Just Give Them the Money, Already

Congress, please, give the U.S. automakers their bailout and be done with it. I mean, it's not like you don't want to -- you just want to show the folks back home that you're really serious about this whole financial mess.

So you made General Motors (NYSE: GM  ) , Ford (NYSE: F  ) , and Chrysler act appropriately contrite when they came asking for a handout. They're not allowed to fly in on their corporate jets, so they made a big show of coming to Washington in their green hybrid cars. They wrote "What I Did This Summer to Earn Your Favor" for you. Hey, did you even read GM's book report? GM said its ad campaigns following the Sept. 11, 2001, terrorist attacks singlehandedly kept the economy out of a longer recession. And here I thought it had been David Letterman weepily telling us it was OK to laugh again.

But this is getting expensive. Remember when the automakers wanted "only" $25 billion? Well, the longer you wait to give them their (our) money, the more it's going to cost us. Now the tab is up to $34 billion.

Of course, Ford is playing coy. Ford says it doesn't really want the money. But if GM or Chrysler muck things up by, say, taking a dirt nap, well, then, Ford will just have to join everyone else plundering Treasury and grab its share, too.

All the bigshots running the companies are willing to pitch in as well. Rick Wagoner and Alan Mulally are both willing to work for just a buck a year! And Bob Nardelli, even as he runs away from Home Depot's angry mobs, can afford to do so as well. But they're not going to work for chump change unless you give them their loans.

Forget bankruptcy. GM keeps telling us that's not an option, because the ripple effects throughout the economy would be too great. If you thought the collapse of the financial sector was too great to sustain and that you had to bail out Goldman Sachs (NYSE: GS  ) , American International Group (NYSE: AIG  ) , and half of the other banks and investments houses on Wall Street as a result, you ain't seen nothing yet.

C'mon! Even Hank Paulson probably wants to give the automakers money -- just not with his TARP funds. But if you just came up with something else, why, I'm sure he'd sign on to it. Heck, he's willing to bail out housing, mortgage companies, and credit card companies for $800 billion. You think a few billion for the carmakers is going to worry him?

Dragging this out isn't going to help the automakers. You wanted the Big Three to jump through hoops for you and they did, so give them the money, already. You've already injected the government into the economy in such a massive way that this dithering over the carmakers is embarrassing.

We all know it's not going to help, just as giving Citigroup (NYSE: C  ) its first $25 billion or so did nothing. The Detroit Three will probably be back for more before long, since no one wants to buy a car these days, not even from Toyota (NYSE: TM  ) or Honda (NYSE: HMC  ) , whose sales have fallen through the floor just like everyone else's.

But you've showed the voters you've got some backbone and that you can stand up to the jet-setting corporate executives. That's great. That's all you were really interested in. The long-term effects of what's proposed here is of little consequence. So be done with it. Then we can get onto the business of looking for the next industry in need of a handout.

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Fool contributor Rich Duprey has no financial position in any of the stocks mentioned in this article. You can see his holdings. The Motley Fool has a disclosure policy.


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  • Report this Comment On December 03, 2008, at 5:42 PM, DrewMerkle wrote:

    The following is a copy of an email I received from Michael Moore's listserve this morning. I'm presenting it as food for thought, neither endorsing it nor criticizing it, just presenting unedited it for others to think about as another perspective in relation to the above Motley Fool article with the assumption that Mr. Moore won't mind (since his missive was publicly disseminated). Hope it's not against Motley Fool rules either...

    =====

    Saving the Big 3 for You and Me ...a message from Michael Moore

    Wednesday, December 3rd, 2008

    Friends,

    I drive an American car. It's a Chrysler. That's not an endorsement. It's more like a cry for pity. And now for a decades-old story, retold ad infinitum by tens of millions of Americans, a third of whom have had to desert their country to simply find a damn way to get to work in something that won't break down:

    My Chrysler is four years old. I bought it because of its smooth and comfortable ride. Daimler-Benz owned the company then and had the good grace to place the Chrysler chassis on a Mercedes axle and, man, was that a sweet ride!

    When it would start.

    More than a dozen times in these years, the car has simply died. Batteries have been replaced, but that wasn't the problem. My dad drives the same model. His car has died many times, too. Just won't start, for no reason at all.

    A few weeks ago, I took my Chrysler in to the Chrysler dealer here in northern Michigan -- and the latest fixes cost me $1,400. The next day, the vehicle wouldn't start. When I got it going, the brake warning light came on. And on and on.

    You might assume from this that I couldn't give a rat's ass about these miserably inept crapmobile makers down the road in Detroit city. But I do care. I care about the millions whose lives and livelihoods depend on these car companies. I care about the security and defense of this country because the world is running out of oil -- and when it runs out, the calamity and collapse that will take place will make the current recession/depression look like a Tommy Tune musical.

    And I care about what happens with the Big 3 because they are more responsible than almost anyone for the destruction of our fragile atmosphere and the daily melting of our polar ice caps.

    Congress must save the industrial infrastructure that these companies control and the jobs they create. And it must save the world from the internal combustion engine. This great, vast manufacturing network can redeem itself by building mass transit and electric/hybrid cars, and the kind of transportation we need for the 21st century.

