Tough Love for Auto Makers but not for the Banks

On Monday President Obama basically threw two of the three US auto makers under a bus when he announced that GM and Chrysler were at the end of their credit line from the US Treasury. It just seemed off to me that the Wall Street con-men who fried the economy, still got billions in bonuses, and whose CEOs hardly got shoved around, got better treatment than the auto makers. Maybe I am not understanding this “tough love” concept I keep hearing about.

I do understand that there needs to be a systematic change in how the auto makers operate as a condition for help but I also believe there needs to be the same kind of changes to the banking industry that actually got us into this mess – like a return to some form of The Glass-Steagall Act and reform in the bank regulatory agencies to enforce existing laws. Also the leadership of the banks that approved the actions that led to the bust should be removed and in some cases the bad banks and AIG need to be wind down and broken up.

Instead we get the removal of the GM CEO and calls for Unions to trash their contracts in an effort to reduce their wages to the same level as workers at foreign owned factories in the US. GM was given 60 days to change and Chrysler was given 30 days to merge with another company.

I just don’t see the fairness of the treatment and yes I know the businesses aren’t the same, but seems to me to be like the guy who held and fired the gun is getting a special deal while the guy driving the get away car is getting the death sentence.

I subscribe to the John Rawls concept of justice – “According to Rawls, ignorance of these details about oneself will lead to principles that are fair to all. If an individual does not know how he will end up in his own conceived society, he is likely not going to privilege any one class of people, but rather develop a scheme of justice that treats all fairly.”

As Eugene Robinson wrote in his column:

Both the credit crunch and the reluctance of consumers to spend what money they have left are the direct result of Wall Street’s atrocious misbehavior. Yet the administration’s plan for rescuing the banking sector involves generous inducements, big subsidies and the opportunity for wealthy investors to become much wealthier while assuming very little risk. There are reasons for structuring the bank bailout this way, and there are reasons to take a get-tough attitude with the auto companies. But the juxtaposition is galling — and, for many autoworkers, potentially devastating.

Detroit Dissonance

So where is the fairness in treatment? Where is the justice?

Maybe I’m missing something?

There really are two Americas

While writing about the current economic melt down, I’ve mentioned that the douchebags on Wall Street that ran the economy into the ground operated under different rules than what we regular Americans do. The fact that the bankers want the taxpayer to pay for their toxic assets for a value more than the paper they are written on should be a clue. Columnist David Sirota points out even a more obvious example and one that seems to have removed the rose colored glasses from the masses, who have acted like they’ve never noticed this before. His column talks about the foundation of business – the contract.

Last month, the same government that says it “cannot just abrogate” executives’ bonus contracts used its leverage to cancel unions’ wage contracts. As The Wall Street Journal reported, federal loans to GM and Chrysler were made contingent on those manufacturers shredding their existing labor pacts and “extract(ing) financial concessions from workers.” In other words, our government asks us to believe that it possesses total authority to adjust contracts at car companies it lends to, and yet has zero power to modify contracts at financial firms it owns. This, even though the latter set of covenants might be easily abolished.

A government of men, not laws

That’s right. Contracts to pay bonuses to the douchebags who ran the economy into the ground were off limits while there is nothing wrong in throwing out labor contracts as a condition for automakers to get a loan.

Sirota also mentioned this double standard applied to mortgages:

Congressional Republicans have long supported the laws letting bankruptcy courts annul mortgage contracts for vacation homes. Those statutes help the shower-before-work clique at least retain their beachside villas, no matter how many of their speculative Ponzi schemes go bad. But for those who shower after work, it’s Adams-esque bromides against “absolving borrowers of their personal responsibility,” as the GOP announced it will oppose legislation permitting bankruptcy judges to revise mortgage contracts for primary residences.

It was equally unfunny when some talking head on CNBC recently noted that you couldn’t get anyone to run the financial industry for less than $250,000 a year. He forgot that the ones making that cash didn’t do a good job of it either. That’s why they are trying to snooker us into a bad deal on those toxic assets.

Proof Senate Republicans are douchebags and hate America

Late last night Republicans in the US Senate killed a bill that would provide a bridge loan to US automakers to prevent their collapse. What did they want in exchange for their vote? They wanted the UAW to make concessions on wages so that they make as much as workers in non-union foreign car plants that happened to be in the states many of the douchebags represent. How convenient.

