Obama makes his move on Detroit
The Obama administration has pressured longtime General Motors CEO Rick Wagoner to resign, and he has done so. That high-profile decision — the first of several as the government tries to force Detroit to restructure itself — will no doubt generate complaints that the federal government is overreaching.
Let’s review the situation:
First, the federal government is not requiring GM to fire its CEO. It has no such power or authority. Instead, the federal government is pressuring GM to fire its CEO AS A CONDITION FOR GETTING TENS OF BILLIONS OF FEDERAL BAILOUT DOLLARS.
That’s a very important difference.
In private enterprise, a distressed company facing bankruptcy will often beg outside investors to rescue it with an injection of cash. However, the company understands that the bailout will come with conditions. The outside investors or lendors will almost certainly demand changes in company operation and management. They may want control of the board. They may insist on a new CEO. That’s just how such things work. The assumption is that if the company was well-run in the first place, it wouldn’t be needing outside investment.
The federal government is doing the exact same thing. GM and Chrysler came to the government seeking huge sums of taxpayer money to keep operating. Barack Obama responded just as private investors would. He had outside experts comb through the automakers’ books and operations, and then he demanded changes as a condition of saving those businesses. To do anything less — to simply hand the money to Detroit without forcing changes in management, operation and labor contracts — would be grossly irresponsible.
Conservatives always complain that government ought to act like a business. In this case, it has.
It is fine to argue that the government should not bailout Detroit or Wall Street, that we should let those companies and institutions fail and deal with the consequences. I think that’s an overly purist and largely impractical approach in the face of this historic crisis, but I do acknowledge that it’s a logically consistent approach and I understand its appeal.
However, if you believe the bailout is necessary, you also have to accept the necessity that there will be strings attached to that money.
Tell us what you think about the site
Customer Care »
Vacation stops, manage subscriptions and more
AJC Services
Sections
Other Editions
Visitor Agreement | Privacy Statement
© 2013 The Atlanta Journal-Constitution
123 comments Add your comment
I Report/ You Whine
March 30th, 2009
11:53 am
Spoken like a true socialist, Bookman-
Instead, the federal government is pressuring GM to fire its CEO AS A CONDITION FOR GETTING TENS OF BILLIONS OF FEDERAL BAILOUT DOLLARS.
Geez, you don’t have to get so excited.
Besides which, the TARP funds, which OneTerm is digging into, IS SUPPOSED TO BE A LOAN, DAMMIT!!
Hahaha, “here, before you kill yourself, sign on the dotted line, duh.”
I Report/ You Whine
March 30th, 2009
11:58 am
Federally sanctioned show trials, why not, when you know the intelligence of democrat voters, bloodlusting psychotics all-
Jeremy Anwyl, chief executive of the automotive Web site Edmunds.com, called the move “political theater” to appease an increasingly bailout-weary public.
“American taxpayers are not happy,” Anwyl said. “But this way you’re able to point to Rick and say he’s gone, and that creates an environment where the loans become politically palatable.”
ew
I Report/ You Whine
March 30th, 2009
12:01 pm
Interviewed Monday on NBC’s “Today” show, the governor of Michigan (democrat Jennifer Granholm) said Wagoner is a “sacrificial lamb.”
ew
@@
March 30th, 2009
12:02 pm
jay:
GM has been nothing more than an “insurance” provider that just happens to manufacture vehicles for quite some time. Why wasn’t the “CEO” of the union fired as well?
Let’s see how Obama’s “expertise” has impacted “the engine” that fuels the American vehicle, shall we?
Dow Jones down 282.83 points.
Should have let GM file for Chapter 11…..wouldn’t have cost the taxpayers a dime. It’s headed that way anyhoo under the clumsy “mechanical hands” of government.
Joey
March 30th, 2009
12:04 pm
I do not believe the auto-maker bailout is necessary or wise. As I recall not to long ago you posted a similar opinion.
But the big problem here is that our Federal government has failed to demonstrate its ability to operate a business that must make a profit in order to survive.
I Report/ You Whine
March 30th, 2009
12:11 pm
‘Starting today, the United States government will stand behind your warrantee’…-Oblahmi’s Teleprompter
Cool, either give me four new tires or I’ll sue your liberal as-s for discrimination, bwa.
caz1158
March 30th, 2009
12:13 pm
Jay- I don’t care how you spin it,Obama fired Wagoner!!! Now if the Govnmt is going to venture into these bailouts(which I dont agree with).Then being able to pressure or put stipulations as terms of the bailout is not uncommon,and I agree with that. But call it what it is. I think the majority of us believe that changes in the Auto industry are long overdue. Can Obama fire the Union’s next? Now that’s CHANGE I would LOVE to SEE!!!!!!!!
Dave R
March 30th, 2009
12:17 pm
So, you fire the rich CEO, but you don’t fire the head of your auto worker’s union, which is REALLY the reason why most of Detroit can’t build a car Americans can afford to buy, right?
DANGER ! Selective, creeping Socialism at work.
Way to try to justify the unjustifiable, Jay.
Brad Steal
March 30th, 2009
12:19 pm
the fact that their is no private capital at all available for detroit is in itself an indubitable indicator that detroit is dead.
too bad the gov’t gonna keep them on life support. well, at least they have good health care.
Red
March 30th, 2009
12:27 pm
It seems to me that the union CEO has done a fine job of making worker concessions during this mess. Why would he need to be fired?
Oh right, the average worker doesn’t make $250,000 or more a year and therefore, doesn’t matter since they can’t run a company.
All the American workers do is take, take, take, get sick, and then take some more. They don’t give back any value to the company and in fact, most companies would be better off if they could figure out a way to fire all the workers so the CEO’s and principles could run the business without encumbrances like safe working environments and wage laws.
Copyleft
March 30th, 2009
12:33 pm
It is funny to watch the working-class rise up in defense of the executives, isn’t it? Especially AFTER they’ve driven their companies into the ground, trashed the economy, and gone begging for bailout funds.
Working-class conservatives are the perfect example of media brainwashing at work, courtesy of talk radio and Faux News.
Swami Dave
March 30th, 2009
12:34 pm
Will these changes (largely decorative) resolve some of the systemic problems at GM & Chrysler? Most likely not.
Is it likely that government bureaucrats and wonks many of whom having no experience in the operations of a private sector organization will better manage the operations any better than the current management? Probably not.
Would it have been better for the companies to go to bankruptcy and reorganize elminating many of the constraints to profitable operations under which they currently struggle? Possibly.
However, the salient point (which I would argue is Jay’s foundation) is that one would have to be silly to feign surprise that politicians are connecting conditions with the taxpayer money that they are controlling. After years of watching Washington tie transportation money to seatbelts and secondary (see: “unfunded) mandates required for participation in specific federal programs, one would have to be a lunatic to have been surprised by this action.
This highlights the true cost of dependence which is, by definition, the surrender of control.
-Swami Dave
caz1158
March 30th, 2009
12:45 pm
Red-Get rid of the Unions would be good start. They’ve outlived there usefullness for a good while now. Overpay for underwork is the motto of today’s union’s.
