AUTO BAILOUT?

[throwbackbilly]

Thoughts?

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[PromoTheRobot]

I am not, nor pretend to be, a financial expert. I do not know what letting the Big 3 crash would do to the economy. But I do believe the Big 3's problem is not so much the recession as dumb management. So bailing them out would only reward and maintain mediocrity.

 

PTR

[Pete]

!@#$ all bailout outs! Die corporate pigs!

[Buftex]

The oil companies should bail out the auto company...they need eachother...

[duey]

I am not, nor pretend to be, a financial expert. I do not know what letting the Big 3 crash would do to the economy. But I do believe the Big 3's problem is not so much the recession as dumb management. So bailing them out would only reward and maintain mediocrity.

 

PTR

Speaking of dumb management...all three heads of the Big 3 flew on private jets to Washington...and they got called on the carpet for it. One GM spokesman indicated that this was standard corporate policy and is done for "safety reasons." WTF?! Is it that they fear flying commercial because it's unsafe...or are they afraid of being ID'd and attacked for making crappy cars?

[Acantha]

I am not, nor pretend to be, a financial expert. I do not know what letting the Big 3 crash would do to the economy. But I do believe the Big 3's problem is not so much the recession as dumb management. So bailing them out would only reward and maintain mediocrity.

 

PTR

Letting them fail will be a huge hit to the economy. It will probably be the knockout punch (at the end of a 15 round fight). And we should absolutely not bail them out.

[KD in CA]

I can not fathom why any taxpayer would be in favor of this. It rewards bad management and unaffordable/unsustainable union giveaways.

 

Just curious...how many people here have full medical for their family and pay a grand total of ZERO for it? Do you really want your tax dollars going to provide that kind of benefit for some guy in Detroit? Or for his boss to fly private jets and get a seven figure bonus for doing a sh--ty job? Me neither.

[Dante]

Thoughts?

Sure why not. They bailed out the banks so why not the auto industry? It's only fair isn't it? Only one stipulation. The UAW isn't involved any more so unskilled labor doesn't get grossly overpaid. Then maybe the big 3 can compete.

[taterhill]

1 Year ago ...let em fail, but this economy and market are WAY too fragile to handle this.....throwing $25 billion at a problem will prevent TRILLIONS in market loss and further business failures......just my 2 cents...

[Steely Dan]

Speaking of dumb management...all three heads of the Big 3 flew on private jets to Washington...and they got called on the carpet for it. One GM spokesman indicated that this was standard corporate policy and is done for "safety reasons." WTF?! Is it that they fear flying commercial because it's unsafe...or are they afraid of being ID'd and attacked for making crappy cars?

 

Linkage

 

 

Say what you want about Michael Moore but he makes some good points.

 

(CNN) -- Senate Majority Leader Harry Reid reversed plans Wednesday to hold a test vote on an automakers' bailout bill on Thursday. Reid had planned to move on legislation that would have taken $25 billion from the $700 billion already approved for Wall Street and diverted it to the big three automakers.

Filmmaker Michael Moore says the collapse of General Motors could mean the loss of millions of jobs.

 

 

CNN's Larry King talked Wednesday with Michael Moore, a filmmaker with deep ties to the auto industry. Moore's father worked for General Motors for 35 years.

 

In 1989, Moore became an international figure for his film, "Roger and Me," which centered on the declining auto industry in his hometown of Flint, Michigan and the ripple effect on the town's residents.

 

The following is an edited version of the interview.

 

Larry King: Michael, was (the movie) prophetic?

 

Michael Moore: When I made that film, there were still 50,000 people working at General Motors in Flint. I mean they had eliminated 30,000 jobs, but there were still some jobs there.

 

Today, I think there's less than 12,000 working in the area, so it has devastated Flint. Flint was one of the first towns to go. When I made that movie almost 20 years ago, I hoped that the film would be a warning to other cities that this corporation was intent upon removing jobs from this country and taking them to Mexico and Brazil and other places.

