Listen. I know most people reading this aren’t any closer to being economists than I am. But here’s the deal with the automakers:
This isn’t the financial crisis. It’s not the credit crunch. It’s the latest episode in a long line of industry failures that’s spanned most of my life.
Right now the heads of the auto industry (including the insidious parasite the UAW) are before congress trying to terrorize them and you into writing them a check.
They are blitzing the media with advertising about what a catastrophe we’d have to endure if they didn’t get this check. Millions of jobs in all kinds of industries spanning the country, they threaten.
They’re even confessing that this check is only to hold them over until they need the NEXT check in five to six months, because it’s really THAT bad.
I learned an interesting lesson about 16 years ago when a friend of mine was taking care of a little girl named Claire, a two and a half year old. When it was time to go to the store, Claire was having none of it because she saw the choices on the table as go to the store or not (even though there wasn’t much of a choice.) It took a bit of frustration before the position was reframed: “We’re going to the store, do you want to walk or take the stroller?” She described to me the look on this little girl’s face when she knew something was going on but couldn’t quite put her finger on it as neither choice would provoke the desired scene.
Well my friends the auto industry is doing the same thing to us, and this time it’s decidedly NOT in our best interest. They’re framing their argument in an intentionally deceitful way: Either they get the money or millions of jobs are going to disappear as they fail. Right? That’s the rhetoric from them and their advocates and shills in the media (Phil Lebeau from cnbc comes to mind.)
But there’s another option.
Chapter 11 bankruptcy allows these companies to continue operating, while restructuring internal and external contractual obligations. It gives them the exact opportunity they need. It frees them from the chokehold of the united autoworkers union, which is bleeding the industry dry.
Is it the nice happy path option? No, certainly not. But we’re in a time of serious economic pain and that’s a part of the process.
Fortunately (I can’t believe I’m saying this) we went through the TARP 700 billion dollar bailout (which neither Hank Paulson or the banks who received money are using for it’s intended purpose you might be interested to know) so Congress is almost justifiably skittish.
Listening to them ream these guys today was mildly heartening because they don’t want to get burned again and they’re mad as hell.
And it almost looks like they’re going to fold their arms and tell Detroit to go home and figure out their own damn mess.
But what else became clear to me today is that they are NOT hearing the inherent deceit in being asked whether they want to walk or take the stroller. So what’s going to happen is the fear of “millions of lost jobs” is going to sink in to them in a way that can only happen to a politician whose career is on the line and frankly it will be Ghostbusters all over again (”and you’ll be saving the lives(jobs) of millions of registered voters.”)
So they’re going to grant them the money.
But don’t be fooled about what’s going on right now. Detroit’s thrashing in the straight jacket like an addict in withdrawal. They’ll say anything, promise anything they need to and offer nothing in return in order to get that check. Then they’ll be back.
And the bitch of it all is that it is truly inevitable. These industries will undergo major INVOLUNTARY restructuring be it via chapter 11, through massive mergers or whatever. And this will happen whether they get the check or not. This does nothing but forestall the inevitable a few months.
We did a good job letting Congress know how we felt about the bail out, but they were frightened in to action by a scaremongering Hank Paulson. (A side point is that the original proposal on the bailout was 3 pages, and Congress…. Congressed it to I think 680 so we really will NEVER know if the original plan would have worked. It died in the first edit.)
Call or send an email to your Congressman. It just might be possible to stop this crap from going through.
It’s NOT an all or nothing deal. They’re lying.
