Mo' money, mo' problems
Pearlstein: ‘A Detroit bankruptcy beats a bailout’—but what do you think? 29
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Posted 10:23 PM on 10 Nov 2008
by Joseph Romm -
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Joseph Romm is the editor of Climate Progress and a senior fellow at the Center for American Progress.
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cjwirth Posted 3:43 pm
10 Nov 2008
>>>> "By 2020, and even more by 2030, global oil supply will be dramatically lower. This will create a supply gap which can hardly be closed by growing contributions from other fossil, nuclear or alternative energy sources in this time frame." <<<<<
http://www.globaliamagazine.com/?id=482
According to most independent scientific studies, global oil production will now decline from 74 million barrels per day to 60 million barrels per day by 2015. During the same time demand will increase 9%.
No one can reverse this trend, nor can we conserve our way out of this catastrophe. Because the demand for oil is so high, it will always exceed production levels; thus oil depletion will continue steadily until all recoverable oil is extracted.
Alternatives will not even begin to fill the gap. And most alternatives yield electric power, but we need liquid fuels for tractors/combines, 18 wheel trucks, trains, ships, and mining equipment.
We are facing the collapse of the highways that depend on diesel trucks for maintenance of bridges, cleaning culverts to avoid road washouts, snow plowing, roadbed and surface repair. When the highways fail, so will the power grid, as highways carry the parts, transformers, steel for pylons, and high tension cables, all from far away. With the highways out, there will be no food coming in from "outside," and without the power grid virtually nothing works, including home heating, pumping of gasoline and diesel, airports, communications, and automated systems.
This is documented in a free 48 page report that can be downloaded, website posted, distributed, and emailed: http://www.peakoilassociates.com/POAnalysis.html
I used to live in NH-USA, but moved to a sustainable place. Anyone interested in relocating to a nice, pretty, sustainable area with a good climate and good soil? Email: clifford dot wirth at yahoo dot com or give me a phone call which operates here as my old USA-NH number 603-668-4207. http://survivingpeakoil.blogspot.com/
cjwirth http://www.peakoilassociates.com
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JMG Posted 3:46 pm
10 Nov 2008
You want hydrogen hype? Michigan's your state.
You want biofuelishness out the yin-yang? Michigan again.
You want a determined insistence on looking reality in the eye and denying it? Michigan leads all comers.
BUT, the Big Three is the management and the owners, not the workers. So why do you say:
And only a bankruptcy court can impose on members of the United Auto Workers pay and benefit packages comparable to those paid at the nonunionized plants of foreign manufacturers that have been stealing market share from the Big Three for decades.
Why don't you just call for making unions illegal then? Or recognize that what we need is a universal, single-payer plan so that no company has to carry retirees and families on the payroll, and all can compete on the basis of manufacturing expertise, not time-in-country.
The Big Three workers didn't direct the companies and didn't make the choices that have worked so disastrously. So why do you propose that we need to slash worker and retiree benefits? They earned those benefits, and they paid for them with their bodies.
Investors who allowed management to run companies into the ground deserve to get nothing; but workers and retirees deserve to be first in line when bankruptcy comes, not to have a former official in a Democratic administration calling for union busting.
The 5% Project
Let's live on the planet as if we intend to stay.
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watchingmarcitz Posted 4:40 pm
10 Nov 2008
How about, at most, we bail-down General Motors.
Let's face reality. General Motors has had cancer for over 35 years that just reached all the major organs. Back in the early 1970s they first encountered a surprising spike in high-priced gas during a time when they sold fabulously large and gas-guzzling vehicles (deja vu?). At that time Toyota was not even a viable competitor but because they made smaller cars they had a more fuel efficient fleet (and, believe it or not, lower quality) and they were able to grab an increasing share of the market. Dumb luck played into their hands but they seized the opportunity.
At the same time of Toyota's ascendancy GM, however, took an entirely different tack (I know I worked there from 1988-1992 and yes worked on the Saturn EV-1 doing all the initial market research). They continued to lose market share by ignoring the market or, even when they got it right, building poor quality product, or even when they got that right doing a poor job of pricing or marketing them.
