View Poll Results: Should DC Bail-out the Big 3 again?

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  • Yes

    3 14.29%
  • No

    18 85.71%
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Thread: are the big 3 worth saving?

  1. #21
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    [QUOTE=jetstream23;2846911][B]What was done with the banks last month was a bail-in. The automakers are bloated, inefficient, and strapped by unions and execs (both of whom have guaranteed commitments like pensions, etc.). We can't use good money to chase bad money.

    With that said, the United States MUST maintain some kind of manufacturing base in the U.S. for national defense purposes. We saw this benefit in WWII. But that's a whole other conversation.
    [/B]
    RJF - I hear what you're saying and it makes sense from a pragmatic standpoint but I'm not sure I want to mandate automakers to sell hybrid cars that are $4K more expensive than regular vehicles in an environment of $2/gallon gasoline. The government is notorious for being late to the game on these things. I agree we need to pivot the industry towards more efficient, more environmentally sustainable technologies but we need to be a little careful about taking the free market of supply and demand out of the equation totally. People were chasing hybrids when gas was $4 and now they are running away from them rather than paying the big premium. I'm not disagreeing with you, just pointing out that we need to be careful and recognize that the government is notorious for bad-timing.[/QUOTE]

    completely agree with all of this . My point was that if a bail out were to happen, the terms must be accompanied with the painful but necessary changes that are needed. im wasnt advocating throwing good money after bad

  2. #22
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    As an FYI

    I believe (and need to confirm) that if GM afails, pension obligations become US tax payers obligations.

  3. #23
    [QUOTE=jetstream23;2846911]
    RJF - I hear what you're saying and it makes sense from a pragmatic standpoint but I'm not sure I want to mandate automakers to sell hybrid cars that are $4K more expensive than regular vehicles in an environment of $2/gallon gasoline. The government is notorious for being late to the game on these things. I agree we need to pivot the industry towards more efficient, more environmentally sustainable technologies but we need to be a little careful about taking the free market of supply and demand out of the equation totally. People were chasing hybrids when gas was $4 and now they are running away from them rather than paying the big premium. I'm not disagreeing with you, just pointing out that we need to be careful and recognize that the government is notorious for bad-timing.[/QUOTE]

    Well I'm not saying that the industry has to be completely turned on its side by the American government, far from it.

    I do think that a large issue of pricing and demand for hybrids and environmentally safe vehicles comes in largely due to the supply of them rather than the demand. I think demand has dropped not only due to the gas price drop but also due to the fact that people haven't been able to get them as well. Remember, there's still a waitlist for most of these vehicles. So many auto plants in this country are fitted for the cars that were in demand in the 90's, particularly SUV's, of which there simply isn't a demand for right now. Retooling these plants is going to be ridiculously expensive and is something that the American automakers can't afford currently.

    I also think that in time, even if the big corporations fail, new ones will rise up to meet the demands of the American consumer via American products, however this isn't something that would happen quickly at all. And would most likely take at least a decade or two to happen. In my opinion, with global competition being at its highest in this country's history, we don't have that sort of time.

    My issue is simply that energy and environmental technology is the future of the global economy. Too often I find myself engrossed in laissez-faire economic policy, however I find it to be blatantly clear that the auto industry has failed to meet the demands of the American consumer, and the transportation aspect of environmental technology must be at the forefront of any major changes that are going to come to the US economy.

    In short, I'd like to see American governmental dollars invested for the good of the vehicles of tomorrow since American corporations currently are unable to do this, and it is so heavily important to our immediate and long-term future. Such development and research will surely trickle down to other industries and hopefully push the country towards forward-thinking processes for technology rather than 'drill baby drill.' However let be very clear that this is one of the rare instances where I think intervention by government into business would be a good thing, and that it should only be done under the condition that it's being done in the name of turning said companies in a new direction, not bailing them out.
    Last edited by RutgersJetFan; 11-07-2008 at 12:04 PM.

  4. #24
    The unions would have to make major concessions, let Chrysler go under they have continually sucked for years. That leaves GM and Ford. GM must consolidate all their divisions into 2 at most.

  5. #25
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    [quote=RutgersJetFan;2846684]The auto industry is one of the few aspects of the economy where I actually prefer the gov't get involved in so long as they enforce the companies going ahead full steam with new sources of energy technology. The entire American auto industry needs a makeover. However, if it's simply another bailout, no thanks.

