We Need Answers

Bailing out the big three auto makers would be a classic case of throwing good money after bad. If we want to bolster the auto industry in the USA why not give the $25 billion to the winners rather than the losers? An investment in Honda, Toyota, and Nissan, with the stipulation that they invest in USA production, would be a much more effective use of our money. Has anyone in Washington even thought of that?

More left wing drivel from this journalist(?). Why is she still working for a supposedly reputable organization? It doesn't matter what administration is handing out the cash in these already failed bailout schemes. Does she really think that SUV's ever really defined success in this country for the majority of Americans? How shallow can a person be?

No, you are not crazy. There is only one solution. As Andrew stated, any more money from here goes in AFTER restructuring; or AFTER banks have written down mortgages and the homeowner's payments to 38% of income (hopefully they have some income; if not forclose). Any negative amortization gets paid back to the bank before homeowner has a gain in the future. Take the hits now all at once, don't dribble write offs over time. We need to find the bottom, so we can rise again with responsible management that takes only prudent risks with other people' money. By the way, why is the CRA Act of 1977 still on the books? That Act and lack of discipline to regulate the massive growth of FNMA and FHLMC are the cause of this bubble, SO REPEAL THAT ACT.

Your right about Sheila Bair. She's the only one that has presented and tested a plan to actually reduce foreclosures. I am not a big fan of her,though, because of her hard-handed approach with WAMU. Her plan will only help the overall problem; but, it won't fix it. At least one US auto company needs to survive. Where are we going to make our tanks and military vehicles if we need to ramp-up production? It's a real national security issue. I agree with Pickens that we should force them to manufacture cars that reduces oil consumption. There should be big financial incentives for the consumer to make this an economic reality. Unfortunately, the US auto makers are slow to change and some won't have such a car available until 2010. Ultimately, some money will be needed for them to survive today; and for those that are ready, credits for oil consumption reduction vehicles will be necessary next year so that they can sell their products. Maybe they can even gain market share if they execute well. The CEO's just asking for $25B to continue their plan without talking of future support is crazy. They are all overpaid even with a %50 reduction. They want the same blanket check the financial institutions got because they recognize that fear is a great motivator. The real economic problems seem to be the pensions and medical benefits of past union workers. This old model needs to be eliminated like was already done in most of the US. The expense will ultimately be passed into the US system. But, it just makes the retirement line a little longer. Mandating by agreement would be a little easier on the economy than filing for bankruptcy. Where is our leader here? I have heard of nothing from the President other than it is up to Congress. For someone so concerned with national security, it greatly disturbs me that he doesn't take action. A leader makes things happen.

Alexis, This is getting so sad...our Politicians and just about everyone else are pointing fingers, running, hiding and asking for More More More!!!! There is ONE and ONLY ONE simple solution to getting the Economy BACK. A Trillion and One Half Dollars MUST be injected into the economy and they MUST "LOAN" these Car Companies and the other Nuts the Money with VERY STRICT GUIDELINES!!!!!!!!! The Unions need to start waking up.....A guy putting a wheel on a Car will simply not be able to make $70/Hour in USA anymore. While they pick their noses on Capital Hill, us small Business owners are failing! Banks must either Loan or give the Money BACK NOW! Or the Government MUST appoint Lending Groups to Lend the Government Money DIRECT. PAYROLLS MUST BE MADE! These people are NUTS and like to talk all day about what to do. They should be kicked out of Office. ALL of them. Thank You!

Not crazy but you forget we are dealing with Washington. For almost forty years now we have been given the slogan oil independence and we have gone from 20-30% imported to 70% imported; only in Washington is that a start at reduction. Just like the budget which is said to be cut when in reallity it increases each year but they claim it didn't go up as much as the agencies wanted, so therefor its a cut. So why expect them to actually do anything they say. Except for when it comes to raising taxes which somehow they manage to do. As for deflation, when you take out the decrease in the cost of fuel it is only one tenth of one percent which is hardly a major move.

no bailout for anyone, and definitely no stimulus package. Quit spending my money(taxpayer). I was not for the $700billion, but now that it is there and law, help the homeowners and not the fat cats. Any fat cat that gets a bonus should have the funds withdrawn by the government. I fear that come January the big give aways will begin. All those who voted for the fat cat union loving demos will get what they want, which will be doom for the free market.

A couple things: The unions just make the cars that management/marketing think will sell. From the above, the big 3 are already making LNG/NG vehicles. Why aren't they marketing them in the USA? The assembly lines are already there and so is the demand. Congressional help to develop the infrastructure for LNG/NG would be infinitely better than giving $25 B to the automakers. It would help with long term marketing strategy. Giving the automakers $25 B will do nothing to change the current management thinking. Sen. Shelby is correct in that they (the investors) need to fire the CEOs for running the businesses into the ground. [That is not the union's fault.] The new bankruptcy laws will prevent the CEO from pocketing taxpayer bailout money in the form of bonuses (remember financial group that blew $400K at a spa after the bailout???!!!). The CEOs are motivated (read bonuses) by short term (Q to Q) results and not long term as well as the institutional investors who just want a return on their money. The workers are there for the long term hence the retirement and healthcare in their contracts. Those goals work in opposite directions. Until the management starts looking long term there will continue to be failure in the auto industry.

You're not crazy. Americans can recreate its auto industry for the good. The big 3 wont do it until its forced to. Throwing good money toward an oversized disfunctional auto industry is bad. Seems America may be getting a new ballclub, via the big 3 its new name? the Detroit Pirates.

