Big Three Bailout?

[vol_scouter]

Lisabob,

 

The airlines seem to routinely file for bankruptcy without massive lay offs. I do not want the big 3 to fail but they would break all union contracts with bankruptcy. They cannot continue to make cars in union shops with considerable legacy debt and compete with non-union Japanese cars with young workforces. My experience has been that the big 3 get a bad rap for quality and, unlike many countries, most Americans are not loyal to American brands. As to the quality, I watched a PBS car show ~10 years ago. I had a new Jeep Grand Cherokee and they were testing the same car. The Jeep had a sticky rear gate/door that was fixed with a few drops of oil. Other than that, no problems. It out performed its advertised numbers and was discussed in glowing terms. That matches my experience after my family has owned 6 Jeeps, all have been great without major problems. Anyway the show then tested a Toyota. The first one had a bad transmission and had to be replaced. The second one had multiple problems including the windshield leaking like a sieve. The car did not perform up to the stated performance standards. Despite the excellent performance of the Jeep, it was panned and consumers were warned not to buy it. Whereas, the problem plagued underperforming Toyota was highly recommended. The recommendations were totally bogus. Yet, the conclusions appeared a few days later in the local paper as a wire report.

 

The big 3 need to succeed in the long run. As a country, we need to re-develop or industrial strength. As citizens, we need to buy American.

[frankj]

No bailout. Short term thinking and action created the problem. The 3 automakers and the unions got themselves into this untenable position by such thinking. The unions did what their members expected them to do over the years, bargain for ever higher wages and benefits. The mananagement went along to avoid strikes and maintain production. Both groups figured the future (the promised health care and pensions) would somehow take care of itself.

 

The future is NOW, unfortunately. The credit crisis has precipitated what was destined to happen anyway. It is short term thinking to suppose that a "one-time" cash injection will lead to the structural changes needed in this case. The president of the UAW has already said that his union is not going to give up any of their benefits to help the situation. Maybe he was posturing, maybe not. But it really is all about the wages and benefits and the promised future benefits. Sure, cut executive compensation like someone suggested, it will be symbolic, not material but maybe worth doing.

 

I don't like what's happening with the so-called bank bailout, but I think the line must be drawn. Otherwise, what industry sector is next? And if a bailout is given to correct the problems created by overpromising benefits and pensions, then why shouldn't cities, counties and states be bailed out too, for their now-underfunded future benefits? Rumblings are now being heard from those entities.

 

 

[mikecummings157]

No Bailout.

 

Bad Management, Bad Labor Agreements, Bad Cars.

 

We're supposed to reward this?

[scottteng]

No bailout for the UAW they have finally managed to kill the golden goose. Cars are manufactured quite profitably in this country by Toyota, Nissan, Isuzu, BMW, Hyundai. The entire problem is the UAW they deserve what they get. Should we resurrect some buggy whip manufacturers , how about AMC, Studebaker, or Nash. GM & Ford should go bankrupt and reorganize, Let the market work. Michigan needs to really become a business friendly state not just advertise that they are then their economy will turn around.

[Beavah]

Yah, Lisa'bob, I think that 3 million jobs figure is a lobbyist number, eh? Seems like those lobbying for the bailout were talkin' 2 million, and that was bogus too. Total number employed directly by all the big 3 in the U.S. is only about 250K. Even with parts suppliers and truck drivers, it's hard to see a 10 times total positions impact without gettin' really, really "creative".

 

Yep, folks will move out of Michigan. That's the way of things, eh? Just like folks moved out of Western PA when the oil dried up. They'll eventually move back when half the rest of the country runs out of water.

 

Personally, I think if any auto bailout passes at all (includin' that dumb $25 billion they already got!), the entire Michigan congressional delegation should be consigned to Siberia in terms of committee appointments. For years those nitwits, both Democrat and Republican, have blocked every effort at makin' that industry rational.

 

Beavah

 

 

Beavah

 

[TwoXForr]

No to any bailout. The big three will not go away. Reorganize under bankrupcty, maybe even be bought out by another car company, but there is still some profit in those companies (R and D patents, models that continually make money). Just need to trim a heck of a lot of fat, and get them to be lean and mean once again.

 

And would someone turn off the funds to the banks as well. I dont think it is helping.

[OldGreyEagle]

hey Lisabob, we are not throwing you under any bus, you guys (rhetorically speaking) climbed under the bus willingly and gleefully and now need help, no, can't do it.

 

You have a college student who is to turn in a term paper for the final grade. All during the term the student skips class, is disruptive when in class, pays no attention to the material and then, one week before the term is over wants an extension and for you to co-authour the paper as well? How does that sound to you ?

[Ohio_Scouter]

No bailout for the auto industry. No bailout for the banking industry. No bailout for any industry. No bailout for me, either. Other than my 401(k) retirement plans, I don't need one; I'll just work indefinitely in whatever industries survive.