    Auto plants all over have to be retooled for the most part for primarily hybrid and alternative vehicles, and with the American industry being in shambles, they need help to do this. It's going to take too long for them to be able to accomplish this on their own. Normally I'd prefer to let the market stabalize itself and the industry adjust on its own, however I don't know if we as a world power in competition with the EU and Asian markets have time for that.[/quote]
    i agree with that, see it more as an investment than a bailout. i do think, especially with oil prices looking like they'll fall significantly again, the gov't should invest in alternative energy - once oil falls, there will be little incentive for business to keep greening... and yes, i did read the sunday times mag re: france...

  6. #26
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    I read this in Forbes last week. The writer (Jerry Flint) regularly writes a column on the auto industry for Forbes. I always find his stuff interesting.

    [URL="http://www.forbes.com/business/global/2008/1110/101.html"]http://www.forbes.com/business/global/2008/1110/101.html[/URL]

    [QUOTE][SIZE="4"][B]Bail Out GM[/B][/SIZE]
    Jerry Flint


    Let's stop kidding ourselves. If General Motors is going to survive in the U.S., it will need government-guaranteed loans. Just between us capitalists, is there anything wrong with that? In 1980 the U.S. guaranteed $1.5 billion of private loans to Chrysler, which was much smaller than GM is today. The government made $400 million on the deal.

    The U.S. is lending $120 billion to an insurance company. There's $700 billion set aside for banks and others whose leaders enriched themselves while ruining their companies and the U.S. economy.

    The leaders of GM have made their mistakes--plenty of them--but they didn't enrich themselves beyond decency as those other executives did. Today's economic problems, brought on by subprime mortgages, credit default swaps, a credit freeze and a stock market collapse, were caused by those other folks.

    The U.S. needs to decide if it wants a domestically controlled auto industry. We won't run out of cars. Toyota (nyse: TM - news - people ), Honda (nyse: HMC - news - people ), Mercedes and BMW will make sure of that. But the auto industry created American society as it's known today. If this industry can't survive, what can?

    We might ask ourselves if Japan would allow Toyota to go down in these circumstances or if Germany would let Volkswagen (other-otc: VLKAF.PK - news - people ) fail. The U.S. should also ask whether those companies will build the tanks and trucks that it might need someday.

    A collapse of GM would bring a huge job loss, close to 100,000 people on its own payroll, plus hundreds of thousands of others in dealerships and supplier industries. The U.S. would pay a price for this in unemployment insurance, medical costs, the squeeze on schools because of tax losses and all the things that go with such devastation.

    GM could be out of money by the middle of next year. GM has successful operations in Europe, Brazil and China, but sacrificing them to save the American business would fail and would destroy chances for a future recovery.

    At the same time it was enacting the bailout legislation, the U.S. Congress approved a separate $25 billion package for the auto companies in Detroit, but that is only for retooling 20-year-old factories, and I doubt if any of that cash will get passed out for another year. GM needs money now to keep the business running until the tide turns.

    There is talk of some sort of GM-Chrysler combination. All this would mean, as far as I can see, is that more factories would have to be closed, more workers laid off, more auto dealers be allowed to collapse.

    The U.S. owes GM some help. The company helped save the country in World War II. GM paid such great wages and benefits that an entire middle class of workers was created. And it built some great cars.

    Maybe an American driving his Mercedes to work is thinking: "What has GM done for me lately? We're not a manufacturing economy anymore. We're technology, service, finance. Let those autoworkers, who make too much money anyway, get jobs at Wal-Mart (nyse: WMT - news - people )." But when GM gets killed, it's bad for business everywhere, and something needs to be done about it.

    [B]U.S. taxpayers should get stock warrants so they win if GM turns around. There should be some sacrifice by the workers whose jobs would be saved. (Workers gave up $1 an hour in the Chrysler deal.) The U.S. should make sure that loan guarantee money does not get moved into union funds, such as the one that GM has promised the uaw in return for taking over health care costs.[/B]

    The biggest question is the management and board of directors. This company has been sinking for decades, losing market share year after year, building cars that didn't match those of foreign competitors--who build them in the U.S., too, by the way. I would demand a new board of directors for sure, including some people who know something about the automobile business.

