Pajamas Media

30 Comments

1. David Thomson:

“Thanks to the government’s heavy-handed treatment of GM’s unsecured creditors…”

The world’s investors have learned not to trust the Obama administration. Every American will pay a price for this backstabbing. W are going to find it much more difficult to get future loans.

“It is their party’s decades-long romance with lending mortgage money to unqualified borrowers that led to the multibillion-dollar implosions at Fannie Mae and Freddie Mac, and to the resulting wreckage at other financial institutions.”

The politically correct John McCain refused to mention this well documented fact during the campaign. Few Americans know about the scandal. They still wrongly blame Republicans.

Jun 5, 2009 - 3:10 am 2. suffer:

How’s the Hope and Change going people..?

Jun 5, 2009 - 4:32 am 3. Gary Ogletree:

If I ran Ford I would ignore the federal mileage dictates right up to the deadline. Make cars people want to buy. Then see if those dictates get toned down. Back in the day, you could look at a car from a distance and identify the make, model and year. We like that. Ford could build on the glory days of the American car and come out on top around the world. Just a fantasy. I guess a lot of us will be keeping our old cars until the Obama Era is a footnote. Como de los Cubanos.

Jun 5, 2009 - 4:53 am 4. Osprey1:

Awesome article, everyones hands are dirty in the downturn of the American economy, Bush should have vetoed the initial recovery package and should have never agreed to bail out Bear Sterns. That bailout set the stage for the madness we now suffer as a nation. The bailouts and takeover of the American Auto industry is a shame. Clean, painful bankruptcy was the correct medicine for there problems, but the Democrat party could not allow the Unions to become less powerful right? Better to distroy the entire company based on some myth that the American people would somehow benefit, with GM closing its American plants and opening plants in China and Mexico. Why is it I believe that in the end the only beneficiaries of this madness will be Democratic Party Members who will walk away with Billions of Taxpayer money like they did during the destruction of Fanny Mae and Freddie Mac? But best we not talk about that or call for an investigation, we are too busy demonizing corporate America, killing our corporations in the name of “fairness, hope and change” to look critically at the government hacks that caused so many of the problems.

One other note, I just (2 mos ago)purchased a new SUV, thankfully I have as of yet, not been clobbered by our nations economic woes. During the process I tried to buy “American” but at that time the Dealers were horribly unrealistic, they demanded over $5,000 more for a comparably equipped Acadia/Enclave than Honda was charging for the Pilot. Lets see, quality car company with a history of owner satisfaction and quality products vs. a company with a spotty manufacturing history on the verge of government takeover and or bankruptcy, that is manipulated by the Unions and there government ties. Easiest call I ever made. And the government is surprised that people like me feel this way, and purchase cars based on thoughts like this because?

God Bless us all ’cause for the next 3+ years we are in deep, deep trouble.

Jun 5, 2009 - 5:05 am 5. Fred Beloit:

And from The Hill’s Blog Briefing Room we hear more about the endearing and ever-busy Barney Frank having his way with an automaker.
http://briefingroom.thehill.com/2009/06/04/barney-frank-wins-delay-of-gm-plant-closing-after-ceo-meeting/

Jun 5, 2009 - 5:48 am 6. Slider:

When trying to engage liberals in these subjects, it is clear they have no understanding of basic economic principles, of psychology, or of risk-reward, planning, or delayed gratification which are the very things that make an economy run or encourage real success. The damage they are doing by removing checks and balances to make reality conform to their unattainable Utopian fantasies will take decades to resolve, if ever. And to top it off, they will never admit it is they themselves who are to blame.

Jun 5, 2009 - 5:52 am 7. WR Jonas:

A clear and well written article with which I personally agree. The participants all were seeking something other than the survival of the company. Unfortunately only the survival of the company mattered.
The companies are dead and the crazies gathered around the corpse do not or cannot undestand that yet.

Jun 5, 2009 - 5:58 am 8. Bilgeman:

Are they going to make vehicles that people want to buy?

Are they going to market vehicles that people can afford to buy?

Are they going to sell vehicles that make them a profit?

If they cannot do any one of those three conditions, they’re STILL toast.

Jun 5, 2009 - 6:09 am 9. Sebastian Shaw:

President Obama & the other Democrats have a vested interest in propping up the corrupt UAW & other unions since they have given millions of dollars to individual Democrats–such as then Senator Obama–& the DNC; this political marriage has long been sewn & each has corrupted the other. Therefore, GM & Chystler is all about the unions & preserving their high legacy costs. The cars are secondary, although the US government will produce cars the public will not buy. The government will create cars designed by political interests groups such as the unions & the environmentalists at the buyer’s expense.

GM & Chrysler are dead. The Democrats will eventually realize this too late when they produce lemons in several years hence. The unions will also be compromised by owning the company as they fought against the “man.”

