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CEO Robert Nardelli, left, and CEO Alan Mulally of the once proud Chrysler and Ford sit grim as they are mocked by Senators while pleading for a 3 percent cut of the bailout bill. The use private jets by GM, Ford, and Chrysler's executives proved ammo for critics in the heated Congressional testimony Wednesday.  (Source: AP)
The future of many tech programs such as the Chevy Volt and Ford Fusion Hybrid hang in the balance, at the government's mercy

As DailyTech previously reported, both GM and Ford are almost out of cash.  GM will likely run out of cash by the end of the quarter and have to file for bankruptcy or break up its business if the government will provide a financial lifeline.  While it’s obvious that America's big auto companies lost touch in the 90s and early 2000s, producing a slew of inefficient big trucks and SUVs while foreign competitors stole away sales with more compact efficient cars, they are an integral part of America's economy.

With the fate of many major tech initiatives, such as GM's Chevy Volt and Ford's new Fusion hybrid hanging in the balance, the country's economic future also is at peril as if even one of the big three fall, it could plunge the deeper into recession -- or worse -- according to financial experts. 

It’s hard not to draw comparisons to another industry troubled by mismanagement and economic misfortune -- the U.S. banking industry.  And while the federal government was quick to bailout banking, finance, and housing firms to the tune of $750B USD in taxpayer burden, the government appears to be unwilling to offer the automakers a $25B USD bailout.

Flying to Washington, Alan Mulally CEO of Ford, Robert Nardelli CEO of Chrysler and Richard Wagoner CEO of GM met with members of Congress in special hearings, begging them for a share of the bailout money.  Many in the Senate, led by Republican opposition were unimpressed.  Some Senators went as far as to mock the CEOs use of private jets as they came asking for financial relief.

"It's almost like seeing a guy show up at the soup kitchen in high hat and tuxedo. It kind of makes you a little bit suspicious," stated Rep. Gary Ackerman, D-New York.

He added, "There is a delicious irony in seeing private luxury jets flying into Washington, D.C., and people coming off of them with tin cups in their hand, saying that they're going to be trimming down and streamlining their businesses."

He continued to mock the auto executives, remarking, "Couldn't you all have downgraded to first class or jet-pooled or something to get here? It would have at least sent a message that you do get it."

Senate Majority Leader Harry Reid has declined to move the bailout measure towards a vote as the measure appears far short of the 60 vote majority needed.

The automakers were grilled at the hearing from all sides.  Rep. Brad Sherman, D-California, asked the automakers to raise their hands if they flew commercial.  No hands went up.  He then chided, "Let the record show, no hands went up.  Second, I'm going to ask you to raise your hand if you are planning to sell your jet in place now and fly back commercial. Let the record show, no hands went up."

The executives refused to respond to the sarcastic remarks on the Senate floor, instead trying to shift the focus to how they're restructuring their business.  Later, spokespeople for the companies defended the use of jets, saying CEOs need them for safety and most major American companies use them.  GM spokesman Tom Wilkinson stated, "Making a big to-do about this when issues vital to the jobs of millions of Americans are being discussed in Washington is diverting attention away from a critical debate that will determine the future health of the auto industry and the American economy."

Chrysler's spokeswoman Lori McTavish said in a press statement, "While always being mindful of company costs, all business travel requires the highest standard of safety for all employees."

Some political analysts are supporting the harsh Congressional criticism.  Says Thomas Schatz, president of the watchdog group Citizens Against Government Waste, "If it is simply the company's money at stake, then only the shareholders can be upset or feel as it might be excessive.  [But in this case] it's outrageous.  They're coming to Washington to beg the taxpayers to help them. It's unseemly to be running around on a $20,000 flight versus a $500 round trip."



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Subsidies, Redux
By nah on 11/20/2008 9:16:02 AM , Rating: 5
quote:
And while the federal government was quick to bailout banking, finance, and housing firms to the tune of $750B USD in taxpayer burden, the government appears to be unwilling to offer the automakers a $25B USD bailout.


I wonder why...

As I've said in a previous post--the auto companies should shape up--or shape out




RE: Subsidies, Redux
By 306maxi on 11/20/2008 9:22:25 AM , Rating: 2
I agree that GM and Ford need to shape up but.... a good deal of their problems are down the the deals done with the unions in the past which make life very difficult for Ford and GM.

I also feel that 25 billion is nothing when you compare it to the money that's already been spent on the financial system which will probably end up being a good deal more.

I think if the financial system gets bailed out with 750 million then there's NO reason why they automotive sector shouldn't be bailed out similarly. At least the car makers didn't cause the problem themselves like the banks did.


RE: Subsidies, Redux
By bribud on 11/20/2008 10:03:08 AM , Rating: 5
Ok, but then when do you stop giving handouts? If the auto industry gets a handout, then who is going to be the next large company to stand in line with their tin cups in hand? Eventually, there needs to be a line drawn and the government needs to be very careful with the American taxpayers' money. In tough times, companies fail. That's the way it is. People can't go through life knowing there is always a net under them so it's ok to fail. To me it seems large industries like this should be the ones you would help out LESS because they should be self-sufficient and be held accountable. If the major, large companies aren't held accountable, then who the hell will be?


RE: Subsidies, Redux
By headbox on 11/20/2008 12:05:53 PM , Rating: 4
I agree 100%. It's no longer a free market, but welfare for the rich.


RE: Subsidies, Redux
By teldar on 11/20/2008 7:41:56 PM , Rating: 2
You think it's going to be better under Obama? He's already basically said he's a socialist. Except I bet the ultra-wealthy don't pay any more taxes than what they already do.


RE: Subsidies, Redux
By majBUZZ on 11/21/2008 2:13:45 PM , Rating: 1
clap clap clap you get the i don't think for myself just repeat talking points award for the day.


RE: Subsidies, Redux
By Jim28 on 11/21/2008 3:41:04 PM , Rating: 2
give yourself one as well.


RE: Subsidies, Redux
By erikejw on 11/23/2008 1:10:53 PM , Rating: 3
"IKEA founder Ingvar Kamprad insists on flying coach, takes the subway to work, drives a ten-year-old Volvo, and avoids suits of any kind."
------
Net worth about 50Billion$
------
He argues, how can you expect others in the organisation to make good decisions about how to spend the company money if they see executives waste them like the funds are endless.
------
http://money.cnn.com/magazines/fortune/fortune_arc...
------


RE: Subsidies, Redux
By AlexWade on 11/20/2008 2:15:49 PM , Rating: 5
I WANT A HANDOUT! I need some money or my business may go under. Small businesses are the backbone of America, and if they go under, we are really screwed. This economy is hurting me. So give me my handout.


RE: Subsidies, Redux
By Seemonkeyscanfly on 11/20/2008 3:01:05 PM , Rating: 3
Don't worry, Obama's tax program will have all small business closed inside of two years, which will cause the end of 80% of the jobs in the US. Then we will have no middle class. You will have no more financial problems - because you will have no money. You talk about now being trouble times, just wait for this next ride... If he has his way, you will be sick in the guts in no time flat.

To quote Star Wars: "So this is how a republic dies. To the sound of millions cheering"

Remember the guys who predict the financial future (stock traders), if they thought his plan was worth a nickel, stock would hold steady or start to rise..... Instead they are dropping like a rock. They understand what is going to happen to our financial future, it's not a guessing game to Economist - it's plugging in numbers (inflation, tax rates, GNP, average income....) into formulas which will spells out what will happen. His plan spells out death to the middle and upper middle class - the back bone to this country...

Have a nice day :)


RE: Subsidies, Redux
By michael67 on 11/20/08, Rating: 0
RE: Subsidies, Redux
By Ringold on 11/20/2008 4:54:24 PM , Rating: 2
quote:
Yeah your highs are higher then ours wen economy go's good, but your lows are also lower when it go's bad,


Actually, if you look at unemployment data for several Western European nations, Europe can maintain 8-10% unemployment for long stretches of time where 10% unemployment in generally a short-term low point in America. There's several strange misunderstandings in your post, such as the belief the Euro-zone is in better shape right now, which could be corrected if you bothered yourself with looking at data and financial news.


RE: Subsidies, Redux
By Seemonkeyscanfly on 11/20/2008 5:47:08 PM , Rating: 4
Yea, we've had about 16 years of very poor financial status. However, the average American is more concern with the looks and charm of our leaders then they are concerned about the background and knowledge the leaders have to lead us into better times. Most US citizen have their blinders on and refuse to look at the truth... They think the problems are new (last 7 years), when the truth is these are very old problems that have never been address and now the troubles are coming to a head.

It does not matter who is president, going to be a crap job. However every Economist in the world knows if you want to slow down the growth of an economy you raise taxes. We here in the USA can not afford slower growth in our economy .5% has been a killer, we need to be back around 3 to 6% a good heath growth (more then 6% is also bad, some would say 6 is to high...)


RE: Subsidies, Redux
By ggordonliddy on 11/20/2008 7:35:01 PM , Rating: 1
Why are you posting comments when you obviously haven't passed 3rd grade English (or were just socially promoted to graduation)? Your spelling is deplorable.

What the hell does "firing ider" mean? And you do you really think that "and" is spelled as "en", and that "much" is spelled as "mouths"? Are you just trying to make people in Europe look extremely uneducated (if so you are succeeding brilliantly)? Maybe you are very drunk, or on crack, or both?


RE: Subsidies, Redux
By ggordonliddy on 11/20/2008 7:36:42 PM , Rating: 1
> And you do you

Yes, I know that should have been "And do you". !#@$ lack of Edit buttons... who the hell wrote this crappy comment software?


RE: Subsidies, Redux
By Ramos22 on 11/20/2008 9:57:06 PM , Rating: 1
quote:
Are you just trying to make people in Europe look extremely uneducated (if so you are succeeding brilliantly)? Maybe you are very drunk, or on crack, or both?


and what culture/country/sect/religion/cult/race are you from? because your just making them look like stupid assholes.
Great logic huh?

There are many incredibly intelligent people in the world that can't speak an ounce of English.


RE: Subsidies, Redux
By michael67 on 11/21/2008 2:32:18 AM , Rating: 2
quote:
Why are you posting comments when you obviously haven't passed 3rd grade English (or were just socially promoted to graduation)? Your spelling is deplorable.

I am a offshore piping supervisor, and can do reports perfect in Dutch, and if i need to do one in English, i mailed it to the office. and have a secretary to have a look over it, to fix the mistakes.

So yes I have a small problem whit writing, (mild form of word blind) but i read and speak 6 languages,
Dutch, German, English, Danish, Swedish and Norwegian how many other languages do you speak and even better can wright in ???

I can do it in Dutch and English and Norwegian are sort of OK.

Its easy make crap about other people's little problems, but i wonder if you even can write in a other languish then English because, i have met a hell of a lot of Americans and 90% only can speak English and non other languishes


RE: Subsidies, Redux
By lco45 on 11/21/2008 3:26:59 AM , Rating: 2
Michael, I speak three languages at a business-level proficiency, and English natively.
It would be a dream come true if I could write in any of them as well as you write in English.

Luke


RE: Subsidies, Redux
By Ringold on 11/21/2008 4:17:59 AM , Rating: 2
quote:
i have met a hell of a lot of Americans and 90% only can speak English and non other languishes


Don't feel bad about your English. I've met a hell of a lot of fellow Americans, to borrow your phrase, who frankly can't read and write English as well as you can. Some times I think we give high school diplomas out as door prizes.


RE: Subsidies, Redux
By ggordonliddy on 11/21/2008 2:39:04 PM , Rating: 1
> languish then English

What the hell is a languish other than English?


RE: Subsidies, Redux
By plinkplonk on 11/22/2008 6:10:42 PM , Rating: 2
seriously, do you think you're some kind of language god or something? seeing as this guy is from europe and english is not his first language why the hell should he be expected to write it perfectly. you clearly understand what he is saying even though it is incorrectly typed so just stfu and stop having a go at someone just for the sake of it.

now back on topic i agree with an earlier post that there has to be a line drawn somewhere otherwise all failed businesses will just come begging for change.


RE: Subsidies, Redux
By majBUZZ on 11/21/2008 2:28:02 PM , Rating: 1
ummm i think your confusing the last 8 years with the next 4


RE: Subsidies, Redux
By AlexWade on 11/21/2008 8:07:02 AM , Rating: 3
Please, I did not want to turn my post into an anti-Obama rant. Neither Obama nor McCain can fix this crisis. Why do I know that? Because they want to meddle! And our Congress, they want to meddle! Both parties have become fat and lazy off power and both parties seem to think they have enough power to affect a global system.

And so an economic crisis comes along. It was an inevitability, capitalism has ups and downs and at times those are drastic both ways. That is the way it is. But our current President, our future President, our current Congress, and our future Congress want to meddle. Just because capitalism is not working the way you want it to does not mean it needs to be fixed or is broken. Leave it alone! That was the point of my post! LEAVE THE SYSTEM ALONE! Stop meddling, you are only making it worse! You cannot help capitalism by socialism.


RE: Subsidies, Redux
By Seemonkeyscanfly on 11/21/2008 9:42:29 AM , Rating: 2
agree, markets do change....

Free markets (capitalism) always fixes itself. If Ford and or GM went under, it would not take long before another manufacture was created. When politicians get involved that's when things go bad. Usually because they studied Law/English and not Business or Economics. It's like having a broken leg and going to see a car mechanic, sure he might be able to help you and can do his job very well, but a medical doctor would be a better choice of person to see.


RE: Subsidies, Redux
By eyebeeemmpawn on 11/20/2008 10:27:29 AM , Rating: 5
quote:
At least the car makers didn't cause the problem themselves like the banks did.


Are you serious??? Here in America wee had a functioning electric vehicle nearly 100 years ago:

http://www.conceptcarz.com/vehicle/z11282/Baker-El...

They have offered up token alternatively fueled vehicles, and must be suffering from intellectual property amnesia (like that would ever happen these days).

As an engineer, I refuse to believe that the Big American Auto Industry haven't gotten themselves in the situation they're in today. The Toyota Prius is entering its 8th production year now, you expect us to believe that they haven't seen this coming for a while?


