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With the Senate's failure to pass the $14 billion auto industry bailout bill, world stock markets fell: Asian markets fell over 5% and European markets are down more than 3%. Futures suggest that Wall Street will open lower as well, also due to news from JPMorgan Chase (it had a "terrible" November and December) and Bank of America (cutting 35,000 jobs over three years).
As for the bailout, Senate Republicans refused to support the bill and Senator Majority Leader Harry Reid (D-Nevada) said it probably wouldn't be discussed again until the new year, "It's over with." The NY Times writes, "The failure in Congress to provide a financial lifeline for G.M. and Chrysler was a bruising defeat for President Bush in the waning weeks of his term, and also for President-elect Barack Obama, who earlier on Thursday urged Congress to act to avoid a further loss of jobs in an already deeply debilitated economy."
Politico wonders if there's a leadership vacuum and noticed, "Obama never threw himself into the fight in a major way, and in contrast with the mortgage foreclosure crisis, Democrats seemed almost intent on protecting him from being entangled in the fight. But if GM falls into bankruptcy now, followed quickly by Chrysler LLC, it will greatly compound the unemployment crisis the new president faces Jan. 20th."
Additionally, Politico reports Vice-President Dick Cheney, in a closed-door meeting with the Senate GOP, warned them that it would be "Herbert Hoover time" if the bailout didn't pass. While some Republicans said their constituents didn't want them voting for the bill, one of the 10 Republicans who supported the bill, Senator George Voinovich (R-Ohio), said, "I’m not even thinking about the politics of it, I’m talking about the substantive part of it, the people who are losing their jobs, the suppliers and the automobile dealer."
Photograph of Senator Christopher Dodd making a call after the auto bailout bill failed by Haraz N. Ghanbari/AP
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I hope that this issue is dead. Please please don't change your minds, Senate.
I am not feeling good about bailing these guys out
The domestic auto industry has basically had its way with government through its effective use of lobbyists. They've won protectionism and held back efficiency, emission, and in some cases safety mandates. They've pinned their survival to thirsty, dirty behemoths based on 60's tech. All this, and they still can't compete AND have the balls to ask for bailouts.
Ford, at the very least, has diversified a bit on the world market and is in a position to weather this downturn. GM has been a bloated POS for decades and should fail or else quit the pretense and be fully nationalized.
Leadership vacuum..duh. Get rid of George,Inaugurate Obama NOW>
we can bail out bankers and money makers, but we can't seem to keep blue-collar workers employed.
what a time to be an american.
world markets did not plummet. they extended slight losses today. tsk tsk so sensationalist!
i don't understand, can't the invisible hand of the free market take care of itself/everything? that's what we've been told for years now, no?
I've never forgiven them for getting rid of Oldsmobile. I loved my 77 Cutlass with the Rocket 350 engine. Been a MB and Lexus man for years now though. GM quality has been shit for years. Hopefully those workers can go to work for Toyota or MB and be re-trained out of their lack of quality workmanship ideas.
why doesn't anyone ever point out that other companies such as honda and toyota make cars in the us and aren't in such a mess? despite everyone here talking about how terrible and stale gmc and ford's products are, they have sold the same or better than the japanese companies over the last 20 some odd years. so what's the difference? their cost to produce a vehicle is substantially higher... do your own research
Let them go chapter 11. Then they will have to improve or die. I do feel sorry for the workers but if we bail them out this will only be a temp fix.
It is unacceptable to rescue banks but allow other industries to perish. Yes, the auto industry in the US is cancerous, but it needs help and guidance, not a cold shoulder and deaf ear.
[5] do you call an average compensation of 75.00/hr "blue collar"? in that case, I wish I were blue collar.
@ r1b2
Which is why we should have never started with the bailouts in the first place.
Its not just the bad products its also the bad/over-leveraged/under-fulfilled contracts they company's have yet complete. Remember: we, the taxpayers, will have to cover the loss in tax revenue and also cover the defaults to union pension benefits via the Pension Benefit Guaranty Corp. Regardless of how it goes down, we are on the hook. This is going to hurt. The big question is do we pull the band-aid off slowly or quickly?
#12 Keep in mind that the 75/ hr includes all the benefits/ union fees too. Workers are probably making around $30/hr.
It's all legacy unions costs that Honda and Toyota don't have to wrangle with because their workers like getting paid more money upfront (+$5/ hr I've heard) rather than having a cushy retirement.
