Wheeling and Dealing for Detroit

By "The Greek"

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Lame-duck President Bush has little leverage to get any of his wishes accomplished before his exit, but it became clear yesterday that the Democrats have a few needs he might exploit toward that end. Namely, the Dems would like to see the auto sector lifted up from cliff's edge as soon as possible in order to take that critical problem off the long list Obama will inherit in January. It's just unfortunate that political wheeling and dealing has left Detroit auto workers with bated breath. Jobs have been lost in Motown in recent days, and more may be lost that might be preserved by swift government action.

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Auto Industry Caught in Between

The auto industry is in the spotlight today, as several publishers are reporting President Bush may be near ready to offer aid to the cash strapped sector. In recent days, General Motors (NYSE: GM) and Ford (NYSE: F), alongside foreign producers Toyota (NYSE: TM), Honda Motor (NYSE: HMC) and private firm Chrysler have garnered attention, but for all the wrong reasons.

October light motor vehicle sales noted the worst month in twenty five years. In the days that followed, automakers publicly discussed their unsustainable level of operations in such an environment. GM and Ford barely have enough capital to survive through a couple more quarters at their current cash burn rates, and asset sales are likely to find far less than optimum pricing in today's garage sale-like environment.

Yesterday, President-Elect Obama supposedly urged Bush to aid the auto sector, because he seeks to avoid inheriting it in a shambles. The lame-duck Bush is said to be playing a poker hand to Obama and Dem desires, by holding the Colombia Free-Trade Pact up as a carrot. Democrats oppose the deal without more substantive progress in Colombia, but the Administration and the Republicans wisely see the need to more strongly ally with Venezuela's neighbor sooner rather than later.

Talking heads are discussing the possibility of another $25 billion or so in capital to help autos through tough times. The Washington Post reported that a bipartisan group of Congressman asked the President to include auto sector aid in that blind bag of money called the Emergency Economic Stimulus Act. It's clear that as time passes the President's leverage declines, so he may have to tweak his request for Colombia a bit to make it more digestible for the Dems. Still, a deal seems clearly possible.

In any event, stubborn Detroit is going to have to adapt to modern times, and get competitive again. Waiting the auto industry out a bit, making the Detroit gang sweat a little, might prod that. It's efforts in the green car push have been late in coming, and much of the companies' current strife is perhaps due to their own lack of foresight and preference for low hanging fruit, i.e. the SUV craze. Unfortunately, that lack of foresight has been exposed now as common place in our society...

While all this political wheeling and dealing finds admiration in Washington, Detroit is left holding its breath. The real livelihood and well being of Detroit auto workers hangs in the balance, and it is unfair to this classic cut of American pie that they are burdened now with stress. Some of these hard working Americans are already losing their jobs because of the delay, so real lives are on line. "The Greek" urges Washington to either drop the politics or sit down and work something out swiftly for the sake of our struggling brothers in Detroit town.


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