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It was hugely entertaining for C-SPAN junkies – but what does it say to the auto-workers? Jeff Koopersmith says the best answer is clear.
December 5, 2008 – Geneva (apj.us) – I watched the Big Three automakers’ congressional testimony yesterday, and must say that it was almost as interesting as the OJ Trial.
United Autoworkers President Ron Gettelfinger, Chrysler CEO Robert Nardelli, Ford CEO Alan Mulally, and General Motors CEO Rick Wagoner were all on hand, like all dutiful third graders, to deliver the "term papers" that Congress had demanded showing how they would use the $34 billion – or $54 billion – or $75 billion – or perhaps as much as $125 billion they might need in the next several months.
Each of the seeming “witlesses” divulged his own story,
Ford outdid the rest in “full of yourself” rights – saying that it needed only a "backstop" with no cash needed now. I can get them a backstop from the old Yankee Stadium for less than $5,000 – but they "might" need $9 billion. Yuh think?
GM was forthcoming admitting it was so poorly managed that it needed money RIGHT NOW! $4 billion today, and probably $4 billion every month from now on, I think.
Chrysler just plain lied. Everyone knows that it can’t go it alone. It’s looking to be bought or to merge with GM, Ford, or perhaps even Studebaker at this juncture. What can I say? Jeeps can’t carry an entire huge corporation,
The most attention-grabbing testimony came from what I would call a strictly impeachable source: Mark Zandi, chief economist at Moody’s Economy. Wasn’t it Moody’s that rated all sorts of exotic junk paper – perhaps totaling $65 Trillion our trustworthy American bankers floated around the earth – as “Grrreat”?
Even Jon Lovitz’s “Yeah, that’s the ticket!” serial liar character from SNL has more credibility than Moody’s – or any credit rating agency, for that matter. Maybe Zandi hinself has some – but those links to Moody’s aren’t helpful.
Zandi seemed to be both in favor of saving the Big Three and destroying them. He is the one who came up with the surprise $125 billion figure durng the hearing. None of the three auto CEOs jumped up and punched him out – so I guess they too are not sure of whether or not they are begging for a mere $34 billion.
Zandi was dubious it seemed, even to himself. Every time he was asked a question by congressional Detroit supporters, he would back off his “learned" study and say the auto companies must be saved. Every time a Detroit Thumper would feed him an opening line, he would rush in with his worst news. At any rate, Zandi appears to believe that the automakers should go into “pre-arranged” bankruptcy – whatever that means insamuch as they are already pretty much gone. Meanwhile, who will ever buy a car form them again? Zandi’s answer: that the moronic staff within the U.S. government should guarantee the auto warranties. Can you just see Manny, Moe, and Jack smiling?
I’ve never seen such foolishness. All three CEOs looked revolting as they shamelessly did their best groveling act.
Each one, like nine-year-old delinquents, recited that they had driven to Washington DC in their "great-mileage" cars and promised they would “drive back!" Talk about bending for it!
Here’s what should happen – THE KOOPERSMITH STRATEGY:
- The twit president of the UAW – who must be thinking of a big job at General Motors someday – should organize his troops and march on Washington with their families, preferably with all their babies and little kids. They should demand help. That will scare the bile out of Congress – especially the Repukelicans.
- Congress should simply guarantee all American-made motor car loans. I might suggest all cars made in America – but then the Big Three would never sell any. This plan would cost the nation nothing – only the price of some losses when some people don’t pay their car loans.
- Establish a new Agency – headed by some honest car dealer. Applying for a new car loan would be as easy as presenting one’s latest pay stub. This agency should lock out the phony-baloney credit check agencies – not only are they liars and puppets, they report pure fantasy and their boards and senior management should all be in jail.
So let’s say 20 million families decide to buy a new car form Ford, GM, or Chrysler. That’s double what they project to sell next year and in essence, that might triple their sales. That would mean that the United States would be on the hook for about $400 billion in total loans to Detroit. Detroit, of course, would sell 20 million cars and take in $400 billion in gross sales or more.
And there’s a sizable silver lining: taxpayers could make a profit of 3-4% from the lower-than-low interest rates new car buyers would be signing on for. Only 6-12% of these loans would go bad. After all, if you don’t live in Chicago or New York, you do need a car!
Thus, the most the U.S. Government (in other words, taxpayers) could lose would be about 8% or $320 million. That’s only $1 dollar per citizen – including those who don’t make their payments! America would stand to gain $3-5 BILLION in interest over several years!
That means a $4 Billion or more profit to the taxpayers no matter what happens.
Remember, the Feds can collect – through payroll deduction of the toughest kind!
It’d say when you put a $2-5 billion gain up against $100 billion or more potential loss – my plan wins. What's better is that all the poor who need new cars can buy them – and most of all – the guys on the line in Detroit get to keep their jobs!
And no, I am not kidding. Think about it!
Jeff Koopersmith is an internationally renowned political consultant, opinion research authority and policy analyst. He has lobbied for causes including the alternative fuel sector and women’s health, and is an expert on the international real estate market. He lives in Philadelphia, Washington and Geneva.