So... What About a GM, Chrysler, Ford Bailout?

[MountainDon]

   Should we pony up our taxpayer dollars, or more mythical money printed by the Fed, and bailout (throw cash at) our remaining American automobile manufacturers? Or should they be left to wither and die, or survive if they can?

My problem with throwing money at them is that it will only postpone the inevitable. I say their death is inevitable because they are saddled with union driven expenses that unless removed will be a continual drag on their ability to perform.

I like my American Iron. I would hate to see it disappear. But what's the "right" thing to do? 

[glenn kangiser]

They destroyed the electric car when the public wanted it or something similar.  They gave us a Hummer.  Not all of us wanted that.

I don't see any loyalty to the public of the US.  Our jobs have mostly been given away by them.  Not even the Cummins Diesel is made in the US.  I think it's time to cut out the middle man.  We don't even have the money to bail them out.  Isn't having the ability to pay a requirement to pay a bill? Let their CEO's go hungry I think would be good.   

Lets not keep rolling the presses and inflating the dollars, but of course Congress will disagree and print more bucks.

[harry51]

Seems to me that a bailout is the best way possible to encourage more of the same counterproductive policies at the corporate level that brought the bankruptcy on in the first place. Let 'em sink or swim. Heard somewhere that the non-union auto factories and auto parts manufacturers in other states are doing just fine. Bailing out businesses and otherwise meddling in the marketplace is not a proper function of gov't. It represents blatant socialization of our culture, and that goes for the bank bailout, too. The bureaucrats' willingness to make all of us pay for the mistakes of the well-connected few just shows how arrogant and power-drunk they are, and how little respect they have for us peons. Maybe we deserve it. We almost never fire the bums every 2, 4, or 6 years like we would if we had any sense.

[apaknad]

i see AIG was in the news again. this time it was another junket but very hush-hush(don't want those bad pr reports). i think it was in new mexico, but somewhere in the southwest. send 'em more bail out money.

[glenn kangiser]

Good for AIG.... They just got an additional bailout too.   Aren't our politicians wonderful --- helping themselves to the money plate as they own AIG.  YOu shOuld sEe the letTer I seNt to AIG rEp when theY offeRed Me a qUote.

In fact you can -- I saved a copy


RE: Complimentary Quote from AIG‏
From:    glenn kangiser (glenn-k@msn.com)
Sent:    Tue 11/04/08 8:58 PM
To:    matrixdirect@jp311uyers.com

You guys really have the balls.  Rip off the American Public for a bailout--- party to celebrate, and now you want me to give you business too?.... I don't think so --- Homey don't do dat.....

Sincerely, Glenn Kangiser
Date: Tue, 4 Nov 2008 20:19:44 +0200
From: MatrixDirect@jp311uyers.com
To: glenn-k@msn.com
Subject: Complimentary Quote from AIG

[desdawg]

From what I have seen if it is to be trusted Obama would attach some strings to a loan that would require the production of more efficient cars if a loan is made. And it sounds like it would be a loan not a grant. The number of jobs that would be destroyed is significant but like Don says the Unions are choking those companies to death. It seems like nothing is just a simple black and white issue anymore there are shaes of gray everywhere as the waters get muddied with extenuating circumstances that create these arguments. I have three GM products myself and all are gas guzzlers.
I agree there is no money to do a bailout with and the presses would have to roll to create it. That can't go on forever
I struggle to get by right now. We keep waiting for this to end but the end is not in sight. Doing this would push it further out of sight rather than having the opposite effect I think.
There are two ways to balance a budget, one is to increase income and the other is to decrease expenses. Borrowing isn't on the list. I suspect that if the big 3 were making autos people wanted to buy they could increase income. It now costs as much to buy a new vehicle as it used to cost to buy a home. So decreasing expenses is a good option. Taking away pay people are accustomed to is tricky business at best. But it has happened to many of us so why should this industry be any different.
I believe the auto industry needs to restructure itself to achieve some efficiency.

