Not for nothing, but Tom's last name is spelled Laskawy. No E.

Having said that, Tom makes one of the best cases out there for a deal to help the Big 3 automakers. I'm still not sure, but let's see what happens.

Now is not the time to strip GM's managment, either -- not when the company is finally being run by an engineer, Japanese style (a Boeing guy) instead of a salesman; not just when said engineer is directing GM through a giant leap forward to simple, almost foolproof, 100 mpg electric drive-hybrids.

The Big 3 re-invented themselves once before -- remember the first oil crises of the late 70s. More digital (electric) and less analog (gas) technology make the engineering more a matter of chalking equations on a blackboard then endlessly dueling with mother nature's whims.

As for all the bellyaching about high Big 3 labor costs: just when America should (hopefully) be stepping back from the homegrown race to the bottom as well as the downward pressure on wages from both (!) foreign born workers at home (at levels unique in all the OECD) as well as abroad -- via legislation that puts strong supports under the price of American labor (hopefully doubling the minimum wage to half the "true" average wage and hopefully mandating a version of sector-wide labor agreements) -- is not the time to be crushing the auto industry's gold standard of wages and (just imagine!) benefits.

Our blue collar workers right now seem to be caught between the red, white and blue conservatives who don't happen to care what happens to working Americans and supposed progressives who don't seem to care at all about the survival of the red, white and blue's flagship industries. Hopefully whoever is left will have enough sense to care about both; hopefully they make up the majority.

suppose the Volt really is all that. I have my doubts about the efficacy of such long-lasting batteries, but you may be right. if that's true, then why won't some other car company buy the Volt division/research when GM goes into Chapter 11 (or 7)? if it really is world-changing etc, are you telling me that no other car company will buy it at bargain-basement prices?

also, supposing we don't bail them out and let the big 3 collapse. that, too, would derail auto opposition to climate change legislation-my understanding is that the foreign car companies have much less vested opposition to higher fuel efficiency standards, etc.

A lot of people seem to think that some form of bankruptcy would be a good solution for GM. What makes them think that a federal judge really understands automotive technology and the financial underpinnings of an entire sector of the economy? The better solution is to have congress sit down with the auto execs and hammer out a deal. I've read Yglesias' articles about the auto industry and he has been dead wrong. He obviously has no indepth knowledge of manufacturing in general or autos in particular.

This is about 16 levels of stupid, but par for the course. The Volt is pure PR at this point. It INTENDS to use lithium ion batteries but so far has not selected the manufacturer of said batteries or produced a working model. Should everything work out perfectly (which is happened all of never with GM) the individual Volts will probably be produced at a loss of $8-10K per car sold, and that's with generous tax incentives. So the idea of a car company that can't make enough money to pay the bills will get better by producing a different car that will lose far more money is insane.

Second, placing "conditions" on GM or whoever that they will only make econoboxes (or actually mini-econoboxes) will only further speed the Big 3 to insolvency (or a bigger money pit for the taxpayers). The Big 3 actually makes the vast majority of their revenue and until recently all their profits from trucks and SUV's. If they aren't allowed to make those anymore they are even less viable than they are now. Ch 11 reorg is the way to go, but putting "strings" to make non-competitive vehicles on whatever money will only make any reorg non-viable from the get-go.

marvyT, if you think federal judges make economic (as opposed to legal) decisions about the companies that go into bankruptcy, you know even less about bankruptcy proceedings than you claim yglesias knows about the auto industry.
granted, the economic and legal decisions are often intertwined, but the judge's role in bankruptcy generally consists of determining the priority of various creditors, and approving the final distribution of assets under chapter 7, or repayment plan under chapter 11. the trustee makes nearly all the economic decisions.

Few seem to be considering the international political economy of this. Car manufacturing is prestigious almost everywhere. Presumably, once the American Big 3 have got their state money (in exchange for some promises to build green cars one day - yes sirree!), the European and Asian carmakers will try and do the same in their home countries, to level the playing field. If they succeed the net competitive position of the big Three will be largely unchanged, but the entire global industry will have been massively subsidised. This in turn should raise the supply and bring down the cost of cars globally, and eventually provide many more engines to poison the Earth's atmosphere.