The sad truth is that the weakness of the GM business model means that, at best, GM can survive (no matter how much help they receive) as a much smaller entity. It is fruitless to provide a "bail-out" and any assistance should be in the form of a bail-down. Like the bail-down of AIG it should be designed to allow a smooth downward transition of GM, maybe not to oblivion but to a much smaller company with AT MOST 3 domestic divisions (I vote for Cadillac, Chevy and Saab). The sad truth is no matter what is done jobs will be lost as GM cannot continue to survive in its present form or present size (and there is 30 years of trend data to back that up).
Looking at any help for GM as a bail-down as opposed to a bail-out also helps to make better decisions that have a longer term positive impact. A bail-out pours money into an archaic management structure that cannot operate efficiently and will only continue to decline (throwing good money after bad). A bail-down shifts those funds to the innocent victims, namely the individual employees (in the form of unemployment benefits, retraining, relocation) currently trapped in that archaic structure and provides a transition out and the ability to reorganize for more efficient use of their labor in growing companies. It seems to be an overlooked fact that there is actually an American automotive company that is hiring and even building a new plant. Its called Tesla and its here in Silicon Valley. Lets get some of those employees some plane tickets. Not to mention they could buy some of those foreclosed houses in Gilroy and Vallejo we need to get rid of thereby solving two problems at once.
Another lesson to learn from AIG is that those initial bailouts never work and only get larger as time goes on so that is why a much more metered and purposeful response is in order that benefits the individuals and not the companies.
Oh and President-Elect Obama I have good news for you. You have a vision of one day being able to buy a hybrid or alternative-fuel vehicle made right here in the United States. I applaud that vision and am happy to tell you that two years ago today I traded-in my old gas-guzzling Pontiac for a a beautiful mid-sized HYBRID family car made right in Lexington Kentucky that gets 35 MPG OVERALL and has more domestic automobile content than the Ford Mustang. Its called a Toyota Camry.
Long live Lieutenant Motors!!!
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watchingmarcitz Posted 4:43 pm
10 Nov 2008
http://watchingmarcitz.wordpress.com
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BILL HANNAHAN Posted 4:56 pm
10 Nov 2008
Did they use the money to build the best schools, universities and libraries in the world? Did they push automobile technology relentlessly ahead to continuously build the best cars in the world? Did they prepare their children for a competitive world?
No, they bought big houses, big cars, color TV's and all sorts of luxury goods. When contracts came up they picked one company to strike and when management caved they enforced the terms on all manufacturers. Management agreed to big retirement benefits that would come due in the future, usually after they retired.
They built junk cars. My dad bought a new Ford and for months we found screws bolts and washers on the driveway that fell off the car just sitting there. Tire punctures were routine from the hardware on the roads and steel belted tires became the rage.
Bailout money would allow the bad practices to continue a little longer by taking money from average Americans in order to benefit Americans who have enjoyed above average lifestyles, and it would delay the needed changes.
When governments and businesses promise retirement benefits that will be paid by unborn children that is taxation without representation. We should pass a regulation requiring all government and private businesses to set aside money for all benefits at the time service is provided. That is, money for retirement benefits would be placed in a separate fund not available to the employer, and retirees would get their percentage of the fund, whatever it is. If they want more they can save during their productive years, as most Americans have to do.
Things Everybody Should Know About Energy
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milgram Posted 8:19 pm
10 Nov 2008
Saying that the auto workers need to lose their benefits as part of a plan for the car industry absolutely stinks.
You aren't going to build efficient cars without workers, shafting them for the sustained failures of their bosses helps absolutely no-one.
They need jobs and healthcare. People need environmentally-friendly transport. Management, investors, the rest can go hang.
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Biodiversivist Posted 12:25 am
11 Nov 2008
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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bigTom Posted 12:52 am
11 Nov 2008
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BILL HANNAHAN Posted 4:23 am
11 Nov 2008
Or was he merly an academic?
I had a business management professor in college
who ended every lecture by saying failure is always management's fault.
You aren't going to build efficient cars without workers, shafting them for the sustained failures of their bosses helps absolutely no-one.
Do unions have no responsibility for the contracts they negotiated using strike tactics? You aren't going to build efficient cars with the retired workers who helped screw up their industry.
Things Everybody Should Know About Energy
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Biodiversivist Posted 4:49 am
11 Nov 2008
However, one loses the option of "going mobile" after one buys a home in a community and starts a family.
