out. But if you're going to throw money around in Manhattan, why not toss some to Detroit?
But the autoworkers can stop kvetching. Detroit will get its bailout too. Just wait.
Bill Bonner
for the Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by Jose Roncal on 17 December 2008:
Since the U.S. has become a Bailout Nation, why don’t we just give them the $100 billion now, check it off Obama’s to-do list and stop wasting time and taxpayer’s money on a Congress that seems to be operating without a compass. This has already dragged on too long.
In my opinion, any so-called Car Czar that can rescue these two companies with $14 billion, also wears a cape and can leap off tall buildings. This whole deal strikes me as a way to buy time. The auto industry has a long row to hoe before they reap any results, what with restructuring, slashing their work force, closing plants, dealing with UAW, etc not to mention actually producing cars that consumers want.
So what exactly is on the Car Czar’s to-do list? So far it sounds like he’ll come up with some guidelines for restructuring GM and Chrysler by the first of next year. But if the auto execs can’t prove that they have a plan to reinvent themselves by Feb 15, they have to give the money back. Give me a break!
If the $14 billion is an emergency loan, it’s just a survival kit, so what money will be left to give back? One forecasting firm is saying that with or without the bailout, Chrysler is already a lost cause. And what restructuring plan? Didn’t they already submit a plan? Furthermore, under whose leadership will these terms be set? A lame duck’s or will they be enacted after Obama takes the oath?
Apparently the bill will restrict executive compensation, but why are these two CEO's still there? I personally would have resigned a long time ago. But these poor excuses for leaders either weren’t paying attention to the mess they were creating, or they just didn’t care. Who are they going to blame now? The reluctant consumer? Oil prices? Japanese and Korean cars? The economy? Who?
I’ll tell you who’s to blame. It’s you, the auto industry CEOs who bear the full responsibility. You were the ones who were either too complacent or else didn’t have the vision to foresee the geopolitical and economic forces that shaped competition as you continued to crank out gas-guzzling SUVs. It is you who have not mastered the core principles of leadership or even the most basic skills required to manage. I’m referring to the bottom-line business basics of planning, organizing, motivating, performance management, risk management, forecasting, and so on. It’s all there in Management 101!
And I also fault the boards of directors for failing in their oversight. Boards are charged with the responsibilities of setting broad policies and objectives, selecting, appointing, supporting and reviewing the performance of the chief executive, ensuring the availability of adequate financial resources, approving annual budgets, being accountable to the stakeholders for the organization's performance.
These are standard duties for members of any corporate board, but they should be even more rigorously adhered to by high-profile publicly-traded corporations. I give these CEOs and their boards a failing grade on all points –they not only failed, they failed miserably!
And what’s worse, millions of people are being affected, not only throughout the Rustbelt, but millions more across America and around the globe in places like Argentina and other countries where there are manufacturing plants. You have let down all your stakeholders!
Perhaps the savior in the cape, the one they will call the Car Czar, will do a better job than the two CEOs have done. And while the czar will only be a puppet position until Obama takes the reins, I’d like to suggest this as the first order of the day—fire everybody at the top of the auto industry chart who was responsible for creating so much grief.
This comment was posted by Jose Roncal, co-author of "The Big Gamble: Are you investing or speculating?" - For more information, visit http://www.financialspeculation.com