    GM has finally woken up, at least as far as the vehicles go. The new cars and trucks coming off the lines are among the best. But this management doesn't inspire anyone. It will take a great leader to bring GM back to prosperity, the way Lee Iacocca saved Chrysler and, a few decades before that, George Romney saved American Motors.

    Now, some may find even this small dose of socialism to be intolerable. Some may think taxpayers have no responsibility to save private companies. But General Motors (nyse: GM - news - people ) needs help if it is going to survive in the U.S. It's about time that GM executives admit this and ask for that help. What's good for America is good for General Motors--and vice versa.
    [/QUOTE]

  7. #27
    [QUOTE=MnJetFan;2846947]The unions would have to make major concessions, let Chrysler go under they have continually sucked for years. That leaves GM and Ford. GM must consolidate all their divisions into 2 at most.[/QUOTE]

    ironically chrysler is privately held and probably in the best fiscal shape

  8. #28
    But their cars are the least reliable. Daimler Benz even dumped them! The unions will have to make major concessions or tough luck!

  9. #29
    Why do we have to pay for the big 3 pensions?

  10. #30
    [QUOTE=bitonti;2846822]I say no b/c they are weak, poorly run and no one really needs or wants their products.

    The American auto industry made it's own bed 20 years ago when they started making cars that implode after 80k miles while Japan was making cars that run forever.[/QUOTE]

    I completely agree. They do not deserve more money. They have not proven that would do anything to save themselves which makes it a bad investment for the tax payer. All its doing is keeping something afloat and delaying the inevitable. I hate to see all those people lose their jobs, but I do not feel the companies deserve that bailout. These companies should declare bankruptcy, streamline and trim down their operations, and see if they can move onward or else shut their doors. To see the government continue to bail out failing business after failing business just is not right. If I started a business and failed I wouldnt have any helping hand keep me afloat. I dont care if the business employs 100,000 or 1 person its the principle of the matter. And if you keep putting band aids on the market like this eventually those band aids tear apart and you just run into even worse times down the line.

  11. #31
    [QUOTE=bitonti;2846822]I say no b/c they are weak, poorly run and no one really needs or wants their products.

    The American auto industry made it's own bed 20 years ago when they started making cars that implode after 80k miles while Japan was making cars that run forever.[/QUOTE]

    Have I just been lucky? I've driven Am cars all my life (mostly Fords) and have never had one go bad under 150K miles. My wife's Taurus has over 200K now and will still beat 95% of anything on the road!

    Let them fold if they can't compete, then let the unions support the workers since they have the workers "best interests at heart!" :rofl:

  12. #32
    [QUOTE=jetstream23;2846911]What was done with the banks last month was a bail-in. The automakers are bloated, inefficient, and strapped by unions and execs (both of whom have guaranteed commitments like pensions, etc.). We can't use good money to chase bad money.[/quote]

    Bailing out the banks made some sense b/c the 'rats have been putting pressure on them to make bad loans, but most of the automakers' problems are self-inflicted.

    [quote]RJF - I hear what you're saying and it makes sense from a pragmatic standpoint but I'm not sure I want to mandate automakers to sell hybrid cars that are $4K more expensive than regular vehicles in an environment of $2/gallon gasoline. The government is notorious for being late to the game on these things. I agree we need to pivot the industry towards more efficient, more environmentally sustainable technologies but we need to be a little careful about taking the free market of supply and demand out of the equation totally. People were chasing hybrids when gas was $4 and now they are running away from them rather than paying the big premium. I'm not disagreeing with you, just pointing out that we need to be careful and recognize that the government is notorious for bad-timing.[/QUOTE]

    Good point...what if hybrids turn out to be the equivalent of the 8-track tape system or beta video system? I have no interest in an "alternative" auto until I'm satisfied they're worth the money I'd have to lay on the dotted line! Let the rich enviro-wackos prove their worth first!

  13. #33
    Wouldn't it be smarter to a) let the big inefficient companies go down the drain and b) work on getting the more efficient, less hand out requiring foreign companies to come in and take up the slack? Its not like if these companies fail its all of a sudden going to be bad to produce cars in america considering the volume required for that market now is it? Sure the industry may shrink a little in size but it wont go completely kaput i'd imagine.

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