Obviously the big 3 auto makers came back to news with the Congressional hearing today. This big 3 Washington show started before the Thanksgiving with the “corporate jet gate”, in which the reporters and some congressmen questioned the 3 CEOs taking corporate jets to ask for money: it like one begs for money while wearing George Armani. But I think the media coverage and the US congress acted (reacted) too much on this show.
In my mind, this is not about politics, unions vs. the car company, mid-west (Detroit, or Michigan) vs. southern states. I am thinking saving big 3 (GM, Ford, Chrysler) is critical to the US economy and manufacturing. If the big 3 fails:
1) Midwest states, esp. Michigan will be hit big. Michigan is already in trouble with declining domestic car makers, the fall of one auto maker will devastated the state.
2) American will lose the icons such as Chevrolet Corvette or Ford Mustang. Don’t think that as a minor thing, as psychology does play a role in economy, consumer sentiment and the financial market.
3) Last but not least, the impact to the US economy. The auto industry says it will pull the economy into depression. Some analyst say auto industry directly or indirectly employs 10% of US workforce. I don’t know. The number I know is domestic auto makers used to put up lots of TV ads ($7 billion annually). So go figure the impact.
4) In normal circumstances, we don’t want to bailout any company: that’s the key of capitalism, as I understand. But after the Bear Stearns, AIG and Citi Group bailout, the situation is different in two ways: the economy is gloomy, the moral hazard outcry from ordinary people put more pressure on the politicians before they put up any more taxpayer money. But this is extra-ordinary time, and we need extra-ordinary leadership, not the kind of “all hats not cattles” we usually see in Washington. Similarly the media should not just look for sensational taste of a story. Help the ordinary Joe and Jane on the main street, will you?