De Lorenzo again

[Camino LS6]

http://www.autoextremist.com/current/

November 26, 2008

Washington to Detroit: Drop Dead.

By Peter M. De Lorenzo

Detroit. The glee with which the Washington establishment - and every two-bit instant car “expert” who decided it was high time to weigh-in with his or her opinions - attacked Detroit and what’s left of the U.S. car industry last week was a sight to behold. Everyone from chief knucklehead Michael Moore to Neil Young (Neil Young?) got on the “Detroit Deserves to Die” bandwagon, adding to the chaos with their naively-crafted pop logic musings and “finger-snap” solutions.

It was truly pathetic.

Starting with the stunningly ill-informed members of the Senate and the House lead by that raging embarrassment Dick Shelby from Alabama, who heaped derision on Detroit and its CEOs for having the temerity to ask for a bridge loan to help them through the worst financial calamity to face America in seven decades - while he conveniently forgot to mention that he helped arrange for over $650 million in tax incentives and other prizes for Mercedes-Benz, Honda, Hyundai and Toyota to build facilities in his home state - to the gang of idiots who followed him while falling all over themselves trying to demonstrate how little they knew about the car business or about the Detroit that exists today as opposed to the Detroit they once read about in the 1990s, it was a beat down of epic proportions.

That actual facts about the U.S. automobile business and its role as an essential part of the manufacturing fabric of the country were in short supply in the rote speeches made by the representatives and senators - and except for exactly one, Representative Thaddeus McCotter (R - MI), they were totally predictable. And so was the piling on that ensued.

By the end of last week it was as if the domestic automakers were not only the scourge of the Western hemisphere but responsible for all known troubles afflicting this country at this very moment, its CEOs were idiots, we’d all be better off as a country if its founding city was just wiped off the American landscape along with the rest of the midwest, and gangs of citizens were assembling with pitchforks demanding bankruptcy for the Detroit Three. I was actually surprised that the mob mentality stopped short of demanding the heads of the CEOs from Chrysler, Ford and GM or anyone else representing Detroit on sticks - the loathing was so far off the charts and unwarranted.

It would have been difficult to comprehend all of this if had originated in any other city besides Washington, D.C., After all, this is a town whose very existence is based on cronyism, perks, earmarks, lobbyists and professional self absorption. But even that pales in comparison to the real pro sport in Washington, which is The Blame Game. The fact that these politicians made hay on the whole corporate jet angle was laughable, especially since one of their esteemed colleagues – Nancy Pelosi – caused a royal stink when she became Speaker of the House by demanding a bigger government plane so that she was able to fly non-stop back to California. That many of these politicians eagerly accept rides on corporate jets from various contributors and lobbyists was a story that was missing in the gathering chaos of the lynch mob mentality aimed at the Detroit Three CEOs, as if they were the only heads of corporations on earth who use corporate planes. And the establishment media, ever in search of a fifteen-second sound bite, found what they were looking for and dutifully reported that angle as the meat of the story.

Lost in all of this, of course, was the fact that the backbone of the U.S. manufacturing sector was on the ropes because of the worst financial crisis since the Great Depression. But nonetheless, the real issues at hand were instead drowned out by the verbal jabs and cackles about corporate jets, and the Detroit Three CEOs were sent packing, but not before they were admonished like little school boys and told to bring back a real business plan for their $25 billion, and to come back “better prepared” as President-elect Barack Obama chimed-in on Monday.

Oh really?

This after Citigroup, which only a month ago received $25 billion, was blessed with another $20 billion this past Sunday evening, and, as part of the plan, Treasury and the FDIC will guarantee against the "possibility of unusually large losses" on up to $306 billion of risky loans and securities backed by commercial and residential mortgages.

What, no hat-in-hand journey to Washington for Citigroup CEO Vikram S. Pandit so he could receive a good old-fashioned ass-whipping for bad management decisions, marketing risky financial instruments, failing to anticipate dramatic shifts in the market and piss-poor planning in general on live television?

No stumblebum senators and congressman tripping all over themselves to demonstrate their complete lack of understanding of the nation’s financial system or to criticize the fact that Pandit used the corporate jet to fly down to Washington?

