Auto Bailout Bill: Dead

[E30 Wagen]

We haven't had anything resembling a "free market" economy in 80+ years,

...

-Charlie

So, from your point of view, the bail out is solely for the benefit of those employed by or are receiving benefits from the big 3. Basically, it isn't for the big three at all, just to avoid a "massive unemployment bomb."

But the question remains, even with a bail out will the big three end up facing the same problem in five years? If so, then what good was it? Where did that money go then, to the people who needed the employment or was it invested into a bunch of crappy new cars that nobody wants? That's a risk that many people aren't willing to take.

Even with the bail out, layoffs are inevitable. These companies are going to have to do whatever they have to to stay alive. I would rather have my tax dollars go directly to unemployment than be sucked up as a "loan" to a corporation that over its long history has struggled to compete. However, I do agree that we can't let those who are retired with nothing.

I'm a realist, too. Reality is harsh sometimes.

[gstuning]

Chrysler will most likely be "bought"/absorbed. Ford actually has a fairly large cash reserve, so while they will struggle, they should pull through. GM is simply too large, who's gonna buy them and their debts outright? Saab & Hummer are already on the selling block, so components may be purchased.

-Charlie

Banks in Europe who are going bankrupt are being bought for a single Euro + some sort of demands, take over debts and other requirements. Just wondering if something similar is going to happen with these.

It´s not going to be pretty if all those people become unemployed.

[nando]

So, from your point of view, the bail out is solely for the benefit of those employed by or are receiving benefits from the big 3. Basically, it isn't for the big three at all, just to avoid a "massive unemployment bomb."

Basically, yes.

I'm a realist, too. Reality is harsh sometimes.

Pray it doesn't get any harsher.

[Charlie]

So, from your point of view, the bail out is solely for the benefit of those employed by or are receiving benefits from the big 3. Basically, it isn't for the big three at all, just to avoid a "massive unemployment bomb."

Yep, pretty much.

Were it one of the 3 going BK, and we were in a "normal" economic climate, I'd say let 'em go 11. This is all 3, and we're up to our eyes in shit already.

-Charlie

[wildstoats]

Basically, yes.



Pray it doesn't get any harsher.

It will. Just wait until companies start writing down their losses in Q1 2009. I laugh when people say we're going to be out of this by the end of Q1. I usually ask: "Do you mean Q1 2010 or 2011?". My big problem is that quite a few of these big plans (DET Bailout / TARP) are relying on the fact that the economy does pick back up and soon. What if it doesn't? We've essentially wasted what little money we had and now have to face the same issue.

Not to mention the banks are increasing their level-3 holdings ... which is never a good thing. It essentially means that no one (not even the government!) has any clue how much the assets are actually worth yet we're still giving them billions of dollars. There is going to come a point in time where the government either runs out of money or gets wise and stops giving them money and when that happens hold on to your shirts.

At the risk of sounding like some kind of conspiracy kook have you guys ever thought about the possibility that the government can't do anything to stop this recession and it's effects? I mean we all want the government to "fix it" but I don't think that 20 years of poor decisions all around (consumers, banks, government, companies) can be easily "fixed" and especially not by throwing money at it. Things are going to suck this next year so be prepared.

[nando]

At the risk of sounding like some kind of conspiracy kook have you guys ever thought about the possibility that the government can't do anything to stop this recession and it's effects? I mean we all want the government to "fix it" but I don't think that 20 years of poor decisions all around (consumers, banks, government, companies) can be easily "fixed" and especially not by throwing money at it. Things are going to suck this next year so be prepared.

yes, of course. the fed is already out of room to cut interest rates (a half point from 1% isn't going to do much). My second fear is that the trillions of dollars that the goverment has promised to spend will cause massive inflation once we do turn around (don't be fooled by the 700 billion figure, the total amount of the promised money is far higher).

That, and the interest payment on government debt and entitlements will soon clash. We may have bought some time with the market crash though since some people will be forced to push back retirement.. but eventually the government is either going to have to cut back spending or cut back on entitlements.

[e30e]

Truth of the matter is this:

gm and toyota sold the same amount of cars basically this past year. GM lost 36 Billion Dollars and Toyota made 9 Billion Dollars. Something has to change Drastically. Change needs to Start with management and unions immediately.