How is this good for the environment again?

My god, Ezra talks as if chapter 11 is the end of the world. You know, first they file the bankruptcy papers, and then the guys come with the gas cans and the matches and burn down every plant and management office, and hunt down the engineers and executives and banish them to a small island in the pacific.
If we want American car companies to get "better" then we need two things:
1. More and smaller car companies. Break them up, or let bankruptcy break them up.
2. Incentives to make better cars. Both market-based and government-funded incentives will work.
What GM wants now is precisely equivalent to your alcoholic buddy asking you to buy him one more drink, and then he'll really get sober. No thanks.

Why doesn't anyone talk of universal healthcare as the way to save these companies? Atrios pointed that out.

Personally, if my taxpayer money is going to be pissed down one drain or another, at least the auto industry produces something. If GM wants help, lets see a good environmental 'Come to Me Jesus!' from their management. Or, we could pay to replace their foreign production plants with some subsidized/updated/efficient plants here in the US, reducing their costs and actually bringing more production home.

I have no doubt that every sector of the US economy will be screaming for their own 'relief' package from the feds. This is a recession, after all. Where can I sign up personally? I promise not to need any more than roughly the annual salary of a Goldman Sachs executive.

Why doesn't anyone talk of universal healthcare as the way to save these companies? Atrios pointed that out.

When discussing the failure of the auto industry earlier, it was never the unions or the tremendous benefits packages the foisted upon the industry. No, that wasn't it.

*Now*, it seems, it is it.

1) Universal health care would be nice, but would not save the companies. Most of those costs got offloaded in the union negotiations a year ago.

2) Chapter 11 doesn't seem plausible for reasons Jon Cohn outlined in his article last week. Liquidation is likelier.

The Volt has been in development for a decade. Let GM liquidate and that work -- and any potential renaissance that could have emerged from it -- is trashed.

Nope. Liquidation means just that -- liquidate the assets. To whatever extent there's value in the work that's been done with the Volt, its an asset that can be sold and the proceeds used to pay off the creditors. If it can't be sold that means there wasn't much there to begin with.

What makes them think that a federal judge really understands automotive technology and the financial underpinnings of an entire sector of the economy? The better solution is to have congress sit down with the auto execs and hammer out a deal.

Why on earth would anyone assume that Congress knows anything more about auto technology and the financial underpinnings than a federal judge does? Not to mention the political pressures on Congress that don't exist in bankruptcy court.

The Big 3 actually makes the vast majority of their revenue and until recently all their profits from trucks and SUV's. If they aren't allowed to make those anymore they are even less viable than they are now.

The Holy Market has pretty well taken care of that business model. The once and future price of oil and -- goddess willing -- a carbon pricing scheme will ensure that SUVs and large trucks are a quaint vestige of the past.
Japanese car companies have done very well making high quality, relatively fuel efficient vehicles. US automakers chose not to. Now they're paying the price for that decision.
If they want to survive they better learn to compete with those mini-econoboxes.

"The Chevy Volt...is a huge deal. Not only will it be the world's first commercially-produced plug-in hybrid, but it will use a lithium-ion battery.

Ummm, no, the Mitsubishi iMiEV Sport should be out before the Chevy Aztek two: electric boogaloo Volt.

"The GM Might Save The World Argument"

Good grief. That's what you call "a point worth taking seriously"? Are there any limits to the absurdity of bailout arguments? How about, "if we don't bail out Detroit, an extraterrestrial invasion will destroy human civilization"? Sounds plausible, doesn't it?

1) Universal health care would be nice, but would not save the companies. Most of those costs got offloaded in the union negotiations a year ago.