RE: Subsidies, Redux
By acer905 on 11/20/2008 10:39:10 AM , Rating: 3
Yeah... electric vehicles are as old as gas ones. So are steam powered cars. But the same reason we don't use them majorly now is the same reason we never did. Its much less practical.
Situation 1: wake up, go outside, start up your boiler. After a while, you have steam. Hop in your car and go. after a while refil your car with water and fuel.
Situation 2: wake up, hop in your electric car, go either a limited distance at fast speed, or longer distance at reduced speed, find a place to recharge. Wait a while
Situation 3: Get up, start car, go 300 miles, spend ten minutes refilling, go another 300 miles...

In my opinion, battery electric will never be practical. electric using on board energy production, will. Or, if we can start to superheat water really fast, go back to steam. Its got more power anyway.


RE: Subsidies, Redux
By eyebeeemmpawn on 11/20/2008 11:20:55 AM , Rating: 2
quote:
In my opinion, battery electric will never be practical. electric using on board energy production, will.


I agree that electric with onboard energy production is the most feasable at the moment. I would argue that all electric isn't that far off. The best data I could find quickly is here (2005 ABC News/Time magazine/Washington Post poll)

http://abcnews.go.com/Technology/Traffic/Story?id=...

The poll indicates that the "an average one-way commute time of 26 minutes (over an average distance of 16 miles)." I would be curious to see more data, but it seems the current Volt all-electric range of 40 miles could cover most commuters. I'm hopeful that with further technological advances, all electric will become more practical. That said, I wouldn't mind seeing emergency backup generator onboard future electric vehicles.


RE: Subsidies, Redux
By Entropy42 on 11/20/2008 10:42:43 AM , Rating: 2
A functioning electric vehicle is a far cry from a profitable electric vehicle. GM created the EV1 quite a while ago, but the battery tech wasn't there to support it, and they lost about a billion dollars on the project.

Did anyone really see the price of gas skyrocketing like it did the past year? No. If anyone really did foresee that, he/she would have made a killing on the futures market. People were buying SUVs and trucks. The Prius was a niche market that most Americans weren't even interested in.

I would completely agree that the financial industry was more to blame for its own downfall. Clearly the US automakers have made poor decisions, and failed to adapt their cost structure and model lines quick enough, but people only care about fuel-efficient vehicles when gas is expensive enough to make it worthwhile. If they had a fleet full of hybrid cars right now, people still wouldn't buy them, because many people either are worried about spending money, or can't get credit to buy the car to begin with, regardless of its fuel-efficiency.


RE: Subsidies, Redux
By Regs on 11/20/2008 5:14:21 PM , Rating: 2
People can get credit. Not unless of course you worked for one of those automakers or financial firms that or just about to go under.

Consumerism at it's finniest, people want more for less. We consume more than we produce, and the statistics and large trading defecate proves this. What we have here are leeches. These leeches take on many forms: inept CEO's or CEO's using old and outdated mythology; companies hiring illegal immigrants for cheap labor; corrupted judges in the judicial system; financial firms and suspect buyers dealing and applying for mortgages with no qualifications; employees defrauding their employers benefits; schools who wont accept applicants because it will effect their rating; patent trolls who scare away both small and large businesses to compete.

Consumerism has been corrupted by a natural human impulse that some label as greed. Bottom line is we need an equal and balanced system for share finite resources. To do this we all must produce as much as we consume.


RE: Subsidies, Redux
By FITCamaro on 11/20/2008 10:43:33 AM , Rating: 2
In all fairness, the Japanese government paid a good portion of the development costs of the Prius. The US government offers GM and Ford no such help.


RE: Subsidies, Redux
By eyebeeemmpawn on 11/20/2008 11:01:25 AM , Rating: 2
what do you call the alternative fuel tax credit? It doesn't go directly to Toyota, but certainly encouraged sales.


RE: Subsidies, Redux
By mdogs444 on 11/20/2008 11:21:49 AM , Rating: 2
I certainly hope you see the difference between tax breaks and subsidies.

Vast difference between the government taking in less revenue to promote something, than giving a person/business money from taxpayers to promote something.

The problem with subsidies is that if you actually asked the taxpayers if they would give their own money for that cause, they would say no. If you asked tax payers to give companies a tax break to build something - they'd say sure.


RE: Subsidies, Redux
By eyebeeemmpawn on 11/20/2008 11:31:51 AM , Rating: 3
quote:
I certainly hope you see the difference between tax breaks and subsidies.


Of course, I hope you see the difference between a tax break and a government bailout...one spurs innovation while the other rewards incompetence, either way we all pay for it.


RE: Subsidies, Redux
By mdogs444 on 11/20/2008 11:34:18 AM , Rating: 2
I'm not for the bailouts of any kind. So I hope that statement isn't for me.


RE: Subsidies, Redux
By eyebeeemmpawn on 11/20/2008 11:56:33 AM , Rating: 2
uh, just wanted to make sure you knew that I know the difference between a subsidy and a tax incentive since you seemed concerned. Subsidy or Incentive, its money out of our pockets. I'd much rather see incentives, more like dangling a carrot in front of a mule. Handing over the carrot first can lead to motivational issues similar to the ones we're seeing now.


RE: Subsidies, Redux
By snownpaint on 11/20/2008 2:40:18 PM , Rating: 2
We gave them money once already..


RE: Subsidies, Redux
By croc on 11/20/2008 7:11:56 PM , Rating: 2
You have a link to that info, yeah?


RE: Subsidies, Redux
By borismkv on 11/20/2008 8:23:35 PM , Rating: 2
The US government dog-eared 25 billion dollars to auto companies to develop alternative fuel vehicles. Part of my disagreement with this is that GM cannot give a firm date of when they'll run out of money without help. Do they not know how much they have? How much they're spending? Are they just stupid? Or are they lying?


RE: Subsidies, Redux
By omnicronx on 11/20/2008 11:57:16 AM , Rating: 5
Are you serious? 100 years ago gasoline was cheap, far more efficient than electric cars of the time and it was an abundant source of energy. Are you really blaming American auto manufacturers for this?

The American people are just as much to blame as the auto industry. The people wanted big gas guzzling SUV's because gas was cheap, and the auto industry liked them because they were high margin. The American auto industry should have been looking to make more efficient cars a while ago, but the finger cannot be pointed solely at them, they gave the public what they wanted, and although the prius has done quite well, its still not an every day use car for many people. (ex: those that drive 60+ miles highway a day)


RE: Subsidies, Redux
By snownpaint on 11/20/2008 4:56:09 PM , Rating: 3
Did you know a 100+ years ago, gasoline was dumped in creeks.. They only really wanted the Kerosene from the refinement of oil. Gasoline was for those few combustible engine tinkerers.


RE: Subsidies, Redux
By michael67 on 11/20/08, Rating: 0
RE: Subsidies, Redux
By masher2 (blog) on 11/20/2008 8:30:28 PM , Rating: 4
> "Uuuhh, issent that mainly due to fact that US cars the last 30 years are only made for the US market?"

Er, no. Ford and GM both are widely profitable on their overseas operations. They're losing money only in the US... and that primarily because of the heavy union cost structure.

> "driving a SUV if you realy dont need one is pritty looked down on over here."

If "over here" is Europe, then you're home to the worst gas-gazzlers on the planet. The least efficient two-seater, subcompact, compact, full-size, small station wagon, and midsize station wagon are all European models.

In Europe as in the US, those who can afford it, drive large powerful vehicles. The difference is that Europe, with its lofty fuel prices and lower per-capita income, has a much smaller percentage of people who actually can afford it.

Secondary factors are, of course, the much higher population density in Europe, which makes driving long distances less neccesary, and smaller roads, which make smaller vehicles more convenient -- but why confuse someone with the facts when they're so desperately searching for something to feel superior about?


RE: Subsidies, Redux
By TheOtherBubka on 11/20/2008 9:39:13 PM , Rating: 2
I believe masher is very correct in that what is killing the Big 3 is their unions and their cost structure. If I remember correctly, for every 1 GM employee working, there are 2.4 in retirement. Talk about having to have some superior productivity to stay afloat. This union cost structure isn't just limited to the auto industry. Look back at all of the US airline deals too. Many, if not all of them, had to ask the pilots union, the flight attendants union, and the grounds-crew/gate agents union for concessions in order to be operationally profitable.

To me, the problem with the Big 3 is they haven't done much on their own to go past CAFE regulations. I *think* if you look back at the Honda Accord as an example, every new model year was larger, had a more powerful engine, and got better fuel economy. Don't recall the domestics being the same. Maybe perception, maybe reality. But somewhere, somehow, someone should have been saying we need to put a vehicle out in that space (i.e, fuel efficient hybrid) just to keep up with the Jones' (Toyota & Honda).


RE: Subsidies, Redux
By Seemonkeyscanfly on 11/21/2008 9:59:47 AM , Rating: 2
I believe masher is very correct in that what is killing the Big 3 is their unions and their cost structure."

Not sure that I'd call them "their unions"... If it was their unions the wages would be much lower. :)

I know what you are saying and agree with you, I just could not pass up the chance to point out that the union do not work for the companies, I would even say they work against the company. Unions are good and needed, but just like vitamins they are good and needed but too much of them will get you sick or kill you..


RE: Subsidies, Redux
By JasonMick (blog) on 11/20/2008 9:24:46 AM , Rating: 1
That's easy to say, but you have to consider the financial impact to the entire nation for letting them fail. There's no doubt they were mismanaged and out of touch and only now are getting on the right track in SOME ways. However, the question remains should the government sit by idle and watch as one of the nation's most troubled, but also most integral businesses is lost?

The banks/mortgage lenders/etc. were equally out of touch and mismanaged and got a fat $750B USD. Compared to that $25B USD seems like chump change.

I agree the U.S. automakers have a lot of unresolved problems, but look at their situation. GM likely won't survive bankruptcy in any form. Chrysler already filed Chpt. 11. Both will default on payments to their suppliers. Ford may be able to reorganize under Chapter 11, but they will likely be like Chrysler now -- a shell of their formal self. At least 1 in 10 American jobs are directly dependent on the auto business. If even GM went under, it would likely plunge our nation into a depression, via soaring unemployment and plunging consumer spending. Sometimes a bailout isn't a great solution, but its the only one you have unless you're willing to let your nation's economy fall apart.


RE: Subsidies, Redux
By 306maxi on 11/20/08, Rating: -1
RE: Subsidies, Redux
By superunknown98 on 11/20/2008 9:35:19 AM , Rating: 5
I suggest you read this article If you really think 1 in 10 people would lose their jobs.

http://economix.blogs.nytimes.com/2008/11/17/how-m...


RE: Subsidies, Redux
By 306maxi on 11/20/08, Rating: -1
RE: Subsidies, Redux
By afkrotch on 11/20/2008 3:10:32 PM , Rating: 1
FYI, try actually reading the blog. He's not disputing the fact that if the Big 3 go under, there would be a wide impact. He's simply saying that the 1 in 10 jobs isn't a true statement.


RE: Subsidies, Redux
By JasonMick (blog) on 11/20/2008 9:49:21 AM , Rating: 1
I think you misinterpreted my comments. I said approximately one in ten jobs DEPEND on them. Just because domestic manufacturers collapse doesn't mean these jobs will all be lost (your interpretation). Many of these are in fields such as parts manufacturers, Robotics/automation firms, etc. which do business with foreign automakers and other types of businesses as well.

I agree probably that study Gov. Granholm cited was auto funded and likely slightly inaccurate, but we're arguing semantics here. Maybe its 6-8% rather than 10%. So? The nation's other industries are already struggled, a near-complete failure of the domestic automotive business would be a catastrophic blow to an already wounded economy.

If you can't see that, you're being very foolish.


RE: Subsidies, Redux
By Gzus666 on 11/20/2008 9:55:54 AM , Rating: 5
Do you think that no one will fill the need? Detroit collapses, so suddenly no one else expands into their place? Circuit City is bombing, but Best Buy and many others will take it's place.

The demand for vehicles will go nowhere, just who they get them from will. That just means all the other auto makers will expand their market and they will be working for another company instead.


RE: Subsidies, Redux
By InsaneGain on 11/20/2008 12:25:24 PM , Rating: 5
Do you really think Toyota is going to hire any of the people who lost their jobs if the U.S. auto market and the general economy is in one of the worst recessions in decades? Right now, thousands of unwanted imported cars are piling up in Long Beach port. Toyota will be cutting back its NA operations. I know enough about economics to know the arguments against bailouts, but I also know enough to realize this economic situation is scary. There are many multiplying, cascading factors and positive feedback loops in something as complex as the economy. Many people feel safe in criticizing the U.S. auto companies, because they buy Toyotas and work in a completely unrelated field. They feel safe and sheltered from its issues, but little do they realize that if the industry fails, they may eventually lose their jobs as well.


RE: Subsidies, Redux
By Gzus666 on 11/20/2008 12:38:41 PM , Rating: 2
No, they will never hire ex-autoworkers to work in their plants in the US, that would be crazy. They will just leave that giant market and never come here again /sarcasm. Of course they cut back, cause the economy is slow, do you think it will never come back again? The major thing that will cause this country to collapse will be bailouts. When other countries won't give us loans and our money is worth jack, that is when the real problems will begin.


RE: Subsidies, Redux
By TomZ on 11/20/2008 1:00:23 PM , Rating: 2
quote:
Many people feel safe in criticizing the U.S. auto companies, because they buy Toyotas and work in a completely unrelated field. They feel safe and sheltered from its issues, but little do they realize that if the industry fails, they may eventually lose their jobs as well.

Amen. None of us takes the danger seriously until it affects us personally, at which point we start screaming too.


RE: Subsidies, Redux
By afkrotch on 11/20/2008 3:46:18 PM , Rating: 2
The US economy is crap. The Euro economies is doing crap. Guess what? Also the Asian economies are doing crap. Japan is currently looking at pushing a stimulus check out to it's citizens. They are also looking to fix their own recession, caused by US's recession.

