Big Three Bailout?

[vol_scouter]

packsaddle,

 

I generally agree with much that you say. However, the federal government employed MIT (in the late 1980's I believe) to do a study on why German and Japanese companies were dominating the marketplace. The results have much to do with the loss of most of our manufacturing. The study concluded that the biggest problem was the structure of the American stock market. The stock markets here are only interested in short term profits. Germany and Japan had a longer vision for their countries (I do not clearly recall how but I think that in general the analysts valued long term results more than short term). So the Big 3 would have lost value to go after long term market value and was essentially forced to build SUV's etc. The article was as I recall in Scientific American but it has been a while. We certainly see that strategy in advertisements and in investor's advise. Until we learn to value the companies that are going after long term marketplace dominance, American companies will always be at a disadvantage.

 

We seem to be at opposite ends of the political spectrum but I totally agree with your comments about conservatives. Many Republicans in the House wanted to abandon Sarbayne-Oxley (sp?) accounting rules which has led to much of the problems and to let the banks fail. I do not know what is the right way but not all conservatives agree with Senate Republicans and the RNC.

[eagle1977]

Why are we not addressing the actual problem here? How can we continue to act as though We, the People are not at least part of the problem here? We do not want to pay for a automobile that is too expensive. We do not want to assist in paying the cost of supporting a living wage (and to those of you that will say it, I do not support the excessive union caused wages, they have long ago abandoned the role they were established to attain!). As an American I would not be willing to pick lettuce, tomatoes, or any other back breaking agricultural product for less than the money required to feed my family and pay my doctor visits for back pain.

 

Our problem is we want it all for nothing. We want to fill our tanks for nothing, even though we know that oil is a ever diminishing resource. We want to eat fast food for nothing and we are not concerned about the poor schmuck that has to prepare it for us (or his/her three kids that need to eat too).

 

Americans seem to be pretty good at talking the talk, but we are certainly not good at walking the walk.

 

Let's bail-out the financial markets, you know the companies that are TOO BIG to fail. But what about the Big Three where one in ten American jobs are related? No way, let's allow them to fail. We can always buy foreign cars. Why can't we just invest all our money in foreign banks too?

[mmhardy]

eagle1977 I hope your last comment was tongue in cheek.

 

I guess what really bothers me is that we as Americans are satisfied with supplying Honda, Toyota, Nissan etc, with our labor then turning around and buying that same product to us, then taking the pure profit back to Japan. (Or reinvest here and double down on the profit in the future) We are quickly allowing ourselves to become colonial zed. Think about it.

 

Someone please indicate to me a factory that Americans own in Japan for a durable good. An article in the Washington Post is grim. The levels of manufacturing jobs, (not just the Big 3) are quickly approaching 1950 levels. I will only accept the hypothesis of Darwinian consequences if our government also acted in our best interest. That $25 billon the government put out was a panic move and will not be available until last next year. It may be too little too late.

 

Consider this point in the Post article The European Union has put more than $15 billion into building this aircraft company from the ground up. Whatever you may think about the recent U.S. Air Force decision to buy tankers from Airbus rather than Boeing, one thing is clear: Through its subsidies, the E.U. has managed to build a highly competitive aircraft industry. South Korea has put more than $12 billion into its semiconductor industry to similar effect, severely harming the U.S. semiconductor manufacturing base.

 

In my mind saving the Big 3 is acting for our nations best interest. Can we do better? You Bet. If the UAW eliminated just is job bank that alone could make a difference. We can also match the tax policies of Brazil, France and Australia with tax credits for exports. Keeping our currency low would also help.

 

Last point. The manufactures lobbied for either help with the CAF mandate or an extension. They were only looking for the same deal that Germany and Japan offer their own automakers. Regardless, it didnt work and the Big 3 were saddled with an unfunded mandate. Last I looked BMW, Porsche, and Mercedes have been paying millions of dollars in fines for missing CAF.

 

 

[eagle1977]

mmhardy, perhaps not too much tongue in cheek. Even you pointed out in your last post "the recent U.S. Air Force decision to buy tankers from Airbus rather than Boeing". The Federal government wants to buy everything for nothing.

 

Unions have become big business themselves. They pay the white collar people too much, not too mention the blue collar worker. CEO's are obscenely compensated for their input to the bottom line. Insurance companies of all types are simply legalized swindlers, they charge large premiums and return as little as possible to the insured when they are in need. People complain about the trial lawyers and how they are ruining our society. I think rather it is the insurance company refusing to pay on a claim that drives the common guy to the trial lawyer.

 

We have been watching, too quietly, from the sidelines while this country has been slowly melting away. We have witnessed the decline and fall of the once great steel industry. The owners sat on their laurels and did not return their profits into modernizing their mills and the unions continued on their upward salary spiral. The Japanese steel makers beat them out. The Big Three are doing the exact same thing today. (But they are in fact too big to be allowed to fail IMHO.) We Americans as consumers have allowed the outsourcing of our once proud manufacturing jobs to other lands. We have done this by not demanding products made in the USA. Even the new Boy Scouts of America uniform is made in China. It is not simply labor that has been sent off-shore it is everything all the way down to tech support operators from India and Pakistan. Where are Americans expected to work these days?

 

We have allowed two of the largest corporations providing service and support to our deployed military to move their corporate headquarters off-shore to avoid taxation on the no-bid contracts they have been awarded. Hundreds of billions of our tax dollars are leaving America and never returning.

 

If the foreign auto makers can not, or will not meet our CAFE standards then they should not be permitted to sell their product in our country. Fining them has not accomplished anything. After having lived in Germany for four years I know their environmental rules are much stricter than ours. You may not even idle your car for more than 30 seconds on a cold winter morning. They will shutdown the Autobahn when there is too much smog in the air. So somehow I miss the point where we allow BMW to simply ignore our CAFE standards.

 

I think we are facing some very bad days ahead. Wonder if we will learn from the economic crash of 2009 since we did not learn from 1929.

 

[vol_scouter]

CAFE standards should be abolished. Let consumers decide the efficiency and gas mileage of their automobiles. If the government wants to change the gas mileage or efficiency of the autos, then increase the tax on gasoline. The Big 3 respond to their market. The GM electric car did not sell well. Their cars now have as better gas mileage than their competitors but the public WANTS to buy foreign cars.

 

Part of the problem I have with a direct bailout is that the government wants some control. It makes since to say that the money is not to be used for bonuses and raises especially for the management but other controls allows our government to slip further into fascism.

 

[frankj]

The auto companies got some relief yesterday from the White House, in the form of a bridge loan -- despite Congress having failed to approve relief after Thanksgiving. Is it a "legacy thing" for GWB? I think it is that, and partially a goodwill gesture of sorts, toward the incoming administration -- the problem will be their to deal with but the meltdown, if there is going to be one, won't start until a few months into the next administration as opposed to right away. In my opinion, the new administration and the Congress will not be able to resist more financial assistance. Because with financial help, they will be able to exert some control as well. I think Congress would like to mandate more rapid development of all-electric and hybrid vehicles.

 

I have a mandate of my own: the person or the design team from Ford, who engineered the way the driver's side headlamp bulb on my Expedition is accessed (for replacement), should come to my house personally and do it the next time it needs replacement.