    And Congress must do all this by NOT giving GM, Ford and Chrysler the $34 billion they are asking for in "loans" (a few days ago they only wanted $25 billion; that's how stupid they are -- they don't even know how much they really need to make this month's payroll. If you or I tried to get a loan from the bank this way, not only would we be thrown out on our ear, the bank would place us on some sort of credit rating blacklist).

    Two weeks ago, the CEOs of the Big 3 were tarred and feathered before a Congressional committee who sneered at them in a way far different than when the heads of the financial industry showed up two months earlier. At that time, the politicians tripped over each other in their swoon for Wall Street and its Ponzi schemers who had concocted Byzantine ways to bet other people's money on unregulated credit default swaps, known in the common vernacular as unicorns and fairies.

    But the Detroit boys were from the Midwest, the Rust (yuk!) Belt, where they made real things that consumers needed and could touch and buy, and that continually recycled money into the economy (shocking!), produced unions that created the middle class, and fixed my teeth for free when I was ten.

    For all of that, the auto heads had to sit there in November and be ridiculed about how they traveled to D.C. Yes, they flew on their corporate jets, just like the bankers and Wall Street thieves did in October. But, hey, THAT was OK! They're the Masters of the Universe! Nothing but the best chariots for Big Finance as they set about to loot our nation's treasury.

    Of course, the auto magnates used be the Masters who ruled the world. They were the pulsating hub that all other industries -- steel, oil, cement contractors -- served. Fifty-five years ago, the president of GM sat on that same Capitol Hill and bluntly told Congress, what's good for General Motors is good for the country. Because, you see, in their minds, GM WAS the country.

    What a long, sad fall from grace we witnessed on November 19th when the three blind mice had their knuckles slapped and then were sent back home to write an essay called, "Why You Should Give Me Billions of Dollars of Free Cash." They were also asked if they would work for a dollar a year. Take that! What a big, brave Congress they are! Requesting indentured servitude from (still) three of the most powerful men in the world. This from a spineless body that won't dare stand up to a disgraced president nor turn down a single funding request for a war that neither they nor the American public support. Amazing.

    Let me just state the obvious: Every single dollar Congress gives these three companies will be flushed right down the toilet. There is nothing the management teams of the Big 3 are going to do to convince people to go out during a recession and buy their big, gas-guzzling, inferior products. Just forget it. And, as sure as I am that the Ford family-owned Detroit Lions are not going to the Super Bowl -- ever -- I can guarantee you, after they burn through this $34 billion, they'll be back for another $34 billion next summer.

    So what to do? Members of Congress, here's what I propose:

    1. Transporting Americans is and should be one of the most important functions our government must address. And because we are facing a massive economic, energy and environmental crisis, the new president and Congress must do what Franklin Roosevelt did when he was faced with a crisis (and ordered the auto industry to stop building cars and instead build tanks and planes): The Big 3 are, from this point forward, to build only cars that are not primarily dependent on oil and, more importantly to build trains, buses, subways and light rail (a corresponding public works project across the country will build the rail lines and tracks). This will not only save jobs, but create millions of new ones.

    2. You could buy ALL the common shares of stock in General Motors for less than $3 billion. Why should we give GM $18 billion or $25 billion or anything? Take the money and buy the company! (You're going to demand collateral anyway if you give them the "loan," and because we know they will default on that loan, you're going to own the company in the end as it is. So why wait? Just buy them out now.)

    3. None of us want government officials running a car company, but there are some very smart transportation geniuses who could be hired to do this. We need a Marshall Plan to switch us off oil-dependent vehicles and get us into the 21st century.

    This proposal is not radical or rocket science. It just takes one of the smartest people ever to run for the presidency to pull it off. What I'm proposing has worked before. The national rail system was in shambles in the '70s. The government took it over. A decade later it was turning a profit, so the government returned it to private/public hands, and got a couple billion dollars put back in the treasury.

    This proposal will save our industrial infrastructure -- and millions of jobs. More importantly, it will create millions more. It literally could pull us out of this recession.

    In contrast, yesterday General Motors presented its restructuring proposal to Congress. They promised, if Congress gave them $18 billion now, they would, in turn, eliminate around 20,000 jobs. You read that right. We give them billions so they can throw more Americans out of work. That's been their Big Idea for the last 30 years -- layoff thousands in order to protect profits. But no one ever stopped to ask this question: If you throw everyone out of work, who's going to have the money to go out and buy a car?

    These idiots don't deserve a dime. Fire all of them, and take over the industry for the good of the workers, the country and the planet.

    What's good for General Motors IS good for the country. Once the country is calling the shots.

    Yours,

    Michael Moore

  • Report this Comment On December 03, 2008, at 7:18 PM, dc46and2 wrote:

    Considering how the government runs its own finances, it seems unlike they would be able reverse a losing trend at any business. They wouldn't have the guts to layoff those 20,000 workers/voters even though thats exactly what needs to be done. Instead of laying them off, the company would continue consuming capital while the taxpayers supported their losses.

    In fact, those 20,000 workers should have been fired a long time ago, along with every person who breathed the word "union." Then the big three would be profitable and I wouldn't be writing this.

