a bridge loan may pacify GM until Obama can get his health plan going. Also, the automakers mess may help PUSH THROUGH sometype of legislation on health care to help bail out businesses and get credit going again.

Ted Kennedy said he’d introduce health care legislation early in the new year. If we can get that going quickly we might take some pressure off the car companies. But, it has to focus on cost reduction as well as being capable of taking on Detroit’s workers (and there are a lot of them).

it’s time for Detroit to start selling the cars that it makes for Foreign to Americans.

I agree, except we do need the steering wheel on the left side. It’s p.c.

I’d say we need at least a year before things like healthcare reform and an ease in the credit crunch start having an effect on the bottom line…

I haven’t studied the plan very closely yet, but I agree with this other stuff. We need TIME to pull out of this nosedive.

But it [GM] is not nearly the hopeless entity that you and many others are stating it to be. It just is not. Am I being overly rosy? Maybe. But I think I am a lot closer than the bleak denouncers.

I don’t doubt you’re right. I’m wondering about the Republican plan to eliminate unions and the Wall Street speculators who might want to take down GM. Do they present additional obstacles to Dem plans to shore up car companies? Is it an insurmountable obstacles with Bush/Paulson still around?

GM can easily be a very viable entity, and I do not believe they would be here if not for the financial collapse. It was going to be thin while the reformation was in process, no question, but the death screw is the financial system meltdown that occurred before their evolution could gestate fully.

Does this make you wonder if the timing of the ‘crisis’ had to do with the state of these car companies?

I usually just look at issues in a secular way. But, in this case consider the politics: is someone actively trying to take down the car companies for fun & profit and political advantage? If so, then ask which side the car company CEOs are on. If you don’t feel certain they’re good guys, then giving them money is giving crooks money. It’s unwise. Who has credit default swaps or is ’short’ to ‘insure’ against their failure?

If they’re trying then what are the chances they can get their companies through this? Is it greater than 50%?

What’s the smallest down-payment you can make on this, so that if they fail we’ll have shown we care about auto workers, but also showed frugality? Schedule a payment plan or line of credit if you will and don’t hand it all out unless they can prove their plans require a huge upfront payment. If they have cash on hand then make them use their monies.

Even more, use our money as just a backstop while they use their money first. That way whatever we’ve loaned can be recouped completely.

Don’t trust AND tie your camel.

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pre tax profits per car
The chart to the left shows the losses and profits per car of some major car companies. John over at Powerline uses it to argue that there should be no bailout, because the Big 3 are so unprofitable it’s just pointless. Let’s do some simple math. Take a look at GM’s loss per car, about $700. What is GM’s cost per car for health care? $1,500. What happens if you add $1,500? A profit. Of $800/car.

What the chart proves is that American car companies (except for Ford) are only not profitable, at this point, because of health care costs. The simplest thing to do to help the US economy (by not losing millions of jobs and one of the few remaining export industries) is to just pass universal health care, taking those costs off them, and in the meantime give them bridging funds to get them by until that’s done. Foreign car companies have far fewer health care costs, so all universal health care does is even out the playing field. Even Ford, with health care costs off, would be very close to profitability.

My thanks to the folks at Powerline for making the case for universal healthcare and for helping the auto industry so clearly.

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