Bailout

We are hearing that a lot lately. It is a very tough situation to wrap your head around, but while people are saying we should let the auto industry go, no one is saying what to do with the millions of jobs it will cost.

It’s not that we need to bailout the auto industry, it’s that we need to secure the biggest sector of the manufacturing division. How does the opposition plan on employing all the people who lose their job when the American auto industry goes the way of the pet rock? What about all the diners, uniform suppliers, parts suppliers, and other businesses that are needed and supported by the auto industry? How do you save the towns that will be totally destroyed by the closing of their local auto plant?

Everyone can say no so easily, but no one can give plans on how to deal with the results of that no.

That’s why I have been behind Pelosi’s plan. Do I really want to see us throw $25 billion at the auto industry, when we don’t even have things like universal healthcare? Of course not, but I also realize we need the auto industry. If they are to get the money then they get it with strong conditions tied to it. Restructure the auto industry. Make them more efficient. Force them to produce cars that compete with the foreign market and help our environment.

Here are some interesting things I have heard on various shows over the past few days.

• Toyota was looking to open a plant up in Alabama. Toyota does have an aptitude/intelligence test required to work for them. They could not find enough employees that could pass the test. In the end they ended up moving to Canada, which turned out to be much better. They found the workers and were even able to pay them more, because Toyota did not have to pay for health insurance.
• Japanese automakers have a policy for CEO pay. The CEO can not make more than 10x the lowest paid employee. If the lower person gets paid $20,000 a year, that means the CEO can only make $200,000 a year.
• Japanese automakers don’t have unions. Their employees also don’t want unions, because their employer treats them so well.

(As to the issue of an intelligence test and the employees being happy, I can attest to that. I know a few people who work for Toyota and they have all verified this to me.)

So we see models there that are working out very well for other countries. Why don’t we try and mimic them? The health care issue alone should be more than enough reason. Health insurance is the highest rising cost associated with employment. If employers didn’t have to worry about that, then the money would go back to the worker, which would then end up back in the economy. Sometimes the answer is so simple.

Think of how that would also save companies when it comes to employees being off sick. A healthy workforce equates to a stronger workforce. Productivity goes up and production costs go down.

And how much is enough? How much money does one man need to make? We need to seriously limit bonuses and salaries for big wigs. CEO pay has skyrocketed while employee compensation has remained stagnant over the past 30 years. It should come as no surprise that this has something to do with our failing economy and middle class. It’s time to tell these companies that their CEO pay will be limited, and to help make sure they stay here in the U.S., we also put legislation in making it hard for them to leave the country.

If we don’t take the right course of action here, then America as we know it is gone. I hate to sound all “gloom and doom”, but that is the simple fact. We need a well thought out plan for the auto makers tied with a radical restructuring, similar to that of what the Japanese are doing. If our leaders are at a loss, then I highly suggest they check out the movie Gung Ho.

That’s what Paulson decided to tell Congress today:

What I also find interesting is how they are now saying they will leave Obama with about 1/2 of the $700 billion from the bailout. So why didn’t they just ask for $350 billion to start with? Why all the drama and demanding the full $700 billion? These people have very serious questions to answer.

That’s what it seems like the Republicans are heading for – a policy of saving white collar jobs, while letting blue collar workers hit the unemployment lines:

Top Republican senators said Sunday they will oppose a Democratic plan to bail out Detroit automakers, calling the U.S. industry a "dinosaur" whose "day of reckoning" is coming. Their opposition raises serious doubts about whether the plan will pass in this week's postelection session.

Democratic leaders want to use $25 billion of the $700 billion financial industry bailout to help General Motors Corp., Ford Motor Co. and Chrysler LLC.

Sens. Richard Shelby of Alabama and Jon Kyl of Arizona said it would be a mistake to use any of the Wall Street rescue money to prop up the automakers. They said an auto bailout would only postpone the industry's demise.

So we should just let a million plus jobs go away? And it’s not just the actual jobs in the auto industry, it’s also all the businesses that thrive upon them. I’m talking about the restaurants and hotels that rely heavily upon the patronage of auto workers. The Cincinnati area has seen the effects of this first hand countless times in the past, and it isn’t a pretty picture.

It seems like the hands opening up for the free government money, aka the bailout, are increasing faster than our unemployment numbers. Now the insurance companies are lining up for their Christmas gifts:

Several insurers, including Hartford Financial Services Group and Genworth Financial Inc., made last-minute bids for billions of dollars in government money Friday.

