While Congress mulled over an inevitable, albeit still wildly unpopular, auto bailout yesterday, I practiced helping automakers by flushing some cash down a toilet.
Ford, GM and Chrysler as essentially asking American taxpayers to pay $25 billion for something bankruptcy courts do every day: give them time to reorganize and settle debts.
Ford and GM collectively ran through nearly $15 billion last quarter. So that $25 billion rescue package will last them until, say, May, at which point auto sales will still be in decline, the Big Three will be filing for bankruptcy and American taxpayers will have flushed $25 billion down the crapper for nothing.
I agree with the bailout proponents on one point: something needs to be done. Shutting down the Big Three would be crippling to Michigan’s economy, not to mention the millions of jobs at risk when automotive suppliers start to feel the crunch.
Maybe bankruptcy isn’t what it used to be, but filing Chapter 11 does not mean you have to close your doors and shut down production. Will jobs be lost? Sure, and in no small numbers. But it’s unlikely these cash flow problems will force Ford, GM, Chrysler and their suppliers to turn off the lights and close their doors forever.
A Chapter 11 filing typically allows businesses to maintain control of operations while being subject to court oversight. The debtor can also make their own proposals for reorganization.
As of this posting, the automakers have failed to outline any changes they would make to help pull their companies out of trouble. Just borrowing more money is not going to help, guys. Your cash flow crisis indicates you’ll need significant structural and administrative changes. Luckily, a bankruptcy court will be happy to take care of that for you. Chapter 11 would force the automakers to come up with their own proposals, or let creditors bring their ideas to the table in court.
Recently, some have called for the resignation or ousting of CEOs at the Big Three. I don’t think ousting the CEOs is the answer, but it’s also a bad idea to hand over cash to drowning businesses, not matter how many strings are attached.
If I had the ear of the auto CEOs for five minutes, I would offer this golden nugget of advice courtesy of Jim/Dad: shut down your excess car dealerships. Auto sales among the Big Three are comparable to those of foreign cars, but the foreign companies own roughly half as many dealerships. Those things are expensive to maintain. If I were an executive at Ford, GM or Chrysler the first thing I would look at as I prepare my Chapter 11 proposal would be how many of those dealerships we could shut down (hint: it’s probably half of them). I mean, I can buy a car on the Internet these days; we don’t need to have dealerships scattered about like McDonald’s drive-thrus. The Big Three’s problems are probably less related to fuel efficiency and safety ratings (all three manufacture models on par with foreign cars) and more a result of careless business practices.
Chapter 11 bankruptcy is not a death sentence. It’s a second chance. The Big Three haven’t engaged in any sketchy or illegal activity (a-la-Enron), so they have a good chance of surviving reorganization.
When it’s done right, Chapter 11 save jobs, maintains the engine of profitability (i.e. the business) and reconciles the company’s debt with creditors, the very reasons automakers argue we need the bailout. So let’s save ourselves $25 billion dollars and let the market work her magic.
Wednesday, November 19, 2008
Thursday, November 6, 2008
How Sarah Palin short-changed herself out of the White House
The set up looked great, but follow-through fell short.
If Senator John McCain is kicking himself this morning, it should not be for choosing Alaska Governor Sarah Palin as his running mate. I will say the same thing about Palin that I wrote about Mike Huckabee in January ("Iowa Caucus Ruckus"): my plumber has more foreign policy experience (a statement that is perhaps even more appropriate now than it was ten months ago given Joe the Plumber's recent rise to fame).
But I also stand behind my earlier statement that Palin was a smart VP pick. Politically, she was a great counter to McCain’s socially liberal policies and she energized the republican base. The ticket was well-balanced. The campaign fell apart in the strategy.
Rather than focusing on Palin’s real assets the campaign spent most of its time defending strengths she doesn’t actually posses, ridiculously clinging to their claim that Alaska’s proximity to Russia makes her a foreign policy buff.
