Friday, December 19, 2008

Auto bailout: blame the workers

Contradictions abound with the auto bailout. Of course no one wants hundreds of thousands of Canadian (millions of American) jobs to disappear. But at what price do we expect government to intervene to "save the day"? When will the big 3 start to take energy efficiency seriously? Why do the workers take the brunt of the disaster while the owners get their bonuses?

Bush Approves $17.4 Billion Auto Bailout

President Bush announced $13.4 billion in emergency loans on Friday to prevent the collapse of General Motors and Chrysler, and said another $4 billion would be available for the hobbled automakers in February. The entire bailout is conditioned on the companies undertaking sweeping reorganizations to show that they can return to profitability.
That doesn't sound completely unreasonable but how can the automakers be trusted to do the right thing - i.e. start to shift production to smaller, more energy efficient and alternatively fuelled vehicles? If I'm not mistaken, the auto industry has been raking in billions in both civilian and military manufacturing over the past few years. When times were good, CEOs were raking in huge bonuses while shareholders were well rewarded. Now that times are bad, compounded by bad business decisions on the part of the Big 3, they're demanding a bailout to avoid going broke. Why didn't they put aside reserve funds when times were good? Remember the story of Joseph?
Mr. Bush, in a televised speech before the opening of the markets, said that under other circumstances he would have let the companies fail, a consequence of their bad business decisions. But given the recession, he said the government had no choice but to step in.

First the banks and financial industry, now the automakers are being rewarded for their greedy and poor decisions. As this article points out, executives continue to rake in billions in executive compensation despite their bad decisions. Taxpayers are on the hook. Next, the oil companies will be coming cap in hand for their share of the spoils as the doors of public treasuries opened wide for the rich to stick their fingers in and grab as much as they can. But here's the real name of the game:
The loan deal requires the companies to quickly reduce their debt by two-thirds, mostly through debt-for-equity swaps, and to reach an agreement with the United Automobile Workers union to cut wages and benefits so they are competitive with those of employees of foreign-based automakers in the United States.
This is the reason the rethuglican senators rejected the deal last week - not enough hammering of unionized workers. This is all about reducing the living standards of those who have decent jobs and reducing everyone to the lowest possible wages. History has shown time and again that concessions always beget more concessions followed by moving the companies off-shore. Today, the comparator is "employees of foreign-based automakers in the United States". Tomorrow it will be employees of foreign-based automakers outside the United States.

Not content with raiding and ransacking working people's pensions, investments, home values and savings, big business is using the hammer of fear and the anvil of bankruptcy to bring down wages while prices for food and energy continue to rise (notwithstanding a temporary drop in the price of gas).

And speaking about looting, Bernie Madoff made off with $50 billion in the largest ponzi scheme in the history of the world. Rather than prey on the small fish, Madoff scammed the sharks whose greed prevented them from asking questions like, "How do you do it? It seems too good to be true?" With regulators like the SEC turning a blind eye for decades, Madoff just kept going until it all caught up with him as investors tried to pull out their cash.

Who once said,

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