No recriminations for Robert Rubin - the most prominent member of the Citigroup's board of directors and a former treasury secretary - who was one of the chief architects of the bank’s risky investment strategy, and who pulled down $62.2 million between 2004 and 2007?

And what about the go-along-to-get-along dimwits on the Citigroup board? The gang that J. Richard Findlay, head of the Centre for Corporate & Public Governance, described for the New York Post thusly: "Citigroup's board of directors increasingly resembles a first-class sleeping car on a train wreck that just keeps happening. Almost whatever it does, it is too slow and too late. It can take months for Citigroup's directors to clue into what others in the real world have known for some time."

And why does Citigroup merit bailing out again with no explanation whatsoever to the American taxpayers other than President Bush saying, "We have made these kind of decisions in the past. We made one last night. And if need be we will make these kind of decisions to safeguard our financial system in the future."

Oh really?

What’s going on is the activation of a New American Double Standard, one that goes something like this:

Washington to Detroit: Drop Dead.

Washington to Wall Street: Who do we make the check out to again?

Thanks to our representatives in Washington, an industry that powered this great nation into the future, which basically created a viable American middle class, and which created the Arsenal of Democracy so that the nation could be properly equipped to win WWII, has all of a sudden become a national punchline and a burden to the rest of the country.

An industry that’s responsible either directly or indirectly for one out of every ten jobs in the nation, an industry that’s inexorably linked with the manufacturing base of this nation and whose failure would send this nation’s economy reeling, was basically sent packing in search of a “plan” while Wall Street and the banking system was given carte blanche just for showing up.

How do we know that Citigroup won’t crash in a few more months and need even more money? And how will they handle their “emergency” need by then in the new “enlightened” Obama Presidency? By email?

What’s wrong with this picture?

Why is it politically more expedient to trash Detroit and the entire domestic automobile industry than it is to shine a harsh light on the glorified pyramid scheme that propelled Wall Street and the banking system to new heights – and now to horrific lows – while screwing over millions of Americans in the process?

The fact that President-elect Obama added to the criticism of the Detroit Three CEOs by echoing the same misinformation spewed by the senators and congressmen last week in Washington was not exactly an uplifting development either.

"We can't just write a blank check to the auto industry. Taxpayers can't be expected to pony up more money for an auto industry that has been resistant to change. I was surprised that they did not have a better thought-out proposal when they arrived in Congress," Obama said on Monday. "Congress did the right thing which is to say, 'You guys need to come up with a plan and come back before you're getting any taxpayer money.'"

Oh really?

But we – as American taxpayers - can expect to keep writing blank checks to mismanaged banks and failed Wall Street conglomerates, and be expected to “pony up” more money to an industry that’s resistant to change, with no thought-out proposals of any kind and no real “plan” in sight? How does that work, exactly, Mr. President-elect?

As if to back-pedal a bit, Obama added that, "We can't allow the auto industry simply to vanish. We've got to make sure that it is there and that the workers and suppliers and businesses that rely on the auto industry stay in business."

Oh really?

Then why is it - Mr. President-elect - that you’re endorsing the miserable performance put on by our so-called leaders in Washington last week? Why is it that you’re regurgitating the same tired inaccuracies about Detroit that we were subjected to for two days last week? Do your homework, Mr. Obama. Stop listening to the media or the sycophants you’ve already assembled and dig deeper into this Detroit “thing” before you start sounding like all the rest of the less than gifted in Washington.

Memo to the old and new Washington establishment:

A large number of American citizens are painfully aware of the hypocritical double-speak that’s currently festering in the halls of Congress and on the Senate floor.

A large number of Americans are tired of the now-tedious stereotypes and flat-out untruths being bandied about in Washington about an industry that’s vital to the long-term health and well being of the nation, an industry that actually creates and builds tangible hard goods, an industry that devotes $12 billion a year in advanced technical research that benefits the entire nation, an industry that is a fundamental part of the American industrial fabric, and an industry that employs millions of Americans all across this nation.

A large number of American citizens are tired of this New American Double Standard, where the financial well being of millions is being held hostage and being put at risk for the benefit of a few – with no explanation, no “plan” and no accountability whatsoever.

