Do you think the US auto industry should get a bailout?

  • Posted by a hidden member.
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    Nov 12, 2008 4:06 PM GMT
    Potential grows for lame-duck session of Congress

    Story Highlights:

    Congress may reconvene to deal with economic problems

    Pelosi is pushing for congressional help for the beleaguered auto industry

    Talk of a possible bailout of the auto sector has sparked intense debate

    Senior official said White House is "open to ideas from Congress"

    http://www.cnn.com/2008/POLITICS/11/11/aid.packages/index.html


    Maybe any industry that takes a bailout should give partial ownership to the government.....
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    Nov 12, 2008 4:14 PM GMT
    I was wondering who was going to ask this very difficult question first.

    I honestly don't know what to think (which is rare for me). I fully supported the $700 billion plan for the banks and insurance companies. Collapse of the financial system can have a devastating impact on a countries economy.

    The bankruptcy of some or all of the "big 3" would also have a terrible impact. They directly employ 240,000 people, and indirectly another 5,000,000 jobs rely on them.

    Going into bankruptcy would not necessarily mean going out of business though. It would not (initially) be a Chapter 7, but a Chapter 11.

    If the government does use some of the $700 billion to "bailout" the auto companies, would this be throwing good money after bad? After all these companies were all struggling before the credit crunch.

    If they do bail them out what about other industries? If United Airlines, US Airways and Delta Airlines face bankruptcy will they also be knocking at the Government's door? The moral hazard is not something to be taken lightly.

    If push comes to shove I will land on using some of the $700 billion to help out the auto sector, but with strings attached.
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    Nov 12, 2008 4:27 PM GMT
    Yes - because the banks were bailed out.

    A real problem for the future, however, is that the US $ is the global reserve currency. Other countries buy it up and stash it away.

    Being the reserve currency is good because it gives you a license to 'print' money and fund expensive projects (say hello Iraq Afghanistan).

    Other countries just buy up the money the US prints. They store it away in reserve. Those blank cheques are never cashed.

    THAT SAID, with the decline of the 'West' and the growth of the 'Rest'. It will be very hard for the US to be an exporting nation with a strong $. A strong $ is necessary for reserve currency status.

    So long term the US has a policy dilemma

    1) Give up the 'license to print money' that comes with reserve currency status. Lose the manufacturing sector.

    2) Lose the reserve currency status - but keep manufacturing.
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    Nov 12, 2008 4:28 PM GMT
    ....indeed.....where does it stop?

    I guess I would want to know how the auto industry intended to use the money to improve their performance, when they havent been able to do a damn thing on their own.
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    Nov 12, 2008 4:48 PM GMT
    Yes
  • Timbales

    Posts: 13993

    Nov 12, 2008 5:07 PM GMT
    No
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    Nov 12, 2008 5:19 PM GMT
    Golly. They did keep building cars that no one could afford to drive / wanted to buy.

    I have mixed emotions on this.

    Darned if we do, and darned if we don't.

    Who bails me out?
  • Posted by a hidden member.
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    Nov 12, 2008 5:25 PM GMT
    whether we want it to or not, the economy needs the auto industry not to fail. otherwise, kiss whatever is left in your 401k goodbye.
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    Nov 12, 2008 5:34 PM GMT
    The auto-industry has been on the verge of collapse for thirty years now with occasional lulls in this drawn out death scene. I couldn't imagine why we would bail them out without demanding a change in leadership, but I expect that is exactly what will happen.
  • TexanMan82

    Posts: 893

    Nov 12, 2008 5:35 PM GMT
    It pisses me off, but at this point, what are the other options? Way too many jobs would be directly and indirectly affected by the Big 3 going under.



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    Nov 12, 2008 5:40 PM GMT
    i want a bailout. granted, i haven't wasted billions of dollars, but if the government gives me a billion, i can quickly find a way to waste it and then come begging for more. just think, i can hire a bunch of people and then put their future paychecks in jeopardy which will give me a lot of leverage in earning that bailout! and i promise, as soon as i get the bailout, i'll throw a huge party bash! err, i mean executive convention!

    no.
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    Nov 12, 2008 5:40 PM GMT
    So let me get this straight. The auto industry, congress and the president routinely reject stricter MPG standards and create barriers to entry for American companies that manufacture smaller more efficient vehicles. Then consumers stop buying low MPG American cars because they are too expensive to drive, and as a result the industry bleeds financial losses. Now the industry, congress, and the white house want to pump our money into these short-sighted companies because, being increasingly smart consumers, we didn't do it ourselves?