  • Report this Comment On December 03, 2008, at 8:44 PM, nerd1951 wrote:

    I say this as a life-long liberal who has often been to the left of the Democratic Party on many progressive issues.

    We are becoming the Soviet Union. We will be paying unmotivated workers in out-dated factories to make products that no one will want and subsidizing it all with government money.

    Soon we'll be building correctional facilities in North Dakota and Minnesota for all of us who don't see the wisdom of this policy.

  • Report this Comment On December 03, 2008, at 10:30 PM, steveherb wrote:

    Plain and Simple....The three rules to surviving. Don't buy a Ford. Don't buy stocks. Don't buy a home.......The first one will burn you. The second one will break you. The third one will bury you.

  • Report this Comment On December 04, 2008, at 10:11 AM, jacktyson wrote:

    I worked on the line in 1965 at the Ford Rouge plant and discovered the line wasn't my trap for life - left in 1968 after night school. A few years later my life was in twined with the Auto industry in management roles (after under grad and grad school) until retirement. I have been to most all of the big three plants (and transplants) world wide and met thousands of hard working, honest people. Because I worked the line I have feelings and understanding for the job they do.

    In most cases people really didn't ask for a union but any company that has one probably deserves one because they treated people like crap, now we are trapped. I do agree that management and unions went to far to remain competitive. However did we ask when government opened the flood gates for the transplants what we were doing to the American industry? Or did we just think the added jobs and tax revenue would be the offset. When they started the factories down south people needed jobs and were willing to work with out a union, what did Detroit do? Nothing!

    Now the issue: During all those years I was amazed at the stupidly and short sided business approach of the "big three" all the time. I watched them make bad decisions over and over. I watched them abuse the supply base in finance and time wasted. I watched them NOT understand lean manufacturing, even after many, many books explained it. I watched them display their arrogance with Congress in asking for a loan with out a plan (I would have been fired if I ever approached one of the executives asking for money with out a plan). Now they are grandstanding again by driving Hybrids. They should be fired.

    What did we expect - that is what they are, what they were trained to be, what their wage and bonus money allowed them to become, what all the American business leaders have become (arrogance may not be limited only to our business leaders - look around a lot exists all over this great land).

    The industry has been great to me and my family but it took all of my blood, sweat and tears as I watched US plant management make grown men cry at meetings - really- a true story of the abuse. Never once was I exposed to this at the Toyota, Honda, Hyundai or other transplant factories. They were willing to work together for a team solution and not live short sighted.

    So now the Auto leaders smell a chance to grab some cash, remember who they are. By the way they trained me to become like them so I would go for it as well, maybe a little more subtle. How can these companies be broke as soon as the Congress said we need to support the economy.

    Because that is the game.

    Ask Congress however why they didn’t take the Finance folks to task like the auto guys. Because that’s the game and no one in congress has ever worked in industry. If they had they would understand the auto industry is a tough and ruthless business that employs a few million souls who go to work every day and work hard for their money. Again I agree that maybe we overpaid but that was established many years in the running by management and union representatives.

    My belief is in as little as 3 years we will not have a domestic car industry regardless of what we do. But for this minute in time WE MUST support the industry or be prepared for those arrogant auto leaders to shut down plants in the US (probably not any other countries) just to say “I told you - so there”.

  • Report this Comment On December 04, 2008, at 1:12 PM, dayislanders wrote:

    I sincerely hope that this article was written with tongue firmly in cheek. Just give 'em the money, right? And when the Not-So Big 3 blow through that bailout as anyone in their right mind KNOWS they will, and come back to Uncle Sam hat in hand, then what?? As a conservative, I can only take mordant pleasure in seeing that, for once, many liberals (including Michael Moore) seem to be waking up to the potential consequences of socializing every failed management strategy, whether in the auto industry, mortgage industry, or financial industry. Where will it end?? How devalued will our currency become?? What's the next industry that's supposedly "too big to fail?"

    The arrogance of the auto execs is matched only by their chronic mismanagement of a once-healthy industry. And, Big Labor has to take a share of blame, too, for pricing themselves out of competitiveness. IF the taxpayers are going to keep these companies on life support, then 1) the CEOs and boards of these firms need to fall on their swords, and get out, 2) the union needs to learn to behave like the Americans working on the Honda, Subaru, and BMW lines here in the US, and 3) the companies need to downsize substantially. Otherwise, we ought to admit what's already reality and have them declare bankruptcy.

  • Report this Comment On December 05, 2008, at 8:43 AM, jacktyson wrote:

    dayislander I agree with you in principle and some of my comments were tongue in cheek. I am hard core and believe that business pay the price for stupid mistakes but the point is:

    In this case at this moment the innocent get ganged and the trickle down is huge.

    The disappointment yesterday was in the questions by the senators of ours. Most just so they could be heard because no one can be that dumb to ask the same questions over and over. They also should be fired. Maybe everyone in the areas of auto, mortgage, finance and government should be fired and we can start all over.

    It seems that we are in a wide spread stupid contest between the government and business and all us little folks pay the price.

    Have a good one.

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