Sean Scallon at the American Conservative wants to know:
So people are holding it against the execs of the Big Three because they all flew their Lear jets to D.C. O.K. but then please explain to me why AIG execs can spend your taxpayer dollars and mine on weekend retreats at posh resorts and hunting lodges and give their equally incompetent management bonuses and still get an extra $65 billion from the Fed to blow right through while the rest of us are bashing the auto industry asking for $25 billion loan combined just to stay afloat?Apparently we have reached the point in this country where making things no longer are is important as pushing money around at the click of a switch.
I am against the auto industry bailout, but I don't feel comfortable about it, for the reasons Scallon suggests in the rest of his post (basically, losing a big part of our manufacturing base). Still, however you feel about the bailout, his question -- why does AIG get to run up a huge tab with the federal government, but Detroit's relatively parsimonious request is sneered at? -- deserves an answer. Would you readers better versed in economics mind explaining this one to me?
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I have a mentally ill son, now 26.
We have done everything humanly and inhumanly possible to "solve" this problem, with few if any rewards.
When you're in that position, and I believe we collectively may be in that position vis a vis the Detroit automakers, it doesn't matter how much money and energy you pour in, the thing's a black hole.
That's the fear, and the danger. I don't think anyone would begrudge the automakers a reasonable government hand up if we thought it would solve the problem. Think how many American jobs are involved!
The doubt comes nagging, though.....would this really do any good? Or are we just pouring good money after bad?
In fairness to the execs, those jets are basically flying offices. They work and stay in touch with their organizations in a way you just couldn't do on commercial jet. Remember, these people run worldwide organizations that are producing 24/7, and they often have to put out fires very quickly.
What looked bad was their not having good answers to Pelosi, who, to her credit, wanted to see some sort of plan.
Derek, the operative phrase is "looked bad."
If you're coming to beg for money from people who are making minimum wage, and struggling to support their families (remember us? we're called "taxpayers"), arriving in a long black Lincoln limo isn't a good idea. Even if you really "need" a limo to operate. Even if you really "need" a limo so you can "stay in touch" with the rest of your (beggar) corporation. Even if it isn't that much money in the grand scheme of things.
The point is not the private jets. The point is, the mindset. THESE GUYS DON'T GET IT.
But the politicians, who must be re-elected every now and again, for all the things they don't "get," they get this one.
If you want to live in some higher atmosphere than that, well then, don't come to me begging for money.
Pyrrho: Our first task is to land the plane we're in. We can design a new one later.
Now *that's* keeping your eyes on the prize! And remember: "A good landing is anything you can walk away from."
Public money and private jets.....
I don't care if you fly to Washington in a private jet, have your own personal flying carpet, have angels carry you specially, bicycle or walk. And I don't care how much it costs. The cost can't possibly be important, whatever it is, in the big view.
But I do care whether or not you are in touch with reality. I especially care that when you want my money.
That's the point here, it seems to me. Bigger than the question of just how these guys got to Washington DC. We "bailed out" Chrysler back in the day, and yet the proportion of sales of American-made vehicles continues to decline. So that serious people wonder whether the Chrysler bail-out was really a good idea. So that now they want to be "bailed-out" again.
If more public money - that would be MY money, and yours - is to be poured into this project, I'd like some feeling that it won't be wasted, as the last automaker "bail-out" seems to have been wasted.
It would have been a nice touch if the auto execs involved had flied coach. After all, the coach passengers get there at exactly the same time as the first-class passengers, that being, when the whole airplane lands. I guess the Private Jet crowd gets there faster, but really, commercial flights from Detroit to Washington take less than two hours anyway.
So, these guys are "out of touch" for two big hours with their multinational corporations. This never happens otherwise? They don't eat, sleep, go to soccer games with their kids, have secret meetings with their mistresses? Give me a break, they could be out of touch for that long in such an important cause, the world would not end. (They don't have vice-presidents??)
These guys didn't take The Private Jet because of some pressing need to be in touch from instant to instant, like the President of the US and the Red Telephone. They did it because they think they are a privileged class, better than us and above us normal mortals, and behavior like that is normal to them.
Not a good omen if we propose to give them public money
Lets clear up some misinformation...