Jun 5, 2009 - 6:36 am 10. Bohemond:

Never fear- the Obama/Pelosi/UAW axis will definitely find ways to kneecap Ford and the Japanese. Expect a major strike at Ford in the next 12 months.

Conflict of interest? Antitrust violations? Who, us?

Jun 5, 2009 - 7:11 am 11. Jettboy:

My new motto when it comes to the Auto (and any “stimulus” run) companies: Support the United States, buy foreign.

Jun 5, 2009 - 7:30 am 12. WhyamInotsurprised?:

Obami-wan-kenyanobi and his team did not allow normal bankruptcy proceedings to take place. Why? That might actually provide a chance for GM and Chrysler to recover and continue producing cars, albeit at government direction. Better to do the job right and drive a stake through the heart of the business by doing it yourself.

Ahhh, lost jobs? Just the price to be paid to put the USA on par with the rest of world who go without cars and must hoof it, either personally, or on a camel.

As for the foreign car manufacturers like Honda, Toyota, etc., they will not escape either. Government CAFE standards will apply driving up the cost of development and manufacture. And then there will have to be increased taxes anyway because these beasts still contribute to global climate warming, oops, excuse me, climate change.

But in the meantime, ‘ol Barry can claim to have “saved” so many, many thousands of jobs.

“Lies, lies, and damn statistics.” Nothing but lies. From the elevated chin to the downcast eyes, our fearless Leader knows all, is all powerful, and will soon be “everywhere.” He is mocking God. And God does not like to be mocked. Unfortunately, I also believe that many will have to suffer along when God speaks.

“Fear of the Lord is the beginning of wisdom, but fools despise wisdom and discipline.” Proverbs 1:7

Jun 5, 2009 - 8:09 am 13. WhyamInotsurprised?:

Sorry, mistyped the quote of “Lies, damn Lies, and statistics.”

Jun 5, 2009 - 8:11 am 14. Mike Kelley:

It seems like Obama and company have a lot riding on the future success of Chrysler and, especially, GM. I can’t see how they will succeed. It will be very tough for the unions to strike them, now, because that will just strengthen the non-union competition even more. It is too bad so many American jobs are riding on such a weak horse.

Jun 5, 2009 - 8:38 am 15. wGraves:

Sorry guys, you should have been studying physics instead of Marx and Class Analysis in college. Now look what you’ve done. The Tesla Polyphase Motor currently operates at a conversion efficiency of over 95%. That means, with regenerative braking, you can build an SUV which is just about as efficient as a SMART car, and gets gas mileage just as good. While Government Motors is cranking out tiny green roller skates, Toyota and Hundai will be building automobiles which we will want to buy. It’s going to become embarrassing when the lots at GM fill up with unshipped vehicles which they won’t be able to give away. The Volksgreunenwagen will be a complete dud, and we are going to own another AMTRAK.

Jun 5, 2009 - 8:51 am 16. G Alston:

#15 — Sorry guys, you should have been studying physics instead of Marx and Class Analysis in college.

Might have helped if you and they both studied geology and geography. The materials needed to make enough electric motors to make a difference are located in countries that don’t like us (or themselves in some cases.) Specifically I refer to that which makes permanent magnets we can all afford. The upshot is that money will INCREASINGLY flow to places that don’t like us much, not the other way around.

Jun 5, 2009 - 10:09 am 17. Michael:

They have failed???

Good Lord, we knew that when “to big to fail” was still a popular phrase.

Jun 5, 2009 - 10:16 am 18. goy:

@15. wGraves: - The Tesla Polyphase Motor currently operates at a conversion efficiency of over 95%.

Cool. When the power generation and transmission systems needed to charge its batteries get anywhere near that efficient, we’ll really be onto something, won’t we!

Jun 5, 2009 - 10:53 am 19. wGraves:

The basic thermodynamic efficiency of the power supply derives from the temperature at which the power is being generated. Most of our driving is short range commuting. You generate the power in a power plant, where the efficiency can be higher, and use the grid to charge the battery. The equivalent miles per gallon associated with electrical generation is under $1.00 per gallon. Since we don’t generate electrical power from oil in the United States, our oil imports drop like a rock. If you want to do better environmentally, figure out how to get Congress to allow us to build nuclear plants, like they do in Europe and Japan. We currently use 51% coal, 20% Nat Gas (CH4 mostly), and 19% nuclear here.

If you want a hybrid, and if your design doesn’t include coupling an internal combustion engine directly to the drive train, but using it to generate electricity instead, you get a pretty good improvement in efficiency because the gasoline motor can operate at a fixed speed…it’s most efficient…all of the time. That’s like an aircraft engine, and that’s a further gain in efficiency.

