OT: Hey political dudes... Car Bailout?

[brywool]

What do you think of bailing out the auto industry? Should it be done?

Granted, it's like rewarding them for bad performance, but if they aren't helped, some of them could go under and it could supposedly bring on a nation-wide depression (http://money.cnn.com/2008/11/18/news/economy/auto_hearings/index.htm?postversion=2008111815&eref=rss_topstories)

Whatchoo Think?

Not sure where I'm at. I don't want to reward them for short-sightedness, but I also don't want to move my family to a refrigerator box.

(PS. couldn't figure out how to add a poll)

[epresley]

I personally don't like the idea. I think the American car companies have not moved fast enough providing us with fuel efficient cars, hybrids, elec. etc., etc., to stay competitive. My wife and I will only buy Japanese cars until they do.

[S2M]

Bailouts do NOTHING except pad the pockets of those in control....

The big three will get their 25 billion bailout, then turn around and layoff 50, 000 workers, and pocket the money. They are only trying to recoup monies lost. Their employees will get the driveshaft.

[brywool]

I personally don't like the idea. I think the American car companies have not moved fast enough providing us with fuel efficient cars, hybrids, elec. etc., etc., to stay competitive. My wife and I will only buy Japanese cars until they do.

I agree... however, what about the consequences of NOT bailing them out? Granted, it probably wouldn't save them and would just be a temporary measure putting off the inevitable.

Tough question.

[brywool]

Bailouts do NOTHING except pad the pockets of those in control....

The big three will get their 25 billion bailout, then turn around and layoff 50, 000 workers, and pocket the money. They are only trying to recoup monies lost. Their employees will get the driveshaft.

probably so.... ugh.

[S2M]

Citigroup is in the midst of laying off 50,000 employees....and this comes afte they got a 7.5 billion bailout from Abu Dhabi investment corp.

Thank god for that bailout....sure helped the employees....



http://www.npr.org/templates/story/story.php?storyId=16650405

[Rick]

Not sure where I stand on it either. American industries are dwindling fast. If this one goes under, it certainly couldn't help the economy. If they're going to bail out banks for their bad decisions, then it only seems right to help the auto industry. I agree though, rewarding any of them for bad decisions and poor performance goes against the grain.

[S2M]

When the average Joe gets a bailout, I'll be impressed....

[brywool]

When the average Joe gets a bailout, I'll be impressed....

Isn't that kind of what the tax refund was last year? Not being a smartass, just sayin'...

[S2M]

When the average Joe gets a bailout, I'll be impressed....

Isn't that kind of what the tax refund was last year? Not being a smartass, just sayin'...

I'm no socialist, but a mere $600 is not what I would consider a bailout.....(not trying to be a wiseass either)

[weatherman90]

As far as GM is concerned, I think that a bailout of GM is a horrible idea, but at the same time don't want to face the consequences of not doing so.

There's a good article in the Wall Street Journal that discusses why we have to let GM die.

http://online.wsj.com/article/SB1226886 ... lenews_wsj

[Rick]

When the average Joe gets a bailout, I'll be impressed....

Isn't that kind of what the tax refund was last year? Not being a smartass, just sayin'...

I'm no socialist, but a mere $600 is not what I would consider a bailout.....(not trying to be a wiseass either)

I'm not trying to be a wiseass or smartass, maybe just a dumbass, but if they gave the bailout money to the people it would only further damage the banking industry? Nobody needing a loan means no interest income for them.

Me? I say fuck them, give us the money. It's ours anyway.

[G.I.Jim]

When the average Joe gets a bailout, I'll be impressed....

Isn't that kind of what the tax refund was last year? Not being a smartass, just sayin'...

I'm no socialist, but a mere $600 is not what I would consider a bailout.....(not trying to be a wiseass either)

I'm not trying to be a wiseass or smartass, maybe just a dumbass, but if they gave the bailout money to the people it would only further damage the banking industry? Nobody needing a loan means no interest income for them.

Me? I say fuck them, give us the money. It's ours anyway.

I'm with you on this thought Rick. If we the taxpayers are footing the bill to fix this problem, why not divide 500 billon dollars amongst us consumers, and let US decide who's products we want to buy. Why should a hundred or so people in Washington determine who gets the aid? If you make shitty products...try making non-shitty products and maybe you're company will make money. Novel concept!

We could also losen some of the damn regulations we have imposed on our own country's companies to make them more competetive with other world markets. Just an idea!

[Tito]

I'm against bailouts. However, since that horse left the barn last month, you might as well bailout the big 3 too. It would be a much smaller price than the Bank/Wall Street bailout. Obviously, conditions would have to met i.e. labor and management concessions and a restructing.

I think its ignorant and still out of touch in some Republican circles to argue for a big bailout of Wall Street but argue against the Big 3 bailout and saying they should go bankrupt. Get use to being a permanent minority with that philosophy.

[strangegrey]

Fuck them.

