Do we need the big 3?

The last time we were in recession, (2000-2001), it could be attributed to the collapse of the dot com bubble, the scandals with Enron, Anderson, and other accounting companies, and, of course, Sept. 11. However, the official word was that the recession actually was over by the end of 2001, indicating that little blame can be placed on our reduced propensity to travel, and much more on speculation in companies that didn't actually make anything, or a company that bought, sold, traded and managed a product that it created. Why does that history matter?

The major argument of the big 3 automakers is that they cannot meet their financial obligations because they cannot borrow money. And they need to borrow money because they are operating in the red. But according to economists, the state of Michigan has been in recession since 2001. It never came out of it, because for the last 8 years, it has continued it's stubborn reliance on the backwards economic ways of US automakers. In order to keep their stock prices up, US automakers boosted sales by offering one stop shopping at the dealerships - pick a car, get your loan, hug your warranty while you pay minimal insurance.

So now, GM and Ford want taxpayer money in order to turn their financing arms into commercial banks. They want taxpayer money to pay their workers, suppliers and no doubt, their executive salaries. Chrysler, a private company owned by a venture capital firm, wants taxpayer money because it can't admit that after being rescued from the dead by Lee Iacoca, it is again going to die.

And, to top it all off, lawmakers aren't asking for any guarantees from the car companies. There is a lot of rhetoric being spewed about "how do we know you'll pay it back" and "how do we know you won't come back for more dough in six months" and even some petulance because they did not get to ask the same questions to AIG and Citigroup since those deals went directly through Treasury. But no beef. No conditions, no demands, no muscle.

Today, the Dept of Labor reported that unemployment is up again, and more people are out of jobs. Ok - it is a recession. What do they expect. In fact, if the definition of a recession is a contracting economy, how is it possible for the economy to get smaller while the workforce gets bigger. We aren't the Soviet Union. We haven't nationalized our industries. YET.

I predict that despite the consternation and disfavor of large swaths of this country, the wise old fools in Congress will give money to the car companies. Because they fear that somehow, the lack of new jobs, and the loss of current jobs will put them out of a job. They have 2 years of job security. They shouldn't worry about their own skin, and should concern themselves instead with making the automakers :

1. Consolidate - 3 to 2. Get rid of GM.
2. Go into bankruptcy, so that they can renegotiate their contracts with the UAW
3. Get rid of the UAW. This union is worse than the mafia. A group of a few hundred thousand, or maybe a million members is holding all of America hostage by equating our economic well being with the well being of the only 3 car companies which will hire them.
4. Close their car dealerships. Tough shit for the car salesmen. We can use their large lots to create more parks, which will help the car companies with their pollution problems which will no doubt be the next reason they will come begging to Washington when they can't meet cap-and-trade requirements.
5. And finally, disassociate the well-being of the overall US economy from the fate of the car companies.

Yes, they indirectly control many jobs and industries. But we forget that all of the foreign automakers also buy parts from various US companies for their US plants. What if we increased the import duties on cars and car parts? We already flount the WTO when it serves our purposes. Why gain a conscience now? Raise import duties, make it more economical for foreign car companies to build their entire cars in the US, and keep the majority of those suppliers in business. Even better, while raising import duties, create tax credits for specific energy efficient goals - factories, cars, fuel. All of this will build an alternative industry, which the US car companies may not be able to keep up with. Again. Tough shit. Maybe they will grow again in the future. Maybe Henry Ford's internal combustion engine will suffer the same fate as Watt's steam engine.

Congress needs to calm down. We've yelled fire too many times in the last 6 months. And none of those fires have been properly put out by blanketing them in greenbacks. So perhaps, instead of using the same poorly functioning extinguisher, we should do a little controlled burn, and build a nice deep fire line which we can construct over a few months instead of a few days.