The other Big 3
Money, arrogance and stupidity add up to disaster for America’s troubled auto industry
By Jennifer Hadley 12/04/2008
I’ve always found stupidity combined with gobs of money to be the perfect recipe for disaster. Take the folks who win a gazillion dollars in the lottery, and announce on live television that all they want is a new bowling ball. Then five years later you see them on Dateline bawling their eyes out because they’ve gone bankrupt. Or take your pick from any number of child stars who made boatloads of money only to blow it on cars, yachts, drug addictions, etc., rendering them flat broke before their 25th birthdays. See what I mean? Stupidity plus enormous wealth leads to disaster.
My brother Adam, an admitted “tree hugging liberal” who lives in Seattle, pointed out that I could add another ingredient to my Molotov cocktail for disaster: Arrogance. In this case Adam was referring to our current commander in chief, while I was merely stewing over the mind-boggling stupidity of Detroit’s Big 3 CEOs’ decision to fly private jets to DC to ask for a $25 billion bailout, with no plan for how they would spend it.
I concede that this in and of itself is certainly arrogant. But what strikes me as even more arrogant is the fact that these three are still adamantly refusing to consider the option of filing for Chapter 11 bankruptcy protection. (Something about it just reminds me all too well of a position our president chose to take years ago: You’re either with us or against us.) I find it appallingly arrogant that taxpayers are effectively being given an ultimatum by Ford, Chrysler and GM. We can either bail out Detroit or suffer grave consequences from massive layoffs, which will in turn drive up unemployment rates and further weaken our already fragile economy. Where is the gray area?
Well, as Mitt Romney pointed out in a recent op-ed piece in The New York Times, the gray area is bankruptcy. By filing for Chapter 11, Ford, GM and Chrysler would be able to renegotiate existing labor contracts and debts to restructure their respective companies. United Airlines and US Airways filed for protection in 2002. In 2005 Northwest and Delta followed suit. I’ve flown these airlines dozens of times since then. Chapter 11 does not mandate that the Big 3 close their doors. It mandates that they restructure and cut costs, just like the airlines did. Yet the Big 3 continue to be bullheaded and refuse to consider this option.
Yes, with Chapter 11 there would still be substantial job losses, and that stinks. But by all accounts, job losses are inevitable no matter what, because these companies just aren’t selling enough cars. Nor are they making enough profit to sustain themselves on the cars they do sell. Furthermore, by all accounts, the way these companies are blasting through copious amounts of cash, $25 billion will get them barely into 2009 before they’re broke again.
Luckily, Congress balked at the pathetic showing that CEOs Wagoner (GM), Nardelli (Chrysler), and Mullaly (Ford) put forth during their initial plea for cash, banishing them back to Detroit with instructions not to return until they had gotten their arrogant heads out of their … well, that’s not exactly how it went. While I wholly applaud the hard-line approach that Congress took with these numbskulls, at the same time my heart breaks for those who have devoted years to the American auto industry. Those who are at the risk of losing their pensions and their incomes aren’t to blame for this mess; this disaster was created by stupid, wealthy, arrogant CEOs.
Of course, I’m guilty of being a bit arrogant too. Suffice it to say that it’s a good thing I don’t actually have a farm, because I arrogantly stated that I’d bet the farm that we’d bail out the Big 3 just a few weeks ago in my article (“BKs, bailouts, mergers, oh my,” November 6). This is now looking less and less likely. But although I may also be guilty of being a bit stupid, I certainly had no way of knowing that Nardelli, Mulally and Wagoner would have the gall to show up in private jets to beg for taxpayers’ money — without any plan whatsoever for how they’ll spend it. Thankfully though, since I’m the furthest thing from rich, at least by my own formula, I’m not quite a complete disaster. Oh yeah, and my arrogance and stupidity isn’t going to ruin thousands of peoples’ lives either.
Contact Jennifer Hadley at jmhadley624@yahoo.com.
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By stepping outside of the authority granted to them by the Constitution, meddling in private industry, and in a large part causing the economic problems that have adversely affected the domestic auto industry, the federal and state governments have made every taxpayer liable should they fail. This money should be in the form of a settlement instead of a loan.
By doing the same thing in the banking industry, they have also made us liable for bank failures. By then supporting the banks in their illegal and predatory loan activities the government is complicit and we are now liable to every home owner who's property is foreclosed on and every business that has been forced to close because of banking practices.
http://ewebsmith.com/gov/WrongBusiness.h...