Moon of Alabama Brecht quote
August 22, 2008

Carmaker Bailout - Why?

How much taxpayer guaranteed loans did Toyota need to develop hybrid cars?

GM, Ford Seek $50 Billion in U.S. Loans, Doubling First Request

Aug. 22 (Bloomberg) -- General Motors Corp., Ford Motor Co., Chrysler LLC and U.S. auto-parts makers are seeking $50 billion in government-backed loans, double their initial request, to develop and build more fuel-efficient vehicles.

The U.S. automakers and the suppliers want Congress to appropriate $3.75 billion needed to back $25 billion in U.S. loans approved in last year's energy bill and add $25 billion in new loans over subsequent years, according to people familiar with the strategy. The industry is also seeking fewer restrictions on how the funding is used, the people said.

The two highlighted sentences are contradictory. Why would one ask for 'fewer restriction' on how to use the subsidy when the declared aim of said subsidy is a quite restricted activity?

Oh, I see. The CEOs need a pay rise.

GM, Ford and Chrysler are bankrupt because:

  • their car finance business was utterly irresponsible
  • their product mix policy was shortsighted
  • their top managers are dumb but greedy people

Would additional taxpayer dollars change anything of the above?

No. There is no reason to give them even a penny. Take care of the workers that will lose their jobs but stop bailing out shareholders and stupid CEOs.

Posted by b on August 22, 2008 at 19:03 UTC | Permalink

Comments

There's that Free Market again. Perhaps someone can tell us how such a thing is possible in a truly Free Market.

I say let Humpty Dumpty fall off the wall once and for all. Because, when that finally happens, if it's allowed to happen, all the King's horses (unopposable thumbs, and all) and all the King's men won't be able to put that monstrosity together again....or will they? In my nightmares they do put it back together again and it's much worse than the original, if that's possible. It's not a pretty sight, in fact, it's a grotesque caricature, a freak, just like me.

Posted by: The Joker | Aug 22 2008 19:27 utc | 1

The United States government is already responsible for the enormous war industry, it is responsible for the retirement of the American workers,it supports the enormous educational establishment through innumerable loans, not for profit privileges, grants for research, intimate university connection with the war industry. Besides the US government supports the health care of the elderly, like me, of the young like my great grand child, the infirm, the handicapped. The US government supports the agricultural establishment, without its subsidies the farming sector would fold, the honey that I eat is subsidizad and so is the corn, the cotton with which I dress myself. Sugar beet production is subsidized, abortions are subsidized and now the auto industry will be subsidized overtly by the government. Now the mortgage industry is under the care of the US government actually the US government now is practically the owner of all the mortgage debt in the country. Actually the transportation industry subsidization is not new, it has been going for years from the design and care of roads to the maintenance of airports. I stop here. To think that there is a free market is candorous. The governement is everything.

Posted by: jlcg | Aug 22 2008 20:14 utc | 2

#2 - Yes - and the odiousness of the "Chicago Boys" is not ipso facto that they "believe" in a free market, but that in whatever country they're given the chance, they destroy democracy, industrial safety law, & socialism for individuals, while oddly enough never getting around to cutting off that corporate socialism.

Posted by: Cloud | Aug 22 2008 20:44 utc | 3

Here in Australia the new federal government is sponsoring Toyota to the tune of $35 Million to subsidize the set up of a hybrid car plant. GM & Ford are not inventing the game, just asking for more.

So good question B, what do they really want 50 billion for. The Hybrid car has already been developed, its in series production by some car makers such as Audi since 1997 and Toyota and Honda since the early 2000's. Hundreds of thousands have already been made and sold.

My guess is that as you suspect there are ulterior motives, such as filling big holes in the balance sheets etc. But now is the time to ask. In the current drive to combat global warming it gives the government a chance to assist a suffering industry close to the American heart (looks good in election times) while at the same time pretending that one is doing something positive about climate change (looks also good in election times). So, two birds with one stone. If there was ever a time to squeeze the gov for subsidies of green car production, its now.

