Quick Big 3 Bailout Update

From Hot Air:

Despite a couple of reported agreements on bailout packages for Detroit's three automakers, Congress has sent their CEOs with homework assignments instead.  Once Harry Reid realized the level of hostility towards expanding the bailout to Detroit among the general public, he called a halt to the effort for now.  Nancy Pelosi blamed the executives for not doing their homework first:

The Big Three are on their own for now.

Congressional efforts to rescue Detroit's auto makers collapsed Thursday, with lawmakers saying the industry lacked credible plans to return to profitability. …

Democrats in Congress offered only a glimmer of hope, saying they would reconsider a rescue if General Motors Corp., Ford Motor Co. and Chrysler LLC submit convincing turnaround plans by Dec. 2.

"Until they show us the plan, we cannot show them the money," said Speaker Nancy Pelosi, the California Democrat.

In other words, don't ask the American taxpayers to subsidize insanity.  One popular axiom holds that the definition of insanity is doing the same thing over and over again and expecting a different result.  The Big Three's CEOs came to Washington on expensive private jets, with no plan to rework their financial model which they admit has them on the brink of failure, and asked for $25 billion to continue pursuing the same model that brought them there.  The only shock is that Congress didn't fall for it … this time.

But don't fret — Congress won't shock us for long.  The Wall Street Journal reports that Congress may offer a "small" aid package, between $5-10 billion, just to get the automakers through to the spring.  That "small" aid package equates roughly to the entire market capitalization of all three companies put together.  In other words, Congress could just buy out the Big Three with that money.

The UAW chief, Rich Gettelfinger, has a courageous proposal to resolve the standoff:

In a news conference in Detroit, Ron Gettelfinger, president of the United Auto Workers, said the Big Three CEOs should consider resigning if that would help win backing for a bailout.

Why doesn't Gettelfinger offer his resignation as well?  Why wouldn't the UAW offer to help by restructuring its contracts with the Big Three, which shoulder far greater labor costs than its competitors, making them less competitive?  It takes a big, big man to offer someone else's resignation.

The reasons that have brought the Big Three to the edge of failure are not limited to just management, or just labor, but a combination of both.  A bailout would allow both to continue to shirk responsibility.  Only when they realize that Daddy Government can't and won't rescue them from their own debacle will they make the necessary changes to restore themselves to viability — if they ever will at all.  If they refuse to do so now, they probably won't in the future, either — which makes them a bad investment for taxpayers.

Just keeping you up to date on the latest developments.

In my opinion, I think all three companies should enter bankruptcy, have the entire management team of all three companies get the boot (with no golden parachutes, by the way), and force a re-negotiation with the UAW to put workers' compensation in line with their foreign competitors.  Though those workers would take some serious pay cuts -- and people who want to complain about a $45/hr. job can just shut up because they are, according to Obama, 'rich' -- at least they would still have jobs.  They might also have to *GASP!* earn their pay, but hey, welcome to the real world.  The rest of the country would benefit because this would minimize job losses and a avoid a looming catastrophic problem with a major industry, as well as removing a big chunk of purely overhead cost to the cars we buy.  The companies would survive, and become more competitive (i.e. profitable) in the long-term.  Remember, the airline industry went through this kind of thing years ago, and they're still around.  I have zero sympathy for the leadership of these companies (and I'm including more than just the CEOs) who get tossed out with nothing because they're the ones who took the companies down.  If I don't perform, I will lose my job, and my company isn't going to pay me a hefty sum to go away; why is their situation any different?  Welcome to the real world to you, too.  Finally, it would send an unmistakable message that our government isn't going to bail out private companies that have been mismanaged.

But that's just my opinion.  What do I know?

There's my two cents.