Ford (F) CEO Alan Mulally will take a 30% cut in salary for the next two years to help with the ailing car company’s finances. Performance bonuses for 2008 and 2009, which should be paid each March, have been eliminated for Mulally, various senior executives and other global employees. Ford’s board will not get cash compensation for 2009, by choice.

This is a fine example of a company sucking it up and doing what it takes to survive and not taking handouts. I’m starting to sound like a Ford commercial but I really respect what they are doing here. Nothing like AIG…

This will work out well for Ford and give them a head start when the economy turns around. They will be able to hire back the laid off employees, they will have public support for not running their own company down and expecting us to bail them out.

The only other thing I can think that Ford should do is cut down the wide range of vehicles they produce, perhaps focus on a smaller range. This is a great way to stop bleeding cash for now. Once again, well played Ford.

Check out http://www.twoseconds.net/?p=373

This pretty well sums it up.

Good one Detroit! You got us. We’re all buying American, whether we want to or not. Looks like the bailout money has found it’s way into your pockets. I can only hope they make those oil cronies who helped get you into this mess find a special tax too that will help bailout the auto industry. But hey it’s not all your fault, you got screwed by the dealer network this time.

Everybody wants to wear lipstick when they go to an auto dealer, because if you’re gonna get fucked you may as well look good. But let’s hope Congress can help us keep our belts on, get some perks for us regular folk with this here bailout. It’s only fair that we receive credit towards purchasing one of those shitboxes that our tax money is building, right? Don’t we deserve to get a little bit of a break for helping Detroit pump those inferiorly huge and thirsty vehicles out of factories? Fuck employee-pricing, I’m demanding owner-pricing, because as of this January, I own your ass!

-adlai plebeian

Ford is begging Washington for a bailout and to tug the strings that are attached to the deal in their favor, the Ford Motor Company has announced that its CEO will be making the road trip from Detroit to D.C. effectively ditching the corporate jet.

The story of Ford’s CEO cutting back on luxuries reminds me of Alan Garcia’s promises of “austerity” which also included ditching the “Presidential plane” and opting to fly “commercial” instead.

Garcia’s predecessor, President Alejandro Toledo (2001-2006), was widely criticized during his presidency for lavish spending, luxury laden indulgences and a Presidential salary that dwarfed the average Peruvian wage.

Alan Garcia campaigned on austerity which Peruvian comedians took to the bank on their variety programs mocking Garcia’s cheap promises.

Back in the U.S. the big automakers hit Capitol Hill a month ago with their hands out asking for a piece of the bailout pie. Congress criticized the well dressed beggars during their session for choosing to fly on corporate jets to Washington when their industry is supposedly on the verge of collapse.

Politico reports that it’s unclear how Ford’s CEO, Alan Mulally, will actually travel or if he will even be behind the wheel at all during his 8 hour terrestial journey.

Many Americans, like myself, are probably shaking their heads at such a ruse to swindle Washington into opening up the tax payers’ checkbooks. Maybe they should follow an austerity plan like Alan Garcia’s.

It’s kind of ironic how the rich can afford the luxury of austerity on a voluntary basis. My mother always told me in slim times, “beggars can’t be choosers.”

In the case of the American automakers it’s the rich choosing to be beggars.

Via Reason.tv, h/t The Foundry:

Regarding: U.S. auto execs plead for Congress to fund bailout – Yahoo! News

US auto executives don’t know how to make a car American’s want.

We need smaller well made cars with good fuel economy, a car that lasts 200,000 miles and can run on electricity or hyrodgen. How about a car with resale value? Unless Detroit can prove they can make such a vehicle they don’t deserve a dime.

Just because any company fails or can’t keep market share doesn’t mean they deserve a second change. How many time have the airlines been bailed out?

The newspaper industry isn’t doing well. Does it deserve the bailout?

Just because you loose market share doesn’t mean you get a handout from the goverment. You have to show potential for demand and performance.

Detroit executive leaches have been marginalizing labor unions on obsolete car production for years. On the other hand maybe Detroit executives don’t need the handout, they have so much money they won’t fly first class to ask for their money.

Do you deserve a bailout?  Apply here.

None of the U.S. auto makers should be granted a government bailout. When times are good corporate CEOs, presidents, division heads, etc. rake in huge profits, squander fortunes on frivolities, ignore the age-old wisdom of storing up reserves for lean years, and use their wealth for power, rather than capital and research for better products. In bad years, which they should have prepared for in good years, because anyone sharp enough to be a corporate CEO ought to understand that “downturns” are an unavoidable part of life, they expect their employees to pay the price for excessive executive greed and mismanagement with layoffs, benefit slashing, plant closings, and share loss.