I'm against almost all bailouts....bank bailouts are one thing, because a bank doesn't have the luxury of bankruptcy..when consumer confidence in a bank dies, the bank dies.

When consumer confidence in a manufacturer dies, the manufacturer can file for bankruptcy protection and restore itself through hard work.

[lights1961]

i want a 5000.00 bailout and NOT in that damn TAX CREDIT BOX.. a real 5000 bail out per tax paying citizen. that would help every business period. non taxable 5,000.00
think what that could do for a lot of families... and GM does NOT deserve until they cut the pension entitlements at least by half... and cut their CEO and high level salarys in half.
for getting the company to the ground in the first place. when I dont make money I cant keep my salary the same... why do these idiots get to keep their salary the same.



Rick

[Tito]

Fuck them.

I'm against almost all bailouts....bank bailouts are one thing, because a bank doesn't have the luxury of bankruptcy..when consumer confidence in a bank dies, the bank dies.

When consumer confidence in a manufacturer dies, the manufacturer can file for bankruptcy protection and restore itself through hard work.

They do have the "luxury" of having the government taking them over though.

[Michigan Girl]

I personally don't like the idea. I think the American car companies have not moved fast enough providing us with fuel efficient cars, hybrids, elec. etc., etc., to stay competitive. My wife and I will only buy Japanese cars until they do.

[FishinMagician]

it is stupid there is a reason why they aren't making money. why should we bail out a non-lucrative industry . people dont wan't the product in the first place that is why they aren;t making money. i should create a product and when no one buys it i should get the gvt to reimburse me for it, since that is how it works, right?

[Don]

Will the money end up going to their pension funds that they have been raiding over the years? Do I really want my money paying for someone else to have early retirement? What are these bailout funds going to be paying for exactly?

[strangegrey]

Fuck them.

I'm against almost all bailouts....bank bailouts are one thing, because a bank doesn't have the luxury of bankruptcy..when consumer confidence in a bank dies, the bank dies.

When consumer confidence in a manufacturer dies, the manufacturer can file for bankruptcy protection and restore itself through hard work.

They do have the "luxury" of having the government taking them over though.

Huh? Start breathing sense tito...wtf are you talking about?

[KenTheDude]

Now is a damn good time to buy some GM or Ford stock. The government is not going to let them go bankrupt.

[Enigma869]

My issue with the auto bailout is the automakers don't have any strategy. In the hard money business (I'm speaking of one part of the mortgage industry), we require all of our borrowers to present us with an "Exit Strategy", so we know the plan to re-pay us our money. The big 3 have no plan. They are a rudderless ship. If someone told me by bailing them out there was a guarantee that they would become solvent, thriving companies, I would say do it (even though it goes against what I believe in). The problem with bailing them out is that it may solve absolutely nothing. I wouldn't be shocked to see all three of these companies go out of business, with or without a bailout.

[tj]

All 3 are looking for someone to prop up their poor business model for another few months or years. Bottom line is that they are burdened with legacy costs from decades of union agreements. Healthcare costs, retirement, etc. Not that this is all the union's fault, they asked for the benefits and GM, Ford, Chrysler gave into the demands over the years.

The retirees and employees who have counted on those benefits and worked for years with the understanding that they would get them are the ones who will be most hurt if the companies file for bankruptcy. At the same time, so were the employees of MCI Worldcomm, Enron... No one bailed out their retirement funds or saved their jobs.

[hoagiepete]

I have to admit that I do not understand the breadth of the negative economic impact which would be created should the big three go under. All I know is the bail out thing makes me very nervous. I fear nationalized banks, now auto makers, and who knows what next?

The big 3 execs and union bosses are both to blame for the mess they are in. I'm not sure if they couldn't bring a competitive product to market because of the high cost of manufacturing or because they didn't have a clue what the consumer wanted or needed.

Execs are idiots by taking the high salaries they do as it pins a huge target on their back, regardless of whether they are good at leading a corporation or not.

The unions are to blame as well. You still see it. The minute they smell or even sense profits, they immediately raise their demands and pull the strike shit. There is a Saturn plant in KC, MO that I believe was the last line to show anything close to a profit. What happened? The union immediately found reasons not to agree on a contract and the banners went up.

Watch what happens to the aircraft industry. Labor is doing it there too. The Boeings, Cessnas, and Spirits of the world will surely ship out of the USA. They can...and they will...if forced. Labor needs to realize that. They need to become a partner, supplying a trained workforce to business instead of constantly being the adversary.

These companies have to be competitive on the global market and I'm not sure how they can be with the business environment here.

[Saint John]

This article seems to make a lot of sense to me. Believe me, I'm no expert on the whole bailout thing, but this article offers some easy to read insights that could be used when deciding what to do with "The Big 3" going forward.



Congress has balked at the Bush administration's proposed $700 billion bailout of Wall Street. Under this plan, the Treasury would have bought the "troubled assets" of financial institutions in an attempt to avoid economic meltdown.

This bailout was a terrible idea. Here's why.

