{"id":5015,"date":"2008-11-01T07:00:43","date_gmt":"2008-11-01T12:00:43","guid":{"rendered":"http:\/\/planetwaves.net\/news\/?p=5015"},"modified":"2008-10-31T11:21:40","modified_gmt":"2008-10-31T16:21:40","slug":"do-we-have-to-save-general-motors-too","status":"publish","type":"post","link":"https:\/\/planetwaves.net\/news\/economics\/do-we-have-to-save-general-motors-too\/","title":{"rendered":"Do we have to save General Motors, too?"},"content":{"rendered":"

Editor’s note: The following article was written by one of the newer additions to the Planet Waves blogging team: Shanna Philipson. –RA<\/em><\/p>\n

Dear Friend and Reader,<\/p>\n

Q: What’s bigger than a breadbox, but smaller than a house?
\nA: The SUV in your neighbor’s driveway that’s about to get repossessed.<\/p>\n

Detroit is the latest to get in line for the $700 billion dollar government bailout package, and unlike Wall Street’s byzantine financial formulations and their equally confusing bailout proposals, this crisis is just the right size and shape for the average American to understand.<\/p>\n

\"The<\/a>
The Chevy Avalanche gets between 11 and 20 miles per gallon. Chevrolet's manufacturer, General Motors, is looking for money from the government to buy Chrysler.<\/figcaption><\/figure>\n

For the last fifteen years Detroit has enjoyed an illusion of endlessly profitable SUV sales. Consequently American automakers saw no reason to downsize or resize or rethink its monster car formula–or the way it did business, except to function in Jupiterian terms of escalating scale: Super-size me, baby! Now some domestic car makers are saddled with uncertain energy futures and super-sized debt in the form of unsold inventory and bad auto loans. If you believe their side of the tale, dismal truck and SUV sales are bleeding Detroit dry; at the current rate of loss, General Motors will be bankrupt sometime in 2009.<\/p>\n

According to this MSNBC<\/a> report, General Motors, who lost $18 billion in the first two quarters of 2008, is seeking help from Washington in the form of a $10 billion loan to buy the steadier Chrysler and merge the two companies in the hope that GM won’t go broke. And what’s in that for our folks in DC? Partial ownership in the new, merged entity.<\/p>\n

Not surprisingly, the idea is controversial. Do we want the government owning a direct stake in our car manufacturers? Moreover, do we have the means to affect a rescue reminiscent of the 1980 salvaging of Chrysler? MSNBC suggests GM’s offer won’t get far.<\/p>\n

<\/p>\n

Even though the Treasury Dept.’s decision to spend $250 billion to buy stakes in small banks and other financial institutions received general approval from members of Congress, the idea of the government owning a stake in GM is not popular. “I haven’t studied it,” says Representative Barney Frank [D-Mass.] who is chairman of the House Financial Services Committee, adding that, “We’d all be skeptical of taking equity.”<\/p>\n

But some see that GMAC, the debt-ridden financing apparatus (read: bank) of General Motors, may yet get them through the government dole door. Even more frightening to others is the very real threat that the mighty consumer arm of our military-industrial complex would collapse, losing far more than the estimated 35,000 plus auto industry jobs expected to disappear in a GM-Chrysler merger. A government loan, they argue, would be the lesser of two evils.<\/p>\n

What’s especially powerful about this news is its concreteness: complex financing schemes that even the financiers don’t understand is beyond most people, but the average American does understand cars. It’s the sort of problem scaled to a size the the average mortal can comprehend. And it doesn’t take much explanation for Americans to understand the implications of Detroit asking for government hand-outs after over a decade of pushing over-priced, over-bearing, over-eating monster cars on an equally greedy American public.<\/p>\n

Detroit has had many opportunities to learn the lessons of past challenges, but have they been willing students? No. But, then nor are we. American love their oversized everything, and we gladly scramble for the latest, best and biggest anything our corporations shill because for many, shopping is a national pastime. We are addicted to novelty and we have rewarded Detroit with our short attention spans.<\/p>\n

But the past few weeks seem to have curbed our national case of ADD. Bailing out insurance brokers and mortgage lenders may leave our heads spinning, but there’s nothing dizzy about what’s sitting on the curb of our street or adorning our driveway. No, that’s pretty solid. If you want to understand the new political-economic paradigm, consider our fifteen year addiction to the SUV and its multi-faceted consequences. You may have never owned one of those babies, but government bail-out or not, you’re surely going to pay as if you did.<\/p>\n

For a full-length discussion of the GM-Chrysler debate, see NPR<\/a>‘s story from Wednesday, Oct. 29.<\/p>\n

Yours & truly,<\/p>\n

Shanna Philipson<\/p>\n","protected":false},"excerpt":{"rendered":"

Editor’s note: The following article was written by one of the newer additions to the Planet Waves blogging team: Shanna Philipson. –RA Dear Friend and Reader, Q: What’s bigger than a breadbox, but smaller than a house? A: The SUV in your neighbor’s driveway that’s about to get repossessed. Detroit is the latest to get … Read more<\/a><\/p>\n","protected":false},"author":17,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"generate_page_header":""},"categories":[14],"tags":[36,473,52,472,117,471],"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/posts\/5015"}],"collection":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/comments?post=5015"}],"version-history":[{"count":0,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/posts\/5015\/revisions"}],"wp:attachment":[{"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/media?parent=5015"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/categories?post=5015"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/planetwaves.net\/news\/wp-json\/wp\/v2\/tags?post=5015"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}