• Jul 16th 2008 at 8:02AM
  • 62
In the wake of GM's restructuring announcement, some observers are beginning to talk about government assistance to get automakers through tough times. President Bush has quickly shot down the idea of assitance for US automakers, saying that the government shouldn't be "bailing out companies." GM spokesman Greg Martin said the General isn't looking for a free pass from Uncle Sam, instead insisting the company is going to take care of itself.

While it's nice to see GM taking care of its own problems, there really isn't much else the Detroit automaker can say. Admitting that it needs help would be an admission of doom, which would further deplete its stock while signaling to customers that bankruptcy is near. A company in bankruptcy protection can go under, and companies that expire don't (theoretically) honor warranties or have parts available for repair.

As for President Bush's comments, it deserves noting that few industries are subject to more government oversight than the automotive sector, and no industry is more vital to reducing America's reliance on foreign oil.

[Source: Detroit News Photo: Getty/Luke Frazza]


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  • 62 Comments
      • 7 Years Ago
      I know there are larger economic implications without assistance of some sort, but why should the gov't continue to assist (bail out) the U.S. automakers? If they can't compete in a competitive market, then maybe something neeeds to be changed internally in their companies, or they should not be in business. Same with the whole housing and foreclosure market. Why should the gov't assist and help homeowners from the whole "loan scam" ??? Stupid people buying what they could not afford, but then they should be bailed out. If the deal is too good to be true... then it's too good to be true.
      • 7 Years Ago
      Bigger picture here than bailout or current economy.

      Cash flow through the system, additional jobs for sub suppliers,dealers and it's employees, associated nearby businesses, including resturants, bars, the usual suspects. Drag on the economy with unemployment and taxpayers. Cost of retraining and possibility of lower wages for those displaced, lowering economy rebound and consumer spending.

      Market forces alone many times do not act quickly enough to absorb the changes, in a down economy it's worse.

      Did the US automakers plan poorly? Maybe, maybe not. Look what was selling until the fuel price shock, and might I just add that was a surprise to everyone. If it's just Detroit, then explain why makers sales are down that are non Detroit.

      Saying NO! is always the easy answer, say YES! is another easy answer. Real solutions lie in the middle.

      Back in the late 50's and early 60's Catepiller ran this ad. "There are no simple solutions, only intellegent decisions"

      Saying no bailout is a simple solution if you're not in the business or associated local economy. Saying a simple yes, does not give you the answer either. Intelligent discussions and perhaps added to the countries direction of thinking of energy demans and usage (if we had a policy) along with somemanagent required changes as well as union changes might bring the best answer in to focus and create a better way out than wholesaling American jobs and companies at an ever increasing rate.

      The simple short term answer is always the knee jerk reaction, and Bush is the king of that.
      • 7 Years Ago
      Once again an answer to a question without looking at all the facts. Remember corn prices and food shortages, all caused by Bush's first "jump to a conclusion", "gut feeling" statements.........what's next?
        • 7 Years Ago
        Those so-called "jump to a conclusion", "gut feeling" policies were exactly what the environmentalists wanted. Big oil bad! Bio-fuel good! Hey, just listed to the environmentalists and Al Gore and all will be well. Don't blame Bush for a left wing policy, helped along by corn-state politicians from both parties.
        • 7 Years Ago
        Frank... it was pushed by BOTH parties. The Dems grabbed control of congress in November 2006. E85 was being pushed by GM & others before that time.

        Bush had Republican control during that time... Perhaps conservatives had their issues with it, but they got over it & cast a "yes" vote along with the greenies (as you tag them)

        I've heard just as many liberals say E85 was flawed as well. I've also heard plenty of crits against CORN ethanol Brazil's ethanol comes from sugar cane & achieves better mileage & is more eco friendly during manufacturing.

