Tuesday, March 31, 2009

Obama threatens US car industry with bankruptcy.

So, it turns out he's not a pushover after all, as Obama refuses a bailout to two of Detroit's teetering car makers, and demands that they restructure before he will give them any more cash.

Obama announced tax incentives for Americans to buy new cars, but delayed a decision on $21bn (£15bn) in extra bailout money from the public pocket, demanding far more radical reform proposals from the carmakers within weeks.

Flanked by his economic advisers in the foyer of the White House, the president delivered a cutting diagnosis of the motor industry's financial crisis, declaring that combined losses of $54bn last year were the result of "a failure of leadership from Washington to Detroit".

"We've seen problems papered over and tough choices kicked down the road, even as our foreign competitors outpaced us," said Obama in a televised address. "We, as a nation, cannot afford to shirk responsibility any longer."

A combination of fierce Asian competition, an evaporation of bank financing for car buyers and a collapse in consumer confidence has hammered Detroit's "big three" – GM, Ford and Chrysler. An estimated 400,000 jobs have been lost among motor manufacturers, dealers and suppliers over the last three years.

Obama said that motor manufacturing was "an emblem of America's spirit" and a "source of deep pride" on which the nation was built. He pledged: "We cannot, we must not and we will not let our auto industry simply vanish."

Urging the American public to rally round, he compared the havoc wreaked by the car industry's financial meltdown to a natural disaster in America's midwestern industrial heartland: "While the storm that has hit our auto towns is not a tornado or a hurricane, the damage is clear and we must likewise respond."

The harsh tone of the administration's message stunned both Wall Street and Detroit, sending the Dow Jones industrial average down by more than 250 points. It dismayed workers and politicians in Michigan who saw the looming prospect of even deeper job losses, factory closures and cuts to benefits.

I understand the logic behind his stance, in fact, it makes perfect sense to insist that the business' are viable before putting more money into them. However, I note that both General Motors and Chrysler are not dissimilar to the banks in that, if the US is to retain a car industry, then they are both too big to fail.

So why is Obama now threatening both these companies with bankruptcy? I suppose what's bothering me is that there is, as always, a harshness when dealing with working class jobs that is strangely missing when dealing with, say, bankers who have lost billions of dollars.

It's not that I think the auto industry should not make itself financially viable - as it obviously should - it's just that, at a time when bankers in bailed out company's are paying themselves bonuses with public funds, it slightly sticks in my craw that Obama is proving his toughness by being harder on Chrysler and GM than he is being on the banks.

One always hears arguments about why it's so dreadful and socialist to tax bankers for taking huge bonuses at a time when they are also taking bailouts, but there's never any similar arguments made for blue collar workers, who are always portrayed as greedy and unproductive, despite the fact that their wages represent a mere fraction of the amount being taken by the bankers.

My point, I suppose, is that Obama is right. But I am sick of listening to the right wing defence of bankers greed which is strangely missing when it comes to blue collar workers.

Simple question from Glenn Beck today to the crusading Connecticut Attorney General still on his anti-AIG witch hunt:

Under what law are you going after the AIG bonuses?

Blumenthal hemmed and hawed for a painful six minutes before coming up with this:

“Because they are undeserving of it.”

Remember those six chilling words:

“Because they are undeserving of it.

Michlle Malkin finds it "chilling" that some rich bankers, whose jobs are being protected by bailouts, might be undeserving of bonuses, but she'd be the first to tell us how unproductive and greedy the US auto industry is. Indeed, here is her reaction to Obama's threats to Chrysler and General Motors:

But the bottom line is, despite their threats to withhold the funds, the feds will eventually give them the billions of dollars in taxpayer money they need to prop up their failing businesses.

It's "chilling" to see bankers asked to have actually earned and deserve their bonuses, but it's wasteful to take action which ensures thousands of working class people might still have jobs. Even if one demands, as Obama is doing, that those same workers make lots of concessions before any help is given.

Help to the richest in society appears to be given with far less strings attached than help to blue collar workers ever is. Auto workers are expected to give up their pensions whilst it's considered an outrage for bankers to be asked to give up their blatantly unearned bonuses. The disparity in the way the right wing treats the two different groups is simply outrageous.


I am pleased to see that Keith shares my outrage at the double standard being employed here.

Click title for full article.


nunya said...

Yes, Olbermann and Maddow are the embodiment of hope that some of us have for the mainstream media. They are on cable, though, and many cannot afford cable.

Kel said...

I am always pleased that, whenever something bugs the Hell out of me, I almost always come across something on You Tube with either Maddow or Olbermann making the point much more succinctly than I did.

As you say, they really do give one hope, even if they are restricted to cable.