Corporal
March 30th, 2009
12:49 pm
Jay:
It’s called “political extortion”. He probably learned that from Jesse Jackson.
I’m sorry, but this guy is really starting to give me the chilly willys …. and believe me, if “I” feel that way ….. real trouble is brewing …… big backlash coming ……..
G
March 30th, 2009
12:50 pm
When will the Rushpublicants in Congress who presided over the ruination of our economy summon the honor to resign?
caz1158
March 30th, 2009
12:51 pm
Copyleft-How absurd of a notion”the right being brainwashed by talk radio & fox”. I guess the left wing isn’t told how to think by majority of the media)ABC,CBS,NBC,CNBC,CNN,PBR&95% of printed press. Nice Try,but the only one’s buying that load of cr*p, is the rest of left wing SHEEP.
Corporal
March 30th, 2009
12:52 pm
caz1158:
I used to be a member (very young – age 19 – had no choice) of the Brotherhood of Railroad Trainmen. I could tell you some real horror stories …. they were out of control.
Let’s all sing together now:
“Everyone stand up and holler for the Union,
Let’s give the brotherhood a cheer.
Everyone stand up and holler for the Union,
We ain’t hit a lick all year!”
G
March 30th, 2009
12:53 pm
Wagoner’s departure is long overdue. Under his leadership, GM suffered from a shortage of vision and an abundance of arrogance. A final point- corporate culture must change. Making the CEO the Chairman of the Board is a huge mistake. It’s the equivalent of putting the fox in charge of the hen house.
G
March 30th, 2009
12:55 pm
Look for Wagoner to have his own talk show on Fox right after Suckabee.
Shawny
March 30th, 2009
12:55 pm
Overstepped his bounds, this Obama did (said in my best Yoda voice). They should have let GM file for bankruptcy last year. If the company was so poorly ran, it should have went bankrupt, like any small to midsize company would have done. I understand that there should be conditions for receiving large chunks of cash, but there should be no cash to start with and we wouldn’t be having this blog.
Obama is failing economics, from CNN page: http://www.cnn.com/2009/POLITICS/03/27/navarrette.obama.economics/index.html
Shawny
March 30th, 2009
12:57 pm
ok, some concessions from management to get the money to continue to exist. So, where are the union concessions?
Bueller?
G
March 30th, 2009
12:58 pm
Wagoner was incompetent, too old, and part of the problem. He presided over the worst of GM’s failures. He almost destroyed GM with his lack of vision and his refusal to change the GM culture of behemoth, gas guzzling, unreliable and poorly constructed road hogs.
In order for GM to survive, he had to go. Good for President Obama.
Shows that the Obama administration believes that GM can make it through, but not without new leadership that will make the required changes in order for GM to make American cars that are competitive.
Chrysler is another story. See ya Chrysler.
Eric
March 30th, 2009
1:00 pm
They should have been forced into a structured bankruptcy 6 months ago. Instead, we poured billions down a hole and wasted 6 months, and they will end up exactly where they should have been in the first place – bankruptcy.
They cannibalized future demand with all of their deals of the past few years. The economy simply cannot support 3 American automakers, and the longer GM and Chrysler are allowed to sleepwalk towards Chapter 11, the more likely they will take Ford with them. Ford is obviously the best run of the 3, so let the others fail and let Ford pick up the slack.
Corporal
March 30th, 2009
1:02 pm
caz1158:
Don’t forget someone who is “brainwashed” doesn’t know it. You’re arguing with a wall.
G
March 30th, 2009
1:03 pm
Let’s get real: GM has to change their wrongheaded culture and President Obama came to some of the same conclusions that this consultant did -
http://www.umtri.umich.edu/content/RetoolingGM.pdf
mm
March 30th, 2009
1:04 pm
Same old talking points from the trolls.
The automakers have 2 weeks to put a plan together or file bankruptcy. The unions somewhat hurt the companies, but the execs ran them into the ground.
Corporal
March 30th, 2009
1:05 pm
I predict the “Economic Talicrats” are in for a big surprise for the next Congressional election. Just make a note of this post, date and time, and we will discuss it again then. If I am wrong I will stand corrected. Don’t worry, I won’t forget.
Corporal
March 30th, 2009
1:06 pm
……… and the CEO of the US has never even run a business.
ByteMe
March 30th, 2009
1:06 pm
Another part of the reason Wagoner was told to take a hike was that he had 90 days to get concessions from the bondholders and unions that would make the company viable and reduce their debt by 2/3rds. Didn’t happen and he didn’t seem to know if/when it would happen. He became part of the problem at that point. The administration was right to make his departure (as well as getting those agreements) part of any agreement for future funding.
DB, Gwinnettian
March 30th, 2009
1:07 pm
It seems to me that the union CEO has done a fine job of making worker concessions during this mess. Why would he need to be fired?
And there’s the little matter of the UAW never having asked the taxpayers for a bailout.
But don’t bother getting in between a conservative troll and the shiny-new talking-point.
Midori
March 30th, 2009
1:07 pm
mm,
they know it’s all the union’s fault, cause Rush told them so.
Dusty
March 30th, 2009
1:08 pm
Well, wouldn’t you know? Jay Bookman is for extortion! Get going, CEO, or I will not give your company any money.
Kidnappers do this in reverse, i.e. hold the person until you pay us. Maybe GM should have tried that.
In the first place, government should never have been giving funds to private industry.
If GM fails, it should be on their own.
The President of rht USA should be running the government, not private business.
Now we have a man with no business experience being advised by a man who forgot to pay his taxes. That is whom is trying to run private business owned by American stockholders.
Jay Bookman, who is no business expert either, wants to say how great it is to have Obama meddle in a self-made mess aided by a liberal led Congress. Yep, that’s a liberal Nirvana if I ever heard of one.
caz1158
March 30th, 2009
1:08 pm
Corp- UAW never saw a STRIKE they did’nt like. When begining job training,new hires were taught was correct way to hold strike signs,proper abusive language to be yelled at those who chose to cross picket lines,& last but not least,moaning about hours & pay. Something to be proud of,and teach our children!
Midori
March 30th, 2009
1:09 pm
the last CEO of the United States ran SEVERAL businesses.
Right into the ground.
and the US as well.
Rush Limbaugh for President
March 30th, 2009
1:09 pm
I Report,
What is your point? You copy and paste and scream socialist without making a point. A few questions;
Do you think Wagoner should not have been forced to resign under any circumstances?
Do you think he should have been forced to resign if the plan he submitted for GM to get more money was unacceptable?
Wagoner has been at GM for 30 years and has be CEO since 2000. Is he part of the problem or part of the solution?
How does any of what Jay said make his position that of a true socialist?
Corporal
March 30th, 2009
1:12 pm
HEADLINE: “Obamas to use own cash to redecorate White House …”
This is somewhat “eyewash” (do you realize how much free food, travel, and other expenses they get?) but I commend them for it.
It a far cry better than the Clintons who tried to steal White House furniture. Remember when the U.S. Archives truck was sent to New York to bring it all back? Oooops!
Wyld Byll Hyltnyr
March 30th, 2009
1:12 pm
The problem is not in requiring Wagoner to resign as a condition precedent to a possible bailout, rather the problem lies in the public spectacle.