[peternap]

I really feel like INDEPENDENT business is what made this country great. The Government needs to stay out of it! Unions had an important place in this country but just like industry outgrowing it's means, the unions have lost sight of their purpose. They would rather see the company go under than make concessions.

Before I could approve of a bailout, I'd have to see all company personnel take a 20% pay cut and relinquish 80% of their fringe benefits, Beats being unemployed.

[MountainDon]

My thoughts are the manufacturers caved in to the unions over the past 20 or so years and it's those albatrosses that are doing them in. If there is to be bailout, loans, then those union contracts must be drastically revised to lower costs and make them competitive.

[NM_Shooter]

I was not in support of the financial bailout.

Screw the big three auto.  The unions sucked the cash out of that industry, and now they want us to bail them out.  NO!!!!

Page A8 of the ABQ Journal today, an editorial by Cal Thomas:

"According to the Wall Street Journal in September of 2006, on average, GM pays $81.18 an hour in wages and benefits to its U.S. Hourly workers."

You have got to be kidding me. 

This same article indicates that Ford is selling a diesel car that gets 65mpg, but NOT selling it in the US.  This is because it runs on diesel and environmentalists in this country fight to keep diesel taxes high and refinery capacity low. 

I'm going to google and see if I can find that car.

-f-

[muldoon]

I would say no deal to any auto bailout right now.  But if the following strings were attached I would probably change my mind.

1) If Americans are paying for it, the auto makers no longer have any patents to sit on - they now belong to the US.  All those stories of who killed the electric car, who killed the super engine, the battery technologies, all of that goes back into public domain where it can be pursued with private capital.  If they were good ideas they will be explored and brought to market without any additional help than that.  

2) let them go into bankruptcy first.  Discharge stupid debts like paying the retired people 100k a year to retire at 45 and keep paying them that salary for the next 30 years.  Yes it sucks for them, but if they are bankrupt and dead anyway they would get nothing more anyway.  

3) You want to build cars in Mexico, ask Mexico for a bailout.  Build them here, were not interested in sending more money to foreign countries when those jobs are badly needed here.  If the only jobs you want to keep in the USA are management related then your done.  period.  

4) Yes, making them here will make them more expensive, but as the US citizens are part owners in the deal offer them tax breaks and incentives to buy american.  If were reserved to the idea that without any help they are bankrupt and done then this is better than nothing.

5) Financing arms (GMAC, FMC, etc) must be split off from production companies.  We dont need any more damn broken banks.  

6) Might not be a bad idea to force the merger of them, do we really need 4 companies selling the same cars rebranded?  

7) Complete catalog - If I can buy it in Europe or China, sell it here too. 

[MountainDon]

Here it is...



articles...

http://www.businessweek.com/magazine/content/08_37/b4099060491065.htm?chan=autos_autos+--+lifestyle+subindex+page_top+stories

http://www.treehugger.com/files/2008/07/ford-econetic-fiesta-diesel-63mpg.php

[harry51]

Why stop with the automakers? Why not bail out Mervyns? Why not Circuit City? Why not Linens & Things? Why not give some money to 84 Lumber and BMC West so they can keep the stores in my town open and save those jobs? Why not the video rental shop down the street?

We vote each time we make a purchase. Businesses that don't get enough votes fail. When gov't props up a failed business, it has overridden our votes. By allowing this, we admit that gov't decisionmakers are smarter than all the rest of us put together, and that we approve of them taking our money by force and giving it to a business we voted down.

This is the antithesis of self-determination, liberty, and limited gov't, the principles this country was founded upon and prospered under to an unprecedented level. It is also absolutely wrong. Unlimited gov't and the prescribed life have been tried and failed. John is right when he says "None of us are as smart as all of us." We are seeing gov't slip more of the chains of the constitution, and if we fail to bind it down again, it will destroy what we have left of our prosperity and our liberty. Will the sheeple ever wake up?

[harry51]

Muldoon, I hope someday we get a chance to sit down and talk about some of these things over a hot cup of coffee or a cold beer. Our first visit was way too short! 