        Its not always a red & blue thing... its a $$$ thing. This continued division & unregulated lobby money in U.S. politics has not helped this country IMO.
        • 7 Years Ago
        Frank, You were right if Big Al says jump everyone says "how high". The nation is becoming a bunch of "jump on the bandwagonites", don't take the time to thionk..... just do.
        • 7 Years Ago
        Hey Frank... HTF is it "Left Wing Policy" if it was pushed/ passed by BOTH parties??? I have never seen Left & Republican anything.

        Thanks to the Dems that wuss out & drift towards the center... GWB keeps getting what he wants... He's never listened to anybody he doesn't want to... especially anybody or any policy that slants "left".
      • 7 Years Ago
      "no industry is more vital to reducing America's reliance on foreign oil."

      And no industry has worked harder to maintain America's reliance on foreign oil.

      If the Gov't does bail them out, ok, but just make sure to replace all of the management, from the board of directors, the CEO, the CFO, the entire executive staff. They don't deserve to be rewarded for doing such a crappy job running these companies.
        • 7 Years Ago
        Hydrogen may the most abundant, but it is hardly ever available in elemental form. Hydrogen itself is NOT a source of energy, it is only acts as a battery, a battery that can be "charged" at a fuel station in a matter of minutes. The energy would still come from power plants.

        If batteries or ultra capacitors ever got to that level of convenience ( recharging in a few minutes), then Hydrogen would be completely obsolete.
        • 7 Years Ago
        baffledu2 I agree with the hydrogen thing. I have been saying this to my friends all along. But our government is too lobbied to the big oil companies. Come on, who can't see it, and if you can't you all need to take off the rose colored glasses. Our country needs to look more into this. HYDROGEN IS THE MOST ABUNDANT ELEMENT ON EARTH! And when it is used as fuel the only exhaust you would get is..... WATER! No worries leaving that car on in the garage with the door shut anymore.... may be a bit humid, but that's it. Our government panders to oil companies. Hell why are we even in Iraq? Was it because of attrocities carried out on its people by their leader? Was it because of Weapons of Mass Destrcution.... hell no. It was because of oil and we needed a friend over there close to Iran where we can keep tabs on MidEast Countries. Look at Darfur, genocide on a rampage, but do we go in and help, hell no, why should we? There is no oil there..... Makes me so embarrassed. But sorry you all to get on my soapbox, just makes me mad and makes me wish the people of America would stand up and say things, writing to congressmen does not help, their wallets are lined with lobby fat. WE NEED HYDROGEN or some other fuel.... I don't think ethanol is the way either. So much corn use would drive all the food prices up (just look at how much food uses Corn Syrup) and with minimum wage here at a joke level, it is not feasible for our country men. Hydrogen folks....earth's most ABUNDANT element.... and it will even recycle itself in the form of clouds, to rain, to ground, and the evaporate to do it all over again!!

        Ok stepping off my sopebox now : )
        • 7 Years Ago
        The airline, shipping, energy, technology, and entertainment industries would like to have a word with you.
      • 7 Years Ago
      Good point Brian and let's not forget Nissan with the Titan, Armada, Infiniti QX56, Pathfinder.

      We'll be interesting to see the upcoming Honda Pilot and the upcoming Acura V10 model, I wonder if a smart guy will tease by saying "Honda's new gas-guzzler". Sure I know then Honda wasn't caught as the others (do they sleep in bed with oil companies? LOL), however most of the sales are from mainly on Japan and the North American market for the car line-up while worlwide, Hyundai is now ahead of Honda in terms of car production.
      • 7 Years Ago
      Wow, even bush knows we have no money left from Iraq, bailing out bear stearns, and possibly now the banks that are on the brink of bankruptcy. Yay America.

      These companies don't deserve to be bailed out. Aside from unions/pension/healthcare issues, it's their own fault for having zero foresight by trying to develop more fuel efficient cars. GM is on the right track with the Volt, but other than that companies should have seen this coming long ago.

      Ford is extra stupid for not dumping money into bringing some of their euro counterparts over here YEARS ago. My roomate works for a large auto mall and they're only selling about 2 new Fords a month, and they're both Foci. They can't give the SUVs or trucks away even with $500 gas cards and big incentives.

