Doing nothing means Chapter 7. GM and Chrysler shut down and liquidate. Ditto their dealers and suppliers. 3 million jobs lost, billions and billions of investor money gone.

This guy Reich was a government official?

How can we keep an auto industry from contracting when people are buying fewer cars? As I see it there was as much of a car bubble as a housing bubble. My wife and I are making do with one car instead of two, and I suspect a lot of families are doing the same.

That said, I wouldn't be surprised if a lot of the bailout money went towards upper management buyouts and parachutes.

This is what is commonly called being between a rock and a hard spot. Sure we need to figure out how to preserve jobs. But right now with things as they are companies aren't able to get by with people on the payroll with no work. Personally, I think the assholes on Wall Street who still want to pay bonuses to the tune of millions or maybe even billions should be required to give that money to all the Americans who are out of work because of Wall Street greed. You could argue how are auto workers entitled to that money but I think the dumbasses on wall Street are less so.

I have tremendous respect for Professor Reich, but is a bailout helping American auto workers keep their jobs if it merely gives an IV drip to a corporation with a business model that does not allow it to function self-sufficiently?

It seems to me that the goal is to reorganize (and in so doing, temporarily offer financial support to) these companies so that they 1) continue to exist and employ Americans, and 2) no longer require government help.

If we only focus on goal #1 and ignore goal #2, we could end up with companies dependent on perpetual subsidies of taxpayer dollars. There's no way that will be acceptable to the American public.

To give GM and Chrysler a reasonable shot at succeeding in the future means we can't save every single job. It is simply a fact that these companies are staffed in a way that made sense decades ago, but does not correspond to the realities of their current production systems or market share.

I'm all in favor of a social safety net -- job training, universal health care that's not employer-dependent, etc. But the auto restructuring can't have saving every job as its only goal.

It seems like Reich is saying that if GM and Chrysler get any gov't. assistance, they shouldn't fire anyone. If that's really what he thinks, then he must be willing to accept an outcome where neither company gets assistance, both fail completely, and everyone gets laid off. Is that pro-worker?

If the automobile market is skrinking -- then why not start making school busses, ambulances, subway cars, train compartments, etc? And if management won't move on it -- then labor must.

Right back to the Work of Nations. Was it nearly 20 years ago that you warned us that there are no "American" businesses any more?

How about using this crisis/opportunity to revolutionize our automobile transportation system? Shai Agassi's plan sure is intriguing:

http://www.ted.com/index.php/talks/shai_agassi_on_electric_cars.html

The Obama administration has bought into the Shelby - Corker auto bankruptcy plan. What Treasury is doing and demanding of these companies is a disgrace. In the case of GM, much of the $24 billion in debt is held by the public and much of that held by large institutions and hedge funds is "insured" with credit default swaps, most likely a bunch with AIG. When the auto task force pushes GM into bankruptcy and then AIG begins paying out in full on the bonds, the public will rise up. A GM bankruptcy will be Obama's Bay of Pigs.

One solution to start with is to put AIG into bankruptcy and repudiate all credit default swaps. Then, creditors will have a much more realistic assessment of their recovery potential in court, and be willing to take realistic haircuts on the corporate debt they hold.

The government should just lend GM money at a low interest rate instead of taking a huge equity ownership position.

I agree with Dr. Reich, though I'm not surprised.

That's what happens when you put a financial weasel (Rattner the briber) in charge of saving an industry.

Screw the industry, save the shareholders.

To quote Gordon Gecko, 'I don't create anything, I own!'

"we're just transferring money from taxpayers to GM and Chrysler bondholders and shareholders."

Fuckin A! Truer words were never written!

When it comes to economics, the Obama administration clearly doesn't understand that the government under democrats is supposed to be about protecting the interests of the people, not just the rich people---that's what makes Democrats different from Republicans.

Let's assume ad arguendo that Detroit's management has not been incompent for decades.Actually , it's somewhat counter intuitive that in all three of those companies somehow incompetent people have risen through many levels of the hierarchy beating out competitors for each promotion. So much so that my guess is they're are pretty much like the people in similar positions in Toyota , Honda ,BMW etc.

If so, the popular "brain dead management" allegation is a cop out and Detroit will be back in the same situation X years from now. After having blown a fortune in tax payer's money which could have been spent on other things we know we need: education, infrastructure , a rational system of health care records.

Unless the Bail Out fixes the real underlying problems that create the flaw in the Detroit business model.

Joke:

Guy is on his hands and knees searching under a street lamp. Passerby:What did you lose? Guy: my glasses.

Passerby gets down on his hands and knees and joins the search.

After 15 minutes.

Passerby "Do you remember where you were when you lost them?" Guy:"Sure. Over there in the woods"

Passerby:"Well why are you searching here?"Guy: "The light's better."

If we go back into the woods and start searching for Detroit's real problem , just maybe we'll find what we should really be doing.

Health care costs? Obama has a plan. But if that is the problem and we don't pass his plan, then we're wasting this Bail Out money.

Foreign wage rates? We could impose tariffs. But if that is the problem and we don't impose them ,we're wasting money.

Financing? Is Detroit more dependent than its competitors on a US equity market which insists on an uninerrupted increase in quarterly EPS and which isn't going to change? If that's the problem then probably we can't fix it and we're wasting the Bail Out money.

Whatever. As long as we dodge searching for the real problem by happily insulting Detroit's management we aren't going to fix it
so we might as well put our money to better use.

As I see it, it would have been disastrous for the American auto industry to fail a few months ago, but things aren't quite so dire now (yes, unemployment is still rising, but unemployment is a lagging indicator, and we are seeing some light at the end of the tunnel). The initial bailout was a good thing, if only because it bought some time. Bankruptcy still isn't a good thing, but it makes no sense to prop up a dying dinosaur, either.

Yes, a lot of people are going to lose their jobs, and that's a shame. It will cause a lot of hardship. But that's inevitable. And one of the strengths of America is our flexible, dynamic economy. We must continue to embrace change, understanding that the loss of jobs in one unproductive area can be countered by a gain in a new, more productive industry. It's not easy, but it's how we can best recover from this economic meltdown.