Tuesday, December 2, 2008

The Big Three Go to Canossa

There is a meeting today in Washington between the government and the Big Three auto companies. The meetings are ostensibly about how the auto companies would use government loans to save the struggling car industry.

The results of the meeting? Well, I guess Ford executives will have to make due without their private jets in the near future.

For those of you who don't know, the auto industry is going down and begging the government to loan them some money ($25 billion dollars) to patch the gigantic hole at the bottom of their proverbial boat.

This includes Ford CEO Alan Mulally cutting his salary to $1 a year if they actually are allowed to borrow money.

Word is he will also be trading in his business suits for hairshirts shortly.

I am of two minds on this.

The populist mind says, "Good. To hell with these rich greedy bastard CEO types, who have single handedly prevented us from having flying cars by now!"

However, the other mind says, "Is anyone else slightly unnerved at all that the government's asking that the auto industry essentially humiliate itself for a loan?"

Populist mind chimes in, "Well, but they deserve it. I mean, they've been hawking gas guzzling SUVs for decades now. They ignored the fact that the people want hybrids. That's why they're failing right now - they can't sell their fat-ass SUVs in the current market."

"Well, that's not completely accurate," says other mind. "First of all, the Big Three made SUVs because people bought them; like, a lot of them. So who's to blame for that? Also, one of the few products still selling strong is the truck. Second, there are plenty of quality Big Three made hybrids available on the market (check out the Ford Escape Hybrid for example) and have plans of rolling out Electric Cars within the next few years. But leaving all of that aside, the reason the Big Three can't sell enough cars right now is because customers can't get the loans to buy them."

"Loans?" asks the populist mind. "You mean those things people used to use to buy houses could also have been used to buy cars?"

"A whole lot of people get their cars using loans," says other mind. "But the credit crisis (which, by the way, was not caused by the auto companies) has infected the likes of Ford Credit. Not to say that the auto companies might have done some things differently - they've certainly been on the slide for a couple of years now - but as far as the current sudden crisis is concerned it looks like it might be related more to the credit crisis and less to the type of product available."

"Credit crisis! They just gave those sons of bitches $700 billion dollars or something!" shouts outraged populist mind.

"And barely blinked an eye too. If there's a hole at the bottom of Ford's boat, you can be sure it was AIG's rock that put it there. And it was probably thrown from the yacht AIG bought with their federal bailout money."

But by now, I've grown tired of listening to my minds argue back and forth, so I pat the side of my head and tell them to shut up in there.

Instead, I decide to placate my inner history nerd. I look to Wikipedia (the source of all knowledge) and find this article about the Walk to Canossa, which was when the mighty Holy Roman Emperor, Henry IV, walked barefoot to the castle of Pope Gregory VII and waited outside in a hairshirt for three days in the snow to beg for forgiveness. This was, of course, back in the days when it was not only cool to be Catholic but also required.

Ostensibly, that little meeting was a matter of religion. Of course, the real issue wasn't religion but power.

1 comment:

Anonymous said...

Great post, Nat! This post should be required reading in business schools one hundred years from now when they are learning about this mess.