General Motors, Chrysler and to some end, Ford, are asking for $34 billion in subsidy loans to support their survival for the next few months. By all acounts, it won’t be anywhere near enough, but that’s beside the point. What’s funny about this is the sheer volume of justification that they’re having to go through to get these loans. AIG, it would seems, got $150 billion just because, and very few questioned the need or the justification for it.
I’m starting to think that congress should have approved the $25 billion in loans that the Big Three was asking for a few weeks back, because it seems as though they’ve all huddled back in Detroit and all of a sudden the “emergency aid” requirement is up to about $34 billion. Today’s news even has it that GM will go under without an immediate $4 billion infusion.
In normal times, this might not be such a big deal. Chrysler went into bankruptcy a few decades ago and emerged as a better, stronger company. But, times have changed, and the underlying problem is the same no matter what industry we’re talking about – lenders are remiss to help companies before they get into trouble and even less likely to help those in bankruptcy. Congress seems to be missing these facts as they continue to grill the Big Three, and while I’m not in support of a bailout, it is time to consider a loan or rescue package that will allow these companies to survive.
I talked yesterday about my feelings surrounding the auto-bailout for Chrysler, Ford and General Motors, and the more I read about what Congress is doing and the debates that are flying around the more frustrated I get. Now CNN is reporting that Congress wants the automakers to show how they plan on spending their bailout dollars before they’re willing to offer any. Generally speaking this isn’t a bad idea, but what I find most frustrating is that they haven’t publicly asked the same from companies like AIG or banks taking money from the already approved $700 billion bailout. Doesn’t it seem logical that any company coming to Uncle Sam for a loan/bailout would be held to the same standards?
At the same time they’re asking for $25 billion in taxpayer money – these auto company CEOs are idiots. They all came from the same state in their own private luxury jets. The average American will never see first class, let alone the inside of a private luxury jet, and while continuing to pay their taxes will probably end up eating Mac-and-Cheese to get through this depression recession and these beggars can’t even share a ride or fly commercial. That’s saying two things – they are neither green nor frugal, and that should be disconcerting to everyone. These companies need to get both quickly and those changes need to start at the top.
I’m a huge fan of golf – although watching it on television is a lot less enjoyable than playing it live. Obviously, being a fan of golf makes me a huge fan of Tiger Woods, one of the greatest golfers of all time, but even his association with Buick wouldn’t convince me to even consider one of their cars. Somehow I doubt that they suit the style and image of Tiger and his wife, either, so it is quite likely that Tiger Woods is celebrating today’s announcement that GM/Buick and Tiger Woods will be going their separate ways.
In typical GM fashion, there is a spin and a feeling, and in this case more than most they don’t mesh. The announcement is saying to me “GM is broke, and Buicks aren’t selling – Tiger or not.” The PR machine is spinning out a mutual, amicable separation:
“Tiger is expecting a second child in his family and he’s looking for more time in his schedule,” said Peter Ternes, G.M.’s director of communications for sales, service and marketing. “At the same time, General Motors is looking to cut costs… we both agreed that we would part our ways.”
Is the current debate over whether or not to provide financial aid to the automakers a white-collar/blue-collar argument, because it’s sure looking that way when the government gives billions to help a single company like AIG and yet it won’t help companies like Chrysler, General Motors and Ford with a nearly insignificant $25 billion. Readers already know that I am against these bailouts on principle with the belief that they are prolonging the problem by smoothing the road and not fixing the problem, which ultimately means a much longer and more painful recession. My mantra remains, let companies fail, even the big ones – it will hurt more, but generally it’s for a shorter period of time The net impact on the economy will most certainly be less.
I doubt there will be any tears on Main Street America today. News is hitting the street that Goldman Sachs top seven executives, including CEO Lloyd Blankfein, are giving up their bonuses for 2008. According to the Wall Street Journal article today there were “months of debate” about this decision. Can you imagine how well it would have come out to the millions of people that have lost their homes, 401K investments and even their jobs over companies like this?
Last year Blankfein received a compensation package of roughly $68.5 million, and I suspect that will tide him over fairly well this year – since he’ll only be making $600,000 from his base salary. Are these people really worth that much more than the average General Motors or DHL employee that will be losing their job this year? Sure, they know things that the average person doesn’t, but if you look at the Wall Street masses this year it would appear that they make plenty of mistakes too, and the difference is that the impact can tear apart the global economy. Mess up on a car and it doesn’t sell – doesn’t seem quite so bad.