Tuesday, November 25, 2008
Should we spare a dime for Detroit? Part I
Sal: "Tom, can you get me off the hook? For old times' sake?"
Tom: "Can't do it Sally"
Tessio and Tom, The Godfather
I don't know where I stand on this, so I'm going to try to think about it as I write. There will be times where I might contradict myself, so please forgive me ahead of time. First of all, let me say that my brother is an autoworker, so I'm not completely impartial.
I shall try to ignore their three private jets, or their false concerns about safety(who would recognize these men that would want to kill them), or the alarmist tenor of their rhetoric. Try as hard as you can to stomach the fact, that only Nardelli would work for $1 a year.
To quote Tom Hagen from The Godfather yet again, "don't get personal. Keep it business."By the way, this is great stock picking advice.
I think that anyone who saw last week's testimony in front of Congress, came away with little sympathy for the automakers. I came away not only unsympathetic, but slightly incredulous. Rick Wagoner claimed that their current woes were not "our product lineup, or our business plan, or our long-term strategy. What exposes us to failure now is the global financial crisis, which has severely restricted credit availability, and reduced industry sales to the lowest per-capita level since World War II." This was not an unsubstantiated claim. He provided numerous supporting facts in his statement. I just don't buy it though. I feel that he was offering convenient facts and half-truths in attempt to lessen his audience's anger. This is the crux of the argument though, at least for me. If you believe that this is a temporary measure needed to help the Big Three get through a tough time, then by all means, giving them this money and averting the loss of 3 million jobs is an easy decision. If, however, and this is the side of the fence where I currently stand, you think this is nothing short of throwing good money after bad, then there's no way you give them one red cent.
As is usual in Washington, this has become a partisan political football. Republicans hate the idea. Democrats, although critical of the automakers, seem far more open to the bailout. In fact, Chris Dodd(D., Ct.), called the industry's wounds "largely self-inflicted."
Richard Shelby(R., Ky.)asked the question that is probably most on people's minds. "Is this the end, or just the beginning?"
Congress wants a plan for how to turn thsse business around. Have they not been paying attention to the last thirty years? The automakers haven't lacked for plans. Maybe they are playing a game at which they can't win? Maybe it's a fool's errand. No one in that room was willing to even contemplate that. I think that's a problem.
On Friday, I'll talk more about their problems and how this all happened.