    Anyone else feeling a little helpless here?
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    Nov 12, 2008 5:41 PM GMT
    TexanMan82 saidIt pisses me off, but at this point, what are the other options? Way too many jobs would be directly and indirectly affected by the Big 3 going under.


    Some libertarian you are. ;-P
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    Nov 12, 2008 5:46 PM GMT
    XRuggerATX saidSo let me get this straight. The auto industry, congress and the president routinely reject stricter MPG standards and create barriers to entry for American companies that manufacture smaller more efficient vehicles. Then consumers stop buying low MPG American cars because they are too expensive to drive, and as a result the industry bleeds financial losses. Now the industry, congress, and the white house want to pump our money into these short-sighted companies because, being increasingly smart consumers, we didn't do it ourselves?

    Anyone else feeling a little helpless here?


    Yep that basically summarizes the short-term focus of the American big 3. Mind you their legacy costs (pensions, health care) were a strong incentive to keep building high margin vehicles such as SUVs, Mini-Vans and pick-up trucks. Ironically Ford Europe does very well, it is in North America that it struggles. Japanese manufacturers who have plants in North America do not have many pensioners right now (the Honda plant in Alliston, Ontario has 1 person collecting a pension) so they are much more cost competitive.

    The credit crunch is putting a patient that was in critical condition into intensive care, with the doctor standing over the bed ready to pull the plug on the life-support systems. If it was just the auto companies that were in trouble I would say let them go into bankruptcy and restructure. It is all the ancillary jobs (eg. auto-parts manufacturers) that are the big worry.
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    Nov 12, 2008 5:50 PM GMT
    SurrealLife said
    XRuggerATX saidSo let me get this straight. The auto industry, congress and the president routinely reject stricter MPG standards and create barriers to entry for American companies that manufacture smaller more efficient vehicles. Then consumers stop buying low MPG American cars because they are too expensive to drive, and as a result the industry bleeds financial losses. Now the industry, congress, and the white house want to pump our money into these short-sighted companies because, being increasingly smart consumers, we didn't do it ourselves?

    Anyone else feeling a little helpless here?


    Yep that basically summarizes the short-term focus of the American big 3. Mind you their legacy costs (pensions, health care) were a strong incentive to keep building high margin vehicles such as SUVs, Mini-Vans and pick-up trucks. Ironically Ford Europe does very well, it is in North America that it struggles. Japanese manufacturers who have plants in North America do not have many pensioners right now (the Honda plant in Alliston, Ontario has 1 person collecting a pension) so they are much more cost competitive.

    The credit crunch is putting a patient that was in critical condition into intensive care, with the doctor standing over the bed ready to pull the plug on the life-support systems. If it was just the auto companies that were in trouble I would say let them go into bankruptcy and restructure. It is all the ancillary jobs (eg. auto-parts manufacturers) that are the big worry.


    I'm sure it is in the best interest of our country and economy to do it. But what pisses me off is that no one will learn a lesson from this, and it'll happen again. Let's not forget that this is a repeat of the early '80s bailout and for the same basic reasons.
  • OptimusMatt

    Posts: 1124

    Nov 12, 2008 5:51 PM GMT
    XRuggerATX said

    Anyone else feeling a little helpless here?


    Yup.

    The simple fact is that society needs an serious overhaul. And that's not going to be simple, or easy. Clearly, the methods employed by a substantial amount of businesses within America are NOT working. Throwing money at the situation (as MZ said) is just prolonging this death scene.
    As idiotic as we as consumers tend to be, we are becoming more and more savvy. I think the auto industry needs to start evaluating what the consumer wants, instead of what big oil does.

