{"id":1088,"date":"2008-12-11T14:21:06","date_gmt":"2008-12-11T19:21:06","guid":{"rendered":"http:\/\/www.jasetaro.com\/blog\/?p=1088"},"modified":"2013-09-13T15:09:12","modified_gmt":"2013-09-13T19:09:12","slug":"will-the-auto-industry-bailout-work","status":"publish","type":"post","link":"https:\/\/www.jasetaro.com\/blog\/2008\/12\/11\/will-the-auto-industry-bailout-work\/","title":{"rendered":"Will The Auto Industry Bailout Work?"},"content":{"rendered":"

I’ve been so focused on finishing up the projects I’m working before the holidays I’ve only been half attention to the news recently. I completely missed Holman W. Jenkins Jr. latest Wall Street Journal column<\/a>:<\/p>\n

\n

The Bailout That Won’t<\/h3>\n

Would you buy a car from Congress?<\/h4>\n

By Holman W. Jenkins Jr., Wall Street Journal, December 10, 2008<\/p>\n

Leave it to Bob Lutz, GM’s voluble vice chairman, to puncture the unreality of the auto bailout he himself has been championing. In an email to Ward’s Auto World, he notes an obvious flaw in Congress’s rescue plan now taking shape: The fuel-efficient “green” cars GM, Ford and Chrysler profess to be thrilled to be developing at Congress’s behest will be unsellable unless gas prices are much higher than today’s.<\/p>\n

“Very few people will want to change what has been their ‘nationality-given’ right to drive big and bigger if the price of gas is $1.50 or $2.00 or even $2.50,” Mr. Lutz explained. “Those prices will put the CAFE-mandated manufacturers at war with their customers — and no one will win in that battle.”<\/p>\n

Translation: To become “viable,” as Congress chooses crazily to understand the term, the Big Three are setting out to squander billions on products that will have to be dumped on consumers at a loss.<\/p>\n

None of this was mentioned at four days of congressional bailout hearings, because Detroit knows better than to suggest Congress has a role in the industry’s problem. Yet its own recently updated Corporate Average Fuel Economy regime, or CAFE, makes a mockery of the idea that government money will render the companies profitable, even as the same bailout bill demands that the Big Three drop their legal challenge to a California mileage mandate even more unsustainable than the federal government’s.<\/p>\n

Forget Chrysler, which has needed a bailout from Washington or Stuttgart in three of the last four recessions. The tragedy of GM and Ford is that, inside each, are perfectly viable businesses, albeit that have been slowly murdered over 30 years by CAFE. Both have decent global operations. At home, both have successful, profitable businesses selling pickups, SUVs and other larger vehicles to willing consumers, despite having to pay high UAW wages. Read the rest…<\/a><\/p><\/blockquote>\n

The problems at the Big 3 have been a long time in the making. Unfortunately, the bailout plan being pushed by the White House, Congress and the Big 3 ignores reality… As long as gas prices are reasonably low people are going to buy big cars.<\/p>\n

The last time I went car shopping the price of gas or fuel economy were way down on the list of things I was thinking about… The number one thing was can this car get me, 3 friends and 4 golf bags the to course in relative comfort, number two was price. Bottom line I’m not going to buy a car that doesn’t meet my needs.<\/p>\n","protected":false},"excerpt":{"rendered":"