If the Big 3 fail, the odds of any foreign automaker expanding their operation in the states is unlikely. More likely that even less ppl would be in the market to purchase more cars.


RE: Subsidies, Redux
By superunknown98 on 11/20/2008 10:08:35 AM , Rating: 2
I agree, it is all semantics, many people will lose their jobs, but it never hurts to clarify a situation. How many people really believe 1 in 10 people will lose their jobs if the industry fails? Quite a few people believe this, even on this board. In order to make a rational decision we need accurate facts, not propoganda.

As to the blog I posted, I do not have a crystal ball and I suspect that neither do you or the blog author. His opinion is just as good as ours.

What really makes me doubt this bailout is the fact that GM or Chysler could get the money and then still go bankrupt. They still need to sell cars in order to pay us back. They haven't been able to do this since the 90's, so my faith in them being able to do this isn't so great.



RE: Subsidies, Redux
By snownpaint on 11/20/2008 4:26:54 PM , Rating: 2
Does everyone realize the trickle down of them failing?
Marketing of their cars crash, therefore advertising crashes. Other companies (Toyota), won't need to advertise as much, the crash will do that for them. Less money to magazines, marketing firms, ad. designers. Now magazines and marketing firms crash.

Many of the suppliers that make parts, plastics, metal, rubber.. Take a dive, I'm sure many people know that 20% of your customers usually contribute to 80% of your revenue. I'm sure the big 3 are someones 20%.. So they are gone. Some suppliers can't keep order quantities up, so costs go up, and companies that are working on smaller margins fail due to manufacturing (raw supplies) cost increases. (ex. Company that makes mops, brushes, etc.)

Being raw materials will be in surplus, they will be more likely to ship to other countries, making the cost go up here. (first cheaper, then more expensive, as they adjust shipping logistics)

The USDollar will take a dive, which will not help.

Even with this, I say let them Fail.. Fail Fail.. You reap what you sow..
Same thing for Wall Street..

Sure we are all going to hurt, but the way I look at is, "Pull the band-aid off slow, or Pull it off fast"..Ether way its going to hurt little over time or allot at once, but your sill going to have a infection underneath that needs to be cleaned out.. With it pulled off fast (go out of business) you will take some of the infection with the band-aid, and speed recovery of the infection, but the sore will be deeper, and take longer rebuild. Pulled the band-aid off slow (bailout) you will be battling the infection longer, and may never heal the sore.


RE: Subsidies, Redux
By rudolphna on 11/20/2008 4:57:55 PM , Rating: 1
so you basically want the US to become a 3rd world country. I agree with the first half of your post, until you got to the "let htem fail" part. I have the utmost confidence in GM and Ford (chrysler not so much) that they will be able to turn it around.


RE: Subsidies, Redux
By snownpaint on 11/21/2008 10:39:25 AM , Rating: 2
I don't think the US citizens will go back to pooing in holes, and wiping with newspaper. I don't think you will see us using horse and buggy to travel. I don't think we will see sanitation issues like a 3rd world countries. So I doubt we will become one, but we may go in the direction of Japan in 70's, or Poland in the 80's..


RE: Subsidies, Redux
By masher2 (blog) on 11/20/2008 8:58:20 PM , Rating: 2
quote:
Being raw materials will be in surplus, they will be more likely to ship to other countries, making the cost go up here
Ah, so our using less steel will somehow defy the laws of supply and demand, and magically make it more expensive, rather than less? I don't think so.

Honestly, this sky-is-falling silliness is just that -- nonsense. GM would have to go through at least a decade of bankruptcies and restructurings before it would even consider closing up shop entirely...and even if it did, that loss in sales, advertising, and third-party supplier orders would be almost entirely taken up by increased demand by foreign automakers. Depending on which models consumers switched to, a loss of Ford and/or GM could actually *increase* employment in the US.


RE: Subsidies, Redux
By snownpaint on 11/21/2008 12:40:58 PM , Rating: 2
The simple is supply and demand.. The long run is supply and demand vs. logistics and world demand.

Do you think other companies will not need that steel in other countries, growing industrial countries? Do you think other car companies will not increase production to fill the holes in supply when the others fail and their inventory is washed out? So at first steel will be cheap while they blow out the US surplus, which will go to CN and Mex. especially with the US dollar direction. Then as the demand migrates away from the US, Steel companies will change logistics to increase profits where the steel is needed. Because the US won't need as much, we will get the short end of the stick on logistics and begin seeing cost go up. The same amount of steel is being made, it just begins to cost more to bring it to the US, making the cost go up. The only balance will be US surplus in recycled steel, which I don't think will be enough to balance the prices.

When buying in bulk, you save money in shipping and costs.

As for sky is falling.. I'm not worried about that. American weathers well, and we can hold out. Americans are really good at starting businesses and finding niches. I don't think Foreign automakers will pick up the slack in marketing, till after the marketing crash when they develop cars for the American market. I don't think it will increase employment in the US till new companies come in to pick up the pieces of the market, which will be 2-3 years before anything starts.


RE: Subsidies, Redux
By masher2 (blog) on 11/20/2008 12:17:21 PM , Rating: 4
> "but we're arguing semantics here. Maybe its 6-8% rather than 10%."

Stuff and nonsense. If GM and Ford stopped making cars, people would simply buy more Japanese and European vehicles...most of which are made with nearly as much U.S. labor, if not more, than those two "domestic" automakers.

But more importantly, the chances of either companies ceasing operations is nonexistent. If either went bankrupt, they would still continue to operate, just under different ownership and/or management. Companies this large don't simply shut their doors because they run out of cash.

This bailout is about protecting the jobs of the CEOs and upper management, only. Currently GM has one of the worst management teams in existence for a blue-chip, according to financial metrics. If they declare bankruptcy, the rank and file will keep their jobs...but heads will roll in upper management.

As well they should.


RE: Subsidies, Redux
By Gzus666 on 11/20/2008 12:40:05 PM , Rating: 2
And people don't seem to get this. This is exactly what would happen.


RE: Subsidies, Redux
By bob332 on 11/20/2008 2:00:26 PM , Rating: 2
ding, ding, ding

we have a winner here

when the execs are getting grilled about their corporate jets, and their response is that it is a safety issue? give me a f*cking break. hell, even puffy is flying commercial :)

the execs have this ultra elitist thought process that needs to go, these people can't stay w/ their huge salaries and bogus bonuses based off of some f*cked reasoning that doesn't make any sense.

get rid of the management and let the people that actually work there run the company and this would not be a problem.

in this case, you cut off the head and the body will work much better...


RE: Subsidies, Redux
By TomZ on 11/20/2008 2:18:39 PM , Rating: 2
Power to the people! Let's have a revolution! Anarchy!

:o)

Sorry, I for one think this is a load of crap. Who are you to judge what another person can or cannot have or earn for themselves? And point of fact is that most large corporation CEOs are shuttled around in corporate jets. That's how corporate shareholders want it.

I also find it amusing that you suggest that a company could operate without its top management. Without it, a company would get nothing done, period. To suggest otherwise is very naive to put it mildly.


RE: Subsidies, Redux
By bob332 on 11/20/2008 3:22:42 PM , Rating: 2
and by the way that they are doing $$ wise your points make perfect sense /sarcasm


RE: Subsidies, Redux
By TomZ on 11/20/2008 3:29:03 PM , Rating: 1
The domestic automotive companies have more challenges - internal as well as external - than the average American is aware of. Their fate is not completely up to them to decide - quite frankly, the deck is stacked against them.


RE: Subsidies, Redux
By Seemonkeyscanfly on 11/20/2008 3:33:15 PM , Rating: 3
CEO's can pay themselves $1.00 or $1,000,000,000,000,000.00 or anything else. It does not matter to me or anyone else. However, before they cut check for dollar one, the company better be making enough profit to cut the check. Every small business owner knows one rule that is universal amongst all small / medium size business owners - "No profit made for this month, no check to take home for this month." Maybe it's time some of these big company re-learn that lesson. I assure you Henry Ford understood it.


RE: Subsidies, Redux
By BadAcid on 11/20/2008 4:56:15 PM , Rating: 3
They've had their heads in the clouds for far too long. Time for a dose of reality.


RE: Subsidies, Redux
By Myg on 11/20/2008 2:06:05 PM , Rating: 3
Spot on masher; your clarity on this issue is very agreeable! Wish there was someone on that senate body with a brain like yours to run those exec's through.


RE: Subsidies, Redux
By Roy2001 on 11/20/2008 12:19:03 PM , Rating: 2
They just threat to kidnap us, the nation.


RE: Subsidies, Redux
By omnicronx on 11/20/2008 1:13:24 PM , Rating: 2
That article is just plain wrong!
quote:
Detroit Three would result in direct and indirect job losses of 2.5 million to 3 million in 2009. (This figure was also cited by Governor Granholm.)
That number is ludicrous, I went to school in Oshawa ontario which is home to one of Ontarios GM plants and there have been many studies on indirect jobs loss should the plant shutdown. This only includes first tier indirect jobs which are companies that make parts, or somehow assist in the manufacturing process, this is not including BS stats like car washes. Whats the number of jobs that would be lost? 50K, with only around 5000 of those being direct GM workers.

Whomever wrote that article is being pretty bias, and while I don't agree with the 1-10 number, it is still very close, and would dramatically effect the economy.

quote:
The study uses data from 1998 to 2001, and the industry has changed significantly since then. Employment in the motor vehicles and parts manufacturing sector has fallen, for example.
How much could it have possibly fallen? Blind statements without any numbers are pointless. These numbers would have had to fall 30+% in order to have a dramatic impact, and judging by the lack of a source I really doubt it is anywhere near that number. (even at 30% drop, it will still not change the 1-10 number dramatically)
quote:
2) Much more importantly, it is an industrywide study: The auto-related jobs covered in the report include more than those dependent on the Detroit Three; they are related to cars sold by any manufacturer
Once again, this is totally unfounded, companies like Toyota rarely make their parts in the U.S, they are merely assembled here. If the big 3 were to disappear then sure, other foreign companies would come in to replace them, but you would lose a huge amount of manufacturing jobs as only assembly would be required.
quote:
In other words, the loss of a single American car company wouldn’t necessarily dissolve all those jobs that the entire auto industry “supports.”
I laughed at this one, do they really think only one company will fall? There entire article is suppose to be based upon if the big 3 were to fail, and then the author says this?
If I'm going to read an article with a title of "How Many Jobs Depend on the Big Three?" I expect that the information be given will be based upon all three companies crumbling, which is where that 1-10 number came from.

The writer of this article obviously has a 'lessez fair' point of view, and his writing shows this. A one sided article without making points for both sides is not an argument, its a merely the authors point of view cannot be considered proof in any way or form. (regardless if he writes for the Times or not..)


RE: Subsidies, Redux
By 91TTZ on 11/20/2008 2:29:09 PM , Rating: 2
quote:
Whomever wrote that article is being pretty bias,


That should be "Whoever" not "Whomever"


RE: Subsidies, Redux
By omnicronx on 11/20/2008 3:47:47 PM , Rating: 2
Thanks grammar nazi..


RE: Subsidies, Redux
By Ringold on 11/20/2008 5:08:15 PM , Rating: 2
quote:
but you would lose a huge amount of manufacturing jobs as only assembly would be required.


Last I checked, both "domestic" and "foreign" car makers used equivalent amounts of US-sourced components, which seems to suggest no such long-run outcome.


RE: Subsidies, Redux
By omnicronx on 11/20/2008 8:17:41 PM , Rating: 2
What world do you live in? Approximately 50 percent of Toyota parts are made In the USA or Canada. Toyota happens to be the largest car manufacturer in the world. Toyota has even imported several cars to North America in the last few years.
Honda has the most domestic parts for

http://autos.aol.com/article/general/v2/_a/is-it-m...


RE: Subsidies, Redux
By Ringold on 11/21/2008 1:38:40 AM , Rating: 2
I don't know what world you live in. First you claim US car makers failing would cause some huge drop in manufacturing here, and then link to an article that basically proves my point that all manufacturers are global, and even debating which is really more American than another is almost pointless.


RE: Subsidies, Redux
By Mitch101 on 11/20/2008 9:59:14 AM , Rating: 5
They need to Chap 11 and get money to restructure not money to stay in the bad business model that they are.

GM has a lot of excess waste, union-ized to death, mismanaged, and with too much CEO and retires feeding off GM. If there is a bailout we will find them in this situation again shortly with many top end people running off with the cash and employees with a few more months of paychecks. It wont resolve the problems.

Its a band-aid when a tourniquet is needed.

The people shouldn't bail out bad business models so the gluttony they get continues at our expense.

Lets say I work on Dell computers and if Dell went Chap 11 I would work on HP. The demand for computers doesnt go away with Dell. The same would happen for many who do work with GM they would have to migrate over to a different source. It not like the demand for cars will disappear they will just go to other companies who have their business models more in line with reality.


RE: Subsidies, Redux
By FreeTard on 11/20/2008 10:53:41 AM , Rating: 2
I agree with that.

How do we know that the money is going to be used responsibly.

AIG set an example. Give them a bailout, they ask for more and get it.

Some reports have shown that they are burning through ~11B a quarter, so with the 25B given to the industry GM will burn through their share in one quarter. Then what? How much do we give GM before we allow them to fail? Or do we take on the responsibility of supporting them forever?

I wouldn't have such an objection to a bailout, if I was confident that it would help long term, but that is the one thing I haven't heard from anyone. Will a bailout solve their problems forever?


RE: Subsidies, Redux
By xsilver on 11/20/2008 11:02:46 AM , Rating: 2
you're right on the money but the problem I see is that what is being rescued isnt the company but rather the brand.

I mean if GM went chapter 11 would they be allowed to use the brand again or will another car company have to resurface?

Would you buy: "Globaltron Pony 2 door sports saloon - formerly known as the makers of GM" ??

Large retail companies going under is a rare occurrence no?
The only other example I can think of is polaroid. However there were kodak/canon/nikon to take their place.
If BOTH GM+ford go under are consumers really going to TRUST toyota/honda/VW to take their place?