The Obama administration, from the lynch mob pursuing certain AIG employees to, now, Wagoner and, on soon, to others,has taken on the patina of post revolution France. Anyone with one shread of class and the desire to act in the most effective and productive manner possible would have asked Wagoner to resign and let him do so. Instead, President Obama creates a public spectacle that will ultimately benefit no one. Already, I have heard the cries for Gettlefingerstein, the union head. This is but an unnecessary side show that is not productive. No wonder the european press has taken to calling our president Ob-amateur.
Perhaps the president would be better served to use his bully pulpit to orchestrate public hangings for tax cheats (Rangel, Geithner, Daschle, and on…) or those sucking to heavily on the lobbyist teat (Rangel, Dodd, Frank, Rahmbo, and on…) or those who are McCarthy-like in their actions (Rangel, Frank, Conrad, and on….)
To see our great nation reduce to the “show trial” level of tinpan dictators and 1970s communist regimes is most distressing, but, all too unfortunately, the hallmark of the Ob-amatuer administration.
Corporal
March 30th, 2009
1:13 pm
caz1158:
I used to watch engineers drink beer all day while running the engines and throw the empty cans out the window. If management had tried to fire them, the Union would have fought it all the way.
Wyld Byll Hyltnyr
March 30th, 2009
1:15 pm
Midori 1:09 pm
One of our family trusts had a small, inconsequential investment in the Rangers. That investment had an admirable return that was, I assure you, not indicative of a business run into the ground.
No matter how many times you bleat otherwise, President Bush was a fine and successful businessman.
Corporal
March 30th, 2009
1:15 pm
P.S.
I had to testify once in a termination hearing (just before I went in the USMC) as I was present one night as the front brakeman when a totally drunk engineer tried to pull two hundred loaded cars out of the yard without releasing the air brakes. They fired him. Two years later he got his job back with all back pay.
DB, Gwinnettian
March 30th, 2009
1:16 pm
I Report,
What is your point?
To get you to notice his imbecilic posts, of course.
The opposite of love is not hate, it’s indifference. Just sayin’.
Corporal
March 30th, 2009
1:18 pm
President “Goodwrench” strikes again.
caz1158
March 30th, 2009
1:21 pm
Corp-I’ve been in the Auto Indusrty since 1979,both corporate and on the retail side. I can tell you that the least productive,me first,clock watchin,company hating,ready to walk at the drop of a hat employees were union members. Don’t miss them at all. Sad to say,but management help create this monster.
Bosch
March 30th, 2009
1:22 pm
Corporal,
Just because YOU used to be a member of a sucky union, and watch some bad things – doesn’t collectively make all unions suck. It just ain’t so.
One thing, unions don’t run the business – they don’t get to decide which things get produced – they don’t deal with the marketing, they don’t deal with R&D (I think).
I’m glad Wagoner is gone – now on to the others.
caz1158
March 30th, 2009
1:24 pm
Corp-If something had happen accident wise,you know the lawsuits would have been aflowin. But not at the union,nooooooooooooo, but at the company.
G
March 30th, 2009
1:24 pm
People railing against union workers don’t know what they’re talking about. They didn’t make the decisions about which vehicles to make, their design, and all the things which assist in making a company prosper.
Management did.
caz1158
March 30th, 2009
1:27 pm
G-It’s a toatal screw-up. You can’t just blame one group,I agree. But the unions have been getting a pass for years,and they ain’t no ANGELS!!
Dave R
March 30th, 2009
1:31 pm
DB Gwinnett, please. You actually think that the UAW didn’t ask the government for a bailout? What do you think all those union leaders were doing with VP Hope & Change down in Florida at their swanky meetings last month? This is payback time for Hope & Change, and he’d better produce. We all know it would be better for GM to go down the tubes and let another car company rise from the ashes – one without the chains of the union around their neck, but Hope & Change can’t say that without getting into hot water with his puppet-masters at the union.
And G, to your earlier question:
“When will the Rushpublicants in Congress who presided over the ruination of our economy summon the honor to resign?”
I think they’ll do so, right after we see Barney, Dodd, Pelosi and Reid go first.
Midori
March 30th, 2009
1:31 pm
I’m going to post this Frontline link again (Just for you, Wild Bill):
http://www.pbs.org/wgbh/pages/frontline/tentrillion/
Eleanor Rigby
March 30th, 2009
1:32 pm
Everybody wants to blame the unions for the automakers’ problems but if you are in the market for a car you will notice American cars are not that much more expensive than foreign cars, particularly Japanese cars. Apparently the problem is not that Americans can’t afford to buy American cars. There must be some other reason. Poor management I say.
RC
March 30th, 2009
1:33 pm
Only Government creates problems and then says we are the only one that can fix them.
CAFE standards, Union contracts, Foolish safety guidelines etc, Government mandated!
PresBO will run GM, Chrysler and the US into the ground. That is Change you can believe in!
DebbieDoRight
March 30th, 2009
1:35 pm
Jay: The federal government is doing the exact same thing. GM and Chrysler came to the government seeking huge sums of taxpayer money to keep operating. Barack Obama responded just as private investors would. He had outside experts comb through the automakers’ books and operations, and then he demanded changes as a condition of saving those businesses. To do anything less — to simply hand the money to Detroit without forcing changes in management, operation and labor contracts — would be grossly irresponsible.
Oh Jay, you sure stepped into a hotbed this morning!!! You and Wooten sure like to keep things interesting huh? Did you get a chance to read Wooten’s “answer” to the same topic? Very different viewpoint, to say the least!! Oh well, good luck ’cause this is going to be a very interesting day!!
@@: Should have let GM file for Chapter 11…..wouldn’t have cost the taxpayers a dime. It’s headed that way anyhoo under the clumsy “mechanical hands” of government.
I learn more from blogging than I do in class at school. I’m taking a finance class and we touched on the subject of GM before — NEVER did my teachers mention that GM was only an insurance holding company!! You’re right @@, maybe we should’ve allowed them to restructure under bankruptcy, ESPECIALLY since they don’t seem to understand that they will have to change radically to stay solvent! Last year, in the private jets, was bad enough; but now I truly believe that they just don’t get it!!
Red: All the American workers do is take, take, take, get sick, and then take some more. They don’t give back any value to the company and in fact, most companies would be better off if they could figure out a way to fire all the workers so the CEO’s and principles could run the business without encumbrances like safe working environments and wage laws.
Red, I hope to God you were just being facetious!! I mean, after all, aren’t YOU an American worker?
Corporal: ……… and the CEO of the US has never even run a business.
Well, the ex-CEO of the US ran the majority of the companies he ran into the ground…not to mention……….. Bio
Midori
March 30th, 2009
1:35 pm
RC,
If you would please tell us what is wrong or evil about CAFE stndards, safety guidelines and union contracts?
DebbieDoRight
March 30th, 2009
1:37 pm
Only Government creates problems and then says we are the only one that can fix them.
CAFE standards, Union contracts, Foolish safety guidelines etc, Government mandated!
Hey, how about a nice peanut butter sandwich for lunch?!
