According to the highly regarded Deutsche Bank, General Motors may not make it even with government aid. An analyst for the bank told the Detroit Free Press that he was slashing his estimated eventual value for General Motors shares to zero.
That‘s because the analyst, Rod Lache, calculates that the giant automaker may not have enough cash to cover the bills that will come due in January. So, think of the irony of this: exactly ninety years after Germany surrendered to the Allies to end World War I, a German bank is declaring the signature American corporation kaput.
That doesn’t mean there is no hope. President-Elect Barack Obama has said that stabilizing the auto industry is a high priority. Trouble is, he doesn’t take power until January 20. As incredible as it sounds, the experts say that may be too late.
Michigan’s congressional delegation has been pressing the Bush Administration to use part of the $700 billon financial industry bailout to save the automotive industry. The Bush administration doesn’t like that. The money, they say, was appropriated by Congress for the financial services industry, period.
That’s true, but if two of America’s three biggest auto manufacturers go belly up, that’s not going to be good for the banks, or anybody else in this country.
Last night, I got a copy of the Center for Automotive Research’s new report on what it would mean to our economy if one or more of our domestic automakers were to go out of business.
What it reminded me of was the reports that used to describe what the United States would look like after a nuclear war. We are talking about millions of unemployed. Michigan would suffer far worse than any other state.
The experts agree that General Motors cannot wait until for the new administration takes office. Reports today say President Bush intends to hold aid to the automakers hostage unless the Democrats in Congress agree to a free trade deal with Colombia.
If true, the nicest thing you can say about the President’s position is that it seems sadly inappropriate, especially given that the people have just delivered a devastating vote of no-confidence in his leadership. Colombia can wait. America can’t. Senator Carl Levin is proposing amending the already passed bailout package to include the automakers.
That sounds good, but economist Sean McAlinden has a better idea. Congress should promptly pass a $15 or $20 billion dollar bridge loan to get the automakers through the next few months. That way the new administration will have time to really look at all this.
Our government needs to make rational and realistic decisions about how best to help our economy and the auto industry. Rushing a spur-of-the-moment plan through a lame duck session is not the best way to do that. The auto industry desperately needs help.
And we need to make sure we do this right, or we may never get another chance.
What an intersting moment it is to consider that the far left wing of the Democrat Party, represented by Nancy Pelosi, Henry Waxman -- and perhaps Barack Obama -- are now plotting to remove the pro-auto Chairman of the the House Energy and Commerce Committee, Rep. John Dingell, the moderate Democrat who represents the Michigan 15th Congressional District.
This is a come-to-Jesus (or is Obama "Moses"?)moment for Michigan Democrats, who gleefully pulled the lever for Obama and that wing of that party a week ago. For years, Congressional liberals like Waxman and Pelosi have regarded Detroit as their ATM, pulling in resources from the UAW, beating up on automakers for "global warming," and generally generally ignoring all sense of business reality. Now, having gained control of both houses of Congress and, come January, the White House, they will have to decide: do we want a competitive group of U.S.-based automakers?
The Democrats gave us CAFE, and union work rules, and pension guaranty boards, and tort litigation as big business. The question is, if they completely take over an industry like car production, will they be able to run it profitably? The question, I think, is self-answering.
Posted by: Anonymous | November 11, 2008 at 03:36 PM
Of course we cannot save Wall Street and not the Car Lot..I do not give much value to speculative reports by consultants paid to write pitiful reports to gain favor we all know that fear produces...
This region must however get rid of Dingell, Levin, Granholm and others if we want to survive ..These people have been asleep at the wheel and offer nothing of value to the new White House mandate...
The automobile remains the #1 mode of transportation in our nation ..The question for this region is can we reinvent the wheel...I think we can but now with the same suspects and paradigms...
Posted by: Thrasher | November 11, 2008 at 04:14 PM