Give
Detroit the Money, but
Thursday, September 11, 2008
Toyota's
very fuel efficient Tundra?
The Big 3 continue to increase their efforts to acquire as
much as $50 billion in loans from the US government - $25
billion of which was written into CAFE increasing
legislation, and momentum is gaining in Congress.
Others, such as Ralph Nader, the iconic third party
candidate for President, have come out against this
'bailout'. According to the DetroitNews, Nader
"lambasted Detroit automakers Sunday for what he
called decades of poor decision-making and said they do
not deserve a federal bailout to save their hemorrhaging
industry."
And hemorrhaging is an
apt description.
In the 2nd quarter of
this year GM lost about $15.5 billion, and about $70
billion since 2004. Can 1/3 of $50 billion really help? If
GM couldn't make smaller, more fuel efficient vehicles for
profit 10 or 20 years ago, why can it today?
Yet, what happens if GM and
the rest of the Big 3 go bankrupt?
Does fuel economy increase greatly? Does the economy
suddenly strengthen?
Also, can foreign automakers fill the gap with much more
fuel efficient vehicles at prices that Americans are
willing to shell out? Would they want to fill it with much
more fuel efficient vehicles, or just the same stuff they
are already selling? It's not as if foreign automakers are
knocking down the doors with significantly more fuel
efficient vehicles than US automakers.
All about the Economics?
Let's say that the bailout is denied and the Big 3
slowly go into bankruptcy. How much money is left on the
table?
Much more than $50 billion I assume. And who will pay? The
executives? The rich people of America? No. Middle and
working class America will pay.
More lost jobs. Huge pension and health care expenditures.
And an even weaker economy, which will only cause even
more problems for average Americans.
Can America afford this?
Yes, Detroit has screwed up, royally. So did consumers. So
did the government. America has become a culture of
'screwed up'. Everything is about today without any regard
to how it affects tomorrow. This has to change, and maybe
the bailout can be an impetus for that change.
Thus, perhaps this 'bailout' is an opportunity for
Congress, industry and consumers to change, to evolve in a
way that can rebuild America.
Detroit wants more than the $25 billion than CAFE
legislation suggests. Fine. Give it to 'em, but with
caveats, such as even higher CAFE requirements. Or, demand
that a certain percent of vehicles must be hybrid
vehicles.
Plus, give the Big 3 a contract to convert all government
fleets to hybrids or some other alternative that helps
push momentum towards change. Give the postal service, for
instance, incentives to upgrade to much more fuel
efficient vehicles, but they have to do it NOW.
Let's be honest. We don't have time to watch Detroit
sputter a few more years, then fail, then wait years
longer for others to pick up the pieces and fill the void.
Besides, do we really want GM to fail and then have
private equity from Saudi Arabia come in and buy GM's Volt
technology, and have them sell us the technology to end
dependency on their oil?
Maybe that wouldn't be so bad, but we need change now. It
needs to start yesterday.
I say give 'em the money, but guarantee that money is a
vehicle for change.
posted by Dahcredyns at
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