The Carnage That Is Called Detroit

Yesterday was the deadline for General Motors and Chrysler to submit their respective recovery plans to Congress in a bid to show that they are making good faith efforts to move forward, with each company beating the 5 p.m. deadline handily.

By last night news of what was in each report began to surface, but I chose to go online to watch a missed episode of The Closer instead. Ever since the networks positioned The Closer and “24″ against each other I’ve decided to watch 24 on Monday evenings while viewing The Closer at a later date. I’m not into American Idol and I certainly did not feel like watching the news!

So this morning I immediately began to rifle through my hard copy of The Wall Street Journal to find out what GM and Chrysler proposed, an easy task since it was headline news for the business newspaper. No shock there.

Not much of what the WSJ relayed was a surprise either because I was previously made aware that Hummer, Saab and Saturn weren’t likely to survive while Pontiac would be scaled back to just one or two models. Going forward, GM seems most interested in preserving its core brands which they have identified as Cadillac and Chevrolet as well as Buick and GMC.

Chrysler won’t be cutting additional brands, at least for right now, but their operation is still in flux pending approval of a possible strategic alliance with Fiat. Fiat has promised to supply Chrysler with several smaller cars in exchange for gaining a 35% stake in Chrysler LLC, an alliance of equally struggling automakers.

GM presented their case with several scenarios mentioned including the possible bankruptcy of the company. Not liquidation bankruptcy as in Chapter 7, rather restructuring bankruptcy as in Chapter 11 of the U.S. bankrutpcy code.

Still, the automaker said that it might need as much as $100 billion if they were to go through the traditional bankruptcy process or the government could “save” tens of billions of dollars by opting for a less drastic approach. Oh, by the way, GM needs an additional $16.6 billion to keep going for the next several months as well as a $7.7 billion loan from the Department of Energy to help develop fuel efficient cars.

Chrysler also mentioned bankruptcy while indicating that a $5 billion loan would keep the company solvent for a bit longer. Both companies are planning to shut down several more factories, trim production levels and lay off tens of thousands of workers. This is without considering bankruptcy, mind you. Expect thousands of dealers and tens of thousands of dealer employees to lose their jobs too.

While General Motors and Chrysler fight for their lives, America’s #2 automaker, Ford, is watching by the sidelines. It hasn’t asked for a government loan, though its request for a line of credit was turned down late last year. Ford has a bit more cash to play with as the automaker has hocked its plants and has been drawing down other lines of credit at its disposal. However, should the economy worsen over the next few months, expect Ford to press the issue and gain government funding.

Reading all of this has left me thinking of one word when it comes to the U.S. auto industry — carnage. There isn’t a pretty way to shrink their businesses nor can pain be kept to a minimum. Everyone smells blood but there aren’t predators coming in for the kill. Instead, the U.S. taxpayer in the form of the federal government is playing ambulance driver, hoping that they can rescue a pair of seriously injured automakers before their very lives have been lost.

I expected that 2009 was going to be a difficult year, but now I believe it will be downright ugly. Ugly for the employees who will lose their jobs. Ugly for the automakers who will lose the last vestiges of their independence and prestige. But extremely ugly for the American taxpayer who will be left paying the medical bills whether the patients recover or not.

Federal Bailout? I’m Absolutely Opposed To It!

Good thing I wasn’t drinking my coffee this morning when I was reading an article on the Huffington Post about the $700 billion federal bail out. I’m not sure what would have made me ill first: the clause in the bill that had me questioning the bail out provisions, as in above court reproach, or that I finally found an area of commonality with HuffPo. Scary stuff!

Regardless, I think the proposed bail out smells and I’m blaming the Bush Administration, members of Congress, and various other government appointees with trying to pull a fast one on American taxpayers.

Check Out Section 8

Specific to my angst is a thirty-two word sentence that has gotten me and tens of thousands of other people steamed:

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Right. Taxpayers are going to give the federal government the right to do as they please with our money and without any accountability. Talk about a power grab!

Politicians Hope That We’re Not Paying Attention

And, you’re hearing this from someone who is a conservative, a person who doesn’t buy into so many of the conspiracy theories that have been hatched by the left over the past seven years. Frankly, I’m tired of people blaming Bush alone for our country’s problems when it is clear that both Republicans and Democrats have been asleep at the switch. Divide and conquer us and they’ll be able to pass *anything* while we bicker…our future is on the line! What a bunch of self serving elitists.

Now, I could have simply posted this article, told a few friends, and left it at that. Instead, I called up my local house representative, Brad Miller, and left a message with his office that I’m against the bail out. I didn’t mention that I’m against certain provisions, rather I’m against the entire thing.

And why is that? Well, if you’ve mismanaged your business then you and your shareholders should take responsibility for what you’ve done. When I learn that every man, woman, and child’s share of this new burden is $5000 a piece, you better believe that I want to have some say in how (or if) these funds (taxes) are to be used.

Call Your Congressional Representative

If you want to voice your opinion about the goings on with the bail out, why not call your congressional representative and give him/her a piece of your mind? I was polite and simply gave my name when asked, but I made it clear that I opposed the bail out.  The entire call took less than two minutes and I was back at my keyboard in a flash.

A lot of people aren’t sure who their representative is, but you can find that information out by filling out this form which will take you to your congressman’s site.

Do it today!

Further Reading

Bernanke and Paulson: Congress must move now (Associated Press)

Cheney, Paulson Head to Hill to Soothe Lawmakers on Bailout (FoxNews)

Text of Draft Proposal for Bailout Plan (The New York Times)

Volatile Markets Pressure US Lawmakers on Emergency Financial Plan

Photo Credit: Michael Slonecker