Paul
March 30th, 2009
1:38 pm
G 1:03
That paper read more like a college research project with a serious lack of substantiation. At the end we read “I have been a consultant for GM for 15 years and an employee for 9 years prior to that, and have worked at one time or another in almost every region and function. This paper has not been endorsed or supported in any way by anyone at GM”
Okay, make that a former employee writing a college paper.
Your earlier: “He presided over the worst of GM’s failures. He almost destroyed GM with his lack of vision and his refusal to change the GM culture of behemoth, gas guzzling, unreliable and poorly constructed road hogs.”
What, exactly? GM produced vehicles the American public bought in record numbers. Those gas guzzling behemoths were exactly what Americans wanted and provided healthy profits to the shareholders. Look at Toyota, Honda, VW, Audi, Porsche, Mercedes Benz, Volvo – they ALL jumped on the behemoth bandwagon in response to American buyers. Your ‘unreliable and poorly constructed” is supported by which JD Powers, Edmunds or other reports? Many of their models were more reliable than Mercedes Benz for the comparable time period. Cadillac didn’t begin producing the Escalade until the dealers pressured it to – management actually resisted!
So what, exactly, should have been done, say, throughout the 90s and on into the next decade? Remember, your objective is to make money, build vehicles that will sell and keep the unions from striking.
mm
March 30th, 2009
1:38 pm
Corporal at 1:12,
Did you ever see a wingnut driven lie you didn’t repeat?
Let’s go to factcheck.
DB, Gwinnettian
March 30th, 2009
1:39 pm
“You actually think that the UAW didn’t ask the government for a bailout? ”
For the UAW? No.
Midori
March 30th, 2009
1:40 pm
Hi Paul
DB, Gwinnettian
March 30th, 2009
1:44 pm
People railing against union workers don’t know what they’re talking about.
Union Derangement Syndrome.
Rush Limbaugh for President
March 30th, 2009
1:48 pm
Wild Bill,
You speak eloquently with your eyes closed…
The entire country was totally pissed off about AIG… is that the lynch mob you are referring to?
President Obama esentially stopped the congress from writing a tax law to get the bonuses back.
How do you know exactly how Wagoner’s resignation went down? Were you there? How do you that when they said we don’t like your plan he didn’t say, “that’s my plan, take it or leave it”?
You think non-conservatives with tax problems are tax cheats and conservatives with tax problems just made a mistake?
Wild Bill you are insightful but biased.
G
March 30th, 2009
1:51 pm
The big CEOs bleed the companies dry, then retire and laugh about it. Back in the 70s & 80s, they asked the employees to take a pay cut or else the company would have to lay off workers. As soon as employees took the pay cuts, the CEOs gave themselves a big bonus…of $300,000 or so. They care very little about the companies or the country. It’s disgusting.
Paul
March 30th, 2009
1:56 pm
G 1:24
[[People railing against union workers don’t know what they’re talking about. They didn’t make the decisions about which vehicles to make, their design, and all the things which assist in making a company prosper.]]
Europe has high sales of fuel efficient, high mileage diesel cars. Why don’t we have them? It’s not all about certification – “In a masterstroke of special-interest politics, the UAW used CAFÉ’s “two fleet” rule to forbid Detroit from importing smaller cars from its foreign operations.” Why? UAW didn’t build them so they effectively blocked importation.
So, yes, all of GM – management and workers – bear responsibility.
DB, Gwinnettian
March 30th, 2009
1:57 pm
“Those gas guzzling behemoths were exactly what Americans wanted and provided healthy profits to the shareholders.”
Paul, just to add on a bit, it’s not quite as simple as that. American automakers (and the UAW) fought for tax code provisions that would make it much easier to sell over-6000 pound vehicles; we effectively subsidized a decent chunk of that “profitability” which was built on sand, putting vehicles on the road that were harmful to us in a lot of ways. I’m not just talking greenhouse gases, I’m talking danger to other normal-sized vehicles, along of course with exacerbating our dependence on oil.
Anyone wants to criticize the UAW, criticize them for their role (minor, but important) in this. But for negotiating the best deals for the workers they could manage during good times? What else is a union supposed to be doing if not that?
Paul
March 30th, 2009
2:01 pm
Hi Midori!
Read an interesting article while I was away – tracked US economic expansion to technologies, such as Internet-related, that weren’t even imagined when the projection scenarios were run. Now Pres Obama pushes investment in new technologies (some of which really are thought of but still in development) – which will have the added benefit of releasing us from mideast oil – as an investment in economic recovery, providing sustainable jobs. I rather think a lot of people gloss over that and don’t really comprehend the scope of what he’s doing.
Dave R
March 30th, 2009
2:02 pm
DB, you’re really off today.
Of course it was for the UAW. It just has to go through the middleman called GM. No GM, no middleman, no bailout for union workers.
You’re better than this.
From a study by a Professor of Economics at the University of Michigan, these are the average costs of salary and benefits for hourly (union) workers at the auto companies back in 2006:
Labor cost per hour, wages and benefits for hourly workers, 2006.
Ford: $70.51 ($141,020 per year)
GM: $73.26 ($146,520 per year)
Chrysler: $75.86 ($151,720 per year)
Toyota, Honda, Nissan (in U.S.): $48.00 ($96,000 per year)
Now, the U.S Bureau of Labor Statistics in 2004 showed that union workers earned about 22% more than their public and private counterparts in wages, so if you take the average uplift in benefits (healthcare, retirement, insurance, etc) that non-union companies have to pay (around 30%), your union worker now costs their company about 37% of their salary in benefits.
Higher salaries, higher benefits, higher costs to consumers or lower profits to keep a car company going in tough times. The unions dug their own grave on this one.
DB, Gwinnettian
March 30th, 2009
2:07 pm
Dave, when I said the bailout wasn’t for the UAW, I meant the. bailout. wasn’t. for. the. U.A.W.
Nobody is asking the Feddle Gubmint to keep the UAW solvent. The Feds aren’t looking to nationalize the union. Thus it’s a little buffoonish to speak about “firing the union leaders” as some righties in here are doing.
Although I’ll give you style points for resurrecting ye old “shiftless 70 dollah/hour N—–s” meme that was so popular some months ago. I’m supposed to believe you actually aren’t aware that Toyota, Honda, and Nissan wouldn’t have the retiree legacy costs because they weren’t doing business as manufacturers here while today’s UAW retirees were working.
But you are, of course.
Brian
March 30th, 2009
2:08 pm
If GM was pinning all their hopes on a 40K electric vehicle that most folks won’t be able to afford anyway, then maybe Wagoner did deserve to go. Other than that, I think it’s a power play by Obama. If he can force out CEO’s of privately held non-financial companies, then who’s to stop him elsewhere? It’s all about stemming rage against the government to privately held mega-companies.
Bosch
March 30th, 2009
2:09 pm
Off topic but awwww. Heartbreaking picture on the cover of the ajc.com.
Paul
March 30th, 2009
2:12 pm
DB
I tend to keep some things to a point or two and note there’s rarely a single causative factor in any of these topics, in spite of how some like to find the ‘magic bullet’ and assign blame.