@tgirl, they're not paid $75/ hour. That's a fabricated number that includes the cost to pay retiree benefits. Read this from the NY Times:
http://www.nytimes.com/2008/12/10/business/economy/10leonhardt.html?em
Also, keep in mind Japan has universal (but not socialized) health care. This NPR piece is really interesting:
http://www.npr.org/templates/story/story.php?storyId=89626309
@TGirl,
If auto workers make so much money, why isn't detroit and michigan itself a paradise?
i mean, really, come on, why wouldn't it be if they were making these gobs of cash as you're indicating?
if someone paid me 30 bucks an hour I would be very very happy.
Check out this story from the LA Times
http://www.latimes.com/business/la-fi-gmworld7-2008dec07,0,5011709.story
I don't understand, can't the invisible hand of the free market take care of itself/everything? that's what we've been told for years now, no?
What we are living in is NOT unfettered capitalism. There are rules and regulations, tax breaks, subsidies, tariffs, handouts, lobbying, etc. that all lead to less competition and an uneven playing field.
I love how they are tagging this as a "Failure of Congress..." and as a "leadership vacuum". As though this was something we HAD to get accomplished and yet failed.
And I think it is noteworthy that this proposal failed for only one reason. The UAW refused to take a pay cut. For some reason, The United Auto Workers feel they deserve to earn on average $30+ per hour, even through one of the worst depressions in US history. They would rather that GM, Ford, and Chrysler file bankruptcy than take a cut in pay to keep the doors open.
This might seem incredible to some of you. But for those of us that live around the motor city, it is nothing new. The UAW has been driving up wages for years needlessly, even agreeing at times to move plants over seas and eliminate jobs as long as the remaining work force gets to keep their ridiculous high salaries.
I am a contractor that visits the big 3, and I am never surprised when I walk in and see workers asleep at their machines or in the break rooms. Their workers are greedy, and arrogant, and treat us contractors with much disdain as we are viewed as "stealing jobs". Apparently the rest of us don't deserve the right to work.
And of course the UAW paints the picture that they are protecting American jobs, but that is simply untrue. The only jobs the UAW cares about are "union jobs". The rest of us can all go pound sand for all they care.
I want to see the Auto Industry bailed out to protect our economy. But do they deserve to be bailed out? I need to see that the UAW is reigned in some. They are too powerful of a force in the industry and are keeping American businesses from being competitive.
So the question of the day is: Why should we, the American tax payers, bail out the auto industry with our tax dollars, when the auto industry workers refuse to take a cut in pay? It should be a foregone conclusion that their pay will be reduced when their industry is on the verge of collapse. And they should all be thankful to just have jobs. Instead, they will cut off their heads, to spite their face.
crazysexycool has to be one the most coherent, bright, and articulate commenters on this board. i don't know if i agree on all points, but i'd be hard pressed to find anyone else express themselves so clearly and compellingly.
And BTW bxbrian. The motor city area was a paradise at one time. But then the unions kept driving up wages until the companies here couldn't be competitive and had to move over seas. The unions even agreed to it to get higher wages for those who remained!
Now all that's here are a bunch of empty, deteriorating factories. And STILL, the unions don't get it!!! I have been told by many people around the motor city area, that they wouldn't get out of bed in the morning unless they were paid at LEAST $25 per hour. That is the arrogant mentality of the union workers in this area. And the rest of us are all scabs.
So don't feel sorry for the autoworkers folks. They don't deserve your pity!
@ CrazySexyCool
precisely.
Bravo crazysexycool!
I just love the sight of Dodd looking miserable.
What Plummet? The Dow is up 16.41 as of 3:25PM.
Excuse me, but it is absolutely incorrect to blame the UAW/people on the line. This is the same divisive bullshit being used by conservatives about the housing crisis: poor people are to blame. They don't deserve a better standard of living (or in the case of the auto workers), maintain the one they already have.
The auto workers are not the ones who drove (no pun intended) the big three into the ground by refusing to become greener/more fuel efficient. They are not the ones in bed with oil companies or pushing SUVs down people's throats. The problems with the big three has always been with the CEOs from Henry Ford onward. They have never adjusted what they earn in proportion with what their industry--or the country--has been making. If you go to Bloomfield Hills or Grosse Point, you can see exactly who is living far above their means in this equation and it's nobody in the UAW.
To not bail them out would be even more expensive to taxpayers, nationally, in terms of unemployment and other social services. The most vocal opposition to this--senators from the south--are ones who have provided ridiculous incentives for foreign auto makers to come to their states. Not only are these workers paid $30 an hour (way less than they should be), but their tax dollars go primarily to fund these incentives. Getting paid less while paying to keep your job? Wow, what a great system...It's horrifying to see the rights of workers eroded by all sides. Don't buy into this demonization!