The real roots of the auto crisis & who’s calling the shots.

(10 am. – promoted by ek hornbeck)

One:  The real roots of the auto crisis.

Listening to Fox News’ Greta Van Susteren talk about auto woes last week left David Cole grinding his teeth.  So, too, about a dozen other national reporters and anchors who have called the usually mild-mannered expert in recent weeks for his wisdom on the trials and tribulations of the Detroit Three and broader auto industry.

Cole, a scientist and engineer by training, is chairman of the Center for Automotive Research in Ann Arbor, MI.  He has been seen on nearly every national TV news program explaining the challenges and perils of the troubled automotive industry.  He says the local media is well-informed as are some at the national level who are assigned to cover autos.  “It’s when you get to the general national media that things fall apart.”

Cole said, “This entire conversation is about the industrial future of our country.  The  auto crisis is not a result of a management problem, but is attributable to the massive collapse of financial markets.

And not having a true national energy policy.

And that most automakers around the world have received aid from their governments.

America is the only one that has not supported its manufacturers — that is, until recently.  

Cole added that it isn’t only some journalists who don’t get it.  

“Too many people are listening to what these experts and pundits are saying, and it isn’t only hurting Detroit, but the nation,” he said.  –snip–

“Of all the industrialized countries in the world, we are the only country that does not understand the role manufacturing plays in our economy,” Cole said. “It is so important in our economy … and it is right on the edge of a cliff.”

He added: “If GM doesn’t make it through this bankruptcy in a surgical way, this will be a catastrophe for Detroit and the nation.”

So now that our government is supporting US autos, how’s that going?  

Two: Obama’s man called shots on bankruptcy  

Bankruptcy proceedings show he planned Chapter 11 for autos in advance

As details emerge in bankruptcy proceedings, it is clear Rattner has both the president’s absolute trust and a go-for-the-jugular instinct. He was not interested in a mundane, outpatient treatment for suffering Chrysler. The president wants major surgery on Detroit’s auto industry, and Rattner is running the operating room. Reluctantly, the leaders were recognizing the harsh decision Rattner made weeks earlier:  Chrysler was filing for Chapter 11, no matter what.  –snip–

More than 30 hours of testimony and dozens of e-mails in the court of U.S. Bankruptcy Judge Arthur Gonzalez lift the curtain on how forcefully President Barack Obama’s automotive task force pushed Chrysler LLC into bankruptcy and into the arms of Fiat SpA of Italy.   –snip–

Rattner, a reporter-turned-investment-banker who is described as relentlessly ambitious, has become — with Obama’s blessing — the chief architect of U.S. industrial policy.  Rattner was unfazed by his lack of experience in the auto industry and, after a short period of research, began quickly making decisions and demanding results. –snip–

Unlike Wagoner, who did not accept Rattner’s premise that GM must file for Chapter 11, Nardelli never defied the broader task force strategy, nor did he resist any conditions Rattner set on future government investment. –snip–

Despite the government’s commitment to Fiat, in the final days before the April bankruptcy filing, the Chrysler team resurrected the idea of a merger with GM that was initially proposed last fall.  Questioned by Glenn Kurtz, representing three Indiana pension funds, about why he suggested that Nardelli and LaSorda revisit the GM option, Manzo said: “I do believe the valuations of an alliance with GM were higher than those of a deal with Fiat.”  –snip–

But Rattner and the Treasury team had already made clear on March 30 that the task force would put taxpayer money only into a partnership with Fiat.  

There is a lot more testimony in the article that details how top down and micro managed this whole thing was.  There are even quotes from heated exchanges when the auto execs dared make a decision without consulting the Obama team.   So we have one more Obama contradiction to add to his pile of public statements.  Despite his denials, the testimony makes it very clear that Obama is running the car companies.

There were moments, however, when Rattner and Bloom were micro-managers. In late April, before the Chapter 11 filing, Nardelli asked LaSorda to negotiate with Daimler AG over its decision to surrender its 19.9% equity stake and a $500-million loan.

Bloom weighed in quickly: “I’m more than a little surprised that you would consider settling without approval,” Bloom e-mailed LaSorda.

Nardelli asked him how he and LaSorda should proceed.

“First, by discussing things before you settle,” Bloom said.

The e-mail chain ends with LaSorda thanking Nardelli for his support, and this final sentence: “I guess UST is running it,” referring to the U.S. Treasury.

Yes, the car companies made bad decisions, but they were already working with the state of Michigan and the UAW to address it in a way that would be a controlled burn for their retirees, employees, and the state’s economy.  They were all doing the best they could and making slow progress until the banks screwed over the economy.  

GM and Chrysler had already absorbed a ton of losses, and they didn’t have the cash to bank roll themselves through the meltdown and credit freeze created by the banks.   While Toyota and Honda are getting help from Japan to cope with the disaster the banks made of the US economy, the autos are being driven into bankruptcy.  This has resulted in Michigan residents and business getting red lined by the banks.  Imagine, they think we’re a bad credit risk.    

Obama did not need to come in and drive them and us over a cliff.  Instead of putting off universal healthcare, he could have passed single payer immediately and relieved these companies of their health care debt for current and retired personnel.     But instead of helping laid-off people with health care, unemployment,credit and foreclosures, they threw people under the bus in favor of the corporation each and every time:  cram down lost and the phony credit card bill with no caps passed.

I got a memo.  It said that between May and December of this year, 99,059 Michiganders will exhaust their unemployment.  If they can’t find a job, welfare is the only place left for them to go.  The Clinton welfare queen reform legislation, made even worse under Bush, is punitive.   It requires recipients, 9 mos. pregnant and even the disabled they refuse to put on SSI, to spend 20 – 30 hours each week in a job training office or lose their benefits.  So in addition to benefit cost, TANF forces the states to spend even more money to hire staff to run programs that infer it is the recipients fault they are unemployed.   In a good job market, this might make an iota of sense.  In today job market, it is just mean and wasteful.    

Meanwhile, the fed is feeding us job training money that has performance outcomes that require us to put 94% of the people we serve into jobs, and the state won’t ask for a waiver.   How nuts is that with MI at 12.6% unemployment rate?   Even if we loaded every unemployed person in this state on to a bus and shipped them off for work some where, there aren’t enough jobs in the whole country to absorb the job loss that is taking place.   7 million of those we condescend to count are unemployed; but we haven’t had one piece of legislation targeted to help any of the people who lost their jobs, homes, savings, or health care because of what the banks did.  Instead, they are pushing everyone into bankruptcy and destroying another huge chunk of the middle class.    Like the glaciers, we are slowly melting away.  

Your tax dollars at work!