      And Chrysler just sucks all together and they don't really have any appealing vehicles, aside from the Viper. Their trucks might be alright, but their cars and sedans are marginable at best (perhaps the 300c excluded). Doesn't cut it this day and age.
      • 7 Years Ago
      I wouldn't be ready to buy low on GM stock yet. I'm not sure we've seen the bottom quite yet.
        • 7 Years Ago
        If you believe that, why aren't you shorting it?

        Put your money where your mouth is.
        • 7 Years Ago
        you mean bankruptcy. yep havnt seen that bottom yet.
        • 7 Years Ago
        Man, that's the last time I take stock advice from some anonymous poster in an Internet forum. GM is up almost 15% today.
      • 7 Years Ago
      I'm 100% okay with no automaker bailouts, but why so many financial bailouts? Yeah a collapse of a major bank is bad for the economy, but then again, wouldn't GM going belly up do the same?
        • 7 Years Ago
        The US did it before. Remember Iacoca and Crysler?
        They paid the loan back ahead of time and remained profitable until Benz raped them!
      • 7 Years Ago
      "Don't blame Bush for a left wing policy, helped along by corn-state politicians from both parties."

      Who signed the bills? That would be Georgie Boy. It's called a veto.
      • 7 Years Ago
      In my opinion the airlines shouldn't have been "bailed out" either. I thought the point of capitalism was free market Darwinism.

      The only way I would approve of a "bail out" is if it included new managers for GM, Ford & Chrysis and no golden parachutes for the managers sent out the door. Reason being that even if the Detroit automakers implode I doubt Wagner and Co. will be in the bread lines in the "mourning" after.
      • 7 Years Ago
      NO BAILOUTS! As much as I disagree with GWB, I have to agree with him here. GM, Ford and Chrysler (Daimler's is at fault just as much since they were at the helm all these years before) have shot themselves in the foot. For years I have written to these three companies asking for explanations as to why the rest of the world got great products and we did not. I mentioned recently about the Ford Mondeo to Ford and they responded they build to suit the markets they are in.Well they must think pretty lowly of us here in the States. For years the Japanese, hell even the Koreans, soldiered on offering small cars, midsize cars, and a few large cars along with a truck, SUV or two. Now yeah Toyota has gotten carried away, but had the foresight to make sure their production facilities could quickly switch to building whatever vehicle the market demanded. Now news GM will not bring over the Beat (which I think would be a cool little car in the Chevy lineup) and no new Cobalt FTW???? That car reaked since day one. It feels like the plastics in it are worse than the Rubbermaid bowls I use at home to store food in. But no new version like the Europeans and the rest of the world will get. Hell they even teases us with the "Vote for Your Favorite SMall Car" crap back when the beat and siblings were at the auto shows.

      Ford may be getting their stuff together... with the Fiesta, new Focus supposedly coming here and all and a switch to smaller, Euro based cars.

      Chrysler, R.I.P. is all I can say.... nothing exciting in the pipeline from what I can tell.... another company ready to bite the dust... guess it has always been in the cards for this company. It has never seemed to pull it self out of its own ashes.

      So I do not feel sorry for these companies. I feeel sorry for the workers. They have had no fault in what their management has done and how their management thought they could always just build fossil fuel burning behemoths that would always rake in the profits.... look to the 70's, didn't learn their lessons then, and now may not again, but this time at the expense of the futures of their companies.
      • 7 Years Ago
      Brilliant picture!
      Bill Ford looks as if G.W. Bush has promsid him a free ice cream...
      :-)
        • 7 Years Ago
        Actually, it looks more like the 1st guy on the left is thinking, "Hmm... not sure I should actually shake that hand; -he may have just jerked off Dick Cheney; -and he's worked with that weird splosher Rove, too."
        • 7 Years Ago
        LOL +1
        • 7 Years Ago
        LOL. "Yay!"
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