Obama cracks down on auto-makers

[Saga]

President Obama this morning outlined his latest version of tough love for Detroit automakers, extending a federal lifeline, but giving the companies a deadline to put up or risk bankruptcy.

"We cannot and must not, and will not let our auto industry simply vanish," he declared at the White House. "This industry is like no other. It's an emblem of the American spirit; a once and future symbol of America’s success. It is what helped build the middle class and sustained it throughout the 20th century. It is a source of deep pride for the generations of American workers whose hard work and imagination led to some of the finest cars the world has ever known. It is a pillar of our economy that has held up the dreams of millions of our people.

"But we cannot continue to excuse poor decisions," Obama added. "We cannot make the survival of our auto industry dependent on an unending flow of taxpayer dollars. These companies – and this industry – must ultimately stand on their own, not as wards of the state. "

After rejecting restructuring plans the carmakers submitted, the president announced that the federal government is giving Chrysler 30 days to complete a proposed partnership with Italian automaker Fiat, with the promise of up to $6 billion in aid if they can make a deal. Chrysler has received $4 billion in federal help so far and had asked for $5 billion more.

Obama gave General Motors 60 additional days of operating money to restructure, but with a price -- GM chairman Rick Wagoner was forced out. Michigan Governor Jennifer Granholm, who has been advising the White House on the auto rescue, said on NBC's "Today" show that Wagoner "clearly is a sacrificial lamb." GM, after $13.4 billion in government loans, had sought as much as $16.6 billion more.

Obama said it is time for tough decisions, for no longer putting off facing fundamental problems.

"What we are asking for is difficult," he said. "It will require hard choices by companies. It will require unions and workers who've already made painful concessions to make even more. It will require creditors to recognize that they can't hold out for the prospect of endless government bailouts....Only then can we ask American taxpayers who have already put up so much of their hard-earned money to once more invest in a revitalized auto industry.

"But I am confident that if each are willing to do their part... then this restructuring, as painful as it will be in the short-term, will mark not an end, but a new beginning for a great American industry; an auto industry that is once more out-competing the world; a 21st century auto industry that is creating new jobs, unleashing new prosperity, and manufacturing the fuel-efficient cars and trucks that will carry us towards an energy independent future. I am absolutely committed to working with Congress and the auto companies to meet one goal: the United States of America will lead the world in building the next generation of clean cars."

He reached out to auto workers, who he said are among those suffering the most during the recession.

"The pain being felt in places that rely on our auto industry is not the fault of our workers. They labor tirelessly and desperately want to see their companies succeed. And it is not the fault of all the families and communities that supported manufacturing plants throughout the generations. Rather, it is a failure of leadership – from Washington to Detroit – that led our auto companies to this point," he said.

To reassure consumers during the uncertain period, Obama said the US government will stand behind warranties. (Click here for more detail.)

"It is my hope that the steps I am announcing today will go a long way toward answering many of the questions people may have about the future of GM and Chrysler," he said. "But just in case there are still nagging doubts, let me say it as plainly as I can – if you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired, just like always. Your warranty will be safe. In fact, it will be safer than it’s ever been. Because starting today, the United States government will stand behind your warranty."

Obama's full prepared remarks are below. For more detail on the plan, click here.

But so far, Obama's plan is not reassuring the markets. The bellwether Dow Jones industrial average has already plummeted more than 200 points.

The auto plan represents Obama's latest set of sweeping proposals as he juggles what he has acknowledged is a very full plate. Last week, Obama's team laid out a new bank rescue plan and a new strategy for Afghanistan and Pakistan. On Tuesday, Obama heads overseas for the G-20 economic summit.

Thoughts? I wasn't aware Wagoner stepped down as a stipulation, that's crazy.

[kuronosan]

I like it, but I'm sure my stepmother and my father will be crying to me about it from across the hall.

[Apelila]

I'm sure there's a problem with it, but it seems that they're telling them 'quit failing at buisness' in order to get help. So it seems ok.

[Tyche]

Essentially getting fired by the president of the united states has to be the worst way to get fired ever.

[Kiro]

Doesn't matter, we're all fucked anyway.

lurn2shoot/growyourownfood/hunt/defendyourself/speakotherlanguages or you're fucked.