It is when companies start abusing their experienced workforce instead of coveting them that things start to go wrong. Management has blown it once employees are forced to unionize to protect themselves. Although it is true that Unions can go too far. Never simple.
Universal health care would go a long way toward solving labor rate problems. Japan has it, Germany has it, Britain, France, Canada, blah blah blah.
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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jimbeyer Posted 5:41 am
11 Nov 2008
Detroit got a well-deserved black eye in the 70's when their quality sucked, but that's really not an issue at this point. Their cars are good (at least with respect to quality) and in some cases, even better than imports.
GM finally addressed the cost issues with respect to worker benefits and health care that added more than $3500 per vehicle compared with Japanese cars. Yes, the issue of universal health car IS relevant, as Germany and Japan de facto subsidize their cars to the tune of several thousands of dollars per vehicle. Despite the problems with Big 3 management, you can't lay all of this at their feet. Unfortunately, GM's plan won't take full effect until 2010, so they need a little more time for this to take effect.
With limited options, they took the route of building big cars (SUVs) that the consumers seemed to like, at least for awhile. The oil spike killed them, so now they are back facing the issues that caused auto manufacturing to be problematic in the first place; health care and union extravagance (and corporate mismanagement).
You can argue that at least Detroit builds SOMETHING. Compare this with the NY banks and brokerage houses, which produced nothing but a toxic waste of bizarre financial instruments, and then ceased in properly monitoring themselves as well. If these folks (the true SOURCE of this huge mess) are worthy of hundreds of billions of handout dollars, I think a collateral victim like Detroit (which was already cleaning up its act months earlier) deserves a bit of a hand as well.
I'd opt for a straight loan, a la Chrysler in the 1980's. They paid that back, with interest. If I were the gov't, I'd point out this is the LAST time, as a good deal of this IS management problems. But the reality is that this is a very low cost way to retain lots of middle-class jobs.
While we are at it, CAFE sucks. It doesn't work. Instead, we should impose a gasoline price FLOOR to allow automakers to build cars with reasonable mpg, without the consumers bailing on them when gas hits a temporary dip in price. The automakers and reasonable industry experts have been calling for this for quite some time. CAFE is a tax on consumer behavior that Washington decides to impose on the automakers, because they are too cowardly to tax gasoline.
And finally, all you tassle-loafered elitists on the East coast, and you self-absorbed California types: buy an American car once in a while. I think you will find the carpet mats clean up quite well (just like your Beemer) when you drop your brie on it.
Build plugin hybrids that run on renewable methane. That's all that's needed.
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Biodiversivist Posted 6:51 am
11 Nov 2008
I agree that the workmanship of American cars is on a par with all others and better than many.
The problem is with management direction--what they tell their engineers to design and their workforce to build.
In the end, it all comes down to biodiversity. Poison Darts--Protecting the biodiversity of our world
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Colin Wright Posted 9:18 am
11 Nov 2008
AMY GOODMAN: How did it happen that they didn't change, that you have now in Michigan the highest unemployment rate in the country?
MICHAEL MOORE: It happened because the workers don't control the means of production. Oops, I guess I can't be president now that I said that. No, but seriously, I think that if the autoworkers, years and years ago, could have had a say in the cars that were being built, the Big Three would have built cars that people wanted to drive, instead of the kind of crappy-mobiles that they continue to build, the gas-guzzlers they continue to build. And people wanted something different, and nobody listened, because the auto companies were arrogant, and they had--they have always had the attitude that what's good for--you know the old saying--General Motors is good for the country. Well, the country changed; General Motors didn't change. And so, now the people have suffered as a result of it. If we had a democratic economy, where the people, we the people, had a say in the decisions that are made, in terms of how our corporations are run, the things that they produce for our society, what we need collectively as a society, we probably wouldn't find ourselves in some of the positions that we're in right now.
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David Roberts Posted 9:23 am
11 Nov 2008
grist.org
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Jon Rynn Posted 11:28 am
11 Nov 2008
There is another, larger problem though: no industry is an island, and neither is the auto industry. When you lose your machine tool, parts of your steel, and lots of other industries, it's almost impossible to survive. It's like being a wolf in a desert. No workee.