[mrsleeve]

^^^^^^^^^^^^^^^^^^^^

hey GM has 385,000 retires and spouses that it takes care of. Toyota has 350 thats not a typo just 350 retires thats it. At one time GM employed 500,000 people in this country and they are all retired or dead now.

You all seem to forget that if the big 3 go under all of their pension oblations get picked up by the tax payer again. Look you all need to get that the implications of the big 3 dieing will plunge us in to something the likes of we have never seen, ask your grandparents if they are old enough how they liked the 1930's

[e30e]

^^^^^^^^^^^^^^^^^^^^

hey GM has 385,000 retires and spouses that it takes care of. Toyota has 350 thats not a typo just 350 retires thats it. At one time GM employed 500,000 people in this country and they are all retired or dead now.

You all seem to forget that if the big 3 go under all of their pension oblations get picked up by the tax payer again. Look you all need to get that the implications of the big 3 dieing will plunge us in to something the likes of we have never seen, ask your grandparents if they are old enough how they liked the 1930's

I understand this, GM in N. America lost 20 Billion dollars......Another 16 Billion World-wide, it is unexcuseable regardless of retiree's.

[Jon325i]

Great thread - lots of spirited (and more importantly, civil) discussion about this topic. Many valid points have been brought up. Since my last time here I've been thinking about what we may expect in the not too distant future.

First - THERE WILL BE A BAIL OUT...that is a certainty. Its a question of when. The way I see it, things can shake out two ways.

#1: Bush will try to tap into the TARP money as a means of a bailout. By going this route, it will appear that no additional tax payer money will be earmarked to pay for it. But as someone already mentioned, the 700 billion dollar figure is very conservative when you consider what the true cost will be some time down the road. Also, since the war in Iraq has been laced with bad PR on the current administration, "saving" the auto industry might be something the President may want to tackle before leaving office as a means of going out on a more positive note. Of course, there will be much political horn locking with the Dems because another angle on this mess is who will get credit for being the savior. Keep in mind, political posturing is just as important (sometimes even more so) than the actual results of their efforts. It's sickening if you ask me.

#2 Should it become Obama's issue to deal with the auto bailout after he gets sworn in on January 20th, he can use this opportunity to not only appear as the savior, but to do some political payback. It was well documented during the campaign leading up the election just how much support from union-based fundraising was done for Obama. He's in, now its time to pay the piper. Whether he opts to go with money from TARP or ask for additional bailout money is still an unknown at this point. But make no mistake, his reason for helping is two-fold: economy and thanking his union supporters. The old axiom in politics is "follow the money". If you ever want to figure out why a particular candidate is taking a position on an issue, find out where the money is coming from.

Second - I realize that letting the Big 3 collapse upon themselves without providing some sort of aid will have huge economic repercussions for years (not months) to come since we are already well on our way to dire straights. Letting yet another "FAIL" occur in this soft economy would seal our fate that a long and painful recession is eminent. In terms of a solution, what I would ultimately like to see is a rescue plan implimented where the UAW is shown the door for good because they are ineffective at best. At the same time, I would want to see as many Big 3 assembly line jobs preserved while retooling the plants to crank out cars which are more aligned with market trends and buyers demands. These workers are the innocent bystander in a drive-by shooting....they didn't do anything wrong - they were simply led down the path of false promises. The Union bosses and corporate mismanagement are to blame for the quagmire this US auto industry is in. I think the first ones to be put on the payroll chopping block should be the suits in the boardrooms and the union leaders which have poisoned the system with their unrealistic demands and promises to the people they claim they have their best interests in mind.


Jon

[JGood]

^^^^^^^^^^^^^^^^^^^^

hey GM has 385,000 retires and spouses that it takes care of. Toyota has 350 thats not a typo just 350 retires thats it. At one time GM employed 500,000 people in this country and they are all retired or dead now.

You all seem to forget that if the big 3 go under all of their pension oblations get picked up by the tax payer again. Look you all need to get that the implications of the big 3 dieing will plunge us in to something the likes of we have never seen, ask your grandparents if they are old enough how they liked the 1930's

Yeah, that $45 BILLION difference came from supporting retired employees.

What's your idea? Let things continue? $70k/yr line workers? $30k/yr floor sweepers? Sure, great idea! We'll surely recover!

[Maluco]