You’re right about those tax code provisions – aided by (guess which party?) Congressmen to give credits to purchase of minitanks. I’ve mention I’ve a neighbor who’s about five one (height and width) who drives one of those – she can barely see over the steering wheel – but as a business owner with one employee those tax credits were too good to pass up.
I’ve never been a fan of those vehicles but my point is, they may gulp gas, roll over and kill occupants, cause frustration for others (like me) because people can’t park them – but look at the sales and profit numbers.
But that business about blocking importation of high-mileage engines wipes out a lot of good will.
BTW – I pulled into a crowed parking garage this past week at the hospital. I stopped as I rounded a corner because up ahead I could see backup lights as a Mistubishi SUV began backing up. Opposite him was a longbed Toyota pickup truck (see G? A Japanese SUV and a Japanese pick-em up truck!) sticking waaay out into the lane. Bam! SUV hits right bumper a glancing side blow and drives off (no, I couldn’t make out tag numbers at that distance). I didn’t pull into the spot vacated by the SUV as I thought the pickup would do the same to me. But the space next to the pickup was open. When I pulled in I saw there was an easy THREE feet from the truck’s front bumper to the wall. So I left him a note:
“I just watched an SUV back into your truck. If you would have just pulled foward even two feet when you parked he wouldn’t have hit your bumper and damaged your fender.”
I know, not the nicest thing to do, but if people would just learn how to park they could avoid all sorts of grief.
DB, Gwinnettian
March 30th, 2009
2:17 pm
It’s incredibly off-topic, but I didn’t want to sign off without mentioning that I’d been over to the old “whitehouse.org” site and saw Bush’s farewell address posted there.
You’ll laugh, you’ll cry. It’ll become a part of you.
A taste follows:
Tonight, with a thankful, if otherwise empty, heart, I have asked for the lastest opportunity to distort, lie, shuck, jive, moisten my armpits with shame sweat, star blankly into space as some Ivy League pr–k’s fancy patter rolls by on the Teleprompter and share some carefully phrased thoughts on the journey that we have traveled together – oh, who we kidding? I’ve traveled. You all just tagged along, like a dog tied to the bumper of my bulletproof limo, just a bloody stump on a leather leash by the time I pulled into the parking lot at the Dallas National Bank.
DB, Gwinnettian
March 30th, 2009
2:23 pm
Paul, you write “aided by (guess which party?) Congressmen”
I know you know, but when I was griping about the UAW’s role in this, it’s specifically because of their support given to such Congresscritters who voted on just such boneheaded legislation.
You also mention the undeniable profit of such gargantuans, but again I ask: At what cost? Detroit got real good at coaxing a lot of dollars out of buyers of crummy, truck-based drek, gussied up with leather and chrome and sporting huge margins because they were based on platforms that had barely been improved since the Eisenhower administration. Fat lot of good it did us for long term global competitiveness.
I could go on–I could probably write a book, this is a topic that’s fascinated and enraged me for decades–but I must bid farewell for now.
Mrs. Godzilla
March 30th, 2009
2:25 pm
Dave R
You numbers are wrong.
for the umpteenth time on this topic:
“media outlets have used data that combines the average cost of current wages and benefits and future benefits to falsely assert or suggest that autoworkers make $70 or more per hour. But, as analysts and some media outlets have noted, the figure includes not only future retirement benefits for current workers, but also benefits paid to current retirees”
read the rest here:
http://mediamatters.org/items/200811220004
If you are afraid of MediaMatters
same info can be found here:
http://www.factcheck.org/askfactcheck/do_auto_workers_really_make_more_than.html
Dave R
March 30th, 2009
2:25 pm
DB, you’re the one missing the point.
No union jobs at GM, no union dues at the UAW. No swanky meetings in Florida.
This bailout is for the unions, plain and simple.
Dave R
March 30th, 2009
2:30 pm
Mrs. G, they still count as costs the companies have to pay in order to keep the unions happy. That is the cost for all workers (including retired) that is built into the cost of every car.
Government, management and unions are to blame for this bailout and government action. The only difference here is that the rational ones see all three as the issue.
I Report/ You Whine
March 30th, 2009
2:38 pm
Do you think Wagoner should not have been forced to resign under any circumstances?
Not by the “president” of the United States.
Do you think he should have been forced to resign if the plan he submitted for GM to get more money was unacceptable?
Unacceptable to whom?
Wagoner has been at GM for 30 years and has be CEO since 2000. Is he part of the problem or part of the solution?
Wagoner is responsible for the mortgage crisis? Wagoner is responsible for the US Congress banning domestic energy production?
How does any of what Jay said make his position that of a true socialist?
Gee, he thinks it was a good idea to for the government to replace a CEO of a major PRIVATE corporation. Duh. When will the whining commence about Rahm Emanual and how Freddie Mac collapsed on his watch? Wanna bet which one was the larger financial catastrophe? Where does Rahm work at now? We’re Third World, dude, Third freaking World.
G March 30th, 2009 1:24 pm People railing against union workers don’t know what they’re talking about. They didn’t make the decisions about which vehicles to make, their design, and all the things which assist in making a company prosper.
But yet, despite all of this “mismanagement,” GM sold more cars than anybody else in the entire world.
Do you libs even have a clue?
DebbieDoRight
March 30th, 2009
2:44 pm
Why doesn’t anyone remember that the unions gave to both the Obama campaign as well as the McCain campaign? Selective memories perhaps?
Corporal
March 30th, 2009
2:54 pm
Bosch:
They are a “necessary evil” but they have way too much power ….. and when they don’t get their way many of them use intimidation and even violence.
Bosch
March 30th, 2009
2:55 pm
Corporal,
Yeah, maybe in movies, and in the days of Jimmy Hoffa, but not now.
Dave R
March 30th, 2009
2:56 pm
Debbie, please. Of course they give to both. The difference is how they are being paid back. VP Hope & Change went down to Florida and dropped his proverbial drawers in from of union leaders to thank them for their help. Now, he got his marching orders and he and Hope & Change are delivering.
I don’t think for one moment that you would have had the same response to unions from McCain or Palin.
Corporal
March 30th, 2009
3:02 pm
mm:
Here’s a quote from your “fact check” …..
1) Almost one year later, after interviewing dozens of Clinton and Bush White House staffers, GSA employees, members of the Secret Service and others close to the situation, the GAO issued a report that stated that “damage, theft, vandalism and pranks” had occurred during the transition between administrations that year.” … (talking about the Clinton administration) !
2) I didn’t see any rebuttal of the “White House furniture going to New York” incident. If it was there please show me ……… bottom line – it happened!
jasper
March 30th, 2009
3:04 pm
Its all window dressing children. Demand management change to mollify the public so you can start sending bailout dollars by the mercedes truckload. Where’s this week’s outrage for last week’s debacle, AIG bonuses, Fannie Mae Bonuses, the forever deficit budget, cabinet tax cheats. Remember the Iraq war? And don’t forget we’ll be completely out of there in a year.
This isn’t about GM, its about the block voting of the blood sucking UAW.
Buy American – Merit Shop Made.
Corporal
March 30th, 2009
3:05 pm
Bosch:
You’re right on that “heartrending” photo.