 

When I made that movie that year, General Motors made a profit of over $4 billion, and they were still laying off people simply to make a bit more money, the people who helped to build the company, the workers in their hometown of Flint, Michigan, they just forgot about them and took the money and ran.

 

King: Since the principle was, 'We'll have the cars built elsewhere and many of the cars are built elsewhere now,' what went wrong if they were paying less out of the country to build them?

 

Moore: Well, what really went wrong is that General Motors has had this philosophy from the beginning that what's good for General Motors is good for the country. So, their attitude was we'll build it and you buy it. We'll tell you what to buy. You just buy it.

 

Eventually, the consumer got smart and said, 'You know what, I'd like a car that gets a little better gas mileage. I'd like a car that's safer on the road,' so they started to buy other cars. General Motors still wouldn't change. They still kept building the wrong cars, and more and more people stopped buying them. Video Watch how Moore feels about auto bailout »

 

At a certain point, you know, General Motors lost such a large part of the market share that there probably was a point of no return.

 

Now, here we are on the verge of this collapse. If General Motors collapses, then there goes hundreds of thousands of jobs, if not millions of jobs of the ripple effect of this.

 

King: And the same is true of Ford and Chrysler?

 

Moore: Absolutely. I'll tell you, it was hilarious just watching these CEOs there (Tuesday) and (Wednesday) testifying in Congress, saying that, you know, that the problem wasn't theirs, you know, the cars they were building. It was the financial situation that we're in now. Video Watch automakers get grilled on Capitol Hill »

 

The problem is the cars they've been building. They've never listened to the consumers. They've just gone about it their own wrong way. I'll tell you, you know, I'm of mixed mind about this bailout, Larry, because I don't think these companies, with these management people, should be given a dime, because that's just going to be money going up in smoke or off to other countries.

 

GM is currently building a $300 million factory in Russia right now to build SUVs, right outside of St. Petersburg. That's where your money's going to go, no matter what they say.

 

King: Why (do you have) mixed feelings?

 

Moore: Well, because we can't let all these people lose their jobs because of the bad decisions, the stupid decisions made by the management of these auto companies. I think what has to happen here is that Congress needs to pass some legislation, and our president-elect needs to do what Roosevelt did.

 

When Roosevelt came in and when World War II faced the country, Roosevelt said to General Motors and Ford, you're not going to build cars anymore. You're going to build airplanes and tanks and guns and the things that we need for this war because we have a national crisis. General Motors had to do what Roosevelt told them they had to do.

 

King: What do you want them to do now?

 

Moore: President-Elect Obama has to say to them, yes, we're going to use this money to save these jobs, but we're not going to build these gas-guzzling, unsafe vehicles any longer.

 

We're going to put the companies into some sort of receivership and we, the government, are going to hold the reigns on these companies. They're to build mass transit. They're to build hybrid cars. They're to build cars that use little or no gasoline.

 

We're facing a national crisis, not just an economic crisis, but a crisis of the polar ice caps are melting. There's only so much oil left under the Earth. We're going to run out of that, if not in our children's time, our grandchildren's time.

 

There's got to be a plan set out to find other ways to transport ourselves in other ways than using fossil fuels.

[Johnny Coli]

Thoughts?

You give them the loan with some major conditions attached (ie no money for executive bonuses, reduction of the number of models, forced introduction of more fuel efficient models, etc). Letting them go under isn't an option because as taterhill said above, the cost if they went under would dwarf the size of the loan we're debating. Millions added to the unemployment rolls. Millions without health insurance. The loss of an entire industry top to bottom. Think about what that would do to an economy already on the edge. And no, you can't let them declare bankruptcy and re-organize. Who the hell is going to buy a product from a bankrupt company? They might as well go straight to chapter 7.

[tennesseeboy]

nope its not a bailout...its called "enabling"

 

The foreign automakers in the states costabout $44 per hour. the GM folks cost nearly $78. Much of that is retirement and health. The compensation and perks for management are out of hand. Michigan's tax structure is crippling. The "bailout" should come if at all after a major restructuring and givebacks by UAW, GM and the state.