I’ve been so focused on finishing up the projects I’m working before the holidays I’ve only been half attention to the news recently. I completely missed Holman W. Jenkins Jr. latest Wall Street Journal column: The Bailout That Won’t Would you buy a car from Congress? By Holman W. Jenkins Jr., Wall Street Journal, December […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","advanced_seo_description":"","jetpack_seo_html_title":"","jetpack_seo_noindex":false,"jetpack_seo_schema_type":"","_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false},"categories":[20,7],"tags":[313,166,314,315,323],"class_list":["post-1088","post","type-post","status-publish","format-standard","category-money-and-investing","category-politics","tag-auto-industry","tag-bailout","tag-chrysler","tag-ford","tag-gm","entry"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/pfpI7-hy","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":1059,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/11\/26\/the-25-billion-question\/","url_meta":{"origin":1088,"position":0},"title":"The $25 Billion Question","author":"Jeff","date":"November 26, 2008","format":false,"excerpt":"Holman W. Jenkins Jr. has an excellent Op Ed piece in today's Wall Street Journal. Mr. Jenkins ask the one question that no one Congress dares ask... Why is it Ford and GM can build viable auto businesses all over the world but not in North America? A Car Wreck\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1292,"url":"https:\/\/www.jasetaro.com\/blog\/2009\/01\/04\/wsj-let-detroit-build-profitable-cars\/","url_meta":{"origin":1088,"position":1},"title":"WSJ: Let Detroit Build Profitable Cars","author":"Jeff","date":"January 4, 2009","format":false,"excerpt":"I'm doing a little catching up this weekend and trying to read all the two dozen or so articles I bookmarked over the past couple of weeks. One of the items I bookmarked was Holman W. Jenkins Jr. December 31st Op Ed piece in the Wall Street Journal \"Let Detroit\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1026,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/11\/19\/mitt-romney-let-detroit-go-bankrupt\/","url_meta":{"origin":1088,"position":2},"title":"Mitt Romney: Let Detroit Go Bankrupt","author":"Jeff","date":"November 19, 2008","format":false,"excerpt":"Former Massachusetts Governor Mitt Romney has a must read Op Ed on troubles facing Chrysler, Ford and GM in today's New York Times. Let Detroit Go Bankrupt By Mitt Romney, New York Times Op-Ed, Wednesday, November 18, 2008 Boston IF General Motors, Ford and Chrysler get the bailout that their\u2026","rel":"","context":"In "Education"","block_context":{"text":"Education","link":"https:\/\/www.jasetaro.com\/blog\/category\/education\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1015,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/11\/18\/cnsnewscom-union-workers-at-big-three-automakers-average-73-an-hour\/","url_meta":{"origin":1088,"position":3},"title":"CNSNews.com: Union Workers at Big Three Automakers Average $73 an Hour","author":"Jeff","date":"November 18, 2008","format":false,"excerpt":"The headline may be a little misleading but the article is worth reading: Union Workers at Big Three Automakers Average $73 an Hour By Pete Winn, Senior Writer\/Editor, CNSNews.com, Tuesday, November 18, 2008 Economists in Michigan, the long-time home of the auto industry, say they don\u2019t support the proposed multi-billion\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":997,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/11\/15\/wall-street-journal-just-say-no-to-detroit\/","url_meta":{"origin":1088,"position":4},"title":"Wall Street Journal: Just Say No to Detroit","author":"Jeff","date":"November 15, 2008","format":false,"excerpt":"There's an interesting essay by New York University finance professor David Yermack in today's Wall Street Journal. Just Say No to Detroit Given the abysmal performance by Detroit's Big Three, it would be better to send each employee a check than to waste it on a bailout, says David Yermack.\u2026","rel":"","context":"In "Economy"","block_context":{"text":"Economy","link":"https:\/\/www.jasetaro.com\/blog\/category\/economy\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1104,"url":"https:\/\/www.jasetaro.com\/blog\/2008\/12\/12\/treasury-throws-auto-industry-a-life-line\/","url_meta":{"origin":1088,"position":5},"title":"Treasury Throws Auto Industry a Life Line???","author":"Jeff","date":"December 12, 2008","format":false,"excerpt":"Damn! What is it with the Bush administration? Senate Republicans rightly stopped the auto industry bail last night and today the Bush Administration decides to use TARP funds to throw a life line to GM and Chrysler. From FoxBusiness: Despite the abrupt death last night of bailout legislation in Congress,\u2026","rel":"","context":"In "Money & Investing"","block_context":{"text":"Money & Investing","link":"https:\/\/www.jasetaro.com\/blog\/category\/money-and-investing\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"jetpack_likes_enabled":true,"_links":{"self":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts\/1088","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/comments?post=1088"}],"version-history":[{"count":0,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/posts\/1088\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/media?parent=1088"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/categories?post=1088"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.jasetaro.com\/blog\/wp-json\/wp\/v2\/tags?post=1088"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}