So the points are:

1. You can build an SUV which operates efficiently, and
2. The efficiency can be much greater than that of any existing hybrids, which use directly coupled drives.
3. A bunch of folks in Washington who have never built a car are specifying the outcome here, which is pretty arrogant. In the long run, the market is going to win, it always does.

For long range driving, consider burying induction devices under the interstates and derive your power as you drive. Charge a toll for the power.

In answer to the question about magnets, we aren’t building the cars anyway, the Japanese are. And there’s a world market for these materials. Unless you’re assuming a war, we can buy the stuff at the same price as anyone else.

Jun 5, 2009 - 11:58 am 20. myth buster:

Best part about a hybrid design is regenerative breaking. Conventional breaks turn the car’s kinetic energy into heat, but an electric motor can be run in reverse as a generator and used to slow the car down, storing the energy in the batteries.

Jun 5, 2009 - 12:10 pm 21. seven:

Obama thinks the construction industry will rebound and buy 2 little fiat/dodge Rahms instead of a real truck that hauls over twice as much. Right now truck equiped for loads can pull 20,000 pound trailers. But he knows best and wants little 4 wheel caskets for doing work.

I suspect he will tell banks to not approve loans for cars he doesn’t sell.

Jun 5, 2009 - 6:18 pm 22. seven:

myth buster:

Best part about a hybrid design is regenerative breaking. Conventional breaks turn the car’s kinetic energy into heat, but an electric motor can be run in reverse as a generator and used to slow the car down, storing the energy in the batteries.

So the Mini cooper electric runs 2 hours and takes 6 hours to charge. None of us have a week to drive to D.C. to see the one and spend most of the time on a charger.

Jun 5, 2009 - 6:20 pm 23. Mike2:

Well written article and lots of good comments.

10. Bohemond:
I bet you are right. They have to try and bring Ford to its knees somehow. When the inevitable happens I hope Ford either shuts the doors or does a chapter 11 the right way. As for me, I will not be buying a GM or Chrysler product.

4. Osprey1:
I’m with you. Buy something made by a company that doesn’t give a lick about quality or buy something from a company known for quality. Choice is easy.

Jun 5, 2009 - 7:01 pm 24. wGraves:

Repeal the Wagner act.

Jun 5, 2009 - 11:16 pm 25. jerryofva:

wGraves:

There is not enough Lithium in the world to produce more then 10% of the batteries required for cars like the Tesla. Battery powered vehicles always have been and always will be a loser in the mass automotive market. They are at best useful in city driving because you can’t spend 3 hours or more to charge your car on a cross country trip.

Given that the United States has the lion’s share of the world’s liquid producing hydrocarbon resources, which can get us to the “Star Trek” era, let’s do something smart. Instead of wasting our time producing base load energy with wind power, something that the European’s have shown to be another green pipe dream, we can take the time to develop wind power to produce the electricity needed to convert the transportation sector from hydrocarbon fuels to hydrogen. That is where the phsyics supports electric powered vehicles not batteries and power stations.

Jun 6, 2009 - 6:09 am 26. wGraves:

jerryofva, thank you for the comment.

I tried looking up lithium abundance and came up with 29 million tons. That would seem like enough to get started. (http://www.evworld.com/library/KEvans_LithiumAbunance_pt2.pdf)
But let’s drop back and look at the bigger picture.

1. The advantages of regenerative braking are too good to pass up, so we’re going to be able to buy it if we want to, we can now in some form. It’s success commercially is probably tied to fuel price.

2. I’m old enough to have participated in several major shifts in technological paradigm. At the onset, you can’t tell how they’re going to turn out. By the time it’s over, maybe we’ll use lithium ion batteries, maybe something else we haven’t invented yet. We don’t know yet, but it’s begun, that’s clear.

3. The marketplace is the best mechanism for sorting out what works best. Having some technocrat in Washington picking winners is pretty much a surefire road to disaster. Ask the French about the Minitel. It was their surefire winner for networking, conceived by the best and the brightest, and anointed by the government and the top industrial concerns. Poof, gone with the wind! Larry Roberts, Jon Postel, Tim Berners-Lee and their buddies blew it away, so now it’s a footnote. You can’t tell where these revolutions are going while they’re underway, but with the marketplace as a guide, you can reliably get to someplace nice.

4. I’m afraid that the land use question will make wind and solar impossible to implement on a large scale, but I could be wrong if there are technological surprises out there. What is true is that something which isn’t cost effective can’t succeed.

