Auto Bailout Plans

As atrios has pointed out a couple of times JNS, any of these plans would seem to violate WTO subsidy rules. There was even a story in TIME about this problem.
.
Is nobody concerned about this in Washington? Detroit?

When I last figured, the Wall Street portion of the bailout was 172 times as large as the B3 bailout - and we haggle over that !
.
But, by gosh and by golly, the $20B handed to Citicorp on the day after the first B3 bailout failure hardly drew comment! Sh!t, it was 80% the size of the B3 proposals and no one's pulse is anywhere near even 80 on that one.
.
In the meantime, I heard 4,616,000,000,000 dollars is the new figure for what we've tossed down the Wall Street hole without supervision, some in very, very sneaky fashion. That makes the total bailout now almost 185 times the B3 bailout.
.
Now I've supported the bailout, but that was when they were bandying small numbers around. You know, like $350,000,000,000 and $700,000,000,000. Yeah. Those small numbers!
.
Lets get a picture here:
.
The Earth is 4.685 billion years old, so, if you spent about 83 bucks a month since that time, it be just about equal to what's being spent now!

I seconded 53_3 in the thread below, and I'll second him here:
Let's hear more about the $4.6 trillion getting tossed around!
.
And don't give us a link to a Justin Fox post; for $4.6 trillion you guys can afford more than one blog post.
For $4.6 trillion, this should be getting blared around popular media like Christmas sale commercials.

This whole charade would be a laugh riot if what was at stake wasn't so serious.
.
Spending two weeks crafting "turn-around" plans for an industry that has never looked past the end of its nose? And they can figure out what ails them and what to do about it in two weeks? That's hilarious...
.
Look, I think we have to do something for the auto industry. If Citi is "too big to fail" then so is the auto industry. I just heard from this morning that GE Plastics (recently sold to Saudi investors who vastly overpaid) laid off 50% of their sales force yesterday, effective immediately. Their biggest customer was the auto industry. The ripple effects from autos are enormous.
.
But this inane obsession with how the CEOs got to the hearings and whether or not they'd be willing to work for a dollar or some other nonsense is insulting and demeaning to those whose livelihoods are at stake here. These are serious issues and focusing on trivia like travel arrangements or working for a buck shows just how worthless and shallow much our media has become.
.
The coverage is a mile wide and an inch deep. Let's educate people on the real issues involved, not on the trivialities or People Magazine-style "news" about how the CEOs got to the hearings.

Are the CEO's really going to be working for a dollar a year? I don't think so. The Apple guy works for a dollar a year and receives millions in stock each and every year.

Hell!
.
I woulda been happy if they just tossed the 25B chump change at the Big 3 if the tide of scritification were to wash over the banking and financial industries.
.
I'd be happy indeed. Then we could axe real questions!
.
Instead we have tinkering with tax code and other sundry stuff going on that we don't even hear about.
.
Keep pouring water on that burning bush, guys.
.
Um, while your at it, d'ya think you could put out that forest fire all around you?

Why do we treat the Big 3 as one entity? Tell them that like Survivor, one of them has to be voted off the island to appease the gods. Review their business/restructuring plans, pick the better two, and guarantee their bridge loans. Throw the third into the deep end, even if that's bankruptcy, for the free market junkies. Someone is appropriately punished, as our economic morality demands, and we still save the majority of the industry's labor force.
.
Likely the bankrupt company will be forced to hustle while in bankruptcy like the airlines did or be ripped apart for scraps, which will be absorbed by the other two anyway.

scritification = scrutification
.
Cant even spell words I invent right...

I don't think Washington or Detroit should be worried about the WTO on this one. The enforcement mechanisms within the WTO are so weak (countervailing measures for subsidies) and the organization itself seems to have reached the peak of its powers a while ago.

Two blind mice,
Two blind mice
See how they run,
See how they run!
.
They all ran after
The farmer's wife
She cut off their tails
With a carving knife
Did you ever see
Such a sight in your life
As two blind mice?
.
A testimony to the abilities of Micheal Scherer and JNS to look at the big picture...

I like nibblybits' suggestion. It's the Joker school of management as applied to the free market.

Ignore the WTO because we can? Sort of like the invasion of Iraq. Who can stop us?

Ford tells Congress it likely wouldn't need to tap the $9 billion bridge loan it's asking be held in reserve through next year and expects to return to profitability by 2011...
.
Ford tells Congress they likely won't need the loan, which will make Congress feel better about giving it to them, and once Ford inevitably takes it, they'll point to that likely qualifier and claim they couldn't have known. This is what you call "priming the pump", also known as plausible deniability. Wall Street has been using this tactic to successfully siphon off now trillions from the Fed.
.
I wouldn't mind all this spending if there was some coherent plan behind it all, but I've seen nothing of the sort. Congress just seems to be throwing money at everything they see, hoping that eventually they'll hit something that works.

nibblybits: You're onto something - why don't each of the 3 companies present competitive proposals and the best of the 3 gets the bailout? Even though the auto industry is far-reaching and deeply woven into our economic landscape, the product they are currently stocked with is on its way to extinction. It simply doesn't make sense to keep all 3 companies afloat without major rethinking. It's like giving the horse-and-buggy industry a bailout when autos were on the horizon.

