Really think that the problems the American automotive industry is having come from bad management and excessive labor wage rates? You're wrong.
Yeah, the automotive industry has made a number of bad decisions. One good one, though, was to work with the unions and to off-load the cost of health care for retirees onto the unions. That has already been put into place.
The problem now is that the automobile makers can't get credit to sell their goods. Emptywheel points out that according to GM's restructuring plan presented to Congress, where GMAC could finance 50% of the cars it sold last year, this year they can finance only 6% of the cars.
That's a financial problem caused by the credit crisis, not bad decisions by the automotive management.
Go read Emptywheel for the details. If the government can bail out banks, they can bail out GMC, which is a lot more important than any Wall Street firm, when the bank-created credit crisis threatens the automotive companies. Besides, the loan the automotive companies is asking the government for is a bridge loan to temporarily replace the lending the banks were doing before they created the credit crisis.
GM, Ford and Chrysler have always borrowed the money to lend to customers. It's just that the banks have stopped lending it. They'll start lending again sometime in the future, but it won't help the American automotive industry if in the meantime they are forced into bankruptcy, the pensions they are paying are handed to the taxpayers to pay, and the assets of the American automotive companies are sold to the Chinese at fire sale prices. After that, when the banks decide to go back into the banking business, there will be no American automotive industry left to save, and three million or more American workers will be out of work and out of jobs.
It really is a "bridge" loan. But it's a bridge over a really nasty chasm that the automotive companies cannot traverse without the government's (temporary) help.
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