Not a Band-Aid, a Transfusion

Mrs. Henry Paulson Giving Transfusion to Happy GM Employee

Mrs. Henry Paulson Giving Transfusion to Happy GM Employee

Tgriffith makes three worthwhile points: 1. Mr. Bush did a complete flip-flop on the bankruptcy idea. In fact, he’s done several during the last two months. 2. The problem now is that the industry has only 90 days to “get viable.” 3. Bush in fact has kicked the reorganization can down the road to Obama.

But none of these points tells the real story. The whole mess started months ago and the real question is whether we are going to punish the companies and the UAW or help them get back on their feet. Do we want a “viable” (whatever the hell that means) U.S. auto industry or to watch them not only bleed to death but infect the rest of the economy through their demise—like the old Typhoid Mary story. Most every respected economist agrees that the standard Ch. 11 bankruptcy would be lengthy, very risky, with unknown and costly consequences, possibly triggering a Depression.
So what the bailout does, finally, is “manage” the bankruptcy and consequent reorganization, giving the companies a chance to do their restructuring without filing for bankruptcy or going through a protracted and messy liquidation. And that’s the only right way to do it. All those free-traders and defenders of instant bankruptcy and the foreign transplants want is to see their ideology triumph, kill the union, and permit the transplants to set wages and terms for the whole industry.
We are in the economic mess we’re in because of such people and the willingness of Chrysler and GM Boards to do nothing while their companies took the road of easy profit instead of thinking about where their businesses would be in 10 years. Yet I’m not willing to lay the entire blame on them for building dopey cars and not leading their market to reform itself. You tell me how to sell small fuel-efficient cars to the masses when gas is cheap.
Sure, it was easier to sell trucks and SUVs. Sure, the UAW got greedy. So did Wall Street and the banks. Their myopic greed (plus the administration’s total lack of oversight and blind commitment to laissez-faire policies) produced the current horrendous crisis that finally brought the auto companies to their knees. The companies need support, new blood and, most of all, time. I hope they have enough, and I hope the Obama team will help them, not spit on them.
You don’t shoot the horse you are riding.
Here’s your chance to vote on the bailout: Was it a necessary evil? Or just evil?

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