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Let's Buy the Big Three
Of course, the auto magnates used to be the Masters who ruled the world. They were the pulsating hub that all other industries—steel, oil, cement contractors—served. Fifty-five years ago, the president of GM sat on that same Capitol Hill and bluntly told Congress that what's good for General Motors is good for the country. Because, you see, in their minds, GM was the country.
What a long, sad fall from grace we witnessed on November 19, when the three blind mice had their knuckles slapped and then were sent back home to write an essay called "Why You Should Give Me Billions of Dollars of Free Cash." They were also asked if they would work for a dollar a year. Take that! What a big, brave Congress they are! Requesting indentured servitude from (still) three of the most powerful men in the world. This from a spineless body that won't dare stand up to a disgraced president nor turn down a single funding request for a war that neither they nor the American public support. Amazing.
Let me just state the obvious: Every single dollar Congress gives these three companies will be flushed right down the toilet. There is nothing the management teams of the Big Three are going to do to convince people to go out during a recession and buy their big, gas-guzzling, inferior products. Just forget it. And, as sure as I am that the Ford family-owned Detroit Lions are not going to the Super Bowl—ever—I can guarantee you, after they burn through this $34 billion, they'll be back for another $34 billion next summer.
So what to do? Members of Congress, here's what I propose:
1. Transporting Americans is and should be one of the most important functions our government must address. And because we are facing a massive economic, energy, and environmental crisis, the new president and Congress must do what Franklin Roosevelt did when he was faced with a crisis (and ordered the auto industry to stop building cars and instead build tanks and planes): The Big 3 are, from this point forward, to build only cars that are not primarily dependent on oil and, more important, to build trains, buses, subways, and light rail (a corresponding public works project across the country will build the rail lines and tracks). This will not only save jobs, but create millions of new ones.
2. You could buy all the common shares of stock in General Motors for less than $3 billion. Why should we give GM $18 billion or $25 billion or anything? Take the money and buy the company! (You're going to demand collateral anyway if you give them the "loan," and because we know they will default on that loan, you're going to own the company in the end as it is. So why wait? Just buy them out now.)
3. None of us want government officials running a car company, but there are some very smart transportation geniuses who could be hired to do this. We need a Marshall Plan to switch us off oil-dependent vehicles and get us into the 21st century.
This proposal is not radical or rocket science. It just takes one of the smartest people ever to run for the presidency to pull it off. What I'm proposing has worked before. The national rail system was in shambles in the '70s. The government took it over. A decade later it was turning a profit, so the government returned it to private/public hands, and got a couple billion dollars put back in the treasury.
This proposal will save our industrial infrastructure—and millions of jobs. More important, it will create millions more. It literally could pull us out of this recession.
John Talks Joe
Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.
A Prize With a Price
Michael Moore is an Academy Award-winning filmmaker and author. He directed and produced Roger & Me, Bowling for Columbine, Fahrenheit 9/11, and Sicko. He has also written seven books, most recently, Mike’s Election Guide 2008.
Goodbye, GM
Michael Moore is an Academy Award-winning filmmaker and author. He directed and produced Roger & Me, Bowling for Columbine, Fahrenheit 9/11, and Sicko. He has also written seven books, most recently, Mike’s Election Guide 2008.
Screw You, GM
Michael Moore is an Academy Award-winning filmmaker and author. He directed and produced Roger & Me, Bowling for Columbine, Fahrenheit 9/11, and Sicko. He has also written seven books, most recently, Mike’s Election Guide 2008.
This makes sense to me--do you think that an article like this is read by Obama's people?
Your comments leave out the debt burden these companies have built up over the years as well the fact that the avg worker at GM makes about $65 a hour factoring union benefits. How can any company be profitable when you have such terrible labor costs and legacy pension issues? It's NOT about the cars - it's about the economics of the business. When people say the companies "need to retool".... start with the economics THEN make hybrids, electric cars etc... I believe there will come a time soon when Mr. Moore could buy GM common stock himself from the profits he's made on his movies.... after that perhaps he'll understand what plagues these companies.
I hope this catches on. Mathematically, it just makes sense. The Big Three are just going to screw it up again and be back to ask for more money.
please someone, send this to Obama! I am so constantly ANGRY that we are sending our tax money to fund the excessive business/lifestyles of Wall Street greedmonkeys, and we have NOTHING to say about any of it. can't we bring criminal charges against the bright young things who were lionized a year ago for coming up with "Derivatives" as a new way to abstract funds from their realities and bundle financial horrors beyond recognition, then sell them to otherwise smart adults? Michael Milken did things that were MUCH less egregious and much more borderline legal, and went to jail for it. Why not now? let's reclaim those NYC apartments, country homes, yachts, accounts, and apply that against some of these taxpayer "loans" that have no oversight and no terms of repayment even. I AM MAD AS HELL AND I AM NOT GOING TO TAKE IT ANYMORE! except I have NO choice. Except for someone sending this to Obama.