Does it make sense? No. But since when does that matter in the decision making process, there are elections to be won and CEOs to be rescued, a politician's two primary tasks.

Posted by: Juan Moment | Aug 22 2008 21:01 utc | 4

cloud@3

for me the chicago boys are essentially war criminals. their words led to deaths, direcly. & they knew it. & that was what was different with right wing 'thinkers' since the 60's is that they possessed a bloodlust. right across the board. in economics, clearly but in the human & social sciences. science itself became the baby of the right's ideologues - quite clearly in the nuclear arms contol but also in other areas. it did not surprise me at all that the 'creationist" tried to make an alliance with some of these ideologues - with their paltry effort 'intelligent design'

what appears as success - the fact that while they protect their elites - they have practically destroyed infrastructure, almost irretrievably. i know new zealand for example has tried to heal it's country after the chicago school piussed all over it (debs is there so would be clearer on whether they have been able to do that)

the 'success' of the chicago boys is held together by fear & we now have plenty of evidence of their concrete failure, in concrete terms. what is happening in latin america is a direct result of the systematic plundering initiated under them

they have no long term. therefore they are amnesiacs. & they are served well by a mass media - that makes remembering in any practical & fundamental sense, a crime

the kind of govts & business kept afloat in this bloodbath - have established as their base inequality of opportunity & for that alone they belong where khodorovsky is, in jail

i guess, what mystifies me though, even acknowledging their greed - they do not plan in any real sense, they are very vulnerable to any shift in the economy or of world events. they are not quick to transform. they learn nothing from necessity. there is no real risk, or initiative or experiment. in the english speaking world - their one industry towns that they have laid waste is still, still after all these years - a level of self destruction i can barely comprehend - even with the most profound understanding of marx

& as you sd cloud & shown in juan's post - these pigs absolutely love the public trough (carmakers in australia have only existed because of public subsidy yet these cretins are the first to atttack the poor for any just demands that make for subsidies)& are parasitic to it & always have been -

in fact, they like big govt but only if it is for them

Posted by: remembereringgiap | Aug 22 2008 21:55 utc | 5

Australia the new federal government is sponsoring Toyota to the tune of $35 Million

big difference between 35 mil and 50 bil. there is no oversite. pensions are evaporating. can the people vote on who they subsidize?

The US government supports the agricultural establishment, without its subsidies the farming sector would fold,

The US government supports an agricultural sector, without its subsidies the farming establishment would fold

it is responsible for the retirement of the American workers

after those same workers paid into it w/every paycheck. if the US public pays GM 50 bil how do we collect?

,it supports the enormous educational establishment through innumerable loans,

schools are paid for from property taxes, every child can get free education. do we all get free cars when we turn 16?

Besides the US government supports the health care of the elderly, like me, of the young like my great grand child, the infirm, the handicapped.

well, when every elderly person gets free health care from the feds like you, and every young gets free health care from the feds like your great grand child along w/all the infirm, then will talk about it, but that aint happening and we all know it.

The governement is everything.

no it isn't. it picks and chooses and 50 billion is a lot of bucks. i'll support that when those running the show are getting paychecks resembling federal workers. the highest paid federal worker doesn't make a 1/100th of those ceo's. or maybe it is 1000 times i don't know.

this has scam written all over it. socialize our debt and privatize the profits.

fuck this is what i say. pardon my french

to combat global warming it gives the government a chance to assist a suffering industry close to the American heart

i find it odd that the same politicos that threaten to fire teachers for their students not perfor=ming up to their standards wants to prop up failing industries. if they want 50 billion fire them and put the people to work in a new deal type situation w/massive oversite. if we own the industry then lets own it for heavens sake. not prop up failures who reap the profits while slashing workers pensions.

