Obama's National Suicide Plan

Alan Caruba has written an excellent piece, comparing Obama's plans with those that were carried out by Britain's Labour governments (and failed badly, by the way). Well worth a read!

Brian Deese: "Boldly Ignorant and Unskilled Apparatchik"

Further to my earlier post on the very strange happenings at GM, come thoughts from others:

John Batchelor:

• Brian Deese is a Gen X version of a commissar - a political officer in charge of maintaining the aura and discipline of a Leninist cult at any particular enterprise.
• ... he dropped out of Yale Law, worked for the Hillary Clinton campaign, then switched to the winning Obama campaign after it won? Or that he lives with his dog? This may be a new kind of passive punishment for GM. Bought by POTUS to be handed over to a boldly ignorant and unskilled apparatchik who thinks of himself as dog-lover.

Uppity Woman:

• I guess the world has changed since last week or something. Most people who are put in charge of important things generally know something. Usually they are picked for experience and knowledge. Oh wait. How stupid of me.
• Don’t you just love the way the New York Times describes an arrogant, horrendous, self-impressed horse’s ass when it’s one of Barack Obama’s horrendous, arrogant, self-impressed horse’s asses?
  

The New GM: Socialist Motors

I'm very disturbed by the news today that the Obama Administration will now effectively be running GM. This is a very bad sign in the long history of American capitalism.

Amongst the strangest of the news of this government takeover is that the person managing it all will be a 31 year-old law student named Brian Deese. His experience in the automobile industry to date is . . . absolutely zero. In fact, I don't actually believe that he has ever worked in the private sector whatsoever. So why is Mr. Deese involved in this at all?

Henry Payne provides some interesting background information on what led up to this day. Hugh Hewitt and his listeners discussed the issue as well.

---

Thinking ahead a few moves . . . Barack Obama is clearly staking his future on this plan. I strongly suspect that very few conservatives (which polls indicate constitute 60% of Americans) are going to buy a government made car. So that leaves the remaining 40% of Americans. There will be a HUGE push to get this latter group to buy GM cars.

After all, GM is now the perfect company for the Left:

• Government controlled
• Employing highly paid union workers
• No more "greedy capitalists" at the helm to mess things up

The question is, do you think that the Leftists and Limousine liberals will walk their talk? Will they put their money where their collective mouths are? Will they give up their Priuses and Honda Civics and Smart Cars and Lexuses and BMWs and instead buy GM cars? Obama's future depends upon it.

A pox on the houses of ALL of the federal political parties. As I said from the very beginning, no bailouts should have ever occurred. But the Conservatives listened to the Liberals, the NDP, and the Bloc Quebecois. Now look at where we are! :-(

The Law of Unintended Consequences

There's an old adage, "Be careful what you wish for." Too bad for the newspaper and TV journalists that they did not heed this wise advice. The vast majority of them clearly wanted Barack Obama to win. More than a few of them shelved their journalistic ethics in order to push their guy over the top. That's not speculation, that's a fact.

Just a few months later, it appears that many of them are going to lose their jobs, directly because of Obama's policies. Kate McMillan, at SDA, explains why.

Absolutely delicious irony. Too bad so many are going to be hurt by their shortsightedness though.

The Real Fat Cats of the Auto Industry

This a must read to understand why the Big 3 Automakers are in so much trouble.

Charles Krauthammer's Take on Obama’s Plan for the Auto Industry

Obama owns GM, and I don't know about you, Bret, but I'm deeply reassured that the largest company in America is owned by a guy with the vast private sector experience of Barack Obama.

His speech today, as always, was eloquent, and it appeared clear, but it really is not. It's not exactly clear what he is aiming at.

As I understand it, I think, though, the plan here is to send GM into Chapter 11, either a real Chapter 11 or a disguised one in 60 days, and to send Chrysler over to Fiat or the wolves, whichever will take it.

With GM, the reason that I suspect it is going to end up in Chapter 11 is because he would not have offered the guarantee on warranties otherwise. The reason people are worried about a Chapter 11 is, that the argument is if that happens, people will not have confidence in the company, and the sales will dissolve.

