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This Is What Democracy Looks Like

www.NationalView.org's Note From a Madman

December 4, 2008


Handouts and Bootstraps

The US auto industry is going to get their money, and it's going to be more than the original $25 billion estimate they laid on the table during their last, private-jet aided jaunt to DC. As I hopped across New Jersey in my 2005 Chevrolet Cobalt (soon to be the property of my son, Jason), I had an opportunity to listen to a little bit of the opening remarks from the CEO of Ford, Alan Mulally and a little less from Chrysler's CEO Robert Nardelli.

They're going to get their money no matter what Senator Richard Shelby (REPUBLICAN-AL) says. Shelby's Alabama is the home to a few non-union foreign-owned auto manufacturers who put together their cars in his state. Of course the parts are manufactured elsewhere and the cars are merely assembled in Alabama, but saving the rest of the auto industry's jobs, and probably the entire state of Michigan and much of its neighbor Ohio aren't a part of Shelby's job... at least how he sees it.

The Big Three CEO's (Including GM's Rick Wagoner) made the drive from Michigan in vehicles of their own company's respective designs. Wagoner drove a Chevy Volt, the new plug-in Hybrid due in 2010 for around $40,000. Their remarks to the US Senate were conciliatory in nature with the two men I heard not only speaking of the strides they have made (few they may be); the strides they are making; and the strides they're promising.

And they are promising. If only we could believe them.

The fear I have of giving money to US auto makers is simple: they lie, and for good reason. Their ties to Big Oil have made their decisions, up to this point, decisions based on profit alone. Nowhere in their thinking prior to the this latest economic catastrophe was even an inkling of an idea to make cars that offer greater gas mileage or invent things which could possibly keep our air just a bit cleaner.

In other words, they are not to be trusted and that's why serious restrictions and checks and balances have to be put onto them if they want the help of the US taxpayer.

Of course, there is a way out of this mess for the Big Three without the help of the US government. Back when my Dad was buying cars, you had to order a new car and wait four-to-eight weeks for delivery. Today it's all about "spot-deliveries" and "drive it home today with easy financing". They produce cars without even the prospect of a buyer and then can't understand why they're in trouble. All one has to do is look at the docks where they store the cars waiting on dealer orders and delivery to see it. The Big Three could sell their new cars at a discount - a very deep discount. It's called moving merchandise and it's a system used by businesses all around the world when they want to get cash fast.

The vehicles are sitting there and it appears that no one is going into the showrooms to view them. Why can't Chevy sell their $23,000 Malibu for $16,000? Why can't Dodge put a $28,000 Charger up for sale at $20,000? Why shouldn't Ford sell their $16,000 Focus for $12,000? Sitting inventory doesn't earn any money, unless there are some very creative finance guys out there who can somehow package and sell them as Triple-A rated.

Didn't we just go through that?

The US car companies, as noted by Mulally to the Senators sitting on the dais during his speech, are too bloated. They need to examine their car lines, keep the good and get rid of the bad. Chevy and GMC both don't need to sell trucks; Ford doesn't need to sell an Escape and their Mercury Mariner; and Chrysler certainly doesn't need about half of their car line at all.

General Motors, in fact, has no less than six lines of vehicles. They include: GMC (trucks only); Chevrolet (economy-to-higher priced cars, trucks and vans); Pontiac and Buick (middle-to-higher priced cars) and Cadillac (luxury cars). All divisions offer up so much redundancy of their other GM divisions that they actually compete with themselves. Believe it or not, there are people out there actually deciding on whether they should buy a Chevy Cobalt or a Pontiac G-6. The cars are identical mechanically with only appearance differences.

Honda is the model these American auto giants should be looking towards. Honda offers up few choices but still sells a staggering number of cars and trucks. They offer up an economy model of the Civic as well as loaded models. They even have a Civic Hybrid which gets close to fifty miles per gallon. And while they offer up a larger, more luxurious choice in the Accord, that, too, is available in lesser and more luxurious models.

The Big Three do, however, make a good point in the amount they have to pay in employees' and retirees' benefits. To their credit, the United Auto Workers Union has offered up concessions to help GM, Ford and Chrysler with their responsibilities. But taking away the rights of workers, their jobs and the benefits they fought so hard for is not the best answer to fix what's wrong with the US auto industry. As we've mentioned before on Note From a Madman, a national health care plan would take care of much of the Big Three's financial difficulties.

It wasn't that long ago that GM came out for a national health care system. And while it was for their own selfish reasons to do so, the timing is right for them, Ford and Chrysler to bring it up again and use some of their publicity money towards that end.

In the end, there is much to be done to get Detroit back on the right track. But they have to help themselves as small businesses have done since our nation was founded.

Hand-outs should come with bootstraps.

-Noah Greenberg

In response to Howard Dean and the election of 2008, Robert Scardapane writes:

Madman, I am with you on Howard Dean. He did a brilliant job as DNC chairman. Not to gloat, well maybe a little, it was progressives that pushed for Howard Dean as DNC chairman over the objections of several Democratic Party insiders. I am glad that in this instance progressives prevailed.

In response to, "You’re an idiot, Noah, dedicated to making a mountain out of nothing, blaming Rice/Bush for a conflict that has endured for a thousand years," David W. writes:

Sorry to be the one to introduce some unpleasant facts here, but Pakistan is not a thousand years old. It's only been around since the mid 20th century.

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-Noah Greenberg