Detroit may be Washington’s whipping boy du jour, and our esteemed representatives may want to continue on with their witch hunt – what’s next, will they demand that the Detroit CEOs bring their college transcripts with them next time? – but they won’t be fooling anyone.

It’s not about what’s good for the rest of the country in Washington. It’s not about nurturing the American fabric, or protecting the foundation of our manufacturing base, or taking care of a productive national industry that creates real American jobs, or keeping the nation as a vital player in the global economy.

No, not even close as a matter of fact.

In Washington it’s about whoever is greasing the skids or blowing in a Senator’s or congress person’s ear just right. And the Motor City finds itself on the outside looking in.

Detroit might as well start writing its own obituary right now, because even if some sort of financial bridge loan package is grudgingly bequeathed, the strings and built-in entanglements are likely to choke the life out of the U.S. auto industry once and for all.

Thanks for listening.

[balthazar]

Great piece.

Sorry for those that are spoon-fed by whatever the media writes, but the media plays a monster part in this. We used to depend on the integrity & journalistic hunger of 'the news' to route out the sort of slimy hypocrisy detailed above- but now all we get is partisan fluff and reguritated inaccuracies. Mainstream media = worthless.

Barry 'bama - >>""We can't just write a blank check to the auto industry."

{'He's not going to support the bridge loan!'}

2 minutes later :

"We can't allow the auto industry simply to vanish."<<

{'He IS going to support the bridge loan!'}"<<

Snake Oyl Salesmanship 101 : talk out of both sides of your mouth so nearly everyone can interpret it every which way but loose.

[Intrepidation]

Great piece.

Sorry for those that are spoon-fed by whatever the media writes, but the media plays a monster part in this. We used to depend on the integrity & journalistic hunger of 'the news' to route out the sort of slimy hypocrisy detailed above- but now all we get is partisan fluff and reguritated inaccuracies. Mainstream media = worthless.

Barry 'bama - >>""We can't just write a blank check to the auto industry."

{'He's not going to support the bridge loan!'}

2 minutes later :

"We can't allow the auto industry simply to vanish."<<

{'He IS going to support the bridge loan!'}"<<

Snake Oyl Salesmanship 101 : talk out of both sides of your mouth so nearly everyone can interpret it every which way but loose.

Oh spare me, he has said for some time now that we need to help the auto industry. He did say recently that he thinks they should show a plan.

Your lovely Republican president/administration said they had no interest in bailing out the automakers.

[regfootball]

it is shameful the extent to which the banks are being given money without any standard to hold them to.

[Intrepidation]

it is shameful the extent to which the banks are being given money without any standard to hold them to.

No kidding. The weekend after CongASS told the Big 3 to go home and come up with a plan and ridiculed them for flying corporate jets, they hand out $20 billion more to &#036;h&#33;igroup, no strings attached.

[balthazar]

>>"...Your lovely Republican president/administration.."<<

It's not 'mine' - I didn't vote for him !

>>"CongASS"<<

Would this be your 'lovely Democrat CongASS' ?? :wink:

[Robert Hall]

>>"...Your lovely Republican president/administration.."<<

It's not 'mine' - I didn't vote for him !

Interesting..by your posts, I've always assumed you were a right winger and supporter of W.

[haypops]

Lorenzo's article would have more heft if it included information pertaining to President Bush's insistence to veto the bailout and the math of the Senate favoring the Republican's minority position not to fund the bridge loans.

Following is the letter stating the position of the Democratic leadership. I think that it is a very optimistic read.

November 21, 2008

Dear Messrs Wagoner, Mulally, and Nardelli:

We recognize the importance of the domestic automobile industry and are committed to working with you to ensure its viability in the years to come. One in 10 American jobs is related to auto manufacturing; our national security depends on the industry's technologies and manufacturing capacity; and our competitiveness in a global economy depends on its pursuit of excellence.

As you know, Congress has provided President Bush, the Chairman of the Federal Reserve, and the Treasury Department the authority they need under the Emergency Economic Stabilization Act (EESA) as well as other authorities to provide short-term financial assistance to the auto companies.