The power of the U.S. economy is capitalism. The government is destroying that foundation with bailouts, not holding corporate executives accountable for irresponsible management. According to its commercials, Ford thinks it’s tough, but here it is wiping its nose and crying to the government to let it survive, a weak, insipid, sniveling jellyfish of a company. I wonder how that image portrayed on commercials beside its tough trucks would drive Ford sales? Capitalism is tough, survival of the fittest. It is that tough competition that drives quality up and prices down. When a company can’t make the grade it goes bankrupt. When the government intervenes, it undermines everything our economy is built upon.

As the one-time owner of a failed small construction company that went belly-up in the early eighties under 20% government lending rates, I feel for the loss of employees’ jobs. But I never considered it the government’s responsibility to bail me out, even though in that scenario the government was uniquely responsible for the bankruptcy, not so with the auto industry.

Thirty years ago railroad workers by the hundreds-of-thousands faced relocation, early retirement buyouts, and job or profit losses, due to the growing irrelevance of the industry. The industry declined to a relevant level in a largely post-rail society, and the mass of affected workers adapted in a myriad of ways and basically survived, although, in instances, with great difficulty.

While the auto industry is of course still highly relevant, the U.S. makers have proven themselves exceptionally resistant to innovative transformation, energy efficiency, and overall competitiveness. When a company becomes so large, archaic, and lethargic it resists change, it is time to die. That’s the nature of capitalism, and anyone who doesn’t accept it when it’s tough doesn’t deserve the rewards of the boom years.

See related:

• Why GM Can’t Survive Bankruptcy
• In Defense of Detroit: Newsweek
• Republicans to Detroit: Drop dead – by MSNBC
• Big Three auto CEOs flew private jets to ask for taxpayer money – CNN
• Auto industry bailout plan dies in the Senate
• Government Should Stay Out of Auto Business

On economic principle, none of the U.S. automakers ought to be bailed-out at the expense of taxpayers, but Ford especially deserves no respite. Ford executives chose to spend several of the past ten years using company resources to wage a culture war over gay rights and marriage, giving grants to gay causes in the face of a boycott over this issue. Not only were they giving company profits to this fight, but they were simultaneously losing sales over the stand.

Whatever Ford’s perceived responsibility to gay America, it is not a corporation’s business to wage a culture war, which the great majority of American’s oppose anyway, with corporate profits, necessarily involving stock holders in its crusade. Company executives possess the prerogative of giving massive donations to such causes from their substantial personal profits, but its doubtful many opted for this avenue of support. It’s so much easier to pursue high-minded ideals with investors’ money and corporate finances.

After choosing such a reckless financial trek, a government bailout would be the equivalent of endorsing a corporation’s investment of time and resources in controversial moralistic issues unrelated to their principal reason for existence, in Ford’s case, turning a profit for investors and making a higher quality, more energy efficient, automobile.

Ford made its choices and needs to live with the consequences, as any small business owner has to, not having the clout to pressure the government for aide. Its demise will not ruin, but in the long run strengthen America, facilitating an economy-saving trend, based in a stronger, more determined, capitalism that demands corporate ingenuity and responsibility for survival. Anything less is non-American.

While sympathizing with the plight of the massive labor force involved, the bottom line is that everyone in the world is susceptible to forces outside their control costing them their means of employment. People adapt, but the remedy to this tragedy is not to make the whole nation the prop for the industry through taxation, while corporate presidents and executives manage and waste resources like derelicts and are never made to shoulder responsibility.  According to Forbes, “Ford Needs The Bailout Package”.  That’s an understatement to be sure, but in this case what’s good for Ford isn’t good for the country!

If the government does devise a plan for the bailout of Ford, GM, and Chrysler, public outcry should insist on an agreement including prohibition against use of corporate funds for waging controversial political or cultural campaigns, as well as bringing manufacturing back to the U.S.!

That’s the size of the newly enlarged financial lifeline the U.S. government threw tottering insurance giant American International Group on Monday, expanding an aid package that’s gradually grown since it began as an $85 billion loan in September.

The big question: Will the bailout be enough to stabilize the firm?

Here are some questions and answers about the rescue plan.

Q: Didn’t AIG already get a bailout from the government?

A: Yes. Back on Sept. 16, the Federal Reserve initially provided AIG with a $85 billion loan, in return for a nearly 80 percent ownership stake. On Oct. 8, the Fed followed up with another, $37.8 billion loan.