I would say no deal to any auto bailout right now.  But if the following strings were attached I would probably change my mind. Sorry my friend, but with or without strings, it is suicidal to condone gov't interference in the marketplace beyond policing for fraud, robbery, or monopoly.

1) If Americans are paying for it, the auto makers no longer have any patents to sit on - they now belong to the US.  All those stories of who killed the electric car, who killed the super engine, the battery technologies, all of that goes back into public domain where it can be pursued with private capital.  If they were good ideas they will be explored and brought to market without any additional help than that.  If the market is allowed to work, those assets will eventually be properly utilized.

2) let them go into bankruptcy first.  Discharge stupid debts like paying the retired people 100k a year to retire at 45 and keep paying them that salary for the next 30 years.  Yes it sucks for them, but if they are bankrupt and dead anyway they would get nothing more anyway.  Stupid debts are evidence of seriously incompetent management. Why force the taxpayers to give the incompetents another chance?

3) You want to build cars in Mexico, ask Mexico for a bailout.  Build them here, were not interested in sending more money to foreign countries when those jobs are badly needed here.  If the only jobs you want to keep in the USA are management related then your done.  period.  If they can get money somewhere else, fine. But we should not ever give them a penny that's been taken by force from a taxpayer.

4) Yes, making them here will make them more expensive, but as the US citizens are part owners in the deal offer them tax breaks and incentives to buy american.  If were reserved to the idea that without any help they are bankrupt and done then this is better than nothing. Please, less, not more, gov't meddling in the marketplace!

5) Financing arms (GMAC, FMC, etc) must be split off from production companies.  We dont need any more damn broken banks.  I kind of like them to finance their own products for consumers. Gives them an incentive to build cars that last longer than it takes to pay for them.

6) Might not be a bad idea to force the merger of them, do we really need 4 companies selling the same cars rebranded?  Apparently we don't need any of them, if they aren't selling enough cars for enough money to stay in business.

7) Complete catalog - If I can buy it in Europe or China, sell it here too. One reason some cars are not available here is different environmental and safety mandates. Another case of gov't interference in the market narrowing our choices.

My position is that:

1. Gov't interference in the marketplace is constitutionally inappropriate beyond criminal policing functions.

2. Gov't interference is ineffective and counterproductive over the long run. Look at the first Chrysler bailout. It ended up being bought by a private investment group. Wouldn't it have been better to have let that happen in the first place and leave the taxpayers out of it?

3. Gov't interference in the marketplace is dangerous to our liberty and prosperity. Gov't can only give what it takes from someone else first. Where is the net gain in that?

ED: increased font size for readability - MD

[MountainDon]

If GM has actual total costs of $81 an hour, and I do not doubt that figure, in a USA union factory there is no way on earth the vehicles can be priced competitively. None at all. That is why Mexico assembles many cars. They probably do it for $8 an hour or less. And a factory in India can probably do it for 81 cents an hour, or some other equally disproportionate amount.  There's the problem with our USA auto industry.

I could favor loans, that would be repaid as Chrysler did a few decades ago. That though would require huge concessions from the unions and the workers. I think the unions are crazy enough, short sighted enough, stupid enough to ensure the Big 3 will go bankrupt. At that point everybody here will lose. Just another nail in the coffin.

[muldoon]

Harry, I agree with you on every point.  I am not advocating a bailout for anyone.  However, if I had my choice I would rather bailout companies that produce a product (cars in this case), over companies that only leech from the rest of the system (banks, insurance and such).  It is somewhat clear that all three of the remaining auto manufacturers are quite broken, GM, Ford, and Crystler.  Likely they will all be in bankruptcy within the next 12-18 months.  With them comes the jobs, not just the assembly workers, but the parts makers, the petroleum and plastics business, the glass workers, the shipping jobs, and with those jobs comes the service jobs as those economies equally contract.  (google Flint for one of many examples on this concept). 

I am not advocating bailing them out, but the fact remains that a bailout may indeed be the cheaper option from a government perspective. 