WTO - closed and secretive in decision making, constantly infringing upon the sovereignty of member states, interfering in issues beyond its mandate, and increasingly seen as illegitimate. Sound familiar?

Cliff and dunedweller: Only fear of failure will fix the problems of the auto industry. Make an example of the third and the other two will get the message.
.
Besides, the third will still have a shot to survive. Go into bankruptcy and let the system do its job. The Republicans are happy. The third company will lean down to its vital parts and hopefully, survive. If not, the best parts, the viable parts, will continue on when they are snapped up by the free market.
.
Plus, saving two companies instead of three is cheaper for taxpayers as well.

Recently we've heard a lot about how UAW workers in GM plants are making $73 per hour. Of course, we're beginning to learn that the figure is arrived at through the curious method of adding GM's 'legacy costs' (retiree health and pension obligations) to the actual hourly wage of an auto worker (about $28 per hour + $13 in health and pension benefits).
.
If it's reasonable to add the 'legacy' costs of retirees to the hourly wage of the guy who installed the dashboard in your Saturn, then isn't it just as reasonable to add those costs to the $1 per year that the GM CEO has agreed to? After all, the auto worker didn't hire and benefit from the labor of the retirees -- GM's management did. If it's reasonable to saddle the guy that painted the fenders on your Buick with the cost of retiree obligations, isn't it just as reasonable to apply those costs to the GM CEO?
.
By doing a little calculation we can discover the GM CEO's true pay (using a calculation that's just as intellectually honest as the $73 per hour number being thrown around).
.
We start by adding:
$1 per year + $60 billion (in GM retiree health benefits) + $87 billion (in GM pension obligations)
.
We then divide the result by 2080 hours (assuming the CEO works a full 40 hour week).
.
We have just discovered that the CEO of GM is actually offering to have his pay reduced to a mere $70.7 million dollars per hour.
.
Maybe we should cut his pay even more.

This is all well and good, but Chris Isidore does (as usual) a great job in conveying the depth of the problem. The problem is the fact that we (just like housing) had an auto bubble. See here: http://money.cnn.com/2008/12/02/news/companies/automakers_plans/index.htm?postversion=2008120213
.
Unfortunately, no amount of CEOs taking road trips in their latest hybrids, opting for $1 yearly salaries or pontificating about future models and sales will change this very significant fact. The only way to get out of a bubble is to reduce capacity and wait for demand to overcome supply until they are back in equilibrium.
.
There is no bailout short of a handout that will keep people employed in Detroit. And any bailout making more cars only prolongs the scenario of bringing supply and demand back into balance. This is the paradox of the bailout...it is welfare where the poor worker never regains control of their wealth making ability.

Yes, Bryan, I agree. Any money spent should go directly to workers directly affected by bankruptcy of the automakers.
.
The time for working this through was the last decade. The last decade is over. For me, the last straw is the dealer network.
.
And, as atrios keeps saying, any bailout is a violation of the WTO. Direct money paid to autoworkers, either into their pensions or retirement medical care, to the workers themselves, etc

Petition Congress:

http://www.rallycongress.com/no-bailout-for-the-auto-industry/1409/

NO BAILOUT FOR THE AUTO INDUSTRY
Nancy Pelosi, with the help of Barney Frank, wants to bail out yet another failed sector of the economy. It is not government's role to reward incompetent, overpaid executives pursuing a failed and anachronistic business model. The American auto industry is in trouble because it produces a shoddy, polluting, gas guzzling product at noncompetitive prices driven by trade union benefit packages. It is a waste of taxpayer money to try to shore up an industry that needs to be radically restructured. The Big Three should be allowed to fail and file for reorganization under Chapter 11 of the Bankruptcy Code. They will not cease to exist, but will be restructured under the supervision of the bankruptcy courts. Congress cannot do a better job than the courts. The courts will supervise the reorganization of the industry without being tempted to reward lobbyists, campaign contributors and unions for their political and financial support.
Congress must allow the economy, existing laws and judicial bodies to resolve the Big Three's financial problems and not throw more taxpayer money away under a hasty and ill conceived bailout.

What palininatowel said.

.

...but thanks for reporting on this, Jay Newton-Small.

.

The plans are actually important. Think of them as if they were the Iraq Coalition Provisional Authority plans that the Congress was considering funding.