“I think it would be a terrible mistake to simply write a check to the auto industry without demanding major, major restructuring of its labor contracts. Without that the money will simply go down a rat hole and the automakers will just be back again in a year or two asking for more money. Obama has a strong hand to play here and I hope he uses his leverage. With bankruptcy as the only alternative to federal aid, he can drive a very hard bargain with the auto workers. If he caves and just writes a blank check, everyone will know he can be rolled and he will pay a heavy political price for it. If Obama shows toughness on this issue, I think it will pay enormous dividends for him down the road.” — Bruce Bartlett, quoted via Tyler Cowen
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Good luck. Is there any conceivable way Obama can demand that auto unions allow for market level pricing, like Detroit’s competition does? This is not going to happen. It’s a blank check all the way. Obama to stand up to the unions? Or the Detroit executives that demand big bonuses? These are the people that made him President. He’ll be stealing from taxpayers to pay off lobbyists and supporters, wasting billions and making everyone poorer except his friends. It’s the American way. Depressing.
Just heard Dennis Miller on the radio talking about Mark Steyn’s new name for the USA…Bailoutistan…I’m hoping for a restructuring approach, but planning on it being a blank check going down the drain. Plan for the worst, hope for the best!
I agree on renotiaiton of union contracts as part of bailout. Detroit also needs to accept stricter fuel efficiency standards competitive with overseas automakers. No bonuses to top execs like GS accepted. Cleaning house of management.
The union issue is but one problem of many that Detroit has. The unions are not the ones who continued to design bigger and bigger and less fuel efficient cars in the face of reduced supply and increased demand for oil.
Its funny that any investor would “renegotiate” with the Unions. They either take the deal or they don’t. What leg do they have to stand on? That the unions are given a seat at the table is in of itself a travesty and a pretty good indicator that no lessons have been learned.