Then, on Oct. 31, AIG was allowed to access another $20.9 billion through the Fed’s “commercial paper” program. That’s where the Fed buys mounds of short-term debt from the companies, which often used the money for crucial day-to-day expenses, such as payroll and supplies.

Q: So, the original bailout plan didn’t work?

A: Even with the original $85 billion lifeline, AIG continued to have problems as the country’s overall financial and credit conditions worsened. The company was burning through cash and was saddled with risky mortgage-related securities that had fallen sharply in value and continued to deteriorate after the initial bailout.

AIG on Monday reported a massive third-quarter hit. It lost $24.47 billion, or $9.05 per share, after a profit of $3.09 billion, or $1.19 per share, a year ago. Revenue declined 97 percent to $898 million from $29.84 billion in the third quarter of 2007.

“This is the largest quarterly loss we’ve ever reported,” Chief Financial Officer David Herzog told investors on a conference call.

Q: What’s different about the new bailout?

A: All told, the new bailout is bigger — providing more than $150 billion to AIG, up from just over $140 billion.

In a new twist, the Treasury Department is now stepping in with $40 billion, which is coming from the $700 billion financial bailout package enacted last month. It marked the first time any of that bailout money has gone to any company other than a bank.

Monday’s restructuring also provides AIG with easier terms on the original Fed loan.

The new package reduces the interest rate AIG will pay and will extend the loan term to five years from two, reducing the need for AIG to sell off business lines and other assets at fire-sale prices to repay the government.

In addition, the new arrangement replaced the second $37.8 billion Fed loan to AIG with a $52.5 billion aid package. Under that part of the plan, the Fed will fund the purchase of both residential mortgage-backed securities from AIG’s portfolio, and collateralized debt obligations, which are complex financial instruments that combine various slices of debt.

By removing these troubled assets from AIG’s balance sheet, the bailout should take stress off the company, giving it more breathing room and helping to prevent future losses, Fed officials said. The Fed doesn’t believe it will suffer losses because it is hopeful the market for such distressed investments will recover as the economy and financial markets eventually rebound.

Q: Why is it important to keep AIG afloat?

A: AIG is a global colossus, with operations in more than 130 countries. It is so interconnected with other financial firms that its problems have a jolting ripple effect both in the United States and abroad.

AIG was pushed to the brink of bankruptcy in September when its credit rating was downgraded and it could not post the collateral for which it was obligated under the “credit default swap” contracts it had issued. Credit default swaps are a type of corporate debt insurance.

The Fed raced to the rescue at that time to prevent AIG’s failure, which could have triggered billions of dollars in losses at other banks and financial firms that bought these swaps from AIG — sending them into failure as well.

However, even after that initial rescue, AIG’s troubles cast doubt on some of AIG’s debt guarantees, leading to other problems. For instance, a Belgian bank threatened to immediately collect $43 million on a loan to the transit authority in Washington, D.C., in late October following the credit downgrade of AIG. Transit authorities in other cities feared the same fate.

Q: In exchange for the money, will the government place any restrictions on AIG?

A: Yes. Neel Kashkari, the Treasury Department official who is serving as the interim head of the $700 billion financial bailout program, said: “AIG must comply with stringent limitations on executive compensation for its top executives, golden parachutes, its bonus pool, corporate expenses and lobbying.”

(So, does this mean that they can only spend $500K per party for their executives?   WTF?!  They are partying and carrying on as if they are at the top of their game!  And golden parachutes?  Executives drive huge corporations into the ground and GET A HUGE BONUS THAT WILL LAST THEM THE REST OF THEIR LIVES.  Yeah!  That’s tellin’ ‘em!.  Their “golden parachute” is more like “golden showers” — them pissing on us!)

Q: Is this the end of the bailout money for AIG?

A: No one is saying for sure. However, government officials are hopeful the new package will be sufficient to stabilize the company.

(Excuse me?!  They should have to be accountable like the rest of us.  When my business does poorly no one bails me out!)

Q: What company might be next in line for a government bailout?

A: U.S. auto companies — General Motors Corp., Ford Motor Co. and Chrysler LLC — have been pressing the government for more financial assistance. The money would be on top of the $25 billion in loans Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.

(Maybe if they made cars worth buying they wouldn’t be in the predicament they are in.  They made their bed, they lie in it.)

Kashkari, however, was circumspect.

“This morning’s action with AIG was a one-off event necessary for financial stability. It is not the establishment of a new program,” he said at a financial conference in New York.

____

AP Business Writers Ieva M. Augstums in Charlotte, N.C., and Stevenson Jacobs in New York contributed to this report.