    Go go gadget green car. Essentially, american auto manufacturers have shot themselves in the foot when it comes to the electric/hybrid car. Foreign auto manufacturers already have entire lines of such cars and are marketing this heavily. Instead of changing with the times, american auto manufacturers decided to stay the same. As much as it sucks for the people who are going to lose their jobs, let the companies die. Thats what happens when stupid people make bad business decisions.
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    Nov 12, 2008 5:53 PM GMT
    No.

    GM and Ford won't go under and people will not lose jobs in masses. GM in particular will either:

    A) Enter protective bankruptcy and continue to operate. The same happened to Delta.

    B) Have its stock prices drop so low it gets bought up by Tata Motors or another company.
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    Nov 12, 2008 5:53 PM GMT
    No.

    Bunch of greedy fucks who got their dicks caught in the meat grinder of their greed. Piss on 'em.

    Clinton or Bush gave them 1BILL to develop a hybrid years ago.. nothing came of it. The Govies made a bargain: they wouldn't pass laws on mileage, and the industry would make a hybrid for the masses. They pissed away the 1BILL and said no go. But the foreign car makers who weren't PAID to do it sure as hell succeeded!

    Our automakers are at Washington demanding money, why? Because they were too busy giving the oil industry a hand job while screwing the general population to have any foresight for things such as hybrids.

    They can rot in hell.
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    Nov 12, 2008 5:54 PM GMT
    I agree with the bailout, too, but only if they include controls on how much the executives and ceo's pay themselves. Laying off employees, who are consumers, so they can pay themselves more money isn't helping the economy either. Also they ned include provisions that will ensure the govt and taxpayers get their money back too.
  • CuriousJockAZ

    Posts: 19138

    Nov 12, 2008 5:55 PM GMT
    No....They have been building big ugly cars that no one wants for far too long. Wouldn't it be cheaper to just give each employee a $100,000 severance pay and just let the company go bye bye?

    I am sad for GM though because the upcoming electric Chevy Volt looked promising.
  • Timbales

    Posts: 13993

    Nov 12, 2008 5:56 PM GMT
    It's my opinion that the current state of the US auto industry is due to both corporate and union greed and corruption. We've allowed all sorts of industry to fail in the US, it's time for this industry to deal.
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    Nov 12, 2008 5:58 PM GMT
    Trance24 saidNo.

    GM and Ford won't go under and people will not lose jobs in masses. GM in particular will either:

    A) Enter protective bankruptcy and continue to operate. The same happened to Delta.

    B) Have its stock prices drop so low it gets bought up by Tata Motors or another company.


    The theory is correct, but unlike airlines, car manufacturers may lose more customers if they are operating under Chapter 11 (people will be leery about their warranties being honoured). Of course we will never know unless one of them takes the plunge. My guess it will be either GM or Chrysler, but not Ford.

    The moral hazard is what worries me. What other industries are thinking about lining up with hat in hand looking for a handout. Once it starts it is hard to stop. Makes me wonder about how wedded to free-market capitalism some of these CEOs really are. "I hate big government unless it saves my ass (and stock options)". icon_twisted.gif
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    Nov 12, 2008 5:59 PM GMT
    It should get nothing. When the gas crisis hit in the 1970s, the industry learned nothing. Instead, we have SUV's getting 12 miles to a gallon. They could have created fuel-efficient cars and did not. They should get nothing. I'll ride my effing bike to work.
  • CuriousJockAZ

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    Nov 12, 2008 6:03 PM GMT
    XRuggerATX said
    Anyone else feeling a little helpless here?



    I know I am feeling helpless, and more than just a little bewildered and confused. I can't for the life of me figure any of this out. We bailed out the banks a month ago so, allegedly, this would free up credit but apparently the banks haven't really freed anything up they are just hoarding the money. Where does this all end? Heck, why not just bail us ALL out...print up a bunch of money and just give it to all of us. It seems like this has all just gotten WAY out of control and it keeps getting worse practically by the hour.
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    Nov 12, 2008 6:06 PM GMT
    No.

    Let them file bankruptcy.

    This sudden rush for government money from corporations bothers me. It's as if they're taking a last advantage of the corporate lap dogs still living in the White House and Washington. That Pelosi is pushing this frustrates me even more. Hello! We kicked out Republicans because they were cowtowing to big business. Ugh. Turds all.