Unfortunately, the Bush Administration and the Federal Reserve have thus far declined to use their powers to improve our nation's financial stability by assisting the auto industry. Notwithstanding existing authorities, this Congress is prepared to consider additional legislation that would give the assistance you seek, provided that you submit a credible restructuring plan that results in a viable industry, with quality jobs, and economic opportunity for the 21st century while protecting taxpayer investments.

In order for Congress to act in a timely manner, this plan must be presented to Congress by December 2nd, specifically to Senate Banking Committee Chairman Christopher Dodd and Financial Services Committee Chairman Barney Frank.

It is critical that you meet this deadline since we have announced we are prepared to come back into session the week of December 8 to consider legislation to assist your industry. We intend to give pertinent agencies within the executive branch, the Government Accountability Office, the Board of Governors of the Federal Reserve, as well as outside experts, the opportunity to comment on your work.

The plan must:

Provide a forthright, documented assessment of the auto companies' current operating cash position, short-term liquidity needs to continue operations as a going-concern, and how they will meet the financing needs associated with the plan to ensure the companies' long-term viability as they retool for the future;

Provide varying estimates of the terms of the loan requested with varying assumptions including that of automobile sales at current rates, at slightly improved rates, and at worse rates;

Provide for specific measures designed to ensure transparency and accountability, including regular reporting to, and information-sharing with, any federal government oversight mechanisms established to safeguard taxpayer investments;

Protect taxpayers by granting the most senior status for any government loans provided, ensuring that taxpayers get paid back first;

Assure that taxpayers benefit as corporate conditions improve and shareholder value increases through the provision of warrants or other mechanisms;

Bar the payment of dividends and excessive executive compensation, including bonuses and golden parachutes by companies receiving taxpayer assistance;

Include proposals to address the payment of health care and pension obligations;

Demonstrate the auto companies' ability to achieve the fuel efficiency requirements set forth in the Energy Independence and Security Act of 2007, and become a long-term global leader in the production of energy-efficient advanced technology vehicles; and

Require that government loans be immediately callable if long-term plan benchmarks are not met.

The auto companies' shareholders, business partners, and prospective benefactors—the American people—deserve to see a plan that is accountable to taxpayers and that is viable for the long-term. In return for their additional burden, taxpayers also deserve to see top automobile executives making significant sacrifices and major changes to their way of doing business.

We look forward to working with you to ensure a viable American automobile manufacturing sector for decades to come. If we are successful, we can ensure a brighter future for the automobile industry, our nation, and our planet.

Thank you for your prompt attention to this matter.

Sincerely,

Nancy Pelosi

Speaker of the House

Harry Reid

Senate Majority Leader

[loki]

Interesting..by your posts, I've always assumed you were a right winger and supporter of W.

he might be a right winger, but why would anyone with a mind support W after some of the things that have gone through. not that these 2 last years were any better since "NOONE" blames a congress

what..pres has single score and congress barely double digit "like" ratings...?

[loki]

the other things that is funny about this loan/bailout is that they're not borrowing from the gov, they borrow from us, and it's financed from a private bank, not the treasury. so "we the people" don't get the interest on this loan.

[Robert Hall]

he might be a right winger, but why would anyone with a mind support W after some of the things that have gone through. not that these 2 last years were any better since "NOONE" blames a congress

what..pres has single score and congress barely double digit "like" ratings...?

Yah, I know..but I still know plenty of people that still support W... I assume they are delusional.

[haypops]

Yah, I know..but I still know plenty of people that still support W... I assume they are delusional.

As a life long Democrat who never voted for President Bush let me add that there is a world of difference between his first and second terms. The second term has risen to "typical" of a Republican administration and the worst of the problems in the second adminstration were consequences of mistakes of his first administration.

[Sixty8panther]

(if I my be so bold as to interject for Balthy)

Balthazar has been saying for months that he is not really on either side.

If you read his posts carefully he's been more of a devil's advocate than

anything.

[balthazar]

moltar- you do far too much assuming & stereotyping, IMHO. And you are never going to 'get a

bead' on me in particular by making assumptions. I'm off the charts far more than I let on, here.

From an online test pointed out here IIRC, I 'tested' out as libertarian. I tend to align with the

core principals of conservatism, but following one party blindly is not responsible citizenship, IMO.