Regards…

Jun 6, 2009 - 11:12 am 27. misanthropicus:

Blumer is perfwectly right, but I take the liberty to add to this article the following:

Mugabeconomics: Bernake printed so far more than 1 trillion (TRILLION, yeah, you read it right, no typo here, more than $ 1 TRILLION), and it appears that the WH is completely unwilling to allow him stop this paper deluge – and whatever you think about the idea of pulling ourselves by commercial paper out of this recession (I personally I find it kind of acceptable if truly & responsibly controlled), the relentlessness of the current process makes me believe that we assist at:

a) either an act of economical sedition/warfare,
b) the extension of presidential campaign financing effort,

And I think that a+ b is the right answer here.

Jun 6, 2009 - 2:23 pm 28. misanthropicus:

A interesting addition to previous post #27, “a) either an act of economical sedition/warfare,
b) the extension of presidential campaign financing effort,” an excerpt from fom a Politico piece:

“Dems express ‘growing concern/By AMIE PARNES/ 06/06/09

House Majority Leader Steny H. Hoyer and Reps. Chris Van Hollen and Daniel Maffei have circulated this letter today [...] to Obama expressing “growing concern” with the closures of GM and Chrysler dealerships across the country. The lawmakers say they’re asking for a “compelling justification as to how closing healthy dealerships will make the automakers more financially sound”. The lawmakers are asking for lawmakers to sign this letter by 5p.m. today.

Dear President Obama:
We are writing to express our concerns about General Motors’ and Chrysler’s decision to close profitable automobile dealerships across the country, and urge you to ask GM and Chrysler to delay final action on proposed closures pending further review of the decision to consolidate dealerships and the process by which Chrysler and GM selected the dealerships to close.

Closing these dealerships will put over 100,000 jobs at risk at a time when our country is shedding jobs at an alarming rate. We also question the criteria being used to determine which dealerships should be closed and the fundamental fairness involved in this effort. It is our view that the market rather than leaving it up to the manufacturers whose poor leadership contributed to their demise. Furthermore, we believe car dealers will be key players in any effort to revive the American auto industry.

We believe the dealerships are one of the auto industry’s key sources of strength and the manufacturers should continue to honor their agreements and contracts. The dealerships, and their more than 1 million employees, form personal relationships with customers that often contribute to brand loyalty and will be key to General Motors’ and Chrysler’s recovery following this economic downturn. While we understand the desire to reduce the number of unprofitable dealerships, no one has yet sufficiently explained the need to close profitable dealerships.

We recognize that efforts by your Auto Task Force prevented the total liquidation of General Motors and Chrysler, as well as their dealership networks. We commend your efforts to help these businesses survive these challenging economic times.

However, we are concerned that manufacturers are closing profitable dealerships to circumvent current contracts which could require expensive buy-outs under normal conditions. We are also concerned about allegations that dealers that have previously stood up for their rights against the manufacturers are being targeted by these closures. We believe that the forced closures of profitable dealerships needs to be scrutinized by the Task Force to prevent additional future financial loses to General Motors and Chrysler and job loses across the United States

We may consider legislative proposals to ensure that dealers and their employees are treated fairly, and we look forward to your timely response. [...]

—————-*——————-

Jun 6, 2009 - 2:29 pm 29. jerryofva:

wGraves:

Are you busy developing a strawman or are you that dense? I said nothing about using wind energy farms to power the grid. I said that the best use of wind energy is produce hydrogen for fuel cells. That can be done off the grid. Wind farms would be the analog to an oil refinery that produces gasoline. The power would be used locally and wouldn’t reguire a connection to the grid for transport elsewhere. The reason that the Obama adminstration will not consider a hydrogen based transport sector based on wind power is that it will alow the US to retain its unique characteristic of a mobile society independent of the government. Battery powered cars are just what the big governmnet ordererd. It will allow urban dwellers the ability to drive locally but will keep them penned up in their urban zones.

Jun 6, 2009 - 5:38 pm 30. B Dubya:

Obama and the progressives in congress have to pay off the big labor unions, corrupt and criminal though they may be.

Even if the unions were not superfluous, and venal to the core, they are totally without self restraint, even when their constant need for more and more concessions from their company has historically resulted in the death of the company and the loss of the membership’s jobs.
Remember International Harvester and the Scout? Gone and all the jobs that vehicle represented.

Union leadership cannot succeed (that is to say, be re-elected) unless they deliver stuff to their members, real or imagined. It is not in their charter to partner with management, it is their function to act as a labor gatekeeper to keep other, equally unskilled workers out of the union shop, while maintaining the artificial labor pricing scheme that the closed shop provides. This system they will maintain and pursue, right up until the factory doors are locked for good, because labor costs price their product out of the market.

What we are seeing here is Stalin light. Government takeover of private enterprise by proxy, in this case the same organized labor that made these companies non-competitive to start with. Stalin was willing to kill millions of Russians and non-slavs to make his system work, and still it failed. Not much chance for the presidential hopey-changey agent, then.

Jun 11, 2009 - 9:36 am

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