A Lemon of a Bailout

[WhiskeyGirl]

A Lemon of a Bailout

By Charles Krauthammer
Friday, November 14, 2008; Page A19

Finally, the outlines of a coherent debate on the federal bailout. This comes as welcome relief from a campaign season that gave us the House Republicans' know-nothing rejectionism, John McCain's mindless railing against "greed and corruption," and Barack Obama's detached enunciation of vacuous bailout "principles" that allowed him to be all things to all people.

The criteria will inevitably be arbitrary and political. The money will flow preferentially to industries with lines to Capitol Hill and the White House. To the companies heavily concentrated in the districts of committee chairmen. To clout. Is this not precisely the kind of lobby-driven policymaking that Obama ran against?

Second is the sheer inefficiency. Saving Detroit means saving it from bankruptcy. As we have seen with the airlines, bankruptcy can allow operations to continue while helping to shed fatally unsupportable obligations. For Detroit, this means release from ruinous wage deals with their astronomical benefits (the hourly cost of a Big Three worker: $73; of an American worker for Toyota: $48), massive pension obligations and unworkable work rules such as "job banks," a euphemism for paying vast numbers of employees not to work.

How many McJobs pay $73/hr? 

In World War II, government had the auto companies turning out tanks. Now they would be made to turn out hybrids. The difference is that, in the middle of a world war, tanks have a buyer. Will hybrids?...

Stylish Hollywood people, do they drive American made cars?  Or cars like the "SmartCar" or other imports?

read more here -
http://www.washingtonpost.com/wp-dyn/content/story/2008/11/14/ST2008111401338.html

With the rest of the US unemployed or in a part time McJob, who can afford to buy these American made cars?   

IIRC, Henry Ford raised wages to that HIS workers could afford to drive the cars they produced.  Who can afford to buy a new American made car?

[WhiskeyGirl]

Chrysler leaders get millions

As Detroit's crumbling auto industry asks Congress for a bailout, Chrysler is in the awkward position of paying about $30 million in retention bonuses to keep top executives while the company cuts thousands of jobs.

Chrysler owes the bonuses under its contracts with about 50 executives, based on a retention incentive plan crafted early last year by former German parent DaimlerChrysler, when it was preparing to sell the Chrysler unit.

(snip)

"We all would be smarter if we knew what we know now back in February of '07," she said. "Probably a lot of different decisions would be made."

Chief executives of Chrysler LLC, General Motors Corp. and Ford Motor Co. are expected to testify next week before a House committee on a proposal for $25 billion in low-cost government loans to help keep the companies afloat. Any aid is expected to come with limits on executive pay and bonuses. It is unclear whether those conditions would affect existing bonus plans -- Chrysler's was hatched around April 2007 -- or merely limit future bonuses and golden parachutes.

Those promised the largest retention bonuses:

• Frank Ewasyshyn, executive vice president, manufacturing, $1.89 million.

• Frank Klegon, executive vice president, product development, $1.8 million.

• Rae, $1.66 million.

• Simon Boag, president, Mopar/global service and parts, $1.65 million.

• Steven Landry, executive vice president, North American sales, $1.63 million.

• Michael Manley, executive vice president, international sales, marketing and business development, $1.53 million.

The bonus sizes ranged from a high of Ewasyshyn's $1.89 million down to $200,000. The agreements provided for payments of 25% of the bonuses in February 2008 -- which were made on schedule -- and for the remaining 75% to be paid in August 2009.

http://www.lansingstatejournal.com/article/20081114/NEWS03/811140361

Why not fund their own bailout?  Be a founding member of the new generation of American automakers?

[WhiskeyGirl]

EU Considering WTO Action Over US Auto Industry Aid

The EU is ready to go to the World Trade Organization should US governmental aid to its struggling auto industry be deemed "illegal" by European lawyers, Commission head Jose Manuel Barroso said Friday.

"We are looking at the (US) plan. The plan has not yet been made official but certainly, if it amounts to illegal state aid we will act at the WTO," Barroso told Europe 1 radio when asked about the US bailout package.

An aid package worth $25 billion was approved by the US Congress in September. The package was earmarked for investment in new generation technology but no timetable was fixed for payments to be made.

read the rest here -
http://www.dw-world.de/dw/article/0,2144,3793399,00.html

Where did the $25 billion go?