[Takedown3]

Doesn't matter, we're all fucked anyway.

lurn2shoot/growyourownfood/hunt/defendyourself/speakotherlanguages or you're fucked.

4/5 here what languages do i need to learn other then english and french? Chinese i guess?

[Olo401]

Lost in the furor over Wagoner's dismissal/resignation is the whole thing about Chrysler & FIAT. I don't think this deal is gonna happen, and even if it does I don't think it's gonna go anywhere. A few people I've read have suggested that Chrysler should simply go under - their minor market share would then get divided up among the other auto makers in the market and help strengthen their sales. The problem with that is the Chrysler-only dealerships and partsmakers that would be put out of business as well, adding in the short-term to the economic mess.

[0ni0n]

Fuck GM and Crysler, we should put our tax money into Tesla.

[Pikarya]

Fuck GM and Crysler, we should put our tax money into Camels.

fixed

[Kiro]

4/5 here what languages do i need to learn other then english and french? Chinese i guess?

Chinese and Russian! :O

[0ni0n]

Chinese and Hindi

fixed

[Mr. Flippy]

lols hopefully these automakers get there asses in gear i would love to have my job back.(was recently laid off from a toyota sister company)

[Absolutely Virtue]

GM is not totally to blame. What about the people who continued to demand gigantic SUVs, fueling the market GM sought to cater to? Where is their punishment?

Oh yeah, giant, piece-of-shit monstrosities with atrocious gas mileage and no resale value. Grats on that.

The comparison has been made a million times, but only because it's so true. This is the hangover of the last decade- the price you pay when you overdo it. Only we don't have a headache from too much booze, we have a depression from an overwhelming tendency, almost worldwide, to fucking grab everything in sight, consequences be damned. You reap what you sow.

It does seem unfair, however, to single GM out for punishment, especially when you consider we're giving hundreds of billions more to Wall Street with almost zero oversight. Together they're responsible for the destruction of trillions of dollars in private wealth. One gets fired by the president (Wagoner), and the other (AIG) gets bonsus for ineptitude. That shit ain't right.

[Seraph]

It does seem unfair, however, to single GM out for punishment, especially when you consider we're giving hundreds of billions more to Wall Street with almost zero oversight. Together they're responsible for the destruction of trillions of dollars in private wealth. One gets fired by the president (Wagoner), and the other (AIG) gets bonsus for ineptitude. That shit ain't right.

I think those who are happy about Wagoner would like to see what happened to him happen to more presidents/leaders/CEOs of the shit companies too.

[Purrrfect]

Does the auto industry need to be as big as it currently is? People always trade in cars just to get something new when the current one still works. I've been wondering about how these events could reshape our entire view on viable industries and purchasing decisions at least nationally, possibily on a larger scale. Additionally, how do you think this kind of monetary climate will affect developing production/industrial nations (thinking mostly around Asia)?

[Aniero]

Wow, living near Detroit is going to suck worse then ever now

[Acturus]

GM is not totally to blame. What about the people who continued to demand gigantic SUVs, fueling the market GM sought to cater to? Where is their punishment?

You mean... the unions? Because they were the ones insisting that the plants continue to pump out high profit SUVs long after the demand for them decreased.

[0ni0n]

GM is not totally to blame. What about the people who continued to demand gigantic SUVs, fueling the market GM sought to cater to? Where is their punishment?

That's a stupid argument. People want stupid things, as the management of the company, Wanger & Co had to decide what is sustainable and what to produce. They decided to make hummers and other gas guzzlers was because they were sport utility vehicles that commanded a premium and higher profit margin...while it lasted. Little did they know that coincided with this economics crisis, this is the straw that finally broke the camel's back, GM simply does not have enough cash flows to research and produce the next generation all-electric vehicles. Wanger and his management team was simply too myopic and had no vision about the future for the company, despite the fact that they have been in the industry for more than 3 decades.

[Odesseiron]

We go right past Socialism and zoom right into Capitalism!

[HAcoreRD]

4/5 here what languages do i need to learn other then english and french? Chinese i guess?

spanish.