RE: Subsidies, Redux
By masher2 (blog) on 11/20/2008 9:09:06 PM , Rating: 2
> "I mean if GM went chapter 11 would they be allowed to use the brand again or will another car company have to resurface?"

You're confusing Chapter 11 (reorganization) with a Chapter 7 (liquidation) bankruptcy. Under Ch. 11, GM would still operate and keep the majority of its assets, including such things as brand names.


RE: Subsidies, Redux
By snownpaint on 11/20/2008 4:52:17 PM , Rating: 3
Unionized to death.. That is a big factor.

Personally, I have worked with unions and found some of the laziest people working in them. Job security is so high, they would have to kill someone to get suspended. Even then they would be paid for that time off.

Also C-exe and VP expenses are probably way out there.. Executives seem to always be a glutton on revenue (written in as cost of doing business), especially when the company gets monstrous.


RE: Subsidies, Redux
By GabrielIkram on 11/20/2008 10:40:47 AM , Rating: 5
"mocked by Senators while pleading for a 3 percent cut of the bailout bill." A bit sensationalist much? Watch the coverage of these automakers on C-Span, and you'll see just how much of a bunch of stuck-up assholes they are. If they truly cared about their companies' welfare or were embarrassed that they are back at the government's door begging taxpayers for money again, they should show a little humility. They are not entitled to any money. Does this mean I think we should not give them the $25B? Not entirely. But I think it should only be given if the management of these companies are fired with no bonuses.


RE: Subsidies, Redux
By masher2 (blog) on 11/20/2008 12:08:32 PM , Rating: 5
quote:
you have to consider the financial impact to the entire nation for letting them fail.
If a company is failing, a government bailout won't save it. Period. Only restructuring its operations will. . . and bailouts *prevent* that. Companies flush with free government funds don't make the tough decisions they should.

A journalist should have some sense of historical perspective. A classic example is the US railroad industry, which received bailout after bailout after bailout, to the amount of what was, at the time, far more than $25B. They still went bankrupt -- multiple times, in fact. It wasn't until the government stopped giving them buckets of free money that they eventually learned to operate in a profitable, sustainable manner.


RE: Subsidies, Redux
By TomZ on 11/20/08, Rating: -1
RE: Subsidies, Redux
By mdogs444 on 11/20/2008 9:43:17 AM , Rating: 5
quote:
Also, isn't it kind of a double-standard - I mean we bail out AIG, banks, investment firms without any "tarring and feathering," but when it comes to the auto industry, they bring in the CEOs and make a circus out of them.

But there are some of us who were, and still are, adamantly against the bailouts of AIG & investment banks alike.

The free market economy survives on the principal of self reliance and personal responsibility, not "pick me ups" and handouts/bailouts.

We're seeing it now. Other companies, industries, and even CITIES want bailout money now. Where does it end? Is this what we teach our children - don't worry if you mess up, someone else will make it right?


RE: Subsidies, Redux
By TomZ on 11/20/2008 10:49:13 AM , Rating: 1
In times with ordinary economic conditions, I would agree with you. For example, I would have been very much against any kind of bailout of the automotive industry a couple of years ago, instead preferring for them to stand or fall on their own.

But the problem we have today is different - we are in a recession compounded by a crisis in the banking/credit sector. Government action is required in order to stabilize our economy and prevent either (a) the recession from getting worse and/or cycling, and (b) it becoming an economic depression. These are very real possibilities. I think people don't realize the seriousness of the problems we face at the moment.

It's not a time for political game-playing, blaming/pointing fingers, etc. It's time for thought-through action. The failure to loan money to the automotives is not a realistic option. There are no other alternatives.

And in the end, Americans still have a choice as to whether they buy their cars from American brands or foreign brands. That will never change, so if in the end, the public is as a whole dissatisfied with the Big Three, then their market share may continue to erode. That is fine - that is gradual - that doesn't have cataclysmic impact on the economy like you would have if the industry were to have one of more of the OEMs or suppliers go bankrupt.


RE: Subsidies, Redux
By mdogs444 on 11/20/2008 10:56:45 AM , Rating: 5
quote:
The failure to loan money to the automotives is not a realistic option. There are no other alternatives.

It is quite a realistic, and only feasible option on the table.

You cannot loan money to a company in hopes of repayment when they are losing money every quarter, and cannot sustain their current business practices.

Unless they force the company into restructuring, and getting rid of the UAW, any money lent to them will only postpone the collapse.

In loaning them they money, we ought to just print out more money, make our own money worth less, increase the national debt even more, and not get anything back just so we can give $70k/yr janitors a job for another 12 months?

Forgive me while you cite political posturing on my part, but there is nothing concerning a bailout that makes any economic sense, or promotes any sort of fiscal or personal responsibility for all Americans or corporations.

I, for one, would rather take the immediate job losses, restructure into a streamlined & profitable business, rid ourselves of the UAW, and look long term.


RE: Subsidies, Redux
By TomZ on 11/20/2008 11:10:20 AM , Rating: 1
Well, our country - and the global economy - cannot afford the immediate job losses that you are willing to give away so that we can achieve your vision of responsibility or efficiency. Those principles can and will dominate in the long term, but the harm caused in the short term if you let large industries quickly fail is simply not worth it.


RE: Subsidies, Redux
By mdogs444 on 11/20/2008 11:24:53 AM , Rating: 3
quote:
se principles can and will dominate in the long term

They will not dominate in the long run if you keep promoting the current bad practices in the short run.

Like I've said before - I'd be willing to give the auto companies a bigger than $50B loan if they presented a forward strategy that involved immediate dismantling of the UAW, and retiree health care/pension costs, while developing a 401k plan.


RE: Subsidies, Redux
By TomZ on 11/20/2008 11:34:30 AM , Rating: 2
Do you think the UAW wants to still be involved with the UAW? Do you really think they have any choice in the matter? And of course, the legacy benefits cost is a direct impact of the labor unions.

And meanwhile, most of the transplants, since they arrived later, have not been unionized by the UAW. So they are able to operate with lower labor costs than the Big Three.

Furthermore, when you consider imports, most of those are built in regions like Asia and Europe where the government pays for healthcare and retirement. Therefore, these companies don't have these kinds of costs.

And finally, many countries have large import duties on cars, making it economically infeasible for US automakers to build cars here and export them to Europe and Asia. These countries to this in order to protect their local automotive manufacturers. But here we do not.

So, considering all this, do you think the Big Three play on a level playing field? Not even close!

I'm not saying they have not made mistakes - but I am saying that a lot of the challenges they face are completely outside of their control. That is what makes the debate more complicated than you realize(d).


RE: Subsidies, Redux
By TomZ on 11/20/2008 11:39:10 AM , Rating: 2
quote:
Do you think the UAW wants to still be involved with the UAW?

Sorry - I mean "Do you think the Big Three wants to still be involved with the UAW?"


RE: Subsidies, Redux
By masher2 (blog) on 11/20/2008 2:16:00 PM , Rating: 4
> "Do you think the Big Three wants to still be involved with the UAW?"

Certainly-- their CEOs do, at least. While dumping or seriously restructuring the arrangement with the UAW would be a long-term benefit for the Big 3, it would mean massive short-term turmoil . . . just the thing to kill CEO salaries, bonuses, and stock options.

That's why this bailout is a bad idea. A GM or Ford currently in bankruptcy restructuring is going to have to negotiate a far tougher contract with the union than one flush with government funding. They'll be forced to make the tough choices now... and they'll ultimately benefit from it.


RE: Subsidies, Redux
By 91TTZ on 11/20/2008 2:32:12 PM , Rating: 2
Executives nearly always are against unions. You're wrong here. GM does not want to be involved with the UAW.


RE: Subsidies, Redux
By masher2 (blog) on 11/20/2008 2:55:44 PM , Rating: 3
> "GM does not want to be involved with the UAW. "

That's why they just signed a fat new contract with them, eh? Nonsense...GM's upper management most certainly *does* want to be involved with the UAW. More precisely, they want it more than the alternative, which is a painful, bloody period of suffering, in which they might find their own jobs on the line.

In Rich Wagoner's perfect fantasy world, he's certainly enjoy it if the UAW magically ceased to exist one sunny morning. But here in the real world, they much prefer to not rock the boat, by continuing to give the UAW just what it wants.


RE: Subsidies, Redux
By TomZ on 11/20/08, Rating: 0
RE: Subsidies, Redux
By lagomorpha on 11/20/2008 9:58:12 PM , Rating: 2
"Frankly, neither you nor I can be sure what is going on inside the minds of these CEOs. "

If I had to guess it's probably something along the lines of: "Golf golf golf I love scotch golden parachutes are awesome I love my corporate jet."


RE: Subsidies, Redux
By Roy2001 on 11/22/2008 2:52:41 AM , Rating: 2
Tell me, please, is Japanese government bailing out Toyota and Honda?


RE: Subsidies, Redux
By Gzus666 on 11/20/2008 9:52:21 AM , Rating: 5
Where do the bailouts stop? When do they stop printing money, effectively rendering your money worth less? Every time they bail these guys out, you lose buying power with the money you have in the bank.

Here is a crazy idea, don't bail anyone out and they will actually have to fend for themselves if they want to stay around. I know it would be horrible to have to make deals with the unions, but if Detroit goes under, so do all their cushy jobs and pensions. Talk to the workers, it's either no job or a reduced benefit job. They deserve a fair wage for their work, but they don't deserve pensions and health care for everyone and their brother.

Let the market work, someone will fill the space. Do you really think if Detroit dropped no one would take their place? Where there is a need it will be met with a supply, that is how it works.


RE: Subsidies, Redux
By bribud on 11/20/2008 10:09:37 AM , Rating: 3
AMEN!


RE: Subsidies, Redux
By TomZ on 11/20/08, Rating: 0
RE: Subsidies, Redux
By Gzus666 on 11/20/2008 11:02:05 AM , Rating: 3
Actually, no, it is not the role of the government to fix the market. That is why economics and government are two different things. You understand that they are printing money to do these bailouts, right? You also understand when they print this money, your money you have and get paid is now worth less, right? When bread is $10 a loaf cause our money isn't worth crap, will you still be asking for bailouts?

The more they do this, the less you are getting paid and the more things cost. You will effectively be getting pay reductions every time they do this, which will destroy buying power.

Great Depression was caused by many things, none of them being the government not paying bailouts to people. Stop using scare tactics to try to get people to blindly follow this crap, it is insane.

The market works fine, companies die from bad decisions, that is how it is supposed to work.


RE: Subsidies, Redux
By TomZ on 11/20/2008 11:18:11 AM , Rating: 2
quote:
When bread is $10 a loaf cause our money isn't worth crap, will you still be asking for bailouts?

Think about it...is what you're saying actually happening? $700B bailout - that's pretty big - what is the effect?

Guess you didn't take econ 101. If what you were saying was true, you'd be seeing a large spike in inflation as the government pumps money into the economy in order to stabilize it. But you don't see that kind of inflation, do you?

In addition, the government also has the power to pump money out of the economy as we recover, in order to avoid the problem of inflation. So that's not really anything we have to worry about right now. In the words of an economist I heard on the radio a few months back, "inflation would be a good problem to have" (relative to the problems we have now).

The bigger problem is getting the economy working again - especially the banking system and credit markets. That is rightfully called a "crisis" - do you understand the effect of that? It means that banks and businesses cannot get the cash they need for their daily operations. Do you think that is a good thing or a bad thing?

And you're wrong about the Great Depression. It dragged on for many years because the government failed to act. Basically it let banks fail instead of propping them up. This led to a very long period of pain. We've learned from that lesson. Study your history.


RE: Subsidies, Redux
By Gzus666 on 11/20/2008 11:57:48 AM , Rating: 2
Obviously it won't happen overnight. But if they keep doing bailouts for everyone and printing money, your money will be worth less and less. That is what printing money does, it reduces the buying power of the money that is out there, do you deny this?

The economy works fine, you just have to let it recover naturally. What, do you think suddenly cause some people lose jobs and banks screw up, no one will ever be able to run a company again?

Show me written proof that the Great Depression was CAUSED by no bailouts, otherwise stop playing word games. Hell, even prove that it dragged on because of it.


RE: Subsidies, Redux
By nah on 11/20/2008 12:15:46 PM , Rating: 2
quote:
how me written proof that the Great Depression was CAUSED by no bailouts,


The proofs lie in Nazi Germany--Hitler literally spent his way out of the Great Depression--by using government money to create thousands of jobs in the military, armaments, automobile and transport industry --America's version of that was the New Deal-it helped cut unemployment and increase economic growth--although both got a massive boost on later because of WW2.


RE: Subsidies, Redux
By masher2 (blog) on 11/20/2008 9:03:20 PM , Rating: 2
> "The proofs lie in Nazi Germany--Hitler literally spent his way out of the Great Depression"

The Great Depression also ended at about the same time elsewhere in Central Europe, Britain, Canada, the Soviet Union, and most of Latin America. All because of Hitler's spending eh? What a marvelous coincidence!


RE: Subsidies, Redux
By nah on 11/20/2008 10:39:24 PM , Rating: 2
this is a joke, right ? The USSR embarked on massive government spending--just like the US and Germany--of course all of them at roughly the same time--there was this little thing called WW2 which massively boosted employment, spending..etc


RE: Subsidies, Redux
By masher2 (blog) on 11/21/2008 11:24:09 AM , Rating: 2
> "The USSR embarked on massive government spending--just like the US and Germany--of course all of them at roughly the same time"

The USSR wasn't much affected by the Great Depression at all-- and what effects it had were almost entirely over with well before WW2 even began. Furthermore, the Great Depression ended nearly simultaneously all throughout Latin America-- including those nations that had little to no involvement in WW2.

In any case, you still dodge the point. From the moment the Great Depression began, most nations began interventionalist policies in attempts to halt it, policies that continued for a decade or more in some cases. Those policies had little effect. Rather than ending the crisis, most of those policies simply lengthened and prolonged it.


RE: Subsidies, Redux
By masher2 (blog) on 11/20/2008 8:50:11 PM , Rating: 2
> "If what you were saying was true, you'd be seeing a large spike in inflation as the government pumps money into the economy in order to stabilize it..."

