The $350 Billion UAW Bailout

Rumors are swirling that President Bush may use Bush-Pelosi Bailout funds to save the UAW, General Motors, and Chrysler.

But even while Detroit is lobbying against local governments buying fuel-efficient vehicles and selling biodiesel trucks that aren’t, the Detroit 3 and their monopolist union supplier may be saved by this maneuver:

Bush may give funds to the Detroit bailout on the condition that Congress not refuse $350 billion more for Wall Street.

Detroit is in trouble because of its coddling of its unions, its incompetent management, its short-sighted use of government connections, and its love of debt.

Next up: a newspaper bailout? (courtesy gmgDesign)

5 thoughts on “The $350 Billion UAW Bailout”

  1. I understand why the Dems in Congress are supporting the reward-for-failure of Detroit-3 (to appease the union bosses), but why Bush? I have my guesses, but it goes against his free-market convictions big-time. And surely he hasn’t bought the fallacious argument of a domino collapse of Detroit-3 if the Gov doesn’t step in. Any ideas?

  2. T.I.R.,

    Wow! I’m currently downloading GM’s 2003 UAW contract, but at 73 megs (and that’s without the 2007 addendum), it’s quite the download!

    Garrett,

    Thanks!

    On Bush, the best theory is that he’s using it as a method of getting to spend the $350 billion before Obama comes to office. That method will narrow Obama’s freedom of maneuver quite a bit, by exhausting the TARP funds that Obama could have spend and forcing Obama to rationalization of Detroit.

    gmgDesign [1] links to the Freakonomics take on the bailout of the oligopolists. [2]

    [1] http://www.gmgdesign.com/go/?p=338
    [2] http://freakonomics.blogs.nytimes.com/2008/12/11/whats-the-point-of-bailing-out-the-auto-industry/

  3. Courtesy of Slate, the Big 3’s predictions of the end of the auto industry don’t seem to have been heard by their competitors in the South:

    http://www.slate.com/id/2206525/

    Obligatory warning: Expect concentration to be difficult as pictures of Kate Winslet in a bathtub occasionally appear on the right-hand side of the screen (link to a video review of her new movie).

  4. Michael,

    Excellent link!

    It remains me of the bank centers in South Dakota (including Citi, HSBC, and others) which operate very profitable under much friendly in the state than their parent organizations do in New Jersey.

    A business professor once mentioned in class that after a BMW executive was caught speeding near a plant in the south, the company’s reaction was to give the police department BMWs to use as cruisers. I’m not sure if the story is true or not, but the different tones of the foreign and Detroit automakers is apparent… The SNL parody of Governor Blagojevich [1] recalls the testimony of the Detroit automakers to Congress [2], in more than just cast.

    [1] http://www.weeklystandard.com/weblogs/TWSFP/2008/12/the_daily_grind_9.asp
    [2] http://www.youtube.com/watch?v=ics1IXr4YBw

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