Why do the Republicans hate America?

If the automakers fail next comes the suppliers then the suppliers of the suppliers and after any business dependant on car makers for their lively hood. You will see millions put out of work just so GOP douchebags can break a union.


What ticks me off more is the GOP douchebags never demanded wage concessions from Wall Street when they voted to give it $700 Billion.

Here is a list of Senators who voted for the Wall Street plan but voted against the automaker plan:

Bob Bennett, R-UT
Richard Burr, R-NC
Saxby Chambliss, R-GA
Tom Coburn, R-OK
Norm Coleman, R-MN
Bob Corker, R-TN
John Ensign, R-NV
Chuck Grassley, R-IA
Judd Gregg, R-NH
Orrin Hatch, R-UT
Kay Bailey Hutchison, R-TX
Johnny Isakson, R-GA
John Kyl, R-AZ
Mel Martinez, R-FL
John McCain, R-AZ
Mitch McConnell, R-KY
Lisa Murkowski, R-AK
John Thune, R-SD

Also note that Corker and McConnell have foreign owned car plants in their state so we know why they want to kill US automakers.

Job killing douchebags, every last one of them.

*Update* The douchebags even wrote out their plans to bust the union in a freaking memo!!!!

Once again in bad times Unions take a hit

Like clockwork whenever an economic downturn hits a manufacturer, the “let’s blame the Unions” criers come out of the wood work. Basically the lie is that due to the massive wages paid to union workers, a company can’t compete with makers in other countries where labor is close to slave wage-wise. Never do you hear that it is the fault of management making poor decisions.

One lie being told is that a UAW member is making $70 an hour.

Sen. Jon Kyl: “For years they’ve been sick. They have a bad business model. They have contracts negotiated with the United Auto Workers that impose huge costs.The average hourly cost per worker in this country is about $28.48. For these auto makers, it’s $73. And for the Japanese auto companies working here in the United States, it’s $48.”

Transcript: Sens. Dorgan, Kyl on ‘FOX News Sunday’

Well I think most union members would be thrilled with $70 an hour but in fact they have been giving concessions back to the companies for many years including a recent GM contract that had the Union take over providing health insurance for its members.

At the core of the new deal is the transfer of retiree health-care payments from GM to the UAW. GM will pay an estimated $35 billion into a trust designed to appreciate in value and pay health-care benefits for retired workers for at least the next 80 years, the union estimated. In return, GM is able to unload a $51 billion burden in retiree health-care obligations from its books, enabling the troubled company to borrow money more easily and move more nimbly against competitors. GM’s health-care liability is more than twice the company’s $21 billion market capitalization.

In exchange for giving up annual raises over the course of the contract and allowing GM to pay new workers a lower wage, the union got job-security assurances. The deal must now be approved by union leaders at a meeting Friday, then by union members. Analysts expect the deal to be ratified.

GM, Union Agree on Contract to End Strike (09/27/2007)

The credit crunch and other economic issues have hit all auto makers not just the US Big 3.

And for the first time, Mercedes-Benz, Toyota, and Nissan have each asked to lease space from the port for these orphan vehicles. They are turning dozens of acres of the nation’s second-largest container port into a parking lot, creating a vivid picture of a paralyzed auto business and an economy in peril.

“This is one way to look at the economy,” Art Wong, a spokesman for the port, said of the cars. “And it scares you to death.”

A Sea of Unwanted Imports

And some of the same people balking at providing a loan to the Big 3 didn’t have any trouble giving millions of dollars to foreign car makers to locate in the US

If it’s no surprise that Michigan lawmakers are behind the pitch for a $25 billion lifeline for Detroit automakers, then it might be just as predictable that Southerners would be leading the charge against it.

Southern politicians have spent years luring foreign automakers to build cars in their states, with huge success. South Carolina has BMW. Mississippi recently landed a major plant for Toyota Motor Corp. Alabama boasts plants run by Mercedes-Benz, Hyundai Motor Co. and Honda Motor Co.

After luring foreign automakers, Southerners have big incentive to oppose auto Detroit bailout

Then we have the excessive wages paid to the people who really don’t seem to have any ideas on what to do – the CEOs. For example in 2007, General Motors CEO Rick Waggoner made close to $20 million in total compensation.

But of course it is all the Unions fault – right?