So a bailout of the auto industry should, ideally, be part of a larger effort to rebuild the manufacturing sector by building a green infrastructure. Which means that the new auto industry could also revive itself by building high-speed trains and subway cars, if the Feds can figure out that trains are part of the infrastructure.
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Pangolin Posted 12:09 pm
11 Nov 2008
Then make them standardize electric motor mounts, motor-generator mounts, control units and battery packs. So that you could pull a type three electric drive motor from a GM vehicle and insert it into a Chrysler vehicle. Pull a battery from a Ford and drop it into a Chevy.
It's time to stop throwing cars away because the parts are hard to replace. Electric drives would make American made cars the most reliable in the world and major component compatibility make them good investments. They could be converted to new batteries or motors without tossing the entire car.
It's not rocket science. Electric drive vehicles have been running for over 100 years.
Put the Carbon Back
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JMG Posted 1:53 pm
11 Nov 2008
Isn't it interesting....
how so many on the left (the Coasts, for example) extoll the virtues of Unions and workers' rights, but then go off an buy their BMWs and Mercedes anyway?
Funny, BMW and Mercedes are German cars, and Americans would think they died and went to heaven if we could only get a little of the deal that German unions offer their members.
Unions can be immensely frustrating -- I say this as someone whose brother in law is a business manager for a Michigan-based plumbers and pipefitters local and who, therefore, has a pretty inside look at things not usually available to nonmembers.
But, to paraphrase Jefferson, given a choice of capitalism without unions or unions without capitalism, the latter would be much preferable.
The 5% Project
Let's live on the planet as if we intend to stay.
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BILL HANNAHAN Posted 3:47 pm
11 Nov 2008
But, to paraphrase Jefferson, given a choice of capitalism without unions or unions without capitalism, the latter would be much preferable.
Capitalism raised productivity enough that some people could enjoy the luxury of a union. Of course that was at the expense of those not in a union.
Things Everybody Should Know About Energy
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JMG Posted 6:12 pm
11 Nov 2008
If you like your capitalism without unions, then by all means move to China, where you can enjoy capitalism unfettered by anything but company unions.
The 5% Project
Let's live on the planet as if we intend to stay.
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milgram Posted 8:23 pm
11 Nov 2008
"the luxury of a union. Of course that was at the expense of those not in a union."
I love this. Are you serious? An organized workforce is only bad for the shareholders of a business, as it means that more of the company's income is kept by the workers who created it, rather than the owners who cream the surplus off the top.
Workers elsewhere benefit from the climate of higher wages, even internationally. Less jobs would get outsourced to China if it wasn't for their government cracking down hard on workers (and communities protesting against factories dumping their waste on them).
Workplace organization isn't a "luxury" unless you think that:
the 8 hour day
pensions
healthcare
a living wage
a working environment that won't kill or sterilise you
security
paid holiday
...are some kind of unreasonable, effete European fad.
(I'd never heard anyone deride universal healthcare as as some kind of state subsidy of business before...)
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jimbeyer Posted 12:32 am
12 Nov 2008
I'm not pro or con union, or pro or con Universal health care. I'm just saying these have consequences.
Unions are mainly a problem when the world changes, and management needs to renegotiate with the Union, who may NOT think the world is changing, but instead, thinks management is trying to screw them. Incompetent management doesn't help in this area either, and together they can create a wonderful economic death spiral.
I'm not deriding Universal healthcare per se, but that is simply the consequence of not having it in the U.S.; higher labor costs.
Build plugin hybrids that run on renewable methane. That's all that's needed.
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Jon Rynn Posted 12:42 am
12 Nov 2008
So hopefully they're waking up and we can try to form a broad progessive agenda.
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christophersj Posted 1:48 am
12 Nov 2008
Transportation accounts for roughly 1/3 of the United State's CO2 emissions. And while token steps have been taken by the big 3, like Ford's Escape Hybrid or GM's Volt, Detroit has gone out of its way to subvert environmental law. They don't just lobby against environmental protection, they actively seek to infiltrate government positions, like the Department of Transportation, the EPA, and Congress, with insiders and then corrupt the decision making process from within. Witness the recent denial of a long-traditional waiver for California to enforce stricter CO2 emission rules after the DOT was practically man-handled by the automakers. Rep. Henry Waxman is currently holding an investigation.
