Without concessions from the UAW there are really only two choices:

Late to this conversation, but... I find it interesting, that all who voted against the bailout wanted to bring the union workers down to the level of the non-union workers. Where do the non-union wages go from here?

I'll give you 3 guesses, and the first 2 don't count.

Why shouldn't govt make business decisions? In the late 50's and early 60's the US steel industry was in high cotton. In fact, predatory pricing was the government's concern.

The Kennedy Administration, afraid of steel shortages, and therefore pricing power, "jawboned" the industry into making huge capacity investments. The nature of those investments? Open hearth furnaces.

Just a few short years afterward the BOF - Basic Oxygen Furnace - obsoleted open hearth steelmaking. The Japanese steelmakers were the first to adopt the BOF, and then its logical companion, continuous casting. The US steel industry, with a wasted generation of capital spending, was cripled.

Most people know the story of the next couple decades.

Your government at work. Tell me again about government directing the automakers.....?

Do you have an estimate of the dollar level of DIP financing required? And rather than the Feds pumping in fresh equity (or purchasing whatever securities or loans) why not have them provide the DIP instead?

Liquidation is not a foregone conclusion.

Echoing the commenter above the automobile industry's problem is that its employees, salaried and hourly, present and past, collectively make more than the industry can generate in revenue. I think the salary structures need to be revised downward to match the prospective revenues of the industry. That's painful and people will naturally resist it. It certainly looks to me at this moment as though the most likely path to that outcome runs through bankruptcy rather than bargaining.

Republican Sen. George V. Voinovich of Ohio, a strong bailout supporter, said the UAW was willing to make the cuts - but not until 2011.

http://nomedals.blogspot.com
is were citations are posted

The same type of arguments used to delay the restructuring of the steel industry, which, like the auto industry, suffered from overcapacity, an excessive portfolio of products, an untenable wage/expense structure and, shall we say, less than visionary management. And how did that turn out? The industry of course fell of its own weight. You can only keep so many fingers in he dyke. But it finally went through its restructuring (largely under new management) and got financially righted.

And so now the auto industry. The transplants are serving a catalytic function similar to the steel minimills: an alternative lower cost, non-union manufacturing environment. What happened to the diseconomic mills (eg Wisconsin Steel, USS South Works)? Yes, they were shuttered. No choice. What happened to the viable plants? (eg, Inland Steel's Harbor Works or Bethlehem's Dunes Harbor Works) They are still there, pumping out product.

So it will go for the autos. Restructured wages, a slimmed down product line, and a smaller manufacturing footprint are issues that the industry must face, but I just can't see them doing it without going through bankruptcy or with the gun-to-the-head threat of withheld funding.

Its a natural emotion to want to preserve the status quo, given the human considerations. But just as we cannot do anything about the law of gravity, the law of economic reality will inevitably force an auto industry restructuring, no doubt in a cruder and more heartless fashion if the industry waits.

Congress doesn't have the power to re-write contracts. There are constitutional issues involved—notably property interests.

Just to clarify, by "dictate terms", I really meant the request for concessions (for example CEO pay of $1) in return for the bailout.

From UAW websit on 2003 contract negotiations:
"UAW job and income security protections have helped transform the old boom-and-bust cycle of the auto sector to a smoother, more stable path, which benefits workers, customers and companies."

So what has changed?
Were they just lying all these years?

Largely because the Bush Administration is strongly hinting it will fund the bailout from the $700 billion approved before. The Dow was down around 300 points in pre-market trading before that.

So far this morning the markets are moving along as irrational as ever. Down some but far from a meltdown as Reid predicted. Perhaps later in the day after the traders shake the magic eight ball to determine trading strategies.

This is not a political move as much as a common sense move by the GOP leadership. The fact elected representatives are listening to their constituents is a good thing as well.

Although I'm not sure if I fully understand all the differences between having the courts dictate terms or having Congress dictate terms.

Congress doesn't have the power to re-write contracts. There are constitutional issues involved—notably property interests.

Look, if anybody has a plan to keep GM and Chrysler pumping along that doesn't involve reducing UAW workers' (past and present) compensation, I'm ready to listen. I'm as concerned about the jobs that could be lost as anybody. But the quote I included above certainly looks as though the UAW wants to run out the clock.

I've read the GM plan and it's an amiable fiction. It's filled with ridiculous assumptions, for example, that GM can reverse the market share slide of the last 30 years in a couple of months.

Let's hear your plan before we start trashing each other.

Former Clinton Labor Secretary Bob Reich is simultaneously reasoned and hyperbolic in making a similar point:

There is nothing reasoned about his argument. It is purely hyperbolic based on the incorrect assumption that the South has nothing to lose if GM and Ford go down. He totally ignores the fact that GM and Ford both have huge plants operating in Kentucky employing thousands of people. Sure, we have Toyota as well, but that doesn't make Bowling Green or Louisville feel any better. Make any arguments you want pro or con, but to totally dismiss the issues Republicans have with this issue under the false assumption they have nothing to lose is bogus.

Yeah, that statement is pretty grating. It's that sort of smug "we know everything about national security and economics" attitude that has taken the Republican brand to the scrapheap, since they've miserably failed at both in the last eight years.

As far as I can tell, there are lots of disagreements among so-called experts in economics. Apparently Stacy McCain trumps them all, though.

I know plenty about bankruptcy, more than Stacy McCain I'll bet. The genius Stacy didn't tell us where debtor-in-pssession financing would be coming from for GM. Citigroup? Wachovia? Not likely.

Without DIP financing, it's not reorganization coming, it's liquidation.

I'm assuming stock traders around the world don't know much about economics or bankruptcy because they are reacting as if this might not be good news at all.

Stock traders make their living by TRADING stockings, so they live in the short term. Creative destruction is generally bad in the short term. Investors, though, will benefit from the longer term shift of the American economy into the 21st Century.