The unions will be getting a Trust Fund from GM for which GM will be contributing about $46.7 billion. It is not a done deal. If GM can afford it.
http://tinyurl.com/6ekv7t

The UAW's source of income is worker's pay. Which GM and other automakers pay.

Finally, especially when it comes to retiree benefits, universal health care would not be a fix because retirees are already eligible for medicare. Workers wanted better than government care. Unless the universal health care laws make it illegal to provide private insurance, GM could still be asked to provide private insurance (as is the case now).

Honestly, I think that a lot of the "extra" arguments made lately in favor of the GM bailout are tossed in as a way to make the pot seem sweeter, but without adding any real substance. If you were focused on significant improvements in electric and hybrid technologies, there are a number of US-based small companies that are WAY ahead of GM already, but do not have the resources to expand aggressively and are getting zero attention in the discussion at the moment... Tesla and Aptera come to mind.

I think that anyone who wants to seriously consider the merits of the GM bailout should just focus on the impact to the economy if GM were to fail, and leave it there. Anything further sounds too much like throwing around a lot of ---- to see what sticks.

These environmental arguments for a bailout are completely crazy. Liquidation means, in this case, selling off the useful assets to Japanese car makers and letting the market share GM currently holds be taken over by Japanese car makers. Who do you think is more likely to successfully make and sell environmentally friendly cars: The people who have been resisting doing it for the last 30 years or the people who have been successfully doing it for the last 30 years?

Too big to fail = too big to exist.

Enough of this shit. Break these companies up and increase the competition.

Either that or let Obama run them from the White House.

I lost most of my sympathy for American auto company management when I saw this article about Ford. They have a 65 mpg car with no plans to sell it in the US
http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm?chan=rss_topStories_ssi_5

I am sorry GM has cash flow problems that are forcing it to close, but it happens to small businesses all of the time and I don't expect to bail them out.

The FIAT 500 (46mpg) sold out its first year's production run in three weeks.

It's not coming to the US, of course. Though plenty of cars made by GM abroad that get high MPG potentially could -- and probably will, if those operations get bought out.

"If we're going to basically buy them, they can't be spending money to lobby against national priorities."

Well, that's the hope, anyway. On the other hand, we were also expecting that AIG officials would stop treating themselves to hundred-thousand-dollar junkets every six months, but that didn't work out so well, did it? Unless the deal has an actual, legally-binding clause in it stating "GM will end its lobbying efforts immediately," they won't. Why should they? Why not have your bailout and lobby the government too? After all, you just proved how effective lobbying is!

Now I'm all but a socialist, and so if the correct answer here is to nationalize every last auto company, then yee haw! Bring it on! But I'll be damned if we end up giving them a huge handout of public wealth just so they can keep acting in the same irresponsible, selfish way they always have. I'm not about to enable them.

To refine my point a little bit:

Unless the deal has an actual, legally-binding clause in it stating "GM will end its lobbying efforts immediately," they won't. And because of the massive influence GM's lobbyists have, such a provision is extremely unlikely. My guess is that a broad consensus in favor of a bailout will lead to a "compromise" where we send them the money, but with incredibly fuzzy restrictions that never get enforced. Kind of like with the banking bailout.

But maybe I'm just cynical.

Ezra, you talk about liquidation as if it means that every last man is banished, and the books burned.

Unless American bankruptcy law is very, very odd, if there is someone willing to buy at least some bits of the business, those parts can be crammed down into a new company and sold to the willing buyer - perhaps the USA.

That would still leave the unprofitable parts gone, with their physical assets perhaps sold off to another auto maker, who will hire some of the newly unemployed.

The bail out would be for the workers.

GM management was not stupid they knew that keeping lots of relatively highly paid workers in the USA would ensure political power and the UAW knew that needed to keep non-UAW management around so that they could put the fault on them. So IMO if the government bails out the auto-companies part of the bail out deal the companies should become employee owned. Then they will not be able to play this game were the UAW holds firm and blames management and management blames the UAW and the tax payer subsidizes these companies with multi-million dollar execs and for the sake of the workers.