Liberals – If you are sick of seeing this ….. too bad!
IT IS THE SOLDIER
It is the Soldier, not the minister
Who has given us freedom of religion.
It is the Soldier, not the reporter
Who has given us freedom of the press.
It is the Soldier, not the poet
Who has given us freedom of speech.
It is the Soldier, not the campus organizer
Who has given us freedom to protest.
It is the Soldier, not the lawyer
Who has given us the right to a fair trial.
It is the Soldier, not the politician
Who has given us the right to vote.
It is the Soldier who salutes the flag,
Who serves beneath the flag,
And whose coffin is draped by the flag,
Who allows the protester to burn the flag.
Corporal
March 30th, 2009
3:07 pm
Bosch:
Disagree about unions and “now”. That’s what all of this controversy is about “card check”. Do you think whether or not to have a union should be by secret ballot ??
Corporal
March 30th, 2009
3:07 pm
Has any one seen or heard from Al Sharpton or Jesse Jackson since the Inauguration ?
Are they on vacation or “something” ?
Dusty
March 30th, 2009
3:08 pm
Well, my last post is lost in space so here’s another one.
Bosch,
Yes. it is sad to see a photo of a little girl crying because her father in the military is leaving for Afghanistan. It is almost as sad as some of the family pictures after 9/11.
(Note..now there is a picture there saying it is his seven year old daughter but shows a lady wearing a wedding band giving a soldier a farewell hug! hmmm Does Bookman post pictures also?)
DB@2:17
Anybody who would post that farcical “Bush’s Farewell Speech” is an example of pure lowlife. Do you have to show your pettiness in front of everybody?
Bosch
March 30th, 2009
3:13 pm
Corporal,
I don’t know that much about it to be honest – not enough to say whether or not to say yes or no.
caz1158
March 30th, 2009
3:14 pm
The same people that don’t believe that the unions have been a player in the downfalls of the big 3 are the same blind people that don’t see a problem with other stronghold unions such as the teachers union!! If the union was’nt part of the problem then why is Barry Obie and gang asking ror consessions? It’s always’s big bad management that’s the problem.Come on,does’nt common sense ever come into play with the left? Both sides were just as greedy as the other.And if you don’t think Union Officials have been lining their pockets for decades,please do everyone a favor & crawl back under that rock.
Corporal
March 30th, 2009
3:16 pm
UNBELIEVEABLE …………..
“Starting today, the United States government will stand behind your warranty…”
Bosch
March 30th, 2009
3:16 pm
“not enough to say whether or not to say yes or no”
Good Lord, could that part of a sentence be anymore stupid?
caz1158
March 30th, 2009
3:18 pm
Corp-Does that include Home,Appliances,& others warranties? Or are they to follow?
Rush Limbaugh for President
March 30th, 2009
3:19 pm
I Report,
As I have always known you are less than informed on the issues and your latest response.
There is a board of advisors (experts) put in place to help decide if the auto companies should get more Gov’t help that reviewed the plans submitted by the automobile companies. They made the judgement that the plans submitted were not acceptable and that Wagoner needed to go. Obama didn’t make those decisions the board did. He just implements based on their feedback.
In my third question I was referring to Wagoner’s impact on GM not the economy as a whole. I don’t know how you missed that one.
Freddie Mac did not collapse on Rahm’s watch. You been watching FOX news to much. That is pure hyperbole.
What difference if GM sold the most cars in the world if their business model is not viable?
bugger
March 30th, 2009
3:28 pm
Their were two options for the Auto Companies. One was the traditional option of bankruptcy. The second was a government bailout. Under option one, the courts would oversee the restructuring of the company. Under option two Obama would oversee the restructuring of the company.
A little more than two months into his presidency and he is controlling two thirds of the us auto industry, and through Geitners newly bestowed power to sieze, virtually all of the financial industry.
And Jay. I know you’re saying, “golly gee guys” he’s just doing what any other businessman would do. Any other businessman would not force healthy banks to accept bailout money, then go in and impose compensation limits after the fact.
If you actually think a president basically firing the CEO of a company is just like any other business deal you are totally lost.
Peadawg
March 30th, 2009
3:31 pm
“First, the federal government is not requiring GM to fire its CEO. It has no such power or authority. Instead, the federal government is pressuring GM to fire its CEO AS A CONDITION FOR GETTING TENS OF BILLIONS OF FEDERAL BAILOUT DOLLARS.
That’s a very important difference.”
Ya, the 2nd part is pretty much blackmail. Not much better Bookman.
Taxpayer
March 30th, 2009
3:39 pm
They could let GM go into bankruptcy and the first thing that would happen is that their pensions plans get taken over by the PBGC. Unfortunately, the PBGC cannot afford to take on any more burden at this point. Then, there are all of those promised healthcare benefits that GM is saddled with and no money to cover them either. So, the Medicare and Medicaid would have to pick up more of that tab and the rest would get dumped on us in the roundabout way of more folks standing in line at the emergency centers, etc. And, then there are all those support businesses that would go belly-up real fast as well. Obama is just trying to keep what could be a worst-case scenario from happening.
I Report/ You Whine
March 30th, 2009
3:40 pm
Obama didn’t make those decisions the board did
{{{{Obama formally announced Monday morning that ——>he<—— was rejecting restructuring plans submitted by GM and Chrysler because they would not make the two automakers viable.}}}}
In my third question I was referring to Wagoner’s impact on GM not the economy as a whole. I don’t know how you missed that one.
You honestly believe that the mortgage crisis does not have an affect on the economy as a whole, and is causing consumers to scale back on large purchases such as automobiles?
Really?
Freddie Mac did not collapse on Rahm’s watch. You been watching FOX news to much. That is pure hyperbole.
Technically, since we are apparently applying our opinions now, GM didn’t “collapse” on Wagoners watch either, bozo.
{{{{Emanuel Was Director Of Freddie Mac During Scandal- New Obama Chief of Staff, Others on Board, Missed “Red Flags” of Alleged Fraud Scheme- ABC News}}}}
You spell “Fox” with an A?
What difference if GM sold the most cars in the world if their business model is not viable?
What are you freaking talking about, my man? Are you lost? GM sells more cars than anybody else in the world and they don’t sell them cheap, either, they are comparable to any other car manufacturer. So what do you think they do with the money, klown, snort it up? Burn in a big pile? Executive bonuses?
Really?
How about Union costs, duh?
Hillbilly Deluxe
March 30th, 2009
3:41 pm
It’s ok to make the GM CEO resign for them to receive a bailout yet the Wall Street execs were kept in place and many got bonuses. Doesn’t make sense to me.
Corporal
March 30th, 2009
3:42 pm
I have a serious question for President Obama’s next press conference (unlike the last one where all the question askers worked in his campaign):
Mr. President.
My right front tire is wearing badly just on the inside. Would that be a problem with the toe-in, camber or caster?
Thank you.
Corporal
March 30th, 2009
3:49 pm
caz1158:
I just bought a Ruger LCP (Lightweight Carry Pistol) .380 caliber. I hope it covers that.
Corporal
March 30th, 2009
3:51 pm
Bosch:
I hear you and I am not trying to be a jerk but that is a cop out.