Come now Tom, your usually impeccable logic is seriously flawed here. Most of that money hasn't even entered the economy yet, and even when it does, it will take months to generate inflation.

> "The bigger problem is getting the economy working again - especially the banking system "

At the start of the Great Depression, we had over 5,000 bank failures...during a period in which we had many fewer banks. In our current "crisis", we've had only a few dozen go under. Many major banks are not only stable, but actually generating a profit...and more than a few of them have spoken out *against* any federal bailout of the industry.

> "the Great Depression dragged on for many years because the government failed to act."

Eh? Read your history. President Hoover began acting immediately, with a wide series of programs, including the RFC program -- almost identical to our current bailout bill. All of them did nothing but make the situation worse...just as our government's current actions will.

Lowering interest rates and continuing to make cheap credit available is the absolute worst thing to do at present.


RE: Subsidies, Redux
By InsaneGain on 11/20/2008 1:04:02 PM , Rating: 2
quote:
Great Depression was caused by many things, none of them being the government not paying bailouts to people. Stop using scare tactics to try to get people to blindly follow this crap, it is insane.


So you think you know more than Hank Paulson, the Treasury Secretary, with a Harvard MBA and a well known student of the Great Depression? You don't think he is very aware that the U.S. government made a colossal error in not stopping the cascading bank failures that led to the Depression? Do you not think that he is very aware that the government should not pick winners and losers in an economy, but that extraordinary circumstances call for extraordinary government action for the good of the entire economy?

quote:
You understand that they are printing money to do these bailouts, right?


No, the money would come from the sale of government bonds. So the money could come from Americans or foreigners like the Chinese.


RE: Subsidies, Redux
By Jim28 on 11/21/2008 4:13:44 PM , Rating: 2
You do realize that there is a bottom to that well right? Facts like the Chinese don't want more US bonds and things like that eh?


RE: Subsidies, Redux
By masher2 (blog) on 11/21/2008 5:15:21 PM , Rating: 3
> "So you think you know more than Hank Paulson, the Treasury Secretary, with a Harvard MBA..."

I certainly do. I said the original bailout plan was a fiasco from the start. Paulson, on the other hand, only realized his original plan was a mistake after he received the approval from Congress:

http://www.google.com/hostednews/ap/article/ALeqM5...

He's now come up with a new plan which is, unfortunately, no better than his original.


RE: Subsidies, Redux
By Ringold on 11/20/2008 5:17:05 PM , Rating: 2
quote:
Actually, no, it is not the role of the government to fix the market.


Some times you sound like Michael Moore, and other times, Milton Friedman. Or are there two Gzus here? :P


RE: Subsidies, Redux
By nah on 11/20/2008 9:52:45 AM , Rating: 2
One thing you have to understand is that the banking system is not inherently inefficient--it was after all the Clinton administration which repealed most of the very strict regulatory hurdles which had been put in place by FDR's administration which led to all of this hoopla--bad lending practices to even worse customers

The auto industry, on the other hand, is inherently inefficient--they don't have the desire to come out with reasonably cheap, efficient cars which won't continually need repairs after so many months--if the industry were to go bankrupt--it wouldn't mean the end of employment in the auto sector--Toyota and other companies produce here too--customers would benefit as their consumer surplus would shoot up--and with it,consumer welfare,

Also, the US of A needs no particular industry to survive--this is a fallacy--if an industry is inefficient, it will be closed down and another more efficient one will take its place--there are many alternatives to cars as a means of transport--although perhaps no exact replacement--in any event--car sales wouldn't stop, only cars made by the big 3


RE: Subsidies, Redux
By Gzus666 on 11/20/2008 10:24:13 AM , Rating: 2
So you blame the government for banking industries piss poor lending decisions? Don't you think they are a bit responsible for giving giant loans to people with no/bad credit and no job? Literally, you could get a loan with no job. You didn't even have to be a citizen. How did they expect them to pay that back, magic?

The regulations weren't needed, the companies running things properly is what is needed. Let them learn their lesson the hard way, things will balance themselves.


RE: Subsidies, Redux
By nah on 11/20/2008 10:57:47 AM , Rating: 2
quote:
So you blame the government for banking industries piss poor lending decisions?


Perhaps you forgot to read this part-
quote:
bad lending to even worse customers


RE: Subsidies, Redux
By Gzus666 on 11/20/2008 11:19:36 AM , Rating: 2
I read that part just fine. You say it is the governments fault they made bad loans because of not regulating. It was their fault, plain and simple, they need to pay for it.


RE: Subsidies, Redux
By nah on 11/20/2008 11:41:01 AM , Rating: 2
quote:
You say it is the governments fault they made bad loans because of not regulating


quote:
It was their fault, plain and simple, they need to pay for it.


Of course--surely you don't expect bank execs to act like angels--with the old regulations things were bad enough ( the S& L scandals of the 80s)--but without it--worse


RE: Subsidies, Redux
By TomZ on 11/20/2008 11:01:06 AM , Rating: 2
quote:
The auto industry, on the other hand, is inherently inefficient--they don't have the desire to come out with reasonably cheap, efficient cars which won't continually need repairs after so many months--if the industry were to go bankrupt--it wouldn't mean the end of employment in the auto sector--Toyota and other companies produce here too--customers would benefit as their consumer surplus would shoot up--and with it,consumer welfare

It is a myth that the domestic automotive companies are significantly less efficient than their European and Asian counterparts. I work with many of these companies, and they are all about the same in that respect. They are all large companies with red tape and bureaucracies and very inefficient. I could tell you stories about Toyota and Honda that would make your head spin. Same for GM and Ford.

Also, if you look at the actual quality statistics and compare USA to Europe and Asian, you'll be surprised to find them pretty much all in the same ballpark. Again, another myth that somehow American automakers are far behind Asians in terms of build quality. Maybe 20 years ago they were - but that has changed long ago.

Feel free to hang onto your opinions, but I would respectfully suggest that your views are not supported by the actual facts.


RE: Subsidies, Redux
By nah on 11/20/2008 11:10:37 AM , Rating: 2
Perhaps you could fill me in on a few metrics here--average MPG of Japanese cars vs US, mean time to repair, average price, price performance ratio ( vis a vis MPG/depreciation)

I'd be more than willing to give you the benefit of the doubt once I see hard stats


RE: Subsidies, Redux
By TomZ on 11/20/2008 11:24:42 AM , Rating: 2
Here's one source of a lot of good information to get you started:

http://www.jdpower.com/autos/car-ratings/

If you cherry-pick the statistics, you can reach any conclusion that you want. But if you look objectively, you'll see that the Big Three are of similar quality compared to the rest of the global automotive OEMs.


RE: Subsidies, Redux
By Chaser on 11/20/2008 11:17:14 AM , Rating: 2
I don't think you have an understanding of what the "Big 3" are asking for. The 25 billion they want is specifically to maintain their union pensions and healthcare benefits.

On TV news programs everywhere they have shown the combined hourly wages and benefits for a U.S. Toyota employee is $47.00. For GM: its $73.00 an hour. Ask a Toyota employee if they are miserable or unhappy with their job.

This is not "letting them fail". Bankruptcy protection would allow GM Ford and Chrysler to renegotiate their union and supplier contracts. Point is throwing $25 billion to MAINTAIN outlandish pensions and healthcare benefits is not the road to long overdue reform and change on how these companies and their unions operate. Its an infusion of money to continue these ridiculous benefits that most americans could only dream of. I have friends that work for Ford. If the plant is not in production, in other words if the plant's employees are told not to come to work -often for weeks at a time- they continue to draw their full wages at at least 70%. I am talking for weeks sometimes months at a time.

Citicorp recently laid off thousands of employees. I'm sure many of them would be very happy to turn a wrench for $30.00 an hour and a 401K match.


RE: Subsidies, Redux
By Chadder007 on 11/20/2008 12:23:01 PM , Rating: 3
I believe they should be bailed out, only because of how many jobs it will affect if they go out of business. But part of the deal should be that the upper management steps down and the UAW agrees to lower employee salaries.


RE: Subsidies, Redux
By mmcdonalataocdotgov on 11/20/2008 1:49:51 PM , Rating: 2
Ah, but this at least it the blue collar bail out. It is all those auto workers and parts supplier workers that will be out of work. So much for Joe freakin Sixpack, eh repubs?!?


RE: Subsidies, Redux
By Ringold on 11/20/2008 5:24:47 PM , Rating: 3
The difference isn't class warfare, as much as you might wish it were. The key term is "systemic risk."

Banking system failure: Economic collapse. Most major businesses fail, small business fold like a house of cards, Great Depression 2.0 style unemployment -- if not far worse, because finance is so much more pervasive than back then.

GM, Ford, Chrysler failure: Almost no one outside the Rust Belt cares, and despite this uninformed rhetoric about the results of Chapter 11, they could negotiate a pre-packaged Chapter 11 that keeps them out of a total failure.

Besides, there are probably just as many blue collar workers in "foreign" car makers plants across the South earning sustainable, competitive wages. This is not a blue collar bailout, it's a UAW bailout, a bailout of failed northern industrial policy.


Umm...no
By FITCamaro on 11/20/2008 9:21:52 AM , Rating: 5
quote:
While it’s obvious that America's big auto companies lost touch in the 90s and early 2000s, producing a slew of inefficient big trucks and SUVs while foreign competitors stole away sales with more compact efficient cars, they are an integral part of America's economy.


Typical Jason.

The big three made trucks and SUVs because that's what people WANTED. They would not have made them otherwise. The F-series was THE best selling VEHICLE in the US until recently. The big three were in perfect touch with what people wanted. Gas was cheap. People wanted big cars. People bought them by the millions.

Then gas prices rose sharply and until the past few years, people still bought big trucks and SUVs. Because they wanted them. American manufacturers cars didn't get quite as good mileage as imports and quality suffered, but they have largely rectified it and are still improving. Domestics are getting better every year. I love my "new" GTO. The quality of the interior is amazing, the ride is great, the power is awesome, and the mileage is good for what it is(a 400 hp muscle car).

As far as the "bailout" (more of a loan. they plan to pay it back), I am mixed. Obviously I don't want to see them fail. However, I think bankruptcy would do some good for them. They will not just shut their doors if they declare bankruptcy. They will restructure and reorganize. They will kick out the unions allowing them to compete with Honda, Toyota, Nissan, and Hyundai when it comes to the cost of labor. Currently GM and Ford pay a total of $30 more PER HOUR of labor than the others because of the pay and benefits the UAW has wrestled out of them at gunpoint.

In the end I think the companies will come out stronger if they declare bankruptcy.




RE: Umm...no
By mdogs444 on 11/20/2008 9:32:06 AM , Rating: 4
quote:
The big three made trucks and SUVs because that's what people WANTED. They would not have made them otherwise. The F-series was THE best selling VEHICLE in the US until recently. The big three were in perfect touch with what people wanted. Gas was cheap. People wanted big cars. People bought them by the millions.

While true, there was actually an article out that showed the Big 3 NEEDED to make trucks and SUV's because small cars would need to be sold at a loss due to the several thousand dollars of higher production costs in comparison to the competition.

You cannot survive by making $200 on a $9,000 car. But you can by making $10,000 on a $40,000 SUV.


RE: Umm...no
By FITCamaro on 11/20/2008 10:01:27 AM , Rating: 2
True. Trucks and SUVs were sold at much higher premiums. But when that's what people are demanding, then you can charge those premiums. Hence why truck prices have floored lately. They still make more off them though.

If they can get rid of the unions, then they'll be able to make more on cars as well.


RE: Umm...no
By 67STANG on 11/20/2008 11:51:27 AM , Rating: 1
Hate to sound like a socialist, but I thought I'd get this "out there".

If we nationalized health care (as I personally believe your nation should WANT you to have adequate health care...), not only would the entire population have more money (I pay over $500/mo. for my health insurace), but corporations would have a lot more money (my company picks up the other $650/mo.).

If the government used the $700B bailout to nationalize health care (they could buy Blue Cross, Blue Shield and KP-- and all the employees could keep their jobs), you'd see the economy sky rocket. Corporate payroll costs would go down at least 25% and consumer spending would skyrocket due to not having to pay for insurace. Hell, I'd love to have that extra $500/mo... I might even use it to buy a new car...

Of course, we'll just maintain the status quo and keep building the costs into the products we sell (like GM does into every car) and make sure that our defunt health care system carries on, business as usual.


RE: Umm...no
By TomZ on 11/20/2008 12:02:12 PM , Rating: 2
Socialized healthcare only moves the costs and adds a new layer of inefficiency and control/regulation.

The real key to healthcare is to figuring out how to manage the skyrocketing costs. Whether the costs are paid out of taxpayer dollars or employer dollars is a secondary issue, IMO.


RE: Umm...no
By 67STANG on 11/20/2008 1:04:15 PM , Rating: 2
Not quite sure I agree about a "new layer of inefficiency" as the current system is about as inefficient as it gets-- not to mention corrupt. (Let us not forget about the strong lobby that donates to prevent socialized health care).

When "cost containment" units at insurance companies get paid bonuses on how many claims they reject (my mom used to work at Nationwide), I argue there needs to be control and regulations.

Are taxes higher in nations with socialized health care? You bet. Am I for "spreading the wealth"? Absolutely not. I think capitalism is king and people should have to work for their wealth-- lazy people shouldn't get any of my money. At the same time, people only making minium wage who cannot afford health care should not die because of it.

But back to my main point:

The cost of providing health care adds from $1100 to $1500 to the cost of each vehicle for GM... And to quote Lee Iacocca: "It is a well-known fact that the U.S. automobile industry spends more per car on health care than on steel".


RE: Umm...no
By Ringold on 11/20/2008 5:29:45 PM , Rating: 2
So, nationalize health care, and you get more money in your pocket. Nationalize health care, and companies get more money in their pocket.

Individuals save money.. business saves money.. I'm sorry, where do you think this money will come from? Costs aren't magically going to go down, so someone is paying. Will the healthcare fairy come and deposit gold bullion in to the US gold reserves at Fed. Res. Bank of New York?