This is by far the best idea to come forth regarding this crisis! I hope MM lets the right people know his plans! I cant wait for Obama to get into office....change like this is what we need to move forward. Big ups Mike!
While sending this to Obama's people is a good idea, sending it to your congress reps and senators is a better one.
Find them here.
http://www.visi.com/juan/congress/
Email the link to the story and tell them that you support these ideas. This is the whole point of Congress, to be voting and making decisions that represent what the people want. We need to tell them what we want and no one is going to do it for us. Pass it on and make us heard!
The wall st problem is not about derivatives as the source of the problem. it's about leverage... just like people all over the WORLD are suffering from overextending themselves to buy more assets. When the unwind begins (as it started in 2007) all over the world it gets ugly... Not even Obama can prevent the unwind and pain as you'll soon learn.
News Flash: Now big three asking for 36 Billion now as opposed to 26 last week. I don't think this sum will stop until about 64 to 70 billion due to liquidity issues with all the companies. This Idea Mike just makes sense. I really hope Obama's people check this out. Even if he steals your idea and selfishly calls it his own, we should all recognize that its still a good plan.
These are ideas worth discussing, but the unions have to be brought back to reality. They've demanded and been promised the moon, and there's no way the Big Three can afford it all. Those costs, then, are either added to the price of every car, making competition more difficult, or swallowed by the companies so they can compete in the marketplace, which reduces their profitability. The auto unions appear to promote laziness, waste and low standards. Maybe this is why Mr. Moore's car won't start. ...
As for loritodd's comments about Wall Street greedmonkeys, I say we send them on a cruise around the Horn of Africa (preferably in an oil tanker) and, y'know, see what happens. These unelected, manic depressive, immoral, unethical, incompetant d-bags have far too much power over the American people and obviously know not how to deal with it. Actually, I'd like to see Mr. Moore do a documentary about them -- before we send them to the pirates, of course.
From an outside continental European perspective, this seems like utter lunacy. Badly managed companies under pressure from the unions do not become wonders of public service because government buys them. They become even worse run companies - and typically grant the protectionist unions even more power and leverage against the public good. Let them file for bankruptcy protection so that the union heads and corporate management can find a solution. Why on earth aggravate the situation by placing a golden pot of tax payer money right in the middle of it - and giving the unions a golden straw for years to come?
This is actually 'the solution' Mr. Moore is presenting here. I DARE the Government to actually listen this time. I'm glad Mr. Moore has also lumped the unicorns and the fairies in there as well ... same problem, similar solution. Throwing money into these things to prop them up won't work. If a Business is failing, there are usually reasons why. Usually it is their Business Practices that cause them to fail. The moral hazard is great in all of these cases and should be observed as part of Good Government, but my guess here is that Congress will roll over and give them what they want...and the country will go broke. That's actually what I'm expecting.
By the way, your car doesn't work because your mechanic is teaching you a lesson in economics. You've got the money, he doesn't. You need a car to run properly, he doesn't. He needs money, you don't. So he sabotages your car until you give him the money he needs to live. Then your car will run. The only reason why Foreign Cars do so well in the US is because local mechanics do not know how to break them first and then fix them second. They don't teach Honda and Toyota in Boces. They teach Big Three. It's an Ocean's 13 world out there now ... duck!
I feel that this is a great idea! Please pass it on to Obama!
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I say this: the big 3 should sell their plants to Toyota for $1. Toyota has to promise to keep all the current workers employed, but not under the union contract. Pay them the wages, adjusted for cost of living, that they pay at their other USA plants. They must also promise to keep the plants open, producing green cars.
I also like the pirate idea - throw in the auto execs too
One more suggestion: Make Michael Moore Secretary of Transportation!!!
I will have to come back to finish reading the article, but I would like to say I agree that Congress should buy the big 3 US automakers. Not just that we need better built autos, but we NEED inexpensive electric cars NOW! This is a NATIONAL SECURITY issue! If gasoline goes up to $10 per gallon (and it will eventually), the economy is going to tank and inflation is going to be sky-high. A horrible economy is going to create a weak military and national security. No way can the USA be a superpower with a weak economy!
