the intellectual bankruptcy of the big three

I knew for certain that the automotive bailout was destined for failure when I read the CNN headline, “Big Three auto CEO’s flew private jets to ask for taxpayer money.” The momentum is clearly building against them.

I’m not generally one to agree with the likes of Mitt Romney, who came out today and said that we should let the Big Three fail, but, Jesus Christ, the CEOs of the Big Three are making it incredibly difficult for me to believe that they’re serious about making the kind of substantial change necessary to save their industry.

I don’t know that I’m necessarily a proponent of the “let them go bankrupt” philosophy, but I’m sure as hell on board with Carl Levin when he suggests that the CEOs of the Big Three should step down. The thought of the three of them, in their three private jets, all going from Detroit to DC, boils my husky, grub-white ass. I know the estimated $80,000 it cost to fly them into Washington is just a drop in the bucket compared to the billions the Big Three burn through each quarter, but the symbolism speaks volumes. These men don’t want to change. They want to continue business as usual, and they want us, the American people, to subsidize it.

What we need is a leader of an American automotive company who leads by calling for bold change. We need someone with a vision. If we had someone like that, I’m confident that Congress would get onboard. We need a leader willing to say, “We are not putting one more dollar into the design of gas-powered automobiles. Gas is not the future of America. We are, from here on out, in the business of creating electric vehicles that people will want to drive. We intend to restructure our company, sharing ownership with our employees, in exchange for their commitment to renegotiate labor contracts in light of the economic realities of today. We would like the government’s assistance with research, and tax credits for early adopters, as well as with the building of a national alternative energy infrastructure capable of powering the zippy, fun-to-drive automotives we intend to build. We’re a resourceful people, with access to the best workforce in the world, and there’s no reason to imagine that, if we set our goal as energy independence, we will not get there.” Of course, that will never happen.

Posted in Observations | 24 Comments

how much blame do the unions deserve?

At the risk of pissing off the majority of my readers, I feel as though I have to say that the unions of this country have, over the past several decades, in my opinion, done a piss poor job. They’ve allowed the American people to forget that unions, through their hard fought battles, were responsible for limiting the workweek to 40 hours, and ensuring a living wage for laborers. They haven’t articulated their value. They’ve allowed the prevalent union narrative in this country to become one of greedy and gluttony. If you asked 100 people on the street for their impressions of unions, you might have one or two mention the workplace safety regulations they were responsible for, or the fact that, thanks to their efforts, we no longer have kids working in coalmines. The rest would likely talk of drunks being paid $70 an hour to occasionally show up and push a broom. Unions have allowed this to happen. Focusing on the dollars, they’ve lost sight of the big picture. Union leaders should be the heroes of the American people, but instead, today, we see them taking the blame for what’s become of the United States automotive industry. It didn’t have to be this way, and it pisses me off…

Posted in Other | 11 Comments

it’s halfway through the month, have you used your cafe luwak coupon yet?

Just a quick reminder that the MM.com Cafe Luwak coupon runs out at the end of the month… If you haven’t already, you can print one out here.

[This post was brought to you by the growing consensus that we should let GM fail.]

Posted in Food | 8 Comments

republican unwillingness makes automative bailout look unlikely

Tonight, I was going to write the most definitive post in the entire world on the plight of the Detroit automakers, and the arguments both for and against their receiving the government bailout that Democrats are asking for, but then I entered into the magical realm of the Ypsilanti 2020 Task Force, where my razor sharp wit (and will to live) got worn down to a dull, little nubbin by two-and-a-half hours of group editing… I mean, I love the folks I serve on the committee with, and I appreciate their dedication to this struggling little town of ours, but after an hour of debating punctuation, wording and layout issues with a dozen people, I’d do almost anything to make it end… Fortunately, our meetings don’t take place near a tiger enclosure.

As for the Big Three getting their piece of the $700 billion bailout pie, it looks like we could see a vote in Congress as early as Wednesday. Right now, it doesn’t look as though any Republicans are onboard, but maybe that will change if they become sufficiently scared between now and then. GM, in hopes of seeing that happen, has just released a terrifying new video about what we can expect if they go out of business. As fear seems to have been the primary motivating force responsible for the Wall Street bailout, I suppose it’s got a pretty good shot at working here.

And here’s a clip from CNN:

…Senate Democrats were trying to earn GOP support for their proposed bailout of the Big Three automakers. Democrats would like to see a vote Wednesday, but some concede they probably don’t have the support.

Senate Majority Leader Harry Reid, speaking on the Senate floor Monday, urged action on the plan.

“The Treasury Department has acknowledged that they could provide the auto companies the temporary assistance to keep automakers solvent by taking money out of the $700 billion we’ve already provided to the Treasury Department,” Reid said.

“If we move forward, we can protect American jobs, help American families and prevent our economy from falling further into a recession,” he said. “In the event there is objection to passing this important legislation, we’ll have the opportunity to vote on a second piece of legislation … that consists solely of unemployment insurance and relief for the auto industry and the auto industry’s work force.”

So, if I understand this right, if Congress doesn’t agree to extend the bailout to the automotive companies, they may pass new unemployment laws making it easier for displaced autoworkers to collect unemployment insurance, perhaps for a longer period of time than currently allowed for… I guess that’s something.

Harvard economics professor Martin Fledstein seems to advocate for bankruptcy in today’s Washington Post. But, if we’re unwilling to do that, he feels that restructuring is possible under the following terms:

…The goal of that restructuring should not just be to require the companies to make cars that are fuel-efficient and more environmentally sound, as President-elect Barack Obama has said, although that can be included in the government’s list of requirements. The goal should be to put the companies on a course that will allow them to survive for the long term, producing cars and creating jobs.

To do that, the government should insist that the unions accept reductions in wages and benefits to levels that allow the firms to compete with imports and with nonunion U.S. auto firms. The trustees of retiree benefits should be required to accept reductions in those benefits. The government should also insist that management eliminate dividends and restrain salaries until the firms return to profitability. Even creditors should have to accept write-downs in the value of their debts.

The government has substantial leverage to ensure that these changes occur. The auto companies’ management, unions, trustees of retiree benefits and creditors would recognize that without government assistance, the firms would be forced into bankruptcy and that the bankruptcy court could require even more severe cuts in incomes, benefits and payments to shareholders and creditors…

From the perspective of U.S. autoworkers, it looks as though such concessions are off the table, at least for now. But, as the professor points out, that doesn’t mean they wouldn’t be forced to accept concessions during either government imposed restructuring or bankruptcy.

And, for what it’s worth, not everyone agrees that high worker pay is to blame for the current situation. Some think it’s more due to management’s demand that the companies crank out gas-guzzling vehicles dependent on plentiful, cheap oil.

Get ready for a bumpy ride, Michigan.

Posted in Other | 16 Comments

the japanese contemplate food security, why don’t we?

Recognizing that they are dependant on foreign nations for an overwhelming percentage of the food they eat, the people of Japan have begun a dialogue on food security. The following video is a product of their Ministry of Agriculture, Forestry and Fisheries… I’m not aware of a similar piece existing for the American market, showing the importance of re-localizing food production, but there’s clearly a need.

[Via Metafilter.]

Posted in Food | 30 Comments

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