You are an emplyee in a huge business. Union people come in (they have that right by law) and want to organize a union. They make their best pitch and then it’s time for the employees to vote yes or no.
Should that be by secret ballot or show of hands ? This is not a hard one.
Yankee
March 30th, 2009
3:52 pm
The guy led G.M. to a 70 milllion loss over the last four years. He should have lost the job three years ago. What the —- are you thinking.
Rush Limbaugh for President
March 30th, 2009
3:53 pm
I Report,
He rejected based on advice of experts. If they had said the plan looks great the news would have probably been different and Wagoner would probably still be CEO. You read the news to literally without context.
GM’s market share has been declining for years. The current economy just accelerated what was already happening.
Rahm, was never the CEO of Freddie Mac. Directors don’t run companies, management does.
I Report, can you not debate without the name calling or are you just to immature to overcome that unattractive part of your personality?
Gm’s loss of market share was a result of competitors stealing their customers. They made inferior cars for years and admitted it. Union costs are a problem and I don’t like anything about unions but poorly designed, low quality cars is what got them in trouble. Their cars are better now but the competition is also better. Please try to respond like an adult.
Yankee
March 30th, 2009
3:53 pm
I coildn’t grasp the real number, 70 BILLION
caz1158
March 30th, 2009
3:56 pm
Corp-This would be funny if not true. And to think we’re just begining to scratch the surface of Barry O’s agenda for us. It’s good to see his Sheep lined up nice and straight behind him.
Dave R
March 30th, 2009
3:58 pm
What we’re thinking is that it is a decision for the Board of Directors of the corporation to make, Yankee, NOT the President of the United States.
N.J,
March 30th, 2009
3:59 pm
Spoken like a true patriot, Mr Bookman.
The founding fathers original intent with regard towards large corporations was as follows:
1) Corporate charters were granted for fixed periods of time, usually between 10 and 40 years.
2) Corporate charters could be promptly revoked for violations of law or for causing public harm.
3) Corporations could engage only in activities necessary to fulfill their chartered purpose.
4) Corporations could not own property that was not essential to the fulfilling of their chartered purpose.
5) Corporations could not own stock in other corporations.
Corporations were not allowed to do anything or own any assets that were not specifically related to the purpose for which they were founded. Period.
6) The personal assets of corporate shareholders were not protected from the consequences of corpoate behavior.
What this last one means is that shareholders in a corporation would have to pay for a corporate bailout out of their own pockets, not the coffers of the taxpayers.
If the founders could see the mess created by the concept of “free market economics” which to a man, almost all of the Founders OPPOSED,
they would be shaking their heads and saying “We Tried to Warn You”. But their warning was not heeded, because from almost day one of this nation, the wealthy and powerful started to chip away at the laws created by the founders which were designed to PREVENT the wealthy from pooling their money corporately in order to tip the balance of government away from the people, and towards themselves. Which is why a small time thief can be sent to jail for stealing fifty dollars while shoplifting, but a member of the new monarchy, the CEO’s the COO’s and CFO’s can rob people blind and often get a mere slap on the hand, and more often than not escape without a day of jail time. As one of the founders once put it with regard to corporations:
“no body to jail, no soul to damn to hell”
The current economic system of the United States is very, very far from the original intent of the founders and very much out of synch with the original intent of the constition. The founders ALL differentiated between property and wealth. They all supported the right to property, but they also all supported limiting wealth, and finding methods of limiting wealth without limiting the right to property. Every one of the methods they suggested involved some form of progressive taxation of some form of income, whether by taxing luxury items that the wealthy purchased or by directly taxing income earned by certain methods, they did not make the mistake that conservatives make today by confusing property with wealth or confusing profits with wealth. One can create wealth without creating profit. The government creates wealth by targeted policy and targeted taxation. By not taxing capital that is directly engaged in creating goods and services, but highly taxing money that is invested speculatively, the government encourages earning money by the hard work of starting a company, working in it oneself, and discouraging wealth made by investing in a the casino of the stock market, which is where money extracted from companies as personal income usually ends up when this money can be extracted at a low tax rate. If the only way the wealthy can protect their wealth is by keeping it INSIDE a company they themselves own, they will do so and not be taxed a red cent, no matter how high the top rate is.
Its only when they decide they want to take it out to purchase a yacht or a Lamborghini that results in it being taxed. If it is going to cost them a 90 percent tax to take the money out as personal income to buy that yacht, they will think a lot longer and harder about taking it out than if the top tax rate is 28 percent.
Conservatives use much complex fraud in attempting to suggest that lowering the top tax rate on income is good for all. It is not. It is simply the deception used by those who want to become part of a new Monied Monarchy who use this deception to get their way. It is the cause of the current economic crisis. From Jefferson and Madison, to Lincoln and Teddy Roosevelt, Americans have been warned about the dangers of allowing too much power to large corporations and the hereditary wealthy class and the fruits of ignoring these warnings were seen in the Great Depression and are being repeated today as the lessons of the Depression are forgotten. The longest period in which our economy was relatively free of deleterious economic cycling was between the start of the New Deal and the election of Ronald Reagan. The post Reagan economy has been one of repeated economic recession, stock market collapses, every few years. This exactly mirrors the American economy between the end of the Civil War and the Great Depression. Economic depressions occured every ten years, like clockwork with smaller recessions in between them. Each sucessive economic cycle resulting in deeper depressions until a the huge one of the 1930’s. All Keynes did was return to the economic philosophy of the founders, which was simply to prevent extremes of poverty and wealth. The means of doing this was taxation.
Bosch
March 30th, 2009
3:59 pm
Corporal,
No, nothing is ever that simple, and I’ve never heard an argument for or against it. I know you like to make everything union bad, and while I know the pros and cons, I simply do not take that argument.
For all I know this could be some made up thing by the wingnuts that the unions are doing – I really don’t know and until I read about it from a reliable source (sorry Corp – that’s not you) I don’t have an answer for it.
I Report/ You Whine
March 30th, 2009
4:00 pm
The Malibu is the Car of the Year.
The Escalade is the most stolen automobile in America.
What?
Kamchak
March 30th, 2009
4:05 pm
N.J,
A thread at salon.com is debeating this same issue. Someone there suggested this a as a must read:
http://www.scribd.com/doc/13429468/Infinite-Debt
caz1158
March 30th, 2009
4:09 pm
I report/- American car companies just started to build somewhat decent vehicles. Don’t forget about the previous 30 years of SH*T they pushed on the American public all the while pushing the “Buy American” slogans. Car of the year status while a good start,talk to me in 2-3 years when American Vehicles have a history falling apart if still on the road. As for the Escalade being the most stolen car- not suprising.
Dave R
March 30th, 2009
4:12 pm
N.J. please cite your sources for that fiction you posted. It should be interesting reading.
Rush Limbaugh for President
March 30th, 2009
4:19 pm
I Report,
That’s great. It is too little too late. Even my most conservative patriotic friends drive Lexus, BMW, Mercedes, Volvo. Why? Ask my conservative friends and they will tell you that the American cars don’t have the quality or style they like. I drive an Audi, my wife drives a Honda. The last American Car I drove that was a GM car was an Aroura(sp). They don’t even make it anymore.
