Long Decades’ Journey into the Dumpster
The White House’s statement was: “Today will rank as another historic day for the company—the end of an old General Motors and the beginning of a new one.” Talk about putting bright, shiny red lipstick on a pig destined for slaughter.
I keep thinking of the quote from Hamlet: “Something is rotten in the state of Denmark.” But today, the rot from the economic dumpster is coming from the state of Michigan and the city of Detroit.
When I was born in 1957, General Motors was the American iconic company, more powerful and dominant than any other in the world. The automotive industry was gigantic and the city of Detroit its hub and wheel. Today, General Motors, trading under 75 cents per share, is making history by declaring bankruptcy in New York (not Detroit) courts.
The White House’s statement was: “Today will rank as another historic day for the company—the end of an old General Motors and the beginning of a new one.” Talk about putting bright, shiny red lipstick on a pig destined for slaughter. The new media term for GM is Government Motors because the government will own 60% of the “new” company, followed by the UAW, and last and certainly least, the bond holders. But the stock market is excited on this historic day as GM leaves the Dow, to be replaced by tech king, Cisco, because the Chinese economy had its third "bettter" month in a row. Oil and commodity stocks like gold and steel are on the rise again, which is one of the big factors that killed GM two years ago as high gas prices and rising steel costs followed by the collapse of the banks that provided car loans, put the double whammy on GM's large and profitable vehicles. And you can add another interesting twist to this scenario: a CNBC commentator mentioned that the investment banks should make lots of money handling the bankruptcies of GM and Chrysler.
What a world. In just the last few weeks, Visteon Corp. and Metaldyne Corp. which together employ thousands of workers in Michigan, filed for bankruptcy protection, two more bankrupt automotive suppliers. Dealerships are being closed at record rates, automotive suppliers are entering more bankruptcies, unemployment and foreclosures are still on the rise; but there are enough media-termed “green shoots” to make the investment community excited that the economy has bottomed and happy days will be here again.
65 years ago, on June 6th at Omaha Beach, Detroit helped propel the United States army on D-Day with its vehicles and weapons. General Eisenhower, “who commanded 3 million soldiers to Europe, said the weapons he valued most were the Jeep, 2 ½ ton truck, bulldozer and transport plane—all partly or fully made in Detroit.” (“When Detroit stood at attention,” Detroit Free Press, Sunday May 31, 2009) According to the Free Press, Stalin told Roosevelt three months before the Germans surrendered, “Detroit is winning the war.”
Even with new government ownership, I wouldn’t bet that GM and Chrysler are ready to become part of the U.S. military just yet. Don’t bet on anything except difficult years of more debt, lots of worry from employees, retirees, and customers, and continued uncertainty about when or where this will end. No one knows.
Automotive analyst David Cole said bluntly that Michigan could enter a “depression” if GM’s stay in bankruptcy goes beyond 90 days. Governor Granholm answered with “It’s depressing enough with what’s happening today” but that she says eventually we’ll see a new Chrysler, new GM, and “ultimately a new Michigan.”
Like our government leaders, we can put our heads in the sand and pretend that the massive debt structure begun as an agreement with the UAW in 1950 didn’t explode and eventually help suffocate GM. We can hope that the wounded company will still have enough to pay 650,000 retirees benefits including billions of dollars of health care costs. We can fantasize that each U.S. household doesn’t owe “$546,668 each, besides mortgages, car loans, credit cards, and other debt” (“What We Owe: $64 Trillion, and Counting,” Investors Business Daily, Monday, June 1, 2009) or that the stimulus plans and bailouts (including for GM and Chrysler) “pushed into the budget by President Obama and congressional Democrats” won’t “add $9 trillion to our national debt over the next 10 years alone.”
It’s comforting to imagine better days ahead: the economy growing again, debts reduced, gold and oil coming back down to earth, and the American consumer once again healthy and spending money on cars and homes. But don’t be fooled by glimmers of hope based on optimistic fantasies when the largest Michigan company is in the dumpster. Yes, we can soothe our fears by rooting for the Detroit Red Wings, a strong, first class organization, owned by a Detroiter who built a 50-year-old company that grew because of its cheap pizzas. But green shoots cannot ease the cries of Michiganders who have lost their jobs, their money, and their hopes for a better future.
A new book written by a man about his experience with his gay partner in the idyllic western Michigan lakeside city of Saugatuck is titled, At Least in the City Someone Would Hear Me Scream. If it were instead about the domestic auto industry, the title would have been, “Can’t Someone in the World Hear us Scream?”
We Michiganders are hunkered down in our homes, condos, apartments, and streets, waiting, praying for something good to eventually come. We just hope the silent screams will someday end.
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