The troubled soul rarely goes along initially with the intervention, but if his friends keep pleading, he might eventually agree to seek help.
Granted, you wouldn’t normally turn to the likes of Christopher Dodd to pull you out of your stupor, but once you’ve gotten yourself that far gone, you roll the dice with respect to who happens to control the gavel.
The Detroit establishment has spent the past several weeks expressing hostility, victimhood and some thinly veiled self-loathing as it waits with bated breath to find out if this generation’s federal auto bailout will go forward. Local talk shows and newspaper editorials cry unfairness because the Congress wasn’t so mean to the bankers. Leaders try their best to make the case that the Big Three are the “arsenal of democracy” because they built munitions during World War II. But Rosie the Riveter is on Social Security now.
Now that Detroit seems to have a shot at a short-term fix of $15 billion to keep General Motors and Chrysler alive for a few months — far short of the $34 billion they wanted — Detroit is moving into the stage of grumbling and groveling acceptance.
An “auto czar”? But he’s going to be some banker instead of a “gearhead” car guy! (Conventional wisdom in Detroit: Gearheads good; “bean counters” bad.) Possible management oversight, or even ownership, by the federal government? “Since when can the federal government run a business?”
Point taken. No one could be worse at running a business than the federal government. Except, maybe . . .
General Motors Vice Chairman Robert Lutz, the 76-year-old industry veteran who was one of Lee Iacocca’s soldiers at Chrysler after its first federal bailout, has a penchant for revealing truths, and this week he pretty well gave away what Detroit thinks about the car czar notion and the general idea of giving up control of its destiny:
“Well, whether we need it or not, I think it’s reasonable that when the federal government steps in with taxpayer money, they’re not going to – they’re not going to lend us the money and just say, ‘Do the best you can with it and tell us when you need more.’”
Detroit really doesn’t think it needs anyone telling it how to do things. It is coming to the realization that it has no choice, but it sees no rationale for its own loss of control. The auto industry’s defenders continue trotting out the comparison to the financial industry, which, to be sure, got a bigger bailout with fewer questions asked.
The auto industry and those who continue to cling to it like grim death can’t grasp that these two things are not the same. Even if you think the financial-sector bailout was a bad policy decision, you have to recognize that it occurred for completely different reasons than the proposed auto industry bailout. One was designed to prevent the complete collapse of capital markets, which could have crippled the entire nation’s ability to borrow, make large purchases and access working capital. The other is designed to forestall the seemingly inevitable collapse of a bloated industry that has been mismanaging itself for decades.
One of Detroit’s major selling points during the early part of this process was the notion that GM would soon be handing legacy costs, in the form of retiree health benefits, over to the union. WJR talk host Frank Beckmann assured Fox Business Channel host Stuart Varney, “In 2010, that comes off the books.”
Oops. Everyone seems to have forgotten that this only happens once GM bankrolls the designated union fund to the tune of $24.1 billion, and now the UAW has grudgingly accepted the reality that GM can’t make the payment, so it will have to be “delayed.”
The guess here is that it will never be made. The $15 billion about to be approved is only designed to keep GM and Chrysler on life support while they work on reorganization plans that must be approved by the “car czar” by March 31. Any such plan that does not eliminate such boondoggle expenditures can’t possibly pass muster, and if the automakers try to pass off a plan that continues this kind of insanity, the car czar will now be forced to call in the loans and force the companies into bankruptcy.
Even as it rages against its rescuer, Detroit knows it is forced to accept any condition — no matter how onerous.
In the 1987 film Less Than Zero, Robert Downey Jr. has to perform acts you don’t want to hear about in order to avoid the consequences of his gargantuan drug debts. But he never truly accepts reality in his heart, and ultimately he cannot be saved. Ironically, he ends up dying in the back seat of an automobile.
Interventions always go like this.
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