[harry51]

Muldoon, point taken. You and some of the others are likely correct, the short-term reality will be some kind of pain sharing arrangement. And yes, there are some good aspects to that. I just can't swallow having the gov't mandate whose pain gets shared, when, and to what degree!

I found it interesting that the Prez-elect enshrined "change" as the centerpiece of his campaign, and then, in his first press conference since the election, endorsed this bailout before the furor over the bank bailout had even subsided. Sure looks like more of the same to me!

Harry

[Squirl]

I believe they should go into bankruptcy and sort it out from there.  But there are a few reasons not to let them disappear.  First is security.  Since WWI and WWII we have subsidized certain industries (food, energy) for security.  We did not want the basics of a fuctioning economy being dependent on a foreign entity. We have very little manufacturing of anything left in this country. I don't want to see what little we have disappear.
Second is that they have are not playing on an equal playing field.  In a perfect world, there is the "free" market.  The japanese subsidize their steel, car, and bank industries and they have been for 40 years.  The largest cost to US auto manufacturers is the health care, second is steel.  Japan has universal health care and subsidized steel.  The government also has a hand in their banks and has been given low interest loans to the auto manufacturing industry in Japan.  I would like to see U.S. car makers punished for making crap for years. When the rest of the world made fuel efficient vehicles, the U.S. car makers lobbied government for the most lax fuel standards in the modern world, even less than china. 

[desdawg]

$25 billion in loans is being approved by the politicians without conditions it would appear. I watched a little TV tonight. Lots of folks are outraged.

[MountainDon]

!@$%&$$#@!!!!     $^itheads politicians!

Abandon all hope! Just postponing tomorrow, the inevitable, without the making of big time changes to their corporate model.

[fishing_guy]

!@$%&$$#@!!!!     $^itheads politicians!

Abandon all hope! Just postponing tomorrow, the inevitable, without the making of big time changes to their corporate model.

Tell us what you really think MountainDon 

I don't expect much change from our newly elected government.  They talk a good game...but when it comes down to action..

[harry51]

Frankly, not much change is likely the best we can hope for from the new powers-that-be. I'm afraid that based on past performance and discussion, their preferred change would be all exactly in the wrong direction.

[apaknad]

i would rather the auto makers get it than the ins. co.'s and bankers.$25 billion as opposed to $700 billion. and as long as were talking big money, i heard that it would cost $60 billion to make our energy grid independent from foreign oil and be completly green. that doesn't sound like a bad idea compared to the way we are throwing money around into a black hole. it would put 10's of thousands of people to work(paying taxes and spending money) and keep the cost of oil down while we work on phase #2(energy efficient transportation that is green, maybe natural gas like pickens said).$60 billion is six months the cost of fighting in iraq. i just don't understand our priorities anymore. is our gov't "smarter than a 5th grader"?

[glenn kangiser]

I think $60bn won't do it --- it's held together with band aids.  These guys all lie to get free money in whatever large quantity they can.  Then come the cost overruns.

I'm with you on the rather autos than criminals but would rather see them all get legit on their own.

Their combined intelligence is only used for theft and is high and devious.  As to the part used for the benefit of the middle and lower class, they aren't interested in even thinking about it - -kindergarten minus there.  Just a facade if they show interest.

[MountainDon]

Until the  Big Shrinking Three are able to compete on the same playing field they are screwed. The latest numbers I've heard is that GM's actual hourly costs for a US plant worker is $71, while Toyota's US workers cost them $47. That places GM in a totally uncompetitive position. The only way out of that is to go through a bankruptcy where the union contracts can be broken.

Throwing money at them amounts to redistribution of wealth.

[Sassy]

What REALLY makes me mad is that they don't put any conditions on the bailouts...  just give them the money & it's business as usual...  I agree, I'd rather see a business that is actually making a product get helped than the international bankers like Goldman Sachs    But there needs to be strict accountability & oversite (although our congress critters are just wolves in sheep's clothing...)

MtnDon, I guess that's why a lot of businesses go overseas...