But you have got to ask yourself as a constitutional aside where in Articles II of the constitution is the president allowed to unilaterally guarantee auto warranties? I mean, tomorrow it will end up — we started with bank deposits, money markets, auto warranties, and tomorrow it's toasters.

But if you have Democrats in power, nobody asks about the constitutional questions.

Rick Wagoner Forced to Resign

Finally, some positive news! The inept CEO of GM, Rick Wagoner, is resigning. He should have done it on his own long ago. I'm not particularly thrilled that the government demanded he do so but considering all the public investment in that company, perhaps they had a good right to do so.

One has to now wonder if The Community Organizer (aka Barack Obama) is going to appoint an incompetent Democrat lackey to fill the role. That might be even worse!

---

Kate McMillan, over at SDA, has a somewhat different view. Here's what I wrote her:

I hear what you're saying, Kate, but my own views still lean closer to Gord's. It seems clear that Rick Wagoner was an absolute disaster as CEO of GM. The correct course of action at the start of his tenure would have been to take a firm stance and say to all, "We have become a massive old age health care rest home provider with a small loss-making automobile manufacturing division" (to borrow a line from Mark Steyn).

But instead, he went on & on & on with the status quo. Some have suggested that he, the head of the UAW, and several Michigan and federal politicians have all been in cahoots for some time.

I wish he had resigned on his own a long time ago. He has not. I desperately fear that Obama will now engineer a Democrat lackey to take over but who knows.

So I agree with you about the severe oddness of an American president interfering with a private enterprise CEO but then we'd probably both agree that no bailout with public funds should have occurred in the first place!

The GM & Chrysler Fiasco

David Berner has an excellent piece on the auto-manufacturing bailout.

Here's the comment I left:

Let's not ever forget the original impetus for this stupid bailout plan: Jack Layton and Stephane Dion, supported by Michael Ignatieff and Bob Rae. They DEMANDED that a bailout of the failing auto-sector occur ... no matter what.

Their demands were met ... big time!

At the same time, the executives of GM & Chrysler have accepted no significant cuts to their remuneration. As far as I know, the Canadian Auto Workers Union hasn't given up anything.

So effectively our hard earned tax dollars are going towards gold-plated salaries and benefits packages of a precious few. And make no mistake, now that the $$$$$ have started rolling out of Ottawa and down Hwy 401 to the auto-plants, it'll be extremely difficult to ever shut off that flow.

Michael Campbell on the Big 3 Automakers Bailout

Michael Campbell was on fire this morning! You can listen to his full editorial here (@ 34:50).

Here's a key part of what he said:

How incompetently run would a business have to be to not qualify for government aid? Cause that's not on the table right now. We're not accepting or rejecting businesses based on how incompetently they've been run. Helping failing or failed businesses is nothing new but it seems particularly acute this year. And with the granddaddy of them all, promising up to seven billion dollars in Canada for three major American car companies.

I'm used to governments blowing money. Anyone who has read an auditor general's report knows all about that, whether you want to acknowledge it or not. But this one, this promise to spend $3 billion dollars right now, as much as $7 Billion in the future and that still may not be enough to bailout the shareholders, the unions, and the executives of the Big 3 Automakers is just so BIG.

Take a moment and think about that kind of money. And we're doing it with virtually no debate whatsoever. Politicians who know nothing of the credit crisis or business or finance, politicians who saw none of this coming are now going to give money to the same management teams who took their companies to the brink of disaster. As if they can get them out of it.

But still, no political debate. Not from Jack Layton, who in my opinion, in terms of economics and finance, is the most unsophisticated leader in national politics since Audrey McLaughlin. No debate from the Liberals, who are vying with the NDP for support of the CAW. And no debate from the Conservative government who are still reeling from the breathtaking miscalculation of Stephen Harper and Jim Flaherty that nearly brought their government down. We are so incredibly poorly served by our national parties.

But before all you politicals light your hair on fire, consider this: How much would $3 Billion, maybe up to $7 Billion, maybe more ... how much could it buy in terms of health care, education, solving the homeless problem, you name it?! To borrow from the late senator, Everett Dirksen, "A billion here and a billion there and pretty soon we're talking about real money." Well, we are talking about real money here, maybe as much as $7 Billion+ worth.