No single politician has ever been -logically-assessed- worthy of either unilateral support

or condemnation. Those who believe otherwise are where your delusionals can be found.

Thanks 68- nicely 'nutshelled'.

Edited November 29, 2008 by balthazar

[FUTURE_OF_GM]

The politicians are against the automakers because this COUNTRY is against the automakers.

Remember, a politician is like a dumb dog. They know how to get the "treat" that they want and they will focus on getting that at all costs. That treat is the voters majority and/or money from import companies (plants, extended manufacturing in some states, etc) so they will destroy Detroit to ensure their success. That's politics 101.

I used to be a little optimisitc, but I think america has (unknowingly, because they've bought into the years of stereotypes that have been tirelessly perpetuated by an anti-Detroit few) decided that the auto industry should no longer exist.

I think the ONLY hope we have is either 1) americans see a "rebirth" in the industry (And the only way this will happen is with political support from Obama and a HUGE PR/engineering push) or 2) A niche industry that sells to diehards like us.

The rebirth was coming when Lutz was hired on, but the media sensed it and started blasting Detroit with OPINIONATED EDITORIALS about "SUVs" and "How Detroit is outdated" and "Why Detroit should be bankrupt" The media can no longer fault the products, so they have moved the (much more aggressive) war to the opinion pages. Their goal is to creat a negative opinion of the Big 3. And since the companies already have a dmaged image, that goal was EASILY accomplished. Now that the big 3 are 'over a barrel' the media barrage has been nonstop and twice as brutal because the anti-Detroit majority in the media can see their ultimate goal coming to life. That ultimate goal is either a dead Detroit or a Detroit that has little, if any influence over the industry.

I just can't pinpoint WHY the most recent media barrage started (circa 2005) The only thing I can think is that it was a massive, anti-Detroit PR push by Japan Inc. or It stems from the horrible financial results reported that year or it's a combination of both (I think this is the most likely) The bad press started with the bad results and the japanese companies started whispering in the medias ear to try and influence them in a 'kick them while they're down' menatlity and it worked TOO well. I'm willing to bet that the japanese companies (judging by their comments) never believed that the Detroit 3 would actually go bankrupt. (And they would not have gone bankrupt had the market not crashed) They merely wanted the industry to limp along and bleed share. But "Freedom of Speech" is a powerful concpet here in america and I don't think they understand what effects it has on the population. (Which is a funny oxymoron, since we promote freedom of speech, then adopt the most convenient opinion and stick to it like a communist sticks to a soup bowl)

I hope I'm wrong, but I doubt it, since americans are too stupid to see the forest for the trees... We're the only country I know that sits back and allows ourselves to be screwed for to benefit of fat, rich bankers and then the very next day criticizes and tries to destroy an industry that employs (empowers) a large majority of us.

IMO, we should've been 'in the streets of DC and New York with our guns loaded' a long time ago. But hey, who am I? I don't have a from an Ivey League school and I don't have any money, so no one listens.

Edited November 29, 2008 by FUTURE_OF_GM

[2QuickZ's]

...following one party blindly is not responsible citizenship, IMO.

No single politician has ever been -logically-assessed- worthy of either unilateral support

or condemnation. Those who believe otherwise are where your delusionals can be found.

Well said. I think it would help us all to have a country full of independent thinkers. Better yet, it's time to vote out ALL of the long term senators, regardless of party affiliation. Term limits would be great.

[Camino LS6]

Well said. I think it would help us all to have a country full of independent thinkers. Better yet, it's time to vote out ALL of the long term senators, regardless of party affiliation. Term limits would be great.

Amen!

[balthazar]

Local station here calls it G.R.I.P. - Get Rid of Incumbant Politicians. As good or better a voting policy than any hardline party affiliation.

Sadly, after observing the last presidential election process, it seems independant thinking is rare & fading fast.

[2QuickZ's]

Local station here calls it G.R.I.P. - Get Rid of Incumbant Politicians. As good or better a voting policy than any hardline party affiliation.

Sadly, after observing the last presidential election process, it seems independant thinking is rare & fading fast.

I did my part. I voted against every incumbent, even the ones I liked. Republican or Democrat - it didn't matter. Our government is stuck in neutral. It needs a good swift kick in the ass to get moving again!