Hurrah! Hurrah!

The US Senate rejected last night a $14bn bail-out plan for the ailing US car industry,

Bloody right too.

Chapter 11 is the right route.

Here\’s why.

Republicans refused to back federal aid for Detroit\’s beleaguered Big Three – GM, Chrysler and Ford – without a guarantee that the United Auto Workers agree to wage cuts to bring their salaries into line with Japanese carmakers by the end of next year. The UAW refused to do so before its current contract with the carmakers expires in 2011.

Everyone\’s going to have to take a haircut here. The shareholders wiped out, the bondholders taking a loss….but so too do the workers have to take a loss. That\’s why Chapter 11, that\’s the system designed specifically to enable such losses to be shared around.

9 comments on “Hurrah! Hurrah!

  1. Clearly the car giants aren’t finished yet and will use their ferocious lobbying power to push through another bailout attempt.

    Just like Woolworths, the US car giants’ poor quality goods and inability to compete has caught up with them.

  2. “poor quality goods”

    ??

    They still sell plenty of vehicles, it’s their costs that are the problem.

  3. The reason you give, taken from the Guardian, is false. It failed because it’s hugely unpopular with voters, and because the Democrats are too cowardly to take full responsibility for it when (not if) it fails. I’m surprised that you of all people have fallen for this transparent spin.

  4. “The reason you give, taken from the Guardian, is false.”

    Well, whatever works, eh? The management is incompetent and the companies have been brought low by disgusting UAW practices. A pox on all of them.

  5. “A pox on all of them.”

    Agreed. For once let’s hope the market gets to deal with this rather than shove the burden onto the American taxpayer.

    As a side note, nationalisation .. oops I mean “bailout” would mean Saint Obama strongarming the manufacturers into making “green” “low carbon” cars. Whatever they are.

  6. An even easier solution would be to ask the union concerned to buy up all the share capital (market capitalisation, $4 billion in October, probably a lot less now) and let them set their own wages.

  7. General Motors had offered buyouts to all of its 74,000 U.S. hourly employees. [5] Those workers could have elected to take a lump-sum payment of $45,000 or $62,500, depending on their job description, and retire with full benefits. [6]

    Republican Sen. George V. Voinovich of Ohio, a strong bailout supporter, said the UAW was willing to make the cuts – but not until 2011.

    http://nomedals.blogspot.com
    is were citations are posted

  8. Mark Wadsworth:

    Dammit, you’ve hit the nail on the head. And they ought to go for it, ain’t? Because, if they get into trouble later, they can always come back for a bailout, huh? Win-win, looks like.

    Syndicalism rules!

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