Posted by: annie | Aug 23 2008 0:28 utc | 6

But . . . but . . . but . . they're 'Murcan cars, dammit! So whatever subsidy they want, or double whatever subsidy they want, can't ever be too much. Its not as if the market wouldn't eventually reallocate that "resource". Sure, a few thousand very well paid UAW workers might have to cut back on their very American consumer lifestyle while those resources find their way into infrastructure rebuilding and the like. But, I guess, it all depends on whose ox is being gored. BTW I don't underestimate the downstream effects of the crumbling auto manufaturing market in the US; but you pays now or you pays later.

And we sure would want it to be the upper management of the big three, would we?

Posted by: DonS | Aug 23 2008 0:37 utc | 7

McCain's daughter just bought/or parents bought a new Toyoto.There's a message for US 3!Also Cindy drives a Lexus.

Posted by: | Aug 23 2008 4:05 utc | 8

I'm not in Australia at the moment so am unsure of what the current subsidy is for but I expect it is the usual "car industry tax" that Australian car makers put on governments with union connections. The "Button Car Plan" which was what the taxes by carmakers on the government in the first term of the Hawke Government was called, cost a lot more than $50 mill.

Basically Austrlia's population can't support a motor vehicle manufacturing industry but Australia is a wealthy country (would be a lot wealthier if Gough Whitlam had been able to buy back the farm in '72 but that is another story) and chooses to keep a percentage of it's population occupied with building cars in uneconomically small numbers. The people subsidise that and no one really minds although the cover story is a little less honest about it. In this case the subsidy is being camoflaged with the Kyoto Protocol cover story since Australia has just signed the protocol far too late to matter, but it has finally signed it. I would be very surprised if Toyota is the only company with it's hand out for a kickback from the new Oz govt. But since amerika's population is large enough to support a car manufacturing industry I'm not sure the two situations equate.

AS for NZ, the people have re-acquired a few of the assets which were given away to corupt business 'tycoons'. They had immediately flogged them off overseas at considerable profit and buying them back was not an inexpensive exercise.

As Talleyrand or Metternich or one of those old buggers said about 1815 or so, as he looked at Europe after Napoleon had dealt to the old ways; "You can't turn back the clock".

This country will never be the safe and friendly co-operative society that it once was. Too many peeps have been brainwashed into the self-obsessive me me me culture. It will take generations of deprivation before peeps relearn that "no man is an island" the hard way. That was the lesson our forebears had brought here 150 years ago. Next time will be much harder of course. People tend to forget that much social change in the North and South was the direct result of the rapid expansion of "us whitefellas" across the planet which had relieved the competitive pressure between all of "us".

Posted by: Debs is dead | Aug 23 2008 7:12 utc | 9

If they support the free market at this moment, the big three in 10 years will be Aptera, Tesla and Feel Good. And America will be much the better for it. If they socialize the failures of these losers much more, I feel like we may not have much in the way of industry in America someday. I keep thinking that the massive losses in the value of assets and the gov printing up so much money to bail out trillions in fat cat mistakes might lead us to a nexus of inflation and deflation where there is no money, and what little money is left is worth virtually nothing.

Then what?

Posted by: Li | Aug 24 2008 1:01 utc | 10

Note how we consider throwing another $30 Billion to the auto industry rather than thinking about it has just one of the possible transportation methods. What would a $30 billion loan facility do to rebuild and transform the passenger rail network on the east coast to modern fully electric system? I'd imagine it would have many times the benifit for the common good.

Posted by: DC | Aug 25 2008 18:31 utc | 11

What would a $30 billion loan facility do to rebuild and transform the passenger rail network

why didn't i think of that? instead of cars they could transform the industry into supporting public transportation.

Posted by: annie | Aug 25 2008 18:40 utc | 12

DC #11--

A good point.

When looting-out and the rewarding of failure take precedence over damage mitigation and amelioration in the face of crisis, you know that thoroughgoing system failure is in the cards. The current bailout moves--as so many recent financial actions--are a sure token that as the environmental and resource crises of the 21st century unfold, the US will be going straight to the bottom.

Posted by: Gaianne | Aug 25 2008 19:00 utc | 13

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