Now let me make one thing clear. If you support this bailout, why don't you man-up for a change? Why don't you man-up and put your own money down? Why don't you buy the stock of GM or their bonds? There's nothing to stop you. Nothing but common sense.

I'll tell you, throwing money at these 3 failed automakers in an environment that will see a profound drop in vehicle sales this coming year sure doesn't top my investment list for 2009.

But what I find really grating is that this is all about political connections and clout. It's about campaign funds and courting the CAW.

My only worry in this debacle have been the dealerships and part manufacturers who do run good businesses. They have hitched their ponies to the wrong wagons but here's the big problem: I don't have any confidence that the money is going to do the trick. Not when we are on the cusp of a dramatic fall in new vehicle consumption. That seems clear.

How the Auto Workers Unions are Ensuring the Destruction of the Big 3 Automakers

The taxpayers of the United States and Canada are giving the Big 3 Automakers a renewed chance at life. And the response of the union leaders in the U.S.? "Thanks suckers, but we're not going to offer a bit of help. In fact, we want even more!" You can read more here. Note the mutterings of Democrat Congressman Barney Frank; clearly bought & paid for by the unions. For those who have forgotten, he's the same one who many blame for acting in a pivotal role in our current financial crisis.

Up here in Canada, watch for the heads of the Canadian Autoworkers to have a very similar attitude. The comments on this discussion thread are most enlightening. I'd like to highlight one in particular:

The reason for the ''bailout' is because of the importance to the overall economy of this particular industry. Think of what would happen to the Saudi economy if oil production stopped. The auto industry isn't as supreme as oil, but GM's payroll is almost 9 billion a year, and a 1998 strike knocked a full percentage point off the US economic growth that quarter.

ulianov - you wrote:

"Unions don't manage the car companies, they don't design the cars, they don't control the price of fuel, they don't approve bank loans, and they don't ask for free trade agreements with countries that refuse to buy products manufactured in North America."

I disagree with your view. The CEO of the car companies, in their management, MUST include the union presence and its effect. This includes costs of production (i.e., contracting out, out-of-country contracts, costs of car production or less man-hours of work etc).Research and design has to be considered with the union in mind as to costs of production. The CEO must also consider the demands of the union in attempting to obtain bank loans, for a bank may very well say that the union costs are so high that the profit margin is too low to provide for future investment by that car company. As for countries that refuse to buy products manufactured in N. America - that's also a result of the union costs which have driven the price of production beyond the carrying capacity of the local consumers.

The union costs are not just 8% of production, but include, for example, an approximate $1,600 per car 'legacy costs' for retiree's health and benefits for their pension. The legacy costs are an enormous drain.

Then, normally in hard times, an industry would reduce production. But GM's union agreements mean that it can't legally close plants or lay off workers without enormous penalties! That's what the union has done!!! Get it, Ulianov? The union has transformed a production industry into a service centre for workers.

The industry can't get enough money to research and develop new cars; it can't reduce the costs of production because it can't reduce even the NUMBER of workers! It can't close plants. Its only reason for existence...is to serve those workers. To hell with car production.

Even if GM halts its production, it STILL has to pay the workers, and their pensions and health care and other benefits. That is, what the union has done is to set up a situation where the car industry can't reduce its production because its production has NOTHING to do with cars but with workers. It can't lay them off, can't reduce its numbers of workers..and when they retire, the benefits are an enormous cost. Those union legacy costs are an enormous drain and this union-caused legacy is the basis of much of what ails the auto industry.

Toyota, Honda, Nissan didn't get trapped by the unions, didn't transform from car manufacturers into worker service centres. They are able to turn their profits into profitable new designs, which the Big 3, with their different focus on Benefits To The Workers - were unable to fund. For example, GM put only 7 billion on research and development vs Toyota's 15.3 billion.

As for 'bailing out the banks', please remember that the banks are not unionized, and the purchase of insured mortgages has nothing to do with production costs of anything.