You continue to miss the main points about what happened; Obama acted on advice from experts. GM has been failing for years and Wagoner has been CEO for 9 years. Plenty of time to change things.
You don’t like President Obama so it really would not have mattered what happened you would have been critical. You lack even a whiff of objectivity.
david wayne osedach
March 30th, 2009
4:19 pm
Obama should be putting pressure on AIG next. There are more than a few executives there that need to go.
caz1158
March 30th, 2009
4:30 pm
I need the 800 number to Barry O’s office about a warranty claim for my quality built chevy truck.Anyone
Taxpayer
March 30th, 2009
4:34 pm
N.J.,
It looks like we have drifted quite a long way off from what the founding fathers intended regarding corporations. The next question is “How do we correct that little problem?”
Corporal
March 30th, 2009
4:49 pm
Bosch:
http://online.wsj.com/article/SB123837553079768121.html
DebbieDoRight
March 30th, 2009
5:03 pm
Any other businessman would not force healthy banks to accept bailout money, then go in and impose compensation limits after the fact.
Sorry that was BUSH and company not Obama. Don’t blame him for Bush’s mess. Read the following article below to refresh your memory. PS: Note the date is NOVEMBER 20, 2008 — Obama took office January 2009.
CAPITAL INJECTIONS
Shortly afterward, Mr. Paulson reversed course, and decided to use the $350 billion in the first round of funds allocated by Congress not to buy toxic assets, but to inject cash directly into banks by purchasing shares, an approach that many Congressional Democrats had pushed for earlier. In an initial round of financing, nine of the largest banks were given $25 billion apiece.
The Treasury also used the bailout to steer funds to stronger banks to purchase weaker ones. To the dismay of many economists, no strings were attached to the Treasury infusions, and many of the banks appeared to be using the funds to bolster their balance sheets rather than to make new loans.
On Nov. 12, Mr. Paulson announced that he was abandoning the idea of asset purchases, and said the bailout money would be used instead for a broader campaign to bolster the financial markets and help consumers seeking loans for cars or tuition and other kinds of borrowing.
To the anger of many Democratic members, none of the first round was used to prevent further increases in foreclosures. An oversight panel created by the original bailout bill also delivered a round of stinging criticisms in its first report, delivered Dec. 10. The report said that the Treasury had failed to create a system to track how bailout funds were being used or to require that banks use them to increase lending and unfreeze credit markets.
http://topics.nytimes.com/topics/reference/timestopics/subjects/c/credit_crisis/bailout_plan/index.html
Taxpayer
March 30th, 2009
5:07 pm
This looks like a good summary of the rise of the all powerful corporation.
Dave R
March 30th, 2009
5:12 pm
Debbie, do you even READ what you post?
“but to inject cash directly into banks by purchasing shares, an approach that many Congressional Democrats had pushed for earlier.”
“To the dismay of many economists, no strings were attached to the Treasury infusions, and many of the banks appeared to be using the funds to bolster their balance sheets rather than to make new loans.”
This is what CONGRESSIONAL Democrats voted for and expected. I’m not excusing the Republicans who also voted for this blank check, but it couldn’t have happened if Democrats didn’t want it. And Hope & Change voted for it as well.
vince neil
March 30th, 2009
5:27 pm
i am now driving my third Suburban/Yukon XL in 10 years and find them to be among the finest vehicles available…at any price……..but without removing the onerous elderly care support recklessly negotiated by GM management they are doomed…
It is a shame…anyone who has had to use union labor and will report honestly how it works relative to profit and loss please call in now….they must reduce cost per car construction costs or we will be buying product built(or sourced at least) elsewhere…period.
Carl
March 30th, 2009
6:50 pm
President Obama did EXACTLY the right thing. This guy’s raking in millions of dollars whilst running the company into the ground. Now if he could just undo the huge bailouts BUSH and crew gave out w/o any strings attached to the banking industry we’d be heading in the right direction.
Yankee
March 31st, 2009
9:20 am
Don’t take the money and make your own future. It’s working for Ford. You take the money, you give up your right to chart your future.
N.J,
March 31st, 2009
9:46 am
As long as the employer has the power to intimidate those who support unionization on the workplace, the right to simply unionize by signing a card rather than signing a card and then having a vote is the only way to go.
Virtually all of the economic problems we are seeing today can be directly traced back to many deregulations that started occuring with the elections of 1980, none more damaging than the insidious changes in the tax code which gave a company the right to deduct any amount of executive remuneration it chose to give. After this a company could choose to give CEO’s huge bonuses and stock options and take the same deductions it would if it chose to give its lowest paid employees raises or improved benefits like health insurance or pension plans. The CEO’s and other executives chose to give themselves massive increases in salaries and benefits, and chose to give little or nothing to the average employees in those companies.
Before the changes in the tax code, a corporation could not deduct remuneration in any forms that exceeded 25 times what the corporations lowest paid employee received in total remuneration. If the lowest paid person’s total remuneration cost a company ten dollars an hour, the maximum that the corporation could give an executive in total remuneration and have all of that remuneration be deductable on its taxes would be 250 dollars an hour for salary and benefits, etc.
So if it was decided that a CEO should earn 500 dollars an hour in total benefits, the company either had to eat the additional 250 dollars an hour as a non deductable expense, OR they had to also DOUBLE the salary of the lowest paid employee to 20 dollars an hour in order to be able to deduct all the executive remuneration on their taxes.
While this tax code was in effect, between 1950 and and 1979, the wages of Americans at all economic levels increased roughly at the same rate. The rich got richer, but the poor also saw similar increases to their own standard of living. This vanished under the Reagan Administration when they rewrote the tax code with the “Tax Simplification Act”. Which almost doubled the number of pages in the code. 99 percent of the changes benefited CEO’s and other executives and actually raised taxes on the lowest 50 percent of income earners in the United States, while allowing CEO’s to give themselves huge bonuses while cutting benefits to employees because executive remuneration was given the same tax benefit status as providing employees with health insurance or pensions.
The money for pension plans that collapsed in the last decade did not simply disappear, it was simply redistributed from the lower level employees to the executives of that company. Corporate remuneration which averaged 17 times the national median wage in 1979 increased to several hundred times the median income by the year that Reagan left office in 1988, and then increased to almost 500 times the national median income by the time George W. Bush left office. The principal Reagan cited for these changes was that those who do the most to create this nations wealth deserve to be paid in a way that reflects this. Which meant that Reagan thought little of the average American worker and beleived that it is the CEO who single handedly drives the American economy.
The attempt to sideline everyone with talk of high union wages is basically absurd. The average union wage in the automobile industry is not much higher than the average national wage, and the benefits that autoworkers recieve are not much greater than those received by workers in who perform other forms of skilled labor.
Originally, when this nation was founded, the federal government had the power to dissolve any corporation that behaved in a manner that was found damaging to the national welfare. Its time to return to those good old days.
Copyleft
March 31st, 2009
10:02 am
Well said, NJ. It’s sad how many conservatives treat corporations like gods… “We must appease the Mighty Ones, or they will grow angry and withdraw their favor from us!”