Give GM the money

I know, I know. It’s bad economic policy and probably un-American too, but we can’t let General Motors go under; at least not right now.

I know all the reasons why not, and if we weren’t already in the middle of an economic shit-storm unlike anything else in our lifetimes, I’d be arguing to let them go through Chapter 11 and emerge in a trimmed-down form more befitting the 21st Century. But we are in a terrible economic crisis, and it makes no sense to allow another 200,000 people to be added to the jobless – not to mention tens of thousands more from GM’s supplier companies, who employ as many as three million.

Whatever we lend them now we won’t be spending on unemployment checks, food stamps, job retraining, the support of a bankrupt city of Detroit, etc. I am also persuaded that a viable automotive industry is vital to the national defense.

This money should not be lent without significant strings attached that include management and labor give-backs. But it must be given lest we dig this hole even deeper. Now is not the time to worry about the deficit – we need to keep bailing this boat hard.

Bye bye big boy

Lost to me in all the election and economic news was the announcement by GM last week that they will cease development of the next generation of their big SUV platform, the one that underpins Escalades, Suburbans and Yukons. The reason is the $2 billion developmental costs. These monsters, plus smaller SUVs and trucks, provided all of GM’s profits for the last 20 years, but no one wants them now. Just a year ago the Janesville, Wisconsin plant that made the big ones produced 20,000 a month. Last month it made 3,000. They are closing the plant before Christmas.

I was at the dealer yesterday having my car serviced, and while I waited I sat in an ’08 Escalade and fantasized. I felt like I was behind the wheel of the Starship Enterprise. This baby had everything, including power, retractable running boards, and an $80,000 price tag. However, a few minutes later I watched a salesman walking a prospect around the beast and overheard him say that they’d get it down around $65k – and that was his opening offer.
I know these things are bad for the environment and a danger to all the rest of us on the road in lesser vehicles, but I felt like Tony Soprano while I was sitting in it, and I think I’ll miss them when they’re gone.

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Well, once I decided to vote for Obama I supposed it was just a matter of time before I started admiring French social policies. I was watching CBS Sunday Morning today (median age of viewers: deceased) and they had a segment on the French health care system. They spend half as much per person, everyone has health care, most services are either free or very low cost, and they have lower infantile mortality rates and beat us in most measures of wellness. I’m sure there are negatives that went unreported, but you have to wonder when we are going to actually do something about our own system. Will Obama & Co. come through?

Can't forget the motor city...

When I was growing up in Warren, Ohio in the '60s, it had about 65,000 inhabitants and General Motors employed nearly 30,000 people there, building cars, truck engines, and assembling wiring harnesses. Those jobs paid high union wages and offered excellent health and retirement benefits (hence the local nickname, Generous Motors). Today the population is about 45,000 and the GM payroll is down to under 5,000 – and many of those jobs have been downgraded in pay and benefits.

We all drove GM cars back in the day; partly out of loyalty but also as part of an endless feedback loop in which you could not sell a used car unless it was a GM model, and no one would buy something they couldn’t sell later.

My grandfather gave me my first car -- a big, black 1948 Cadillac, so decrepit my parents wouldn’t let me drive it. Next came a 1952 Chevy followed by a chocolate brown 1972 Buick Electra 225 with a chocolate brown interior and vinyl roof. Then a ’71 Olds 442 succeeded by a ’71 Chevy Impala Super Sport – fire engine red, chrome reverse wheels and a sreamin’ small block V8 engine that got about 8 miles to the gallon if I babied it. Someday I’d like to have the car in the photo above, ('59 Caddy Eldorado) or maybe a new ‘Vette.

When I moved away from Ohio I lost my automotive way and owned a succession of European sedans. And while they were nice cars, driving them always made me feel vaguely pretentious and disloyal to my heritage. So a few years ago I went back to my GM roots and now have three pieces of “Detroit Iron” in the driveway. They are all nice cars. They’ve been trouble-free and each was much less expensive than their Japanese or European counterparts. So don’t hesitate to drive American. It won’t hurt and it might make you feel good.

This is all on my mind today because I had a drink last night with an old friend from Detroit, and we were talking about how S&P had just downgraded GM, and raised the possibility of bankruptcy, which would just be unimaginable to me. (In the last year the stock has gone from $40 per share to $5.) We talked about how many of our old friends from home depend on GM or Ford for either their job or their pension. And these are just about the last blue collar jobs in America that can support a truly middle-class life. It would be unbearably sad to see that disappear.