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Wednesday, November 19, 2008

Romney: Let Detroit Go Bankrupt!

I was finding plenty of conservatives to agree with before the election; after the election, they just keep coming! Now I find even Mitt Romney, one of the purveyors of sheer baloney from the RNC stage in St. Paul, talking sense. He writes the New York Times that the federal government should not offer the big U.S. automakers a bailout. "Let Detroit Go Bankrupt," says the headline, not to kill Detroit, but to save it and the American economy. Call it tough love:

Without that bailout, Detroit will need to drastically restructure itself. With it, the automakers will stay the course — the suicidal course of declining market shares, insurmountable labor and retiree burdens, technology atrophy, product inferiority and never-ending job losses. Detroit needs a turnaround, not a check [Mitt Romney, "Let Detroit Go Bankrupt," New York Times, 2008.11.18].

Romney speaks from close family experience. Remember, he grew up in Michigan. His dad George ran American Motors and saved the compnay from its own collapse, apparently with no government intervention.

Romney's recipe has some ugly, like cutting retirement benefits. But it also talks sense: boot the management that helped make the mess, axe executive salaries and perks, and switch from trying to make a quick buck for shareholders to investing in "truly competitive products and innovative technologies — especially fuel-saving designs — that may not arrive for years."

Sometimes if your friend is drinking too much, you have to intervene. But Romney is saying you don't intervene with a check to buy more hooch. Romney says smack 'em until they're sober—or, more accurately, force the automakers through a managed bankruptcy. It'll hurt... but we'll all be stronger for it when it's done.


  1. But the flip side of tough love is this. Hundreds of auto dealers going belly up. Madison has enough problems with Gehl, now what if Prostrollo's started letting workers go.

    We all know the problem, the big three have been three of the worst run companies in America. Making bad cars the suck up gas, even when EVERYBODY ELSE know that fuel economy was the way of the future.

    So lets do this, don't bail them out...BUY them. Like we did with Freddie and Fannie, we (the Federal Government) can buy up majority shares, purge the executives, and put the automakers on the right track.

    In five or ten years, when the stocks are back up, we sell for a profit.

    Let's keep America working while we fix the problem.

  2. Sure let em go under let an estimated 2.5 million people lose there jobs and watch companies like Toyota and Honda come to a standstill due to lack of parts. Watch thousands of people that were retired in the age frame of 55-64 lose all insurance coverage. Sounds great. Now we can become just a nation of consumers not builders but consumers. How about we give Michigan to Canada and let them find jobs for the minions of jobless.

    I am not advocating a blank check but the workers will be the ones screwed the executives they have already made their money. Aid should be given but some very strong strings attached.

    I don't have the answers but wow letting them all go under would be catastrophic to say the least. How can we give AIG 125 Billion to help one company but nothing to an industry that affects at least 2.5 million people.

  3. Ah, we made a mistake w/AIG, et al. We must not continue making the same mistake in the interest of "fairness." Please, this is like saying "Son, your brother broke his arm falling out of that tree, now's your chance to do the same."
    Regarding the automakers, it is a lot of pain now or enough pain to shut the system completely down later. I want to deal with it now--my children will have enough in their own future without adding this to the mix.

  4. Nobody should have been bailed out. Sink or swim. Part of the big 3's problem is the union and the exorbitant wages, benefits, etc that they mandate. Other car companies in different parts of the country are doing fine. Why not these? Answer partly, unions. Not to say bad management, high CEO wages etc, refusing to produce cars that people want, gov't mandates re fuel and environmental concerns, etc also.

    I am so sick of hearing the threat that you can't let them fail, think of the jobs lost. Well, companies were bailed out and people are still losing jobs, the bailout money is going elsewhere than intended, and the whole thing is a mess, made worse by threats that if you don't do something immediately the world will end, or some such thing.

  5. According to news reports, the average American union auto manufacturer worker is paid $75 an hour where Toyota and Honda workers are paid $45 per hour with benefits. Even if all three of the Big Three filed bankruptcy, layoffs would not exceed 300,000 workers, production of autos would not stop, union contracts would be renegotiated to a more competitive wage and benefits package that would poise the Big Three to emerge stronger. Short term pain for long term gain? Who knows.

  6. it is a mess either way. damned if we do damned if we don't.

  7. Do we live in the real world in SD?

    If we make $30K a year in SD, we are doing really well.

    What would happen if we dropped the pay to $15/hour at the auto plants?

  8. If one of these CEOs were to renounce the exorbitant perks, take the pay of a middle-management person, move into a modest house, and give up the corporate jet and expensive personal vehicles -- in short, live like Craig the Carpenter -- he or she would instantly become a national hero.

    The fact that none of these people seem to realize that they are so close to salvation is both amazing and frightening. They are all like the rich man (described in the Bible) who became depressed because he knew the power of the master that had enslaved him, and realized that he could not free himself from its grip.

    A lesson for every one of us ...

  9. Nobody is saying drop the pay to $15 an hour. But $78??? That's over $162,000 per year!!!!

  10. I believe their labor burden works out to 78.00/hr & $45.00/hr respectively - that is not what they actually take home. that includes all cost for that employee.

    I am not trying to speak for all industry in SD, but a 45.00/hr labor burden around here would not be that far out of line.


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