If you don't pay for health care, your company will -- which means they'll count that as part of your total compensation cost, which means you'll pay for it. Bottom line, anything the government does, you pay for at the end of the day.

The first day of the first economics class people ever take, preferably in high school, should include the phrase "There is no such thing as a free lunch."


RE: Umm...no
By 67STANG on 11/20/2008 10:56:20 PM , Rating: 2
No one ever said there was a free lunch... Costs, of course, will not "magically" go down. But they will go down realistically. Part of the corruption of the system is that it is privatized.

Have you ever visited a medical clinic and told them that you don't have insurance and to bill you directly. When you get the bill you say, "Wow, that's not nearly as much as I expected." Then you call them and say that you actually do have insurance. You'll get a statement from your provider that is around triple what they charged you when they thought you had no insurance. Why? Because they can. Almost all hostiptals, doctors and clinics do this. Its an abuse of the system and part of the reason why premiums are so high.

If government were running the show, (like it does in every other civilized western democracy), the abuse would stop. If you want proof, research Canada, France, U.K., etc.


RE: Umm...no
By Ringold on 11/21/2008 1:52:51 AM , Rating: 2
Actually, I've done exactly what you said. I chose a very high deductible to cut down on my costs, but it means I end up having to negotiate for myself prices some of the time. Frankly, I've been amazed at some of the price reductions I've negotiated.. off the cuff, I'd say 75-80% in at least one case.

Unfortunately, you assume that government will do somehow better than insurance companies. Insurance companies have incentive to at least try to keep costs low; they have profit motive. Government has no such incentive at all! In fact, as most economists could tell you, because government employees generally don't take bribes their personal version of profit maximization is actually to maximize the size of the bureau over which they manage, which explains immortal agencies that decades ago outlived their need. Any economist can also tell you without batting an eye which is more efficient: private enterprise. If nothing else, the government doesn't have the manpower to negotiate case by case as we can do for ourselves.

Government can try to force down prices via price controls or refusing to buy expensive medications, etc, but they can only flip a coin and hope they're somewhere close to bringing supply and demand in line. More realistically, they don't even care about supply and demand, just about doing whatever sounds good to win votes.


RE: Umm...no
By FITCamaro on 11/21/2008 8:23:59 AM , Rating: 1
Not true with them charging insurance companies triple. Yes the initial bill that goes out is higher, but that's the way the game is played. Sometimes the insurance companies pay it, many times they don't. They negotiate down to a much lower payment. Yes it creates inefficiencies, but since when has the government ever been efficient at anything? Yeah let's let them decide the price of health care.

In Canada and Britain, they're having to search for doctors because the doctors they have are leaving in droves. Many come to America. Why? Because whats the point of spending 8-10 years of your life in school when you can't make any money? Doctors get paid a lot because they spend a lot of time, effort, and money getting the education they need to become a doctor. Take away the compensation for that time and effort, and what's the point of being a doctor?

Many doctors in the US even have already said they think they're overworked and many want to cut back. If nationalized health care sets in where the government sets the cost of care and drugs, even more will leave. And we'll have a shortage of doctors just like Canada and Britain.

Not only that, do you know WHY drug prices are so high in the US? Because of nationalized health care in other countries. Drug companies can't make any money on their drugs in other countries so WE have to make up the difference. That's why more drug research happens in the US than anywhere else. Because they can actually make money here. With the patent laws on drugs they've only got 10 years to make their money back. And that means not only covering the cost to develop the drug they're selling, but all those that they weren't able to sell. Take that away, and say goodbye to most new drug development. But hey. The government will take care of you right? If anything, we should be pushing other countries to change to privatized systems so some of our costs can go down.


RE: Umm...no
By 67STANG on 11/21/2008 11:14:17 AM , Rating: 2
I know they try to "negotiate" (if you don't have insurance, try "neogtiating" your bill and see what happens...), but if they can't negotiate your bill lower, then the amount you have to pay goes up. The insurance company and medical practice work together to insure the bottom line is maintained-- no matter what kind of PPO you have. As I stated before, my Mom worked for one of the largest insurance companies and was in the "cost containment" unit, I know how it works....

As far as doctors in Canada and Britain go, it goes both ways. My Uncle, who was a doctor in Los Angeles actually moved to Quebec because his malpractice insurace ate a lot of his income. It's the same all over the country. Malpractice insurance isn't paid in Canada and Britain and thus, much of any pay cut they would take would be largely offset. By the way, my Uncle does quite well in Canada.

As far drug prices go, I absolutely know why they are so expensive. Insurance and marketing. Drug companies spend billions on commercials, lobbying and traveling sales people to get doctors and/or hospitals to prescribe their medications. Each pill has a huge markup because of this. Why do you think generic prescriptions that do the exact same thing cost $5 or $10? If it weren't for Canada and Britain would generics be free?

The next time a family member goes to your local hospital and you notice they are charged $75 for (1) Tylenol. The circle will be complete.


RE: Umm...no
By Ringold on 11/22/2008 12:25:57 AM , Rating: 2
quote:
(if you don't have insurance, try "neogtiating" your bill and see what happens...


If it's for something thats already been done, you may not get far. But I've negotiated, as I said, due to a high deductible, and managed amazing cost reductions (agreeing to use facilities off peak hours, agreeing to pay cash up front, forgoing some niceties, etc).

quote:
Why do you think generic prescriptions that do the exact same thing cost $5 or $10?


Try a little research, they also spend billions in R&D, spending big bucks on drug after drug that fails before finally hitting something that works. Generics are cheap for one reason only: once the IP rights expire, all they have to do is copy and paste manufacturing specs for the most part. Biotech firms therefore have to compensate themselves for their R&D costs and extract enough profit to make it worth their time. Trying to blame it all on marketing costs alone smacks of someone who has taken the liberal talking point without actually looking in to the issue.


RE: Umm...no
By NubWobble on 11/20/08, Rating: -1
RE: Umm...no
By mdogs444 on 11/20/2008 9:54:31 AM , Rating: 5
quote:
There's no need to drive a 400HP car because you will NEVER get to drive it fast enough.

And there is no need to have a 2,000 sqft house because you will never use ALL of it. There is no need to have a new Intel i7 processor, 8GB ram, and 3 video cards...because you don't NEED it. In fact, there isn't even a reason to have anything bigger than a 19" television because you don't NEED it.
quote:
Capitalism is a failed system.

I tend to disagree. True capitalism has greatly succeeded - hence why the US has the highest GDP of any country, and its only been around for slightly more than 200 years, while having a much smaller population than other countries like China and India.
Regulation is what has failed the Capitalist system. Forcing changes to a free market system that would not come into existence on their own. Like forcing banks to give loans to people who do not have the assets to justify them.
quote:
The only system that works is Socialism

This is a joke right? Forgive me if I don't see the humor here. I cannot find a single good reason that anyone could honestly think socialism works...much less being the only system that works.


RE: Umm...no
By nah on 11/20/2008 10:16:29 AM , Rating: 3
quote:
hence why the US has the highest GDP of any country


Capitalism has also existed in Brazil , Argentina, India--why aren't their GDPs equally big--

The one thing that differentiates us from other countries is our social and moral characteristics--as Alexis de Tocqueville called it--or our political culture, which combined with capitalism, gave out a knockout punch to poverty


RE: Umm...no
By FITCamaro on 11/20/2008 10:24:48 AM , Rating: 2
Brazil is largely still a farm economy as is Argentina. Neither has large industrial bases or large high tech industries.

India has a large high tech industry but the vast majority of its population still lives in rural areas and slums.


RE: Umm...no
By nah on 11/20/2008 11:01:35 AM , Rating: 2
Thats not the point--both are intensely capitalist, or, as I dislike the term-- free market economies . The point was that capitalism alone was sufficient to catapult a country into the front ranks of the world economy


RE: Umm...no
By mdogs444 on 11/20/2008 11:18:36 AM , Rating: 2
No - capitalism has been defended as a method to allow those things to happen. Capitalism is a tool to allow personal success because you take personal responsibility.

Taking a poor country and giving them a capitalist economic system still isnt going to make much difference if they didnt have much money to start with before they made the transition.


RE: Umm...no
By nah on 11/20/2008 11:52:00 AM , Rating: 2
quote:
Taking a poor country and giving them a capitalist economic system still isnt going to make much difference if they didnt have much money to start with before they made the transition.


This is vague-- Brazil and the former USSR had tremendous potential to grow--with huge untapped reserves of land, water, minerals--like the US. Why didn't they grow at the same exponential rate--

It's because only the US offered political, social and economic opportunities to allow personal ambitions to be maxed to their potential--any immigrant could come, and watch his son or daughter become an industrialist, or President


RE: Umm...no
By Lord 666 on 11/20/2008 11:47:29 AM , Rating: 2
Speaking of Brazil, in my opinion, it was GM's backing of E85 in their vehicles when everything was pointing to diesel and hybrids as one of their largest failures.

However, have to wonder with the US government giving 3 billion a year (thanks masher for that fact) in subsidies for ethanol production, did maybe Uncle Sam have anything to do with GM leaning towards E85?


RE: Umm...no
By FITCamaro on 11/21/2008 8:27:37 AM , Rating: 2
GM and Ford embraced E85 because that's what the environmental crowd pushed. Environmentalists jammed E85 down our throats, not GM and Ford. I really doubt they could care less. It was just more work for them to redesign their cars to run on it.


RE: Umm...no
By Gzus666 on 11/20/08, Rating: -1
RE: Umm...no
By CrazyBernie on 11/20/2008 10:52:29 AM , Rating: 3
Considering that was changed over 140 years ago, I highly doubt it.


RE: Umm...no
By Gzus666 on 11/20/08, Rating: -1
RE: Umm...no
By TomZ on 11/20/2008 11:37:44 AM , Rating: 3
quote:
I think the few hundred years of free labor had something to do with that...just saying.

You really know nothing about history or economics, do you. The USA did not get to where it is now because of slavery, as you said/implied.

Please go back and study the last 100 years of USA history. The answer is there for you. I'll give you a hint: WWII had a lot to do with it - a heck of a lot more than slavery!


RE: Umm...no
By Gzus666 on 11/20/08, Rating: 0
RE: Umm...no
By Gzus666 on 11/20/2008 12:55:40 PM , Rating: 2
quote:
Egypt has slaves


Oh my, snafu. This should be HAD not has.


RE: Umm...no
By TomZ on 11/20/2008 1:05:49 PM , Rating: 3
quote:
You just love WWII don't you? WWII was not the fix for everything.

Huh? Where'd you get that from? WWII was a global disaster of huge proportions. My point was only that it created a huge economic boom in the USA and set the stage for our current dominance in the world economically and politically. (A lot of which we've pissed away over the past 50 years, I might add.)
quote:
Slavery helped build this country to be great just like it did to damn near every other super power in the past.

I'm not denying that slavery had a signficant place in getting this country going. My argument, however, is that the significance is little compared to the developments during the industrial revolution, which had a lot to do with the world wars.


RE: Umm...no
By Jim28 on 11/21/2008 4:49:00 PM , Rating: 2
Actually your reasoning is busted if it is slavery of which you speak. Considering that industrialism occured in the North of the Country where slavery was not condoned and the fact that slaves generally did not work in factories, and the South largely used slaves in labor intensive farming, how does slavery have anything to do with this country's industrial might? The droves of immigrants with nothing but a dream and an ambition and fire to realize that dream is what built this country into the powerhouse it has become. The argument of slavery today (At least from some of my friends that are black.) is that it did not allow for wealth building in families, where that argument falls apart is the fact that so many families had no wealth with which to start from. (Like mine, Mix of Creek Indian, Irish, English) The differance today is that many black people are taught victimization and entitlements due to slavery and 1900-1960 civil rights issues. With that thinking the rsult is that they themselves are typically holding themselves down. Many similar people start in poverty (My direct family included) yet manage to succeed.(I was the first in my entire family to recieve a college education.) Bill Cosby and even Obama have said things along these lines. (Cosby very directly and he was basically stoned, and Obama speaking very indirectly.) What of other ethnicities that start in poverty and suceed such as Asians, Indians, all sorts. The start with nothing, and yet seem to make it, hell the Chinese were even treated as slaves in this country during the late 1800s, but yet they made it?


RE: Umm...no
By lagomorpha on 11/20/2008 11:16:49 PM , Rating: 1
Adam Smith had some choice words about slavery. To paraphrase: a slave's labor is among the most expensive there is to be purchased because a slave has only two incentives, to work just hard enough to not be whipped, and to consume as much food and resources as possible. Without the ability to accumulate wealth there is no motivation to work harder or consume less.


RE: Umm...no
By Ringold on 11/20/2008 5:37:03 PM , Rating: 2
quote:
Capitalism has also existed in Brazil , Argentina, India--why aren't their GDPs equally big--


Just a guess, but it may have something to do with America being a relatively free market state since day one, 232 years, and Brazil, India and Argentina not only being much younger democracies but much younger capitalists. India only started free market reforms in the 80s, if I recall, and since then have had excellent growth. The "Hindu Rate of Growth" once was disparaging, now it's a compliment.

Give those countries time. I, however, fully agree with your reference to political culture. Adam Smith also spoke of this as being absolutely necessary.


RE: Umm...no
By NubWobble on 11/20/2008 11:23:32 AM , Rating: 1
quote:
the US has the highest GDP of any country


It also has the worlds largest debt as well as corrupt system. In the 1930's it was proven that Capitalism, without control, without government input, without support for the poor or the working man, is a failed system. Now we have returned, once again, to the 1930's due to lack of regulation, lack of control, lack of protection for the poor and, despite the claims of "Uniouns are ruining this country", there is no support for those who are 'weak'. Your comparisson with China is absolutely ludicrous as the Chinese, the Russians and the Europeans practically own the US. If the Chinese for one day stopped lending money to the US, the US would collapse immediately so save your "We own the world" dillusions.

