Just out of curiosity, what would the other option be? Letting the company completely fail? In your opinion, why isn’t the Administration pursuing this as a viable option?

“Why isn’t the Administration pursuing this as a viable option?”

Unions (specifically the UAW).

Recently, the St. Petersburg Times Newspaper’s Business Section asked readers for ideas on “How Would You Fix the Economy?” One reader sent in the following…

Dear Mr. President,

Patriotic retirement:
There are about 40 million people over 50 in the work force – Pay them $1 million apiece severance with the following stipulations:

1. They retire immediately. Forty million job openings – Unemployment fixed.
2. They buy NEW American cars. Forty million cars ordered – Auto Industry fixed.
3. They either buy a house or pay off their mortgage – Housing Crisis fixed.
It can’t get any easier than that!

P.S. If more money is needed, have all members in Congress and their employees pay their taxes

This is meant as humor, but still you have to wonder if it might not be a better (and cheaper) plan than the Obamination Motors plan…

There was never any danger that the company would completely fail. It still would have restructured via bankruptcy, but that restructuring would look different than the current model. Dealers would still be shut down. Some units like SAAB and Saturn would be spun off. Private investment — instead of taxpayer money — would be raised. And union contracts would have gone away, something that will now not happen.

I’m still trying to figure out what the inherent value is to having an auto company whose top executives live in the US as opposed to a car company whose top executives live outside the US, but that still manufactures its vehicles in the US. So far, those companies haven’t needed bailouts, despite their market losses. Nobody is whining around about jobs lost at those US plants.

Ah yes, it’s political payoff time for favored groups that make lots of campaign donations and do a lot of lobbying.

How do you say Hummer in Chinese?
???????

Can wait to read the owners manual for that one…

When Coca-Cola decided to enter the Chinese market, they had Coca-Cola rendered in Chinese characters. Regrettably, it came out as “bite the wax tadpole” or “female horse stuffed with wax”, depending on the dialect of Chinese used.

Reach,

I agree that I am unable to figure out what extra value there is to having an auto company whose top executives live in the U.S. over a company that makes cars in the U.S. but is run by foreign executives outside the U.S. Besides that, we still have Ford as a domestic car company that is not taking government bailout money – apparently it can be done.

I am reminded of the quote that has been attributed to Mussolini:

“Fascism should more properly be called corporatism because it is the merger of state and corporate power.” — Benito Mussolini

I am also reminded of the origins of the VW Beetle. Hitler made it possible to give the masses a car they could afford and the Nazi Party would be the benevolent provider of this Power to the People Car.

With Government Motors, we see even more evidence of Fascism in the USA.

I think the guy is “on leave” from law school.

I just read a short article called “Making Sense of a U.S. Owned General Motors” and thought some of you might want to read it also.

http://www.globalresearch.ca/index.php?context=va&aid=13849

To Steve on June 3rd, 2009
 Yeah, it does sound better than the current plan but that isn’t saying much.  I looked at this a bit closer, just for fun and found a few problems.  First, there are actually about 70 million people over 50 in the civilian noninstitutional labor force.
   If we were to give each of them $1 million dollars that would come out to $70 trillion dollars (about 5 times the US GDP or 6.2 times the current national debt).  To put this in context, the government has spent about 1.6 trillion on the bailout so far and has committed about 9 trillion in the form of loans, insurance, lending, and other investments.  
  The main problem with this proposal is the assumption that the government is going to spend a certain amount of money so we might as well spend it in a way that helps people.  The problem is that the government can’t give any money without taking it from someone else so to “give” $1 million to each person over 50 would, or even $1 to each person over 50 would mean that the us taxpayers have to come up with that money.
Footnotes/references for my facts available on request

Yup, Government Motors is the new, albeit much larger, Amtrak.

I assume what Rep. Paul means by “what is left of the great American auto industry” is Ford. As that is all that is left of the “big three”. I am concerned that the government will find some way to force it into their clutches. I am so pleased that they have chosen to work through this on their own. It is a ray of hope to me, in this very messy scenario. But, like the similar plight of small and wisely run banks, governmental pressure may very well soon force them to their knees in submission. (FDIC astronomical fee increases for smaller banks is a perfect example.)

The Amtrak example is a great one.

It boggles my mind how flying in a complex aircraft that costs millions to buy and maintain, is somehow price competitive with a train car that, ideally should cost a fraction of that. Even busses are more mechanically complex than trains. You know, the rail freight business is doing just fine these days. (I don’t know, there may be some “opportunity cost” issues with carrying passengers as opposed to cargo.)

Of course, train companies have a long history of collusion with the government, as does the american car industry, and the banking industry. Detroit has benefited from friendly legislation and bureaucracy almost from the start, this is only the latest icing on the cake. I wish I could say different, but turning parasite seems to be a successful business model.

I can say with a bit of confidence that all GM and Chrysler’s problems, basically boil down to incompetent management. Bad management isn’t a problem that will ever fix itself. Giving these people more money is like giving more blood supply to a tumor.

Also, who’s to say that there won’t be new American car companies that spring up to fill the clearing left by GM and Chrysler? There are plenty waiting in the wings….for example, one of my favorites, Tesla Motors.

P.S.
I happen to work in the welding industry. Basically, if there is way to make lots of faulty welds, Chrysler has done it. (this IS a management problem.) The front ends of Dodge Neons were/are notorious for this.

If you own a car made by Chrysler or even GM, (Or Kia, don’t buy Kias,) you have good cause to doubt the soundness of it’s welds. This is one of the reasons why imports tend, on the whole, to have better crash safety ratings.

I could rant on and on about the backward state of American cars.

Technologically, cars have improved very little since the 1940’s.

OK I’m done for tonight.