As I listened to bits and pieces of today's hearings re: the Big 3 US auto companies, I am led to wonder --
(b) how the remainder of Cerberus Capital is doing. Are all its businesses hurting, or is it just this one? What share of their equity is in Chrysler? (And should we care? Should we be protecting their shareholders from their managements' poor judgments?)
(c) who owns Cerberus Capital. I suspect that the owners are the sort of individuals and entities who can apply their own capital to solving the problems they've created. Perhaps the same folks who have brought us all the benefits that hedge funds and private equity have wrought for the other 90% of the public might be asked to provide working capital for Chrysler, instead of borrowing those funds and asking our children to repay them.
(d) how the remainder of these companies are doing. GM owns Ditech. Chrysler has Chrysler Capital. These are diversified corporations. Are these divisions having difficulty? Are they not harvesting enough?
(e) what sort of transfer pricing activities these companies have been engaging in, and what sort of federal income taxes they've paid in, say, the past 5 years. I'm not a fan of corporate income taxes, but we ought to be collecting from all who turn a profit on an approximately equal basis.
When I hear their pleas for help, what flashes through my mind's eye is a graph from the film "An Inconvenient Truth" about US CAFE standards (fuel economy) compared to what other countries' manufacturers were already doing. I can't seem to find the graph online, but what struck me when I saw it a few years ago was how stubborn and stupid America's major auto manufacturers were being, and, equally, how Congress was enabling them to be stupid.
Separately, but relatedly, I wonder whether, if we applied the bailout money which these companies are requesting to the Pension Benefit Guaranty Corporation, and then told the Big 3 to go forth and do business, we might put them on the course to either solving their problems or going under, without endangering their retirees.
Finally, I am thinking of the awesome subsidies which Congress provided to the manufacturers of Hummers, Excursions, Suburbans and a few other vehicles a few years ago which provided HUGE tax deductions for those who owned small businesses and bought 6000 pound behemoths "for their businesses". Suppose we did the same thing with high MPG vehicles. Suppose we provided subsidies for high MPG vehicles for the next 2, 3 or 4 years. Suppose we bought high MPG vehicles for every military family in the US. Suppose we bought high MPG vehicles for low-income folks who are currently driving high MPG vehicles, and took those low MPG vehicles off the road. Recycled them -- not send them overseas. What sort of fiscal stimulus would we create, compared to what we could create with gifts to the shareholders of these corporations and private equity funds?
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