You must be blind to the whole housing crisis because it had nothing to do with forcing anyone to give loans to anyone. Go to a bank and force the manager to give you a loan at gun point, see what happens. The housing crisis started because of 0 control. Clinton deregulated the banking system and allowed them to do what they wanted without government oversight.

Capitalism with control, oversight, regulations, protection for the poor is Socialism. The US is the only Western country that has no universal healthcare and it is one of the reasons why the US car manufacturers are in decline.

Instead of pretending you understand the 'humour' please explain why German car manufacturers are still doing as good as they can in current times, while the US ones are basically dead. Could it be because society looks after itself? Could it be that universal healthcare is cheaper to work under? Could it be that you are blinded by the fake propaganda of a country resisting change and thus suffering for it?

And I don't have a Core i7, nor do I have three video cards or 8GB's of RAM. I have 4GB of cheap RAM that works and my Quad Core runs at over 90% most of the day. Then there's my video card, which is more than two years old. Cute try there though because the US doesn't need to spend more money on offense than the entire world put together either.

Try to turn that mass medium of yours off and read a book, everything I have said here has been documented by Zinn, Chomsky and many others who have been warning of the imminent collapse of the US for decades but have been marginalised and branded as Commies because the last thing the US want to hear is the truth.

The truth isn't painful, the truth is bankrupting the US.


RE: Umm...no
By Ringold on 11/20/2008 5:41:44 PM , Rating: 2
quote:
In the 1930's it was proven that Capitalism, without control, without government input, without support for the poor or the working man, is a failed system.


So, thats what you get from reading history. Silly me, I thought it was the Federal Reserve and Smoot-Hawley.

Seeing that you referenced Chomsky, though, I know you're far too brainwashed to bother arguing with, which is sad.


RE: Umm...no
By Jim28 on 11/21/2008 4:53:34 PM , Rating: 2
Sociology does not mix well with the real world.(Or with me as I am an electrical engineer by trade.) However Chomsky's Manufactured Consent is starting to occur isn't it? That last election if it wasn't manufactured consent then what was it?


RE: Umm...no
By Ringold on 11/22/2008 12:44:22 AM , Rating: 2
Agreed. I disagree with Chomsky's economics, but as far as manufactured consent goes, he's on the right track. :P


RE: Umm...no
By FITCamaro on 11/20/2008 10:15:25 AM , Rating: 2
Much of Europe has been trying to dig its way out of socialism for the past few decades. France certainly has been. And if it works so well, why is Europe's unemployment STILL higher than the US's?

http://en.wikipedia.org/wiki/Economy_of_the_Europe...

Ours has gone up since March as I'm sure Europe's has(search has suggested 6.9%). But even now we're still below their March number of 6.7%. And funny, the Dutch unemployment rate is the lowest in the EU and they embraced capitalism...

Capitalism rewards those who work for it and try to excel. Socialism takes from those who have worked to excel and gives it to those who have chosen not to work as hard (or at all).

If socialism works, why after 6 months did Hawaii get rid of its government run health care plan? What? You say people will stop paying for private coverage when they can afford it to enroll in the system their taxes are already paying for? No. Who would've thought.

Banks did not fail because of capitalism you ignorant drone. They failed because the government created a system for them to assume no risk on giving out loans. They created the subprime market in the 70s and had Fannie and Freddie buy up all the bad debt. In the 90s they pushed it even more. Why should a bank not give out a loan when its not going to hold it? The banks were giving out loans because they turned around and sold it to Fannie or Freddie. If we had actually ALLOWED capitalism to work, those loans would have never existed in the first place. Sure that'd mean more poor people wouldn't own homes, but why should you when you can't afford to?


RE: Umm...no
By NubWobble on 11/20/08, Rating: -1
RE: Umm...no
By FITCamaro on 11/20/2008 1:48:11 PM , Rating: 3
quote:
You think that because the US is able to print borrowed money the US is doing fine. The US isn't doing fine, the US hasn't been doing fine and the US won't be doing fine


This does not describe my current feelings at all.

My point is that socialism is what is making us print all that money. "Stimulus packages"? Socialism. Government bailouts. Socialism. Nationalized health care. Socialism. We have now printed and spent over a trillion dollars this year alone based off the ideas of socialism that the government should take care of its citizen's and business's mistakes. The ultimate goal of the people crafting all this is that the people will be even more reliant upon them than ever before and they will have direct control over industries they have "saved". Because they think they know what is best for you.

I fully recognize that we are in trouble. Hence why I feel that another Civil War is brewing. Between those who want to live in the United States of America(the country that was founded 231 years ago) and those who want to live in the United Socialist States of America.


RE: Umm...no
By TomZ on 11/20/2008 1:54:19 PM , Rating: 2
I think we can look to Europe to see how the future we currently envision will end up - moving more into the direction of socialism. Our collective and potentially unfortunate choice of our new president has sealed the deal.

It's playing out just as some of the conservative pundits had predicted...


RE: Umm...no
By arazok on 11/20/2008 10:20:49 AM , Rating: 5
quote:
There is one simple reason why the US bought unimaginably thirsty cars. The reason is marketing.


No, it’s because the American consumer likes large cars, and they could afford to drive them.

quote:
They are the ones who prevented legislation forcing them to produce more efficient cars, claiming it would hurt their production and their income.


Of course they did. They were selling gas guzzlers like hot cakes, and making a killing off of it. What business wouldn’t oppose the government mandating it sell unprofitable products? It’s not that they didn’t WANT to sell small cars, it’s that they can’t compete in that market – the Asian manufacturers have saturated that segment of the industry.

quote:
The only system that works is Socialism, as Europe isn't in nearly as bad a shape as the US.


The average American has a standard of living far in excess of the average European. Economic growth in Europe consistently underperforms compared to America, and unemployment is much higher. Sounds like a smashing success.


RE: Umm...no
By Entropy42 on 11/20/2008 10:52:30 AM , Rating: 3
quote:
There is one simple reason why the US bought unimaginably thirsty cars. The reason is marketing. In the 80's when the first electric car was designed and ready for mass production it wasn't the oil firms who killed it, it was GM. They are the ones who have been responsible for their own demise. The oil firms also played a big role in the idea that the bigger the car, the better it is. There's no need to drive a 400HP car because you will NEVER get to drive it fast enough.

This is total and complete crap, top to bottom. Do you know how much GM's EV1 cost to make? Do you know how poor the battery reliability was? It wasn't like they had a secret stash of advanced Lithium Ion batteries that they hid from the world. Even today, the tech is barely doable in a full size car. The $10,000+ battery pack in the Volt stores as much energy as 1 GALLON of gas! GM killed the EV1 because it couldn't make money selling that car.
Also, a person might not need a 400 HP car, but there is more use for horsepower than just top speed.


RE: Umm...no
By nah on 11/20/2008 11:26:02 AM , Rating: 3
quote:
Capitalism is a failed system


This is rubbish--even Gorbachev's economists in the Shatalin Report claimed that the capitalist system was probably the most efficient one known to men

That doesn't mean that a state shouldn't exist to preserve order--as Thomas Hobbes said in Leviathan (1651)--life without an effective state would be ' solitary,poor,nasty, brutish and short'


RE: Umm...no
By CommodoreVic20 on 11/20/08, Rating: 0
RE: Umm...no
By mdogs444 on 11/20/2008 9:56:16 AM , Rating: 5
quote:
they had nothing to do with the inferior aesthetics, engineering, design, construction and just about every aspect of every American car

Sure they do. When you are going up against the competition who has several thousand dollars less cost into the product you're going up against...you need to cut costs and corners to keep competitive.


RE: Umm...no
By aapocketz on 11/20/2008 9:56:28 AM , Rating: 1
I don't blame the big 3 for selling cars that people wanted (F150) during the 90's and 2000's. I do blame them for not introducing and actively engineering a competing high fuel efficiency car and for lagging on quality. I do blame them for actively lobbying Washington for lower fuel efficiency standards for decades. They knew it would come back to bite them but they were making good money now.

I understand their financial burden with healthcare costs and pensions for employees weighing them down, I believe that needs to be addressed to allow them to be competitive.

Its pretty obnoxious to have these 3 guys fly down in separate private jets, especially considering the circumstances. I would like to see the rationale for this. I imagine since they may own and maintain their own execjet its not that expensive to use it, since the larger cost is owning and maintaining. Plus they can fly their whole entourage with them for free. However if they are leasing the jets for one guy, it seems excessive. I have worked for small aircraft manufacturing companies (companies that make business jets) and even their executives do not fly around on these jets very often. McCain even boasted about flying around on southwest in group C during the primary.

Of course when Nancy Pelosi gets her own military 757 its hard to throw stones. http://newsbusters.org/node/10690


RE: Umm...no
By FITCamaro on 11/20/2008 10:21:48 AM , Rating: 2
quote:
I do blame them for actively lobbying Washington for lower fuel efficiency standards for decades.


Why shouldn't they? Let them build the cars people want. If people want low mpg gas hogs, let them drive them. The only reason the fuel economy standards have risen to their current level is because of environmental radicalism. This absurd idea of man-made global warming. Prior to this latest increase, I thought the economy standards were reasonable. This latest increase was even fought by Toyota and Honda because of the increased cost it will impose on vehicles.

Let the market drive innovation and sales. If oil prices are low, people like trucks and SUVs. They should be able to buy them. When oil prices are high, people prefer more fuel efficient cars. But should those who can afford to drive a "gas guzzler" even when prices are high be punished? Or not able to buy them at all because the companies weren't able to meet mileage standards? Not to mention the many large families in the US for who a Camry is not practical for. And don't even talk about minivans because most minivans barely (if at all) get better mileage than SUVs.


RE: Umm...no
By NubWobble on 11/20/08, Rating: 0
RE: Umm...no
By TomZ on 11/20/2008 11:57:25 AM , Rating: 2
Car makers don't advertise that class of cars as much because they have lower profit margins. It's really no more complicated than that - and it certainly isn't any kind of conspiracy theory.

And regarding MPG standards imposed by the government, each time they are raised, it costs the industry tons of money because it effectively forces them to sell more economical cars. Cars that carry lower margins again.

And let's think this through...why do you think that smaller, higher-MPG cars have lower profit margins? Quite frankly, it is because consumers don't value them as much as larger cars. Consumers are willing to pay a premium for larger cars because they prefer them.

Please read my other posts about your specific question as to why the Big Three are having a hard time. It has a lot to do with a complete and total lack of a level playing field:

http://www.dailytech.com/article.aspx?newsid=13487...


RE: Umm...no
By FITCamaro on 11/20/2008 1:57:51 PM , Rating: 3
Nearly every car advertisement I see touts the fuel efficiency of the car they're talking about. From smaller cars to large SUVs.

Now as far as large advertising campaigns, as Tom said, why would you spend tons of money advertising a car that doesn't earn you any money? Toyota doesn't advertise the Prius. They advertise the Tundra far more than the Camry. I see far more advertising from Honda for their SUVs than their cars as well.

The difference between Toyota/Honda and GM/Ford is that Toyota and Honda can make a lot more money on their cars than GM and Ford due to the labor cost disparity. If those factors were even, GM and Ford would be in a far better position. Hence why I think the bailout shouldn't happen, they should declare bankruptcy, and be able to ditch the unions. It will suck for a little bit and yes, job losses will happen. But in the end they'll come back stronger and able to compete better.


RE: Umm...no
By theapparition on 11/20/2008 10:01:33 AM , Rating: 2
quote:
Domestics are getting better every year. I love my "new" GTO.

In all fairness, that "Domestic" GTO was designed and built in Australia. So too is the G8 and upcoming Camaro.

However, I do agree that American cars are easily on par with any foreign competition. The days of crap 80's cars is over, and the domestic haters need to get over it. When 3 million people lose their job here, they won't find it too funny anymore.


RE: Umm...no
By aapocketz on 11/20/2008 10:13:00 AM , Rating: 2
GM is a multinational company really. They make cars all over the world. You could argue that Honda is just as American as GM in many ways.

GM would take the money and invest overseas most likely. Thats where their profit is right now.
http://www.washingtonpost.com/wp-dyn/content/artic...


RE: Umm...no
By FITCamaro on 11/20/2008 10:49:22 AM , Rating: 2
I'm well aware of its origins. It's still a GM product.


RE: Umm...no
By Nfarce on 11/20/2008 11:13:17 AM , Rating: 2
quote:
In all fairness, that "Domestic" GTO was designed and built in Australia. So too is the G8 and upcoming Camaro.


All of those cars weigh around or close to 4,000 lbs. What are they feeding those things Down Under?


RE: Umm...no
By sprockkets on 11/20/2008 3:05:29 PM , Rating: 1
While you are correct FIT, just remember who made your GTO and why it is better made - Australian Holden. Sure, nothing wrong with GM taking Holdens and Opels to replace the crap his US company engineered, and they are made here to their specs.

But, to just say that GM just improved their quality on their own is simply not true. Too late for GM it seems.


RE: Umm...no
By masher2 (blog) on 11/20/2008 3:19:12 PM , Rating: 2
> "But, to just say that GM just improved their quality on their own is simply not true"

Er, what? Holden has been a wholly-owned subsidiary of GM for 75-odd years now. It's not an independent company, it's simply yet another brand name for GM.


RE: Umm...no
By FITCamaro on 11/20/2008 3:33:57 PM , Rating: 2
Not only that but many of its components are taken from cars developed in the US.

The entire drivetrain was pulled from the Corvette.

It's also highly unlikely that platform the GTO is built on was developed solely by the engineers at Holden in Australia. Could be wrong but I'd bet more on some cooperation with engineers from the US.


RE: Umm...no
By croc on 11/20/2008 8:57:18 PM , Rating: 2
Thanks for helping out our exports...

In the meantime, Ford and GM are asking AUS for about $6B (that's about 60B based on the comparable populations) or they will close shop. They employ ~2000 people, and maybe 5000 in suppliers.

Will our government cave in? Probably... The previous gov't gave Mitsubushi a few 100M to keep them here, and they closed anyway.

Does no world gov't read the history of British Leyland?


By Amiga500 on 11/20/2008 9:19:35 AM , Rating: 2
Ultimately, I think this boils down to free-market capitalism versus some form of regulated and diluted socialism.

