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  Money-Business

Bail Out the Big Three Automakers?

By Kevin Gosztola ()     Permalink
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Headlined to H3 11/17/08
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Bail Out the Big Three Automakers?

    

 

The Senate and the House will be deliberating and deciding whether or not to bail out the Big Three auto makers this week (Chrysler, Ford, GM).

Here's what you should know when deciding whether or not to support a bailout. This is what you may not hear from network news or cable news.

*Bill Gallagher, a former Niagara Falls city councilman who now covers Detroit for Fox2 News, might have told you this would happen three years ago. He wrote this in 2005:

GM is in big trouble and Standard & Poor's has downgraded America's largest industrial corporation's debt to "junk bond" status. Ford also has serious problems and is in the same debt status pickle, but it does not have nearly the manufacturing capacity and labor force of the GM behemoth, and thus can more quickly adapt to changing circumstances. Daimler-Chrysler began significant restructuring in 2001 and is now churning out profits.

*Just like what happened with the Wall Street Bailout, consumer advocate Ralph Nader issued a statement months ago on the bailing out of the Big Three:

Today, congressional actions to grant multi-billion dollar loans to the corporations lack the reciprocity some in Congress demanded 30 years ago. Before Congress irresponsibly dips into the public piggy bank, this time it would be wise to look back at how the government once dealt with Chrysler's dilemma, require clear benchmarks to deliver on the next generation of green collar jobs, improved fuel efficiency and gain a substantial return on its investment, not just in monetary value, but in the longterm viability of the domestic motor vehicle fleet.

Congress needs to call on the auto industry to innovate their way out of this morass into which they've engineered themselves into. A sensible strategy would be to issue stock warrants to the government, like in the 70s, which would create an incentive for Congress to keep pressure on the auto industry to improve. Public Congressional hearings are a must.

*Sen. Carl Levin from Michigan would like to see the CEOs of the Big Three resign:

Sen. Carl Levin (D-MI), during a Sunday appearance on Meet the Press, assailed the CEO's of Detroit's big three auto makers and said they should resign if it meant the government would then provide rescue loans to the failing companies.

Asked by MSNBC's Tom Brokaw if he had relayed this opinion to General Motors Corporate Chairman Rick Wagoner, Sen. Levin remarked, "I'd be happy to tell Rick Wagoner that he ought to consider resigning if that is the difference between getting this kind of support and not."

General Motors specifically dissolved over $14 billion in the third quarter. It is requesting aid from Congress because the company expects to run out of money and be unable to continue operations by early 2009.

*Some push back to repeal the "blank check" is occurring on Capitol Hill:

U.S. Sen. Jim Inhofe said Saturday that Congress was not told the truth about the bailout of the nation's financial system and should take back what is left of the $700 billion "blank check'' it gave the Bush administration.

"It is just outrageous that the American people don't know that Congress doesn't know how much money he (Treasury Secretary Henry Paulson) has given away to anyone,'' the Oklahoma Republican told the Tulsa World.

"It could be to his friends. It could be to anybody else. We don't know. There is no way of knowing.''

The Financial Times is reporting:

A senior Republican senator is seeking an investigation into potential conflicts of interest among former Goldman Sachs executives serving at the US Treasury and whether any officials exceeded their authority by implementing a controversial tax change without the approval of Congress.

Chuck Grassley, the most senior Republican on the Senate finance committee, asked Eric Thorson, inspector-general of the Treasury, to investigate the "independence" of several Treasury officials who formerly worked at Goldman Sachs and serve as advisers to Treasury secretary Hank Paulson, the former chief executive of the Wall Street bank.

Sen. Bernie Sanders (I-VT) released this statement:

Senator Bernie Sanders (I-Vt.) said today he will introduce legislation to stop the release of a $350-billion second round of the Wall Street bailout.

Sanders, who voted against the $700-billion package Congress approved in October, said he has serious concerns about how the Bush administration and Treasury Secretary Henry Paulson are spending the bailout money that was already released. He also said it was unacceptable that the oversight provisions in the bill were ignored.

The media and politicians may "shock and awe" Americans into supporting another bailout. But, remember, Americans were shocked and awed into supporting a $700 billion bailout for Wall Street and may now regret supporting it.

In an effort to lower Americans' expectations of what can be done, media will qualify everything done this week by attaching the adjective "lame-duck" to Congress whenever reporting on Congress' actions.

Barack Obama and his transition staff have a lot of power and could do a lot to diffuse the situation. For example, they could issue a call for no more bailouts and start deliberating and synthesizing ideas for long term solutions to the financial turmoil this nation is in.

Anyways... What do you think? Should the government bailout the Big Three?

Bail Out the Big 3 Auto Makers
Bail Out the Big 3 Auto Makers with conditions that require MPG cars
Bail Out the Big 3 Auto Makers with conditions that require MPG cars & govt equity
Bail Out the Big 3 Auto Makers if the CEOs of the Big 3 agree to resign
Don't Bail Out the Big 3 Auto Makers

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Kevin Gosztola is a writer and curator of Firedoglake's blog The Dissenter, a blog covering civil liberties in the age of technology. He is an editor for OpEdNews.com and a former intern and videographer for The Nation Magazine.And, he's the (more...)
 
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