Detroit Faces Congress
The big issue today in Congress is the future of the big three Detroit automakers. On the verge of bankruptcy, General Motors and Chrysler packed up their green vehicles and took the 10 hour drive to Washington. Both automakers are asking Congress to loan them money so that they can survive. GM CEO Wagoner has made it very clear to Congress that they could shut their doors if they don’t get badly needed funds before the end of the year.
The multi-billion dollar question is whether or not to lend GM and Chrysler the money. Each one is seeking billions of dollars in loans to keep their companies going. Chrysler is seeking $8 billion in loans while General Motors is seeking $18 billion in federal aid. However, without this aid the Detroit automakers will be forced to shut down and the United States faces another potential 3 million jobs being lost. Economists have even gone so far as saying that the failure of any one of the big three automakers could cause the United States to go from a recession to a depression.
The failure of any of these three companies would send the economy into a long term downward out of control spiral. The effect would be felt all the way across North America all the way from Mexico to Canada. The Mexican economy, which imports billions of dollars worth of American made products, would be faced with the loss of thousands of jobs. Mexico is a major producer of automotive parts and boasts many plants belonging to both General Motors and Chrysler. On the northern end of the spectrum, our Canadian neighbors would also loose thousands of jobs. Our economy here in the United States would loose jobs as well. Transportation companies will no longer be moving parts and cars back and forth between Mexico, United States and Canada. Retirees’ will go without their pensions. American suppliers who have provided parts will be forced to go unpaid. There is no doubt that the financial repercussions would be felt all over.
Although Congress has not laid out a specific plan, it is widely anticipated that they will find common ground. This time the auto execs left their private airplanes back in Detroit and opted to drive instead. Furthermore, execs have agreed to reduce their expenditures drastically and even reduce their annual salaries to $1. This is quite a reduction to Wagoner’s lavish $20 million dollar annual salary. It is no wonder the companies are broke. Executive pay should directly reflect the performance of the company. Hedge fund managers have been criticized for the large salaries that they were paid on Wall Street. However, these managers made a percentage of the hedge fund’s profits. If the hedge fund was not profitable, then managers do not make any money. Unfortunately this is not the case every where else, both on Wall Street and other American corporations.
This economic crisis has affected every American one way or another. As a citizen of this great country, I hope that our leaders will do the right thing. The automakers have all agreed to have made mistakes and are willing to completely overhaul their operations. More efficient assembly lines and fuel efficient cards will help Detroit become profitable again. The fact of the matter is, that the failure of such large financial empires like General Motors and Chrysler will further deteriorate our economy and perhaps even plunge our company into another depression.
The big issue today in Congress is the future of the big three Detroit automakers. On the verge of bankruptcy, General Motors and Chrysler packed up their green vehicles and took the 10 hour drive to Washington. Both automakers are asking Congress to loan them money so that they can survive. GM CEO Wagoner has made it very clear to Congress that they could shut their doors if they don’t get badly needed funds before the end of the year.
The multi-billion dollar question is whether or not to lend GM and Chrysler the money. Each one is seeking billions of dollars in loans to keep their companies going. Chrysler is seeking $8 billion in loans while General Motors is seeking $18 billion in federal aid. However, without this aid the Detroit automakers will be forced to shut down and the United States faces another potential 3 million jobs being lost. Economists have even gone so far as saying that the failure of any one of the big three automakers could cause the United States to go from a recession to a depression.
The failure of any of these three companies would send the economy into a long term downward out of control spiral. The effect would be felt all the way across North America all the way from Mexico to Canada. The Mexican economy, which imports billions of dollars worth of American made products, would be faced with the loss of thousands of jobs. Mexico is a major producer of automotive parts and boasts many plants belonging to both General Motors and Chrysler. On the northern end of the spectrum, our Canadian neighbors would also loose thousands of jobs. Our economy here in the United States would loose jobs as well. Transportation companies will no longer be moving parts and cars back and forth between Mexico, United States and Canada. Retirees’ will go without their pensions. American suppliers who have provided parts will be forced to go unpaid. There is no doubt that the financial repercussions would be felt all over.
Although Congress has not laid out a specific plan, it is widely anticipated that they will find common ground. This time the auto execs left their private airplanes back in Detroit and opted to drive instead. Furthermore, execs have agreed to reduce their expenditures drastically and even reduce their annual salaries to $1. This is quite a reduction to Wagoner’s lavish $20 million dollar annual salary. It is no wonder the companies are broke. Executive pay should directly reflect the performance of the company. Hedge fund managers have been criticized for the large salaries that they were paid on Wall Street. However, these managers made a percentage of the hedge fund’s profits. If the hedge fund was not profitable, then managers do not make any money. Unfortunately this is not the case every where else, both on Wall Street and other American corporations.
This economic crisis has affected every American one way or another. As a citizen of this great country, I hope that our leaders will do the right thing. The automakers have all agreed to have made mistakes and are willing to completely overhaul their operations. More efficient assembly lines and fuel efficient cards will help Detroit become profitable again. The fact of the matter is, that the failure of such large financial empires like General Motors and Chrysler will further deteriorate our economy and perhaps even plunge our company into another depression.
Labels: Chrysler, Congress, general motors
Credit Card / Financial news blog post by Todd Holliday at 8:20 PM 