It *seems* greed has killed deregulated capitalism, now will those that support the capitalist theology continue to advocate it while trying to ignore the evidence that it doesn't work? (parallels *perhaps* could be drawn with the communists in the Soviet Union - particularly in the latter years)

Socialism is not perfect, definitely not. But I do think a mix of socialism and capitalism is the best way forward, unfortunately I feel too many will equate it with red star wearing commie.

The greedy need to be controlled with regulation, that seems to be the sad fact coming out of the economic downturn. Too many got too greedy, and tried to make too much money out of situations they knew were un-viable.

Lets face it - in the wider interests, GM, Ford and Chrysler cannot be allowed to go down - but, they cannot be allowed to continue to make the same mistakes without punishment. I think the companies will have to be broken up to some degree.




By mdogs444 on 11/20/2008 9:27:57 AM , Rating: 5
quote:
It *seems* greed has killed deregulated capitalism, now will those that support the capitalist theology continue to advocate it while trying to ignore the evidence that it doesn't work?

I tend to disagree. Too much greed in capitalism forces you out of business. Too high of prices, or an increase in demand for your product, spurs the competition to come up with a similar product for less money. Giving bailouts to all companies - financial, auto, etc - only does more to fuel the greed by saying we'll help you out.
quote:
Socialism is not perfect, definitely not. But I do think a mix of socialism and capitalism is the best way forward, unfortunately I feel too many will equate it with red star wearing commie.

Has nothing to do with the "red star wearing commie". It has to do with self reliance and personal responsibility - something that today's generation is being taught to throw out the window. When my parents and grandparents were hard up for money, or in financial distress, they didn't go and apply for a welfare or unemployment check until they found a job that paid them as much or more than they were making. They went out and got 2 or 3 lower paying jobs because they had enough self pride to earn their own income. They didn't want to rely on anyone, or the government. And after they got back up on their feet, they feel its not their responsibility to pick up others who refuse to do what they did.
quote:
The greedy need to be controlled with regulation, that seems to be the sad fact coming out of the economic downturn.

Unfortunately, its regulation that is fueling the greed, not lack there of. By the government, and a certain side of congress, forcing the banks to give loans to people who shouldn't have qualified only fueled a bigger home building market and increased the demand for homes. Once they realized that they people could pay - those industries came to a crash. Building in regulation into free markets by means on empathy and "compassion" only hurts the economy.
quote:
Lets face it - in the wider interests, GM, Ford and Chrysler cannot be allowed to go down - but, they cannot be allowed to continue to make the same mistakes without punishment.

That's exactly what chapter 11 and chapter 7 bankruptcy protection are for. They will not go down, but they will be forced to sever the contract with the UAW, and start over. Win-win situation for both the company, consumers, and a real free market.


By mdogs444 on 11/20/2008 9:29:39 AM , Rating: 2
quote:
Once they realized that they people could pay - those industries came to a crash.

Meant "couldn't" pay.


By nah on 11/20/2008 1:01:00 PM , Rating: 2
quote:
quote: Once they realized that they people could pay - those industries came to a crash.


Actually they COULD pay---until the rates were jacked up


By FITCamaro on 11/20/2008 10:46:33 AM , Rating: 2
If I lost my job today, I would immediately go out and apply for new jobs and take what I could get until I found a new one that I wanted. My first trip would not be to the unemployment office.


By Amiga500 on 11/20/2008 1:05:24 PM , Rating: 2
I tend to disagree. Too much greed in capitalism forces you out of business. Too high of prices, or an increase in demand for your product, spurs the competition to come up with a similar product for less money. Giving bailouts to all companies - financial, auto, etc - only does more to fuel the greed by saying we'll help you out.

Sorry, but greed has got us to where we are now.

Look around you. Look at the BS the banks have been trying to pull in the last few years. One company doesn't fall, everyone tries to beat each other - and if a CEO disagrees, the board will replace them with one more aggressive. Thus, they all lead each other into it... I suppose you could use the analogy of peer pressure.

The unregulated capitalist system is doomed to fail forever as it rewards more aggressive operating - all ok until it becomes too aggressive. Unfortunately due to the lag, that is not realised until years too late.

Has nothing to do with the "red star wearing commie". It has to do with self reliance and personal responsibility - something that today's generation is being taught to throw out the window.

Nobody is truly self-reliant in a globalised world. Unfortunately, those nearer the bottom are reliant on those nearer the top making the right calls. But those near the top are blinded by greed - hence why the banks handed out stupid mortgages, as they seen ridiculous ***profit***, not ridiculous risk.

Those at the top, the big decision makers, need to be totally accountable for all their decisions, including retrospective punishment, as a means of slowing the gears down, and ensuring proper due diligence is performed before key decisions are made - not a case of

"it'll not be on my watch, I'll be retired by the time the sh!t hits that particular fan".


When my parents and grandparents were hard up for money, or in financial distress, they didn't go and apply for a welfare or unemployment check until they found a job that paid them as much or more than they were making.


Your away off at a tangent (the wrong tangent).

Socialism also means the government taking more control over (and even a stake in) the direction companies can move in, and prevent them from leading the wider economy into disaster through over-aggressiveness.


Unfortunately, its regulation that is fueling the greed, not lack there of.


LOL!!!

Are you trying to be sarcastic?

Tell me how on earth regulation can fuel greed?

Regulation did not get us into the current sh!t - banks handing out toxic loans (I've heard of 125% mortgages going out over here - madness) in the aim of increased profit did.

By the government, and a certain side of congress, forcing the banks to give loans to people who shouldn't have qualified only fueled a bigger home building market and increased the demand for homes.

WHAT?!?!?!

The government (certainly the one over here) did no such thing, and in general they were trying to put the brakes on the economy which was over-cooking badly!

Your trying to re-write history now!


That's exactly what chapter 11 and chapter 7 bankruptcy protection are for. They will not go down, but they will be forced to sever the contract with the UAW, and start over. Win-win situation for both the company, consumers, and a real free market.


Perhaps, perhaps.


By arazok on 11/20/2008 10:00:37 AM , Rating: 5
If you think that Socialism isn’t greed in disguise, then you’re on crack.

The only difference between capitalism and socialism is that capitalists work to achieve their selfish ends.


By mdogs444 on 11/20/2008 10:02:25 AM , Rating: 5
quote:
The only difference between capitalism and socialism is that capitalists work to achieve their selfish ends.

Exactly. Socialists are greedy too...except they don't want to work for achievements. Rather its easier to cry some sort of inequality to get it for free.


By phxfreddy on 11/20/2008 10:28:43 AM , Rating: 2
Yeah and it is nice work if you can get it! I want to be a rich socialist cry-baby who can pull some strings and get a billion in my back pocket!

( but even if you send the check I am still a hard core stand up conservative who won't tell you the lies that the socialist church of latter day warming do )


By FITCamaro on 11/20/2008 1:59:54 PM , Rating: 2
Don't forget the potential risk of failure in capitalism that doesn't exist under socialism.


By arazok on 11/20/2008 3:08:54 PM , Rating: 2
I’m not sure I understand. Socalism has an inheriant assumption of failure. It assumes that without the state, people are incapable of looking after themselves. Everyone is a failure in the eyes of a socalist.


By JarvisTheGray on 12/10/2008 7:44:32 AM , Rating: 2
Socialism isn't a free ticket on the profit train either.


Let's not praise the Congress
By Oyster on 11/20/2008 9:37:59 AM , Rating: 5
1) I love how the media [which includes Jason Mick] keeps saying "millions of jobs are at stake." For f*** sakes - when you file for Chapter 11, you are technically restructuring, not going completely bankrupt. So it is BS, when the media sells the idea that 2.5 million jobs are at stake. This is a nice way to scare the average Joe on Main Street. Of course they will say they need the money. Do you expect anything else. Heck, I need the money... someone bail me out - I am the future of this country. If these companies file for bankruptcy protection, they'll able to sell off unnecessary assets - maybe things like the freaking jets they used to fly into DC. It is not as if you file for Chapter 11, and vanish in thin air.

2) Let's not forget that these Congresspersons are the same ones who were dumb enough to sign a blank check of $700 billion and hand it over to Paulson. Now they've been grilling him over the past week as to why he lied to Congress in how he was going to use the money. Would it have been too smart to include a clause in the bailout that lies will not be tolerated! Of course, Paulson was a former Goldman Sachs employee - no wonder he is going to help his friends there. Is it too shocking to believe that people will "sell themselves" in order to get a chunk of that "free" taxpayer money? Of course, I am the shittiest, filthiest homeless around here - please bail me out. LOL.

3) This sort of thing is referred to as a moral hazard in economical terms. If you bail out one, you'll have to bail out five others. Where do you stop? What's to stop the airline industry to start "begging" for taxpayers' money? I'll be damned if I ever see even $100 from the so called "bailout." Sure, the banks might grow in value, so I have made a profit, but who f*** is going to share that profit with me? And not to mention, the $1.3 trillion printed for the $700 billion bail out will obviously increase the inflation (from Bloomberg).




RE: Let's not praise the Congress
By Homerboy on 11/20/2008 10:03:15 AM , Rating: 3
1) The point is many many analysts don't think that GM etc will make it out of Chap 11 alive. Hence the loss of MASSIVE jobs and possibly shutting the doors permanently. Chap 11 does not autoamagically save your ass.

2) What the hell is a blank check for $700B?

3) you wont see $100 cash. Who said you would? What you WONT see from such a bailout though is the depression that it will prevent. I don't think many people here realize what the loss of 10s of thousands of jobs, and the ripple affect it will have on this company. Even through restructuring etc of the Big 3, there will be problems. They will cut back on orders from suppliers (this goes from raw steel, to plastics, to internet and technology services to the pens and pencils they use in the offices). If its more than just a cut back, and is a complete disappearance of these orders, MANY other businesses will be affected by the loss of business from GM etc and they too will start to have to pinch pennies and lay off people and cut back on their orders etc etc. You have to realize just how much money these auto-industries keep circulating through countless different branches of business in the US (and world wide for that matter).


RE: Let's not praise the Congress
By stilltrying on 11/20/2008 10:22:29 AM , Rating: 3
Listen clearly. WE WILL BE IN A DEPRESSION ANYWAYS WHETHER ITS NOW OR IN A YEAR OR TWO. GET IT DEPRESSION WILL BE HERE IT IS UNAVOIDABLE. Know your history, WEIMAR REPUBLIC, look it up. How long do you plan on propping companies up on dollars from tax payers. In a year when GM is back in the mess again are you gonna give another 25B and then again the year after that, meanwhile raising the cost of bread to $10 a loaf. Yeah lets keep creating money from nothing hand it out to companies, companies pay employees, employees purchase goods that are constantly rising because companies know that the dollar is becoming worthless so they must raise their prices to feed the Executives super appetites. We know that workers wages are not increasing with inflation, why in the heck do you think its harder and harder to make ends meet.

Its time to have an intervention not be an enabler. This financial mess is no different than drug addiction unfortunately a taxpayer bailout is the cure for the addicts when tough love and non enabling should be the cure.


RE: Let's not praise the Congress
By NubWobble on 11/20/2008 11:40:47 AM , Rating: 1
The money isn't created from nothing at all, it's created by borrowing MASSIVE amounts from China, Russia, India and so called poor countries who have more money than the US.


RE: Let's not praise the Congress
By stilltrying on 11/20/2008 8:58:53 PM , Rating: 2
Bull, thats why they have given almost 2 trillion away not even included in the bailout packages to stabilize other currencies.

And by the way we dont borrow massive amounts of money from Russia, China, etc... The FED buys government bonds and then either holds those bonds or sells them which most of the time is purchased by other countries, but we sure dont borrow. The FED can print money whenever they feel like it. What do you think the interest rates mean. They create money out of thin air and loan it to banks at that interest rate and then the bank gives people or buisnesses a loan at a higher rate then the FED. So basically what you have is money created from nothing lent to people at interest with no collateral whatsoever by the FED, IT WAS CREATED OUT OF THIN AIR AND ONLY COST THE FED THE MONEY FOR THE PAPER, INK, AND MANUAL LABOR TO MOVE IT, BUT HEY WHEN YOUR CREATING THE MONEY PEOPLES LABOR CAN BE PAYED WITH MORE WORTHLESS MONEY. Look up FIAT MONEY AND FRACTIONAL RESERVE BANKING. A 10 is worth no more or less than a 20 creation wise but only by whatever little number the FED wants to put on the bill. Now with Gold as the currency, you cannot create it on a whim but thats another story in which sheeple Americans dont want to hear, they like being robbed through inflation and an unconstitutional private bank non government related Federal Reserve, it is in no way shape or form any part of the American government.


RE: Let's not praise the Congress
By Ringold on 11/21/2008 2:03:17 AM , Rating: 2
quote:
They create money out of thin air and loan it to banks at that interest rate and then the bank gives people or buisnesses a loan at a higher rate then the FED.


LOL

No.

If the over-night interest rate for borrowing is trading above the Fed's target rate, they buy treasuries in the market to bid down the rate. If the market is trading below the Fed's target rate, they sell to increase liquidity. The Federal Reserve Bank of New York carries out these open market transactions.

http://en.wikipedia.org/wiki/Federal_Reserve#Open_...

For the discount window, they use repo agreements to temporarily buy assets (treasury bills usually) from banks and apply a specified 'haircut' to the asset price to penalize the bank for the use of the window.

We have not printed money out of "thin air" in a long, long time. The Civil War, if I'm not mistaken. The actual physical currency in circulation, as far as I know, is actually pretty trivial.


RE: Let's not praise the Congress
By Doormat on 11/20/2008 10:43:01 AM , Rating: 2
1) When you enter Ch 11, you stop paying your creditors temporarily until everything is worked out (and you exit Ch 11). All these suppliers are working on credit - GM doesn't pay cash up front for these parts deliveries. Though they might be forced to soon now that it doesn't look like the bailout is going through.

That is why they say jobs will be lost. GM doesn't have the cash to pay for the parts, and suppliers aren't going to keep