Saturday, December 20, 2008

General Motors & Chrysler Get A Lifeline, But Do They Remember How to Swim?

Well, it's come to this: General Motors, Chrysler and the United Autoworkers union, resisting bankruptcy because it would be marketplace death, are now being told that help is on the way in the form of a $17.4 billion emergency loan plan as the Bush administration sings from the same hymnal as the anti-union Republicans beholden to foreign automakers who killed an earlier bailout bill because the UAW wouldn't make immediate and deep concessions.


Before we go too much further down this sink hole, let's not forget that the automakers created this crisis because of their own incorrigibility. Those high gas prices and a recession happened along on their own.

Let's also not forget that the last eight years have been a low water mark for blue-collar Americans, so there is a certain predictability to the White House's backslide to the emergency loan plan announced yesterday that is unremarkably similar to the southern fried poison pill that killed the earlier bill.

Having gotten that off my chest, the White House didn't have a whole lot of wiggle room.

It had fiddled while Detroit burned only to have to deal with an embarrassing insurrection among its own Senate faithful when it finally acted. Raiding TARP, which was set up to bail out Wall Street banks and not failing auto or toaster oven makers, was all but inevitable to avoid further tarnishing the Bush legacy.

And so this particular bucket of bolts, along with a war or two among other unfinished business, is being kicked down the road and into the lap of Barack Obama.

The good news, such as it is, is that the emergency loan plan puts the onus squarely back on GM and Chrysler to craft restructuring plans in the next 90 days. In theory, plans with real teeth would get them out of the deep end of a pool they have been standing in way too long, which is something everyone except union-busting Republicans want. But despite the hosannas from Michigan for the president's belated action, the feeling persists that GM and Chrysler have forgotten how to swim and the loan plan probably doesn't give them a whole lot more than the opportunity to drown at a more propitious time.

Indeed, the refusal of the GM board to fire CEO Rick Wagoner for his manifold sins of mismanagement is a pretty good indication that the manna from Washington will be viewed not as a last chance but another fix for a junkie.

I must say the view of Michelle Malkin and other pundits that the plan constitutes a union bailout has me feeling somewhat better since they have it totally bass ackwards: Under the plan, the UAW will have to make immediate wage concessions and not the concessions already written into its current contracts when they expire in 2010.

Meanwhile, it should be noted that Ford is in only slightly better shape. This is because it started doggy paddling sooner.

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