Chrysler did not get a "bailout" back when. They asked for, and got a sizeable 'cosign' by the government to some loans they wanted. No public money ever left the treasury for any aspect of what happened back then. The federal government actually collected quite a few million in cosigner fees for their role.
Further, the conditions Congress imposed upon Chrysler damaged their future, by stripping them of their aerospace and defense divisions, which were healthy and still are operating well.
But Chrysler paid back the loans. Early. And then put its heart and soul into remaking itself. By the early 90's Chrysler was the most productive car company, most profitable, and most creative by far... in the world. I have no idea what kind of snake oil pitch Daimler made to the board of directors, but somehow, Daimler convinced them to "merge".
Daimler, the master of efficient destruction, promptly ran the awesome management of Chrysler off, and then raided the piggy bank for everything they could get. They replaced the US management with the utterly and completely incompetent people, twice. To his credit, Dieter Zetche realized the mistake and led the move to make Chrysler once again, a real American company.
Daimler merged with Chrysler - who had NO debt, and 13 billion dollars in cash, a growing market share, and rapidly improving reputation - and awesome cars to boot. In 2007 Daimler had to cough up a billion dollars in cash to offload an in-debt and decimated Chrysler to an investment group. After just nine years, Chrysler went from industry leading, to the back of the line.
It hasn't even been a year and a half since then. In that short span of less than 18 months, Chrysler has actually pulled its production quality up by huge margins, has reduced warranty claims dramatically, improved productivity to match the best there is. They have introduced practical electric cars which are being readied for production, 2009 will the actual cars in service in fleets.
While not a public company, Chrysler's statements just a month ago indicated they had about a year's worth of cash and credit remaining, and they were continuing to find ways to stretch that farther WITHOUT cutting any of the new and essential products projects.
Chrysler is a shadow of its former self, to be sure. But many of the really awesome people who were driving Chrysler in the 90's are still around. Muzzled and robbed by Daimler, they've been turned loose to try to turn the company around.
Nardelli gets no golden parachute, no big paycheck. His only hope of big monetary compensation is turning the company around. Should Chrysler fail, Nardelli gets almost nothing, and the same is true of all the other management.
Cerberus capital, which owns Chrysler LLC is acting like it wants to kill off Chrysler in the worst way. But they have different interests than the rest of us. Chrysler is not big and fat and overweight. It bears no resemblance to GM and Ford now. They're fighting with everything they've got left to survive, from the top down.
While I am not in favor of bailouts, I do believe it is incorrect to lump Chrysler in with GM and Ford, when it comes to analyzing what they are and how they got where they are. If the merger with Daimler had not happened, Chrysler would now being talking about buying up GM's scraps. They had the most absolutely awesome future planned out when Daimler took over, but Daimler killed it. Awesome cars, efficient operations, etc.
Even today, Chrysler has signed a number of deals to build Nissan's midsize and large trucks for them, for instance, and will be selling Nissan built small cars in south America, and has been very agressively pursuing not a path of dead-end "we're too big to fail" strategy, but one more like a "hail Mary" move, where they have set about a course of complete renovation and renewal, and the only question is whether "broke" or "success" arrives at their doorstep first.
Next year, Chrysler will be introducing a broad line of the most efficient engines produced anywhere, US OR Asia. They have developed a brand new, super efficient transmission that is both light and inexpensive, along with being incredibly sturdy and more efficient than even your normal stick shift. And cheap, too. It would have been introduced next year, except that the joint venture arranged to build it failed to get sufficient financing to do the job, and has now gone broke.
If they can find a way to get the factory built to build them, you're going to see most efficient cars in the world built right here in the USA, with the Chrysler brand on them.
GM's been hyping that they're going to have an electric car, but now claim they lack the money. Chrysler WILL have them in pre-introduction fleet service next year. They're real, they work, and they're practical. An SUV, Minivan, and sports car have been shown to the public. And the technology is not a purpose built car just for electric use. They have made it modular, so they can adapt the technology to any car they produce quickly and cheaply, if it appears to be worth doing.
It can be retrofitted with minimal re-engineering to any car they sell now, or have planned.
They, if anyone, are worth saving. In fact, if they could just be pryed away from Cerberus Capital, and get a few billion dollars in capital, would do very well and be a bright star in our industry and economy.
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