[scoutingagain]

As noted I'm not in favor of an auto bailout. But no one should think that this will not effect the US economy overall and especially in the upper midwest. The exact no. of jobs that go away is a guess, but it will be a lot. And it will effect not just the midwest but the rest of us as well. The market is already beginning to price in the effect of the coming reorganization of the Auto industry. Obama has little to do with it.

 

I agree there will be some kind of US Auto industry that resurects itself one way or the other. But one of the big three will probably not survive and be absorbed or merged. Total employment in the industry will drop signigicantly and those that survive will be making a lot less money than they are now. Those that find other jobs, will be making even less than those that survive in the auto industry. That means less for them to spend on other goods and services from the rest of us. Yep, no more vacation homes in SC. That will effect builders, resturants etc, in the southeast. No more Florida vacations, more impact there. No more ski vacations to the Rockies. They will buy fewer computer, TVs furniture etc. Fewer transportation and retail jobs. There will be fewer taxes collected. As people move out there will be a less of a need for teachers, police firefighters etc. With fewer people in MI do they really need two big state univerisities? Can they even support both?

 

It will have a monumental effect on the economy. But it will happen sooner or later, one way or the other.

 

SA

[packsaddle]

I just read this article, seemed relevant. I hope the link works..I think it opens to a preview of the issue but I was able to read it.

http://www.zinio.com/express3?issue=313023118&o=int&prev=sub

Commentary by Jamie Kitman, page 26 of December issue of Automobile.

A teaser, "Many talk of the general cheapening of our culture, but surely it doesn't get more debased than when rock-ribbed Republicans and hard-core free-marketeers sidle up to the public trough."

I quite agree. It's a surprising statement for this magazine.

[TheScout]

I don't know where the bailout would be authorized by the Constitution.

[FScouter]

Article I.

Did you mean "not authorized"?

[TheScout]

No. Thats what I meant. Article I strictly limits Congress by specifically listing the things it may do. Giving money to corporations is not listed.

 

Further the 10th Amendment more clearly defines the power of the federal government, saying:

 

"The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people."

[anarchist]

Beav...they "got" Dingle yesterday...he lost his committee chair.

 

There seems to be a lot of hostility towards the US auto makers (both for the big shots and for labor)...There are also a lot of "bad product"- "bad car" comments...that I find interesting...personally speaking remember when "made in Japan" equaled "a piece of trash" ...

 

On the home front, I have had pretty good luck with detroit's "iron". Personally speaking, I am a truck guy...my last truck was a chevy half ton, extended cab 4X4 with a 3/4 ton suspension and towing package and a 350 cc engine...1987...I got 360,000 miles with only a rebuilt short block (which was my fault) a rebuilt transmission (while we had the engine out anyway)and normal brakes and tires and oil changes and a rebuild on the front end and transfer case (my fault again-four wheel drive doesn't mean you won't get stuck...just that you will get stuck in more "interesting" places).

 

My current truck is a 2002 Ford 250 4x4 diesel with 208,650 miles and still going strong...only repairs so far have been an oil sending unit (warranty) and some front end work caused mainly by where my truck and I sometime go for fun and relaxation...I religiously service these things...they may need a bath but they get oil, brakes and fluid changes on schedule.

 

During this same time My wife has had a Pontiac a 1989 she drove 136,000 miles before we got her a new car and let one of my sons take "moms bomb". Her "new" car was a $27,000 -2000 model year rice burner which she has put on just over 100,000 miles (not a bad car but it has had more "stuff" go wrong than the other three combined)...so in my book detroit is not all that bad...just stupid- planning wise. Like many folks they closed their eyes and hopped for cheap gas forever and American buyers held them up by buying SUVs and trucks.

 

Personally, I couldn't give a "nit" if these guys survive or not but unlike most folks bad mouthing a bail out -I see shock waves in and already screwed up economy that could cause a lot more than "a ripple" through everyones neighborhood. I think (MHO) that an orderly downsizing with iron-clad oversight and mulitple strings attached will be the best way to soften the impact. (certainly nothing like the nearly blank check the bankers were given.)

 

I suggest we start with the demand for a special bankruptcy proceeding leading to a take over of the "participating" auto companies by a govenment entity. the second order of busines is the termination of the three morons who flew private jets into Washington to beg for a bail out...they all should be "toast".

 

Republicans and their sponsors have been feeding at the public trough for many more years than the Dems over the last 32 years...so whats the big surprise when they go all "socialist" on you? (rhetorical question)

 

and certainly the Constitution is not a problem...the people who can bring you unauthorized wire taps, kidnapping, lying to congress, illegal wars, and torture surely can bring you mini socialism...right?

 

anarchist

 

 

[Basementdweller]

Wow dlrscout, you put more in your 401k than most decent people take home a month.

 

The big three are out of touch let them find their own way.