Hartford Financial said that it agreed to buy a small savings and loan, helping the giant insurer apply for a government investment of up to $3.4 billion.

Don’t you like that trick? Want government money? Buy a troubled banking company. Welcome to the economy George built. We throw true business standards out the window and instead redistribute the wealth from the bottom up.

Pelosi is putting forward a plan that really sounds good:

Pelosi said the auto industry funds would come with many strings attached, including restructuring company finances, meeting new standards for gas mileage and requiring advanced technologies "to compete in the domestic and global market." The speaker's office offered no specifics about what the new fuel efficiency standards would be and what types of technologies would be required for the auto industry.

This has been a really telling year for the auto industry. They saw their sales plummet this summer when we had gas over $4.00 a gallon. It seems no one wanted a 13 mpg Hummer. Go figure…

After that we saw the new hammer come down on the auto industry – the credit crunch. Besides people not being able to afford gas (not because of the high price now, but because of a crapping out economy) they also can’t get the credit to finance a new car. It has been a double whammy for the auto industry.

I can't say that this comes as any shock:

In the six weeks since lawmakers approved the Treasury's massive bailout of financial firms, the government has poured money into the country's largest banks, recruited smaller banks into the program and repeatedly widened its scope to cover yet other types of businesses, from insurers to consumer lenders.

Along the way, the Bush administration has committed $290 billion of the $700 billion rescue package.

Yet for all this activity, no formal action has been taken to fill the independent oversight posts established by Congress when it approved the bailout to prevent corruption and government waste. Nor has the first monitoring report required by lawmakers been completed, though the initial deadline has passed.

"It's a mess," said Eric M. Thorson, the Treasury Department's inspector general, who has been working to oversee the bailout program until the newly created position of special inspector general is filled. "I don't think anyone understands right now how we're going to do proper oversight of this thing."

Isn't that irony? We got into this mess because of a lack of oversight, a cornerstone of the GOP platform, and now the mess is getting even worse after the government got involved - because of a lack of oversight. If people can be so trusted to do the "right thing" without oversight, then why do we have laws and law enforcement?

Now we get to see what $700 billion gets us.

The bailout bill that passed the Senate last night included a bunch of pork and earmarks in it. McCain has said repeatedly that he would veto any such bill. So if he were President now, would the bailout receive the stroke of his veto pen?

During debate for the bailout, McCain didn't speak. Instead he entered into record a prepared statement. Barack Obama spoke for 13 minutes and all the networks covered it. The same would have happened for McCain, so why did he pass up this free PR?

I was skeptical about the whole "drooping eye" thing about McCain. That could have been something as simple as a back tooth really bothering him. You got a lot of nerves up there, and I have experienced the same thing before from a tooth that is messed up.

Then a few seconds after that happened, John McCain went to leave the stage. He was obviously confused as he walked back and forth until someone escorted him of. John McCain is a lot like George Bush in the sense that situations like that merit a little humor at the cost of ones self. A goofy, playful face to the crowd or quick joke, which McCain is good at. None of that happened.

McCain also gave that interview yesterday with the Des Moines Register, in which an angry John McCain peeked his head out. Not very presidential at all.

Given all that happened with McCain just yesterday, there are now serious questions about his health. The questions are growing around the internet and should bleed over to the traditional media in short time. The McCain campaign could easily put an end to these rumors of his well being by releasing McCain's medical records, but they won't. Why not? Is their something they are hiding? It sure sounds like it.

Oh boy - John McCain is contemplating suspending his campaign again:

Do it John - it worked so well for you last time!

The Republicans have been planning all along to use this bailout as an issue against Democrats, despite the fact that it is a bill by a Republican administration. They were so intent on using it that the RNC already had made attack ads and sent them to key states:

The Republican National Committee's new advertisement critical of the the Wall Street "bailout" was produced and sent to television stations in key states before the package failed, officials at two stations said.

"Wall Street Squanders our money. And Washington is forced to bail them out with -- you guessed it -- our money. Can it get any worse?" asks the ad's narrator, as the words "BAILOUT WITH OUR MONEY" cross the screen. (The answer: Obama's plans would make it worse.)

Absolutely amazing. The Democrats should say they aren't bringing the bill backup until the Republicans stop holding the American people hostage. We saw what this did to Wall Street and America's 401k yesterday. They always put party before country. Will John McCain stand up and denounce the RNC for this? Will the media even ask him about it?