Now, they are hurting, and that is good. They need to be in a kneeling position -- begging. Its a perfect time for leverage. Obama needs to cut a strong deal: We bail you out and you make your entire car and light-truck line of vehicles plug-in hybrids within 5 years. Full stop. All of them. You get a little of the money now, and we dole out the rest as you meet intermediate goals. If you don't, we'll pull the (ahem) plug, and let you die. End of story. No re-dos. Take it or leave it.
I'm a big supporter of American industry. I bought a Ford hybrid because it achieves its goal very well and supports American jobs and ingenuity. But its nothing more than a tiny baby step towards carbon neutrality, and Ford has almost completely buried any promotion of the vehicle. And it does this not only in the face of the threat of dangerous global warming, but strangely, in the face of Toyota's financial successes with hybrids.
At this point I look at myself and think, this isn't support anymore. Its blind codependence with a violent drunk daddy in the house! And he's reeling and swaying and asking for a ride to the liquor store!
Put the thumbscrews on Detroit, Obama. Make them beg and then make them commit. All new cars and light-trucks converted to plug-in hybrids within 5 years, or not even a dime will fall in your laps!
-Christopher S. Johnson
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Jon Rynn Posted 1:59 am
12 Nov 2008
To second Christopher, apparently Toyota plans to make all of its cars hybrid by 2015, I believe, so there would be precedent for forcing this on them.
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Luddhunter2 Posted 9:25 am
12 Nov 2008
It is Joe and other ludds' onerous rapulations which helped the big 3 accelerate to the brink. It is Joe and other ludds' appeasement of union extortion which created an unsustainable cost vector.
It is Joe and other ludds' prevention of national oil exploration and refinement that drove up gas prices and killed demand.
Let them die. They appear willing to die on their knees, hands out, begging pathetically. Better to call Dr. Kevorkian now, and declare bankruptcy, and let foreign companies buy the profitable divisions.
I must rant on the bailout mentality.
The statist handout begging whiners from the left and the rightwing-monopolist-oligarch-sucking punks must be creaming in teir collectivist/fascistic jeans over these daily bailout calls. This is the 72 green smelly virgins they dreamt of when their pillowbiting Knight in Shimmery Satin, Barney Frank, and his p_ss-boy Chris Dodd, and the libertarian-in-name-only Alan Greenspan aided the sabotage of the housing market years ago. The inevitable socialist/fascist bailout coup going on now must be like a never-ending orgasm for the Leviathan-knob-slobbers. Pelosi and Obama want to bail them out. Typical bleeding __ss appeasement of failure.
F_ckin parasites, all of them. But be careful what you wish for. There is only so much tax extortion money you can use. They can't bail out every bloated, overregulated, govt co-opted, union-slacker-infested dinosaur company. They should die a horrible death, with screwdriver turning union idiots losing their 45$/hr jobs that would be $10/hr in a free market, and losing their pensions, and having to work their last 5 years for Toyota at 1/3 the pay. Justice served for parasiting for so many years.
They are now begging to suckle Mommy Government fearing that they will have to get a real job. Makes me f_ckin sick to watch the begging or the suckling. Good thing the founders are dead and don't have to watch what sissified losers half of us have become.
No charge for the Luddhunter's tough love today.
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David Roberts Posted 9:42 am
12 Nov 2008
grist.org
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Luddhunter2 Posted 10:02 am
12 Nov 2008
So get 'er done, you ludd punk. Make my day.
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Salikah Posted 3:11 am
18 Nov 2008
"First they ignore you; then they laugh at you; then they fight you; then you win."
Mahatma Ghandi
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Salikah Posted 3:31 am
18 Nov 2008
Workplace organization isn't a "luxury"
I'm happy to add that but for unions, NO employers would provide those benefits! They were forced to do so in order to compete with union shops. The reason that the American public is more productive than it has EVER BEEN, and yet still faces a decline in real wages is directly due to the decline in union jobs. Matter of fact, jobs. Period. Oh so many employers would much rather pay Asians or South Americans or the Irish to do what we once did here, rather than pay U.S. wages. It has little to do with the taxes they pay on net profits, no matter what the Tax Hating (Republican) party would have you believe.
"First they ignore you; then they laugh at you; then they fight you; then you win."
Mahatma Ghandi
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