Posted by: ET at December 26, 2008 6:12 PM

The Toyota Way

And for a little smile:

Mark Steyn on the Current Bailout Madness

General Motors now has a market valuation about a third of Bed, Bath & Beyond, and no one says your Swash 700 Elongated Biscuit Toilet Seat Bidet is too big to fail. GM has a market capitalization of about $2.4 billion. For purposes of comparison, Toyota's market cap is $100 billion and change (the change being bigger than the whole of GM). General Motors, like the other two geezers of the Old Three, is a vast retirement home with a small money-losing auto subsidiary. The UAW is AARP in an Edsel: It has three times as many retirees and widows as "workers" (I use the term loosely). GM has 96,000 employees but provides health benefits to a million people.

How do you make that math add up? Not by selling cars: Honda and Nissan make a pretax operating profit per vehicle of around $1,600; Ford, Chrysler and GM make a loss of $500 to $1,500. That's to say, they lose money on every vehicle they sell. Like Henry Ford said, you can get it in any color as long as it's red.

Full article here

Wise Words about the Big 3 Automakers

Here's CKNW's Bill Good paraphrasing a businessman he spoke with yesterday:

"There's always going to be a demand for cars. The market should decide. Let the chips fall where they may. Let these companies go down if they're going to go down. They will restructure or reform or new companies will emerge to take up the slack, to pick up the market. They've become too fat. They've become too inefficient. They've created contracts that are unworkable and untenable. We should just let them go and suffer the pain."

Another View of the Automakers Bailout

Click on the image to go to the actual story by Michelle Malkin. And near the bottom, be sure to read how Toyota is managing to survive and prosper without getting government help.

Why Are We Even Considering Bailing Out The Big 3?

Here's the latest from my new favourite ranter (language warning) :

Michael J. Fox Car

This beautiful Delorean DMC-12 was manufactured in North Ireland in the first few years of the 1980's. It gained fame in the Back to the Future trilogy featuring Vancouver's own Michael J. Fox (who was in the Grade 5 class of my Uncle Martin by the way!)

The Big 3 Automakers: Let Capitalism Be Allowed to Work!

Today, I listened to a fascinating discussion on the financial crisis and what to do with the Big 3 Automakers. You can listen to it here (starting at 7:00). Afterwards I sent the host, Sean Leslie, this letter, which he read on-air:
I agreed with every criticism you laid at the feet of the Big 3 Automakers ... until you said that they can't be left to die.

I disagree with that last part and here's why: They are inefficient, unproductive organizations building products that most people don't want. If they were allowed to fall into bankruptcy protection then:

1. Things eventually would sort themselves out.
2. The incompetent current management would be sent out to pasture.
3. Most of the people working directly or indirectly for these companies would find employment with whatever Phoenix rose from the ashes.
4. These workers would be hired at wages that the market can bare, not overinflated wages that only exist because of dumb management decisions.
   

Capitalism needs to be allowed to work. When profits are privatized but risk is made public then we have an untenable situation that cannot be sustained.

So not only can the Big 3 be left to suffer the consequence of bankruptcy, they must be forced to do this.

Interesting Analysis into the Possible Bailout of the Big 3 Automakers

Misguided Union Leaders

What's the #1 priority of every union leader? I always thought it was to increase the wages & benefits of their union members. Did this change and no one told me?

Ken Lewenza has succeeded the incompetent Buzz Hargrove as head of the Canadian Auto Workers Union, the largest private sector union in Canada with 260,000 members.

The traditional North American auto manufacturing industry is in desperate trouble, with plant after plant after plant being shut down. There are many reasons for this, which include: high gas prices slowing down sales, uncompetitive wages, and poor productivity.

In the [expected] upcoming Canadian federal election there are only two political parties that have any realistic chance of forming the government: The Liberals and The Conservatives. Stephane Dion's Liberals are focusing much of their campaign on a Green Shift plan. Every realistic examination of this plan concludes that it will amount to a tax on every household, estimated at $6,000 per family in energy producing provinces and $1,300 per family elsewhere.

With more money going to the government there will be less money to buy things like . . . automobiles and gasoline! So, from the perspective of a CAW member, is it in their personal best interest to support a political party in favour of such a plan or one opposed to it?

Would someone please explain to me why Mr. Lewenza would say the following in his first speech as president of the CAW: "I will do everything in my power to defeat The Conservatives in the upcoming federal election!"

Politics often boggles the mind.