Palin is no political lightweight. She has battled corruption in Alaska, been an advocate for families with special needs children, and her experience on the Alaska Oil and Gas Conservation Commission is particularly relevant as our nation vies for fuel independence. These are all strengths that would have helped create a well-rounded administration. Twenty years in the senate have given McCain enough experience in foreign and economic policy for the both of them. We should look for vice presidential candidates to posses skills or experience that the presidential candidate lacks.
I could blame the liberal media for unfairly attacking and haranguing Palin, but ultimately that just feels like a cop out. The campaign failed to refocus attention on Palin’s strengths, and that’s really too bad.
McCain will be 76 by the next election, and it’s unlikely he’ll run again. As for Palin, I wouldn’t support a bid for the presidency in 2012, but as Vice President she’d have done alright. If not, Mac could always send her on a peacekeeping mission to Africa.
If Senator John McCain is kicking himself this morning, it should not be for choosing Alaska Governor Sarah Palin as his running mate. I will say the same thing about Palin that I wrote about Mike Huckabee in January ("Iowa Caucus Ruckus"): my plumber has more foreign policy experience (a statement that is perhaps even more appropriate now than it was ten months ago given Joe the Plumber's recent rise to fame).
But I also stand behind my earlier statement that Palin was a smart VP pick. Politically, she was a great counter to McCain’s socially liberal policies and she energized the republican base. The ticket was well-balanced. The campaign fell apart in the strategy.
Rather than focusing on Palin’s real assets the campaign spent most of its time defending strengths she doesn’t actually posses, ridiculously clinging to their claim that Alaska’s proximity to Russia makes her a foreign policy buff.
Palin is no political lightweight. She has battled corruption in Alaska, been an advocate for families with special needs children, and her experience on the Alaska Oil and Gas Conservation Commission is particularly relevant as our nation vies for fuel independence. These are all strengths that would have helped create a well-rounded administration. Twenty years in the senate have given McCain enough experience in foreign and economic policy for the both of them. We should look for vice presidential candidates to posses skills or experience that the presidential candidate lacks.
I could blame the liberal media for unfairly attacking and haranguing Palin, but ultimately that just feels like a cop out. The campaign failed to refocus attention on Palin’s strengths, and that’s really too bad.
McCain will be 76 by the next election, and it’s unlikely he’ll run again. As for Palin, I wouldn’t support a bid for the presidency in 2012, but as Vice President she’d have done alright. If not, Mac could always send her on a peacekeeping mission to Africa.
Tuesday, November 4, 2008
McCain needs a major upset
My normally perky cup of coffee this morning turned into a big downer as I glanced over a red and blue map of the country. The numbers are not exactly in McCain’s favor.
McCain should easily secure 118 electoral votes from 14 states, according to Real Clear Politics’ count. Another 14 electoral votes are leaning his way. Assuming McCain wins those 132 votes and the 128 toss ups, that’s 260 electoral votes. Candidates need 270 to win. Ouch. Even in this best case scenario (Obama may steal some of those toss up votes), McCain’s campaign will fall short by ten votes. Obama, on the other hand, could win with the 278 votes that are either solid or leaning democrat. No toss ups needed.
If the polls are correct, McCain’s best hope is for an upset in Minnesota, which has ten electoral votes leaning toward Obama.
McCain should easily secure 118 electoral votes from 14 states, according to Real Clear Politics’ count. Another 14 electoral votes are leaning his way. Assuming McCain wins those 132 votes and the 128 toss ups, that’s 260 electoral votes. Candidates need 270 to win. Ouch. Even in this best case scenario (Obama may steal some of those toss up votes), McCain’s campaign will fall short by ten votes. Obama, on the other hand, could win with the 278 votes that are either solid or leaning democrat. No toss ups needed.
If the polls are correct, McCain’s best hope is for an upset in Minnesota, which has ten electoral votes leaning toward Obama.