No, Alexis, you are not crazy. This whole episode is causing thinking people to approach issues, questions and therefore, solutions in a new way, it just feels crazy. It is sad when companies will adjust their charter to line up for gov't/our funds in this "bail out". I hope some good learning and some good ol' fashion shame and some solid indictments comes out of this. Our country will survive but in what state? I wish our country felt some strength and operated from a position of it and not out of fear or crisis mindset. Decisions made in haste rarely workout with the original intent. What's pleasing to the eye In the delusion of my sight Is not what I find when I reach into the light I have lost my mind I'm walking through time Deluded as the next guy Pretending and hoping to find That distant peace of mind - Beastie Boys

I watched most of the hearings that were on tv. What I see is collusion fron the auto industry to inject fear. Basically what they are doing is extortion. They refuse to even think about a chapter 11 and threaten a chapter 7. If we need an auto maker in the US and they refuse to file chapter 11 then let them merge into one company and go it on their own. What they really want is for us to foot the high bills of their failures.

Alexis, I could not agree with you more. I think filing Chapter 11 and restructuring, with government backing on warranties, would be the best solution. Detroit has completely misread the U.S. auto marketplace and we all know they have mismanaged their businesess for years. I certainly didn't like what I heard from the CEO's at the House hearings yesterday. Didn't it seem like they were just flat out lying when asked how they planned to pay the money back? One of them said they would be able to do so because they would increase the qulaity of the cars and thus become more profitable. Hello! Why didn't you make better cars all along?...you wouldn't be in this position if you had. Why would anyone want to give them any money when they've proven that they can't manage their businesess properly? If the government gives them a "bridge loan" it will just buy them a few months of operating capital. Eventually, they'll come right back looking for more. What Detroit has to do is basically start over. If they file Chapter 11, they can get creditors off of their backs, break out of the ridiculously expensive labor agreements they have, and bring in some new management who can position the companies well for the future. We can't let them fail outright, because the impact on unemployment and the chain of suppliers down the "production line" would be too immediate and too overwhelming. But handing them free money just doesn't make any sense to me when Chapter 11 is available. Joe

Alexis, Great blog. I have had the opportunity for the last several weeks to watch our congress in action and quite frankly, it scares me. I listen to Paulson stammer each time he is asked a question like a school kid making up the answers on the spot. I was impressed with Sheila Bair and the answers she put forth. The difference between these two and their ability to answer was astounding. Something that concerns me though was the gentleman from Ohio asking Paulson about the bank from Ohio that basically was in good financial shape and yet was never offered the opportunity to participate in the TARP plan. It looks like the same thing that happened to Washington Mutual. I am astounded that Fox has not reported anything on these items and focuses so much on Yahoo. Yahoo made their bed and are now having to lay in it. These banks (and now I wonder how many more) were not allowed to participate under the same rules that the big boys were. Who is making this decision on who participates? By limiting the participation are they allowing some banks (who were doing well) to be consumed by the big boys for pennies on the dollar? I just don't understand as I'm sure many Americans don't even know this is happening. Very news worthy I would think. I watched the big 3 automakers plead their case. From my point of view, Ford is already making changes for success, GM is in a horrible bind and Chrysler will do anything congress demands just to get some money. I am not sure America even knows what cafe standards are for the most part. I find it ironic that the general consensus for the auto makers is that the unions have tied their hands and are preventing a competitive opportunity against the foreign companies who are paying less in wages. At the same time our new President, Congress and Senate are going to push more unions at us. Doesn't sound right to me but what do I know. I am just an American, proud of my country, and watching with much dismay as our leaders erode what our forefathers created. Good job on this article Alexis. Keep shining the light on truth.

One out of every three barrels of imported oil goes into the manufacture of diesel fuel for tractor-trailers to move goods around the country. If, as he says, over the next decade, trucking company’s diesel vehicles switch to Compressed or Liquified Natural Gas, we would meet our goal of cutting oil imports by 30%. We could kill two birds with one stone. Why not?" Because everyone keeps investing in oil companies, guys like Eric Bolling feed this dependency. You know TARP is about taking care of your buddies. I don't know if it will create a "catastrophic collapse," but there will be massive tax revenue loses. Let's play you make the call: (Assume you are powerless to stop TARP, I believe it's a realistic assumption) One choice 1. Give money to Paulson's cronies in a back room with no stipulations or guidance for any performance measure. Tax benefits realized probably approach zero because of tax evasion tactics. 2. Loan money to a poorly managed American auto industry that injects billions of dollars of tax revenue into the local, state and federal governments and economy. Yes, poor performance, but as a tax investor through TARP, I believe if these companies trim down and get lean we could actually make money on this deal. You know maybe the problem has always been an over taxed society across the board. All the money these companies have generated for the US government in tax revenue and they have to beg for help. The US government pulls this on an individual level as well. You know maybe GM, FORD, Chrysler, wouldn't be as burdened by employees of the past if they weren't taxed ridiculously. Industry is not the villain it's the government's aggressive tax structure. I haven't taken my eye off that principle, even though Dodd and others create this circus of deception. Hilarious to hear guys like Dodd criticize the labor benefits of autoworkers. What about your lobby money and inflated retirement package that we paid for. I'll at least feel somewhat relieved giving money to a line worker who puts in a full year of work. Hey take another vacation on us Mr. Dodd. Yea those dirty autoworkers. It’s funny to watch these politicians discuss business with the big 3. They’re making the decision for us on TARP expenditures and they can’t differentiate between simple economic terms like, net income vs. cost of capital, operation margin, working capital, etc.

Your so fast to approve giving our money to others. How about supporting those of us that made good decisions and pay our bills. There is no doubt, that will help us and the economy. It would be something that we (us responsible people) can actually see! And keep the government out of our pockets going forward!