[Johnny Coli]

nope its not a bailout...its called "enabling"

 

The foreign automakers in the states costabout $44 per hour. the GM folks cost nearly $78. Much of that is retirement and health. The compensation and perks for management are out of hand. Michigan's tax structure is crippling. The "bailout" should come if at all after a major restructuring and givebacks by UAW, GM and the state.

Man, I'm sick of this bull sh-- about how the UAW is the root of all evil and the cause of Detroit's downfall. The UAW made massive concessions last year saving the Big Three billions of dollars. The facts are management was/is grossly negligent and incompetent, and the economy sucks and no one is buying automobiles. The UAW is a convenient scapegoat, but they aren't the problem.

 

What to expect from U.S. auto bailout debate

In a landmark 2007 contract deal, the United Auto Workers, agreed to steep concessions on wages and benefits for new hires and the establishment of a trust for retiree health care.

 

Much of the opposition to the bailout has focused on labor costs, labor accounts for only 13 percent of the cost of a GM vehicle.

 

GM and the other Detroit automakers are already saving money based on the 2007 contract with the UAW. GM estimates it is already saving over $500 million per year because of concessions in the 2007 contract.

 

That will rise to $4 billion per year from 2010 once the healthcare trust shifts the liability for retiree healthcare costs from the company's balance sheet, said GM spokesman Tony Sapienza.

 

The UAW will probably have to make more concessions to save their jobs, but they've already made quite a few. I can't believe you of all people would buy into the GOP talking point blaming the unions. The GOP doesn't give a crap about the American taxpayer. They want Detroit bankrupt so the UAW gets destroyed. That's what this opposition is about. We're talking a 25 Billion dollar loan with interest.

[RayFinkle]

It isn't like GM is going to go out of business if they don't get 25 billion in aide. They will file for bankruptcy and re-structure and a lot of big wigs will lose their jobs. Not EVERYBODY who works for GM is going to be thrown out on the street. They'll still be building cars.

[Poeticlaw]

Thoughts?

 

 

Let the OIL companies Bail out the Auto industry since THE GAS prices associated with the OIL prices has driven them into the ground.

[Johnny Coli]

It isn't like GM is going to go out of business if they don't get 25 billion in aide. They will file for bankruptcy and re-structure and a lot of big wigs will lose their jobs. Not EVERYBODY who works for GM is going to be thrown out on the street. They'll still be building cars.

Would you buy a car from a company that is bankrupt? During a recession.

[Fan in Chicago]

It isn't like GM is going to go out of business if they don't get 25 billion in aide. They will file for bankruptcy and re-structure and a lot of big wigs will lose their jobs. Not EVERYBODY who works for GM is going to be thrown out on the street. They'll still be building cars.

Agree and I posted this in another thread also.

http://www.becker-posner-blog.com/

 

The 'lose millions of jobs' is a ridiculous scenario. Even though they are financially hurting, that manufacturing capacity cannot just disappear overnight as it will create a disastrous shortage of vehicles. Worst case, manufacturing will be scaled back over the coming few years to allow other auto makers to fill the quantity void. But, scaring people with a total shut down scenario is moronic - an insult to my intelligence to expect me to believe that.

[Fan in Chicago]

Would you buy a car from a company that is bankrupt? During a recession.

Didn't people fly United when it was in bankruptcy proceedings ? Agreed they are different businesses but I don't see why people will be scared of buying a vehicle from a company which is in Chapter 11 re-organization (and not Chapter 7 liquidation)

[KD in CA]

It isn't like GM is going to go out of business if they don't get 25 billion in aide. They will file for bankruptcy and re-structure and a lot of big wigs will lose their jobs. Not EVERYBODY who works for GM is going to be thrown out on the street. They'll still be building cars.

 

 

Thank you. A lot of people don't really understand the process of bankruptcy. They also don't seem to understand that handing them $25B while making nothing but cosmetic changes will not 'save' the US auto industry.