Monday, November 3, 2008
Why John McCain was screwed before he even got out of bed this morning
The presidential race between O-Bom and Mac was all but decided before either announced his candidacy. And it has little to do with the economy or the war on terror.
It’s no secret that I’m a fan of Senator John McCain and would like to see the election swing his way, but if history is any indication (and she usually is) I won’t be breaking out the cigars and champagne on Wednesday. The incumbent party has little chance of retaining control over the White House. President George W. Bush’s term has seen some of the lowest approval ratings since the 1940s, and low approval ratings often forecast a shift in political power.
Harry Truman frittered away political capital like it grew on trees and in 1952, Dwight Eisenhower dominated the electorate over democratic candidate Adlai Stevenson. (Truman began his term following FDR’s death with approval ratings in the 80s; by 1951 his ratings were at 22 points, according to Wall Street Journal reports).
Jimmy Carter’s approval ratings were just starting to recover from the disastrous Iranian hostage crisis in 1979 when the economy took a downturn, sliding his approval ratings back into the 30s. Ronald Regan’s victory in 1980 was nothing short of a landslide.
Bush’s approval ratings are currently hovering in the 30s, just a few points lower than his father’s were when Bill Clinton unseated him during the 1992 election. At the time, unemployment and poverty had climbed to their highest in nearly ten years.
I’m not suggesting that approval ratings alone will make or break an election. Each of these examples had other contributing factors. Eisenhower’s victory came in the midst of the Cold War, and Bush’s 1990 tax hike left room for Clinton to secure a victory. Regardless of the issues, when the president’s approval ratings sink below 50 percent the party is in trouble. As a candidate, even if you do everything right (which no candidate has in this, or probably any, election) you’ll still face an uphill battle through a blizzard.
Of course Republicans should not be deterred from voting tomorrow, our votes still count. We also need to be realistic about our expectations for the election’s outcome: a McCain victory is unlikely.
So for now, tuck those Cubans back in their box and leave your Tattinger on ice. The political climate could look much more favorable for conservatives once Obama’s had four years in the White House.
It’s no secret that I’m a fan of Senator John McCain and would like to see the election swing his way, but if history is any indication (and she usually is) I won’t be breaking out the cigars and champagne on Wednesday. The incumbent party has little chance of retaining control over the White House. President George W. Bush’s term has seen some of the lowest approval ratings since the 1940s, and low approval ratings often forecast a shift in political power.
Harry Truman frittered away political capital like it grew on trees and in 1952, Dwight Eisenhower dominated the electorate over democratic candidate Adlai Stevenson. (Truman began his term following FDR’s death with approval ratings in the 80s; by 1951 his ratings were at 22 points, according to Wall Street Journal reports).
Jimmy Carter’s approval ratings were just starting to recover from the disastrous Iranian hostage crisis in 1979 when the economy took a downturn, sliding his approval ratings back into the 30s. Ronald Regan’s victory in 1980 was nothing short of a landslide.
Bush’s approval ratings are currently hovering in the 30s, just a few points lower than his father’s were when Bill Clinton unseated him during the 1992 election. At the time, unemployment and poverty had climbed to their highest in nearly ten years.
I’m not suggesting that approval ratings alone will make or break an election. Each of these examples had other contributing factors. Eisenhower’s victory came in the midst of the Cold War, and Bush’s 1990 tax hike left room for Clinton to secure a victory. Regardless of the issues, when the president’s approval ratings sink below 50 percent the party is in trouble. As a candidate, even if you do everything right (which no candidate has in this, or probably any, election) you’ll still face an uphill battle through a blizzard.
Of course Republicans should not be deterred from voting tomorrow, our votes still count. We also need to be realistic about our expectations for the election’s outcome: a McCain victory is unlikely.
So for now, tuck those Cubans back in their box and leave your Tattinger on ice. The political climate could look much more favorable for conservatives once Obama’s had four years in the White House.
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