And for those people that complain about the unions, they should first be complaining about the millions of dollars executives make in salary, bonuses, and stock options every year. No way should you be criticizing someone making $28 per hour when the CEO is making $25 million per year.
Mike's Proposal.
1) Good business plan - public transport will see growth in the next 2-5 years. But can any of the Big Three(B3) change their operations to manufacture trains, buses, subways and light rail in the next year without making a huge capital investment? Can they compete with the likes of Bombardier?
3) Good point - they need innovative management to make this all work.
2) Shareholders of the big three are speculators hoping for one thing; a bailout which will cause the share price to temporarily rise. Buying those shares is bailing them out. Shares in the B3 right now are worthless... the shareholders just don't know it yet. Let them go down with the ship.
Here are the government's options.
a) Keep the companies running. This means loaning them $34 billion. And next year another 25 billion, and so on until the companies have a positive cash flow (employee contracts will have to be renegotiated[unlikely] and some assets will have to be sold for this to happen). The loan should include collateral (Property, Plant & Equipment) and 90% ownership stake (i.e. GM issues 1,000,000,000 shares to gov't for $1). In this case the shareholders lose almost all their investment, and the company's future is still uncertain (bad for taxpayers who are owed $34 billion).
b) Do nothing. Let the B3 go bankrupt. Toyota, Honda, and VW will buy the assets and hire more people as they take the market share that once belonged to the B3. The theory of "Magic of the free market" and all that. In this case the shareholders lose everything, plus the economic and social impacts of relying on the free market.
I guess the million dollar question is; are the economic and social impacts of relying on the free market worth $34 billion?
Frankly, both options suck... Sorry.
anyone who thinks this buying equity is a "great" idea that solves anything should ask themselves who will pay for all the debts these companies have to pay? If it was that easy to pay 3b instead of 36b then don't you think someone would have thought of it already? The legacy debt and pension obligations will send these companies to the grave. Thank the Unions!
Cool. I'd like to hear a rebuttal though. But sounds amazing.
They should be asked 3 questions:
1. Why can't you make a good car?
2. Why can't you make a fuel-efficient hybrid?
3. Why can't you make a hydrogen bus fleet?
Answer: We don't care to.
longshortfund,
The idea that pensions and healthcare are "legacy costs" that should be dumped has always struck me as immoral. I cringe when I hear conservative politicians repeat this. The concept has been part of the scene since the 80s when corporate raiders started buying troubled companies, taking them through bankruptcy, stripping their assets and *PENSION FUNDS*. They ended up taking the money that had been promised to workers as pensions, money promised as part of their contract negotiations, normally in exchange for wage and other benefit concessions. This is no less reprehensible than reneging on any other contract, whether to suppliers or investors.
GM has actually done the right thing. They pumped about $100B over the last 15 years into funding their obligations to their former and current workers.
This has to be about the dumbest idea ever. The market should be the final arbiter of what people want and need. Not the government. So lets assume we have 3 bloated giants that can't turn a profit and are now on the government dole (see amtrak, USPS, et al) and can't trim down to make a profit for fear of upseting a union. And then we force them to make cars "for the 21st century", that no one wants. And so then the car buyers go to Toyota, Honda, you pick it to buy the cars they want. Surprise these companies are hugely profitable and build cars right here in the good old USA. So according to "Genius'" plan, we as taxpayers are left with a bloated soviet style industry producing something inneficiently no one wants, at what cost? Its always best to let the market decide. Michael Moore proves himself to be a colossal jewel of stupidity.
Ladies and Gentlemen!If you like riding AMTRAK, get ready to drive an AMCAR!
(Please don't complain about the qualilty or the price, it's only your tax dollars at work!)
Has Mike Dukakis left AMTRAK?I wonder if he's one of the geniuses Mr. Moore thinks can run GM.
I've got a better idea. Why doesn't Michael Moore buy the car companies instead? Then he can make cars for opinionated fat people that no one wants to buy. He'll lose all his money, and we won't have to listen to him blovate any more.
Here's a very simple formula to keep in mind when suggesting something to Congress or the President:
1. If your idea will benefit the Big Banks or bring about the further erosion of our Constitutional Rights, it might have a shot.
2. However, if your idea makes sense; if it's good for the American people at large, it won't see the light of day.
Hate to be so pessimistic, but until the current corrupt Congress is swept clean, and the People of America retake their rightful place as the BOSSES of our Country, that's the way it is.
Thank you.
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