The current mess would never have occurred in the absence of ill-conceived federal policies. The federal government chartered Fannie Mae in 1938 and Freddie Mac in 1970; these two mortgage lending institutions are at the center of the crisis. The government implicitly promised these institutions that it would make good on their debts, so Fannie and Freddie took on huge amounts of excessive risk.

Worse, beginning in 1977 and even more in the 1990s and the early part of this century, Congress pushed mortgage lenders and Fannie/Freddie to expand subprime lending. The industry was happy to oblige, given the implicit promise of federal backing, and subprime lending soared.

This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle.

Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets.

The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government.

The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company.

Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airlines). Bankruptcy punishes those who took excessive risks while preserving those aspects of a businesses that remain profitable.

In contrast, a bailout transfers enormous wealth from taxpayers to those who knowingly engaged in risky subprime lending. Thus, the bailout encourages companies to take large, imprudent risks and count on getting bailed out by government. This "moral hazard" generates enormous distortions in an economy's allocation of its financial resources.

Thoughtful advocates of the bailout might concede this perspective, but they argue that a bailout is necessary to prevent economic collapse. According to this view, lenders are not making loans, even for worthy projects, because they cannot get capital. This view has a grain of truth; if the bailout does not occur, more bankruptcies are possible and credit conditions may worsen for a time.

Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen.

Further, the current credit freeze is likely due to Wall Street's hope of a bailout; bankers will not sell their lousy assets for 20 cents on the dollar if the government might pay 30, 50, or 80 cents.

The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion.

If these assets are worth something, however, private parties should want to buy them, and they would do so if the owners would accept fair market value. Far more likely is that current owners have brushed under the rug how little their assets are worth.

The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients.

Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take. The bailout will open the door to further federal meddling in financial markets.

So what should the government do? Eliminate those policies that generated the current mess. This means, at a general level, abandoning the goal of home ownership independent of ability to pay. This means, in particular, getting rid of Fannie Mae and Freddie Mac, along with policies like the Community Reinvestment Act that pressure banks into subprime lending.

The right view of the financial mess is that an enormous fraction of subprime lending should never have occurred in the first place. Someone has to pay for that. That someone should not be, and does not need to be, the U.S. taxpayer.

[Rick]

As far as unions go, what's good for the goose is good for the gander. I've been in the Transport Workers Union for 25 years, and in '02 or '03 we signed a concessions package that resulted in an over 30% pay and benefits decrease. The very day after we signed that, the big wigs at AMR corp awarded themselves millions in bonuses, bankruptcy proof retirements and other golden parachute accouterments. One of the bargaining chips used by upper management to secure our deal was that it was a shared sacrifice by all departments including management. Since that day, we've not seen one raise or reestablishment of anything we conceded to. They've instituted raises for themselves and millions in bonuses every year since.

I'd beg to say that the union, at least in this instance, is not the bad guy.

[stevew2]

no fuckin way. Why should we give money to a company that produces beige Malibus. Only a fucken moran would by such a car. i l Know only of one.he bought that heap second hand anyway No wonder they are bankrupt

[hoagiepete]

As far as unions go, what's good for the goose is good for the gander. I've been in the Transport Workers Union for 25 years, and in '02 or '03 we signed a concessions package that resulted in an over 30% pay and benefits decrease. The very day after we signed that, the big wigs at AMR corp awarded themselves millions in bonuses, bankruptcy proof retirements and other golden parachute accouterments. One of the bargaining chips used by upper management to secure our deal was that it was a shared sacrifice by all departments including management. Since that day, we've not seen one raise or reestablishment of anything we conceded to. They've instituted raises for themselves and millions in bonuses every year since.

I'd beg to say that the union, at least in this instance, is not the bad guy.

I hope I didn't come across as saying the unions are the only problem, but I sincerely think some are a big part of the problem. I also shouldn't paint unions with the same broad brush. I agree, the execs of our nations corporations have done some unbelievable things.

[Rick]

As far as unions go, what's good for the goose is good for the gander. I've been in the Transport Workers Union for 25 years, and in '02 or '03 we signed a concessions package that resulted in an over 30% pay and benefits decrease. The very day after we signed that, the big wigs at AMR corp awarded themselves millions in bonuses, bankruptcy proof retirements and other golden parachute accouterments. One of the bargaining chips used by upper management to secure our deal was that it was a shared sacrifice by all departments including management. Since that day, we've not seen one raise or reestablishment of anything we conceded to. They've instituted raises for themselves and millions in bonuses every year since.

I'd beg to say that the union, at least in this instance, is not the bad guy.

I hope I didn't come across as saying the unions are the only problem, but I sincerely think some are a big part of the problem. I also shouldn't paint unions with the same broad brush. I agree, the execs of our nations corporations have done some unbelievable things.

You're good with me brother. I know unions have gotten a lot of black eyes, and deservedly so on most counts. The one I belong to seems to be one of fairness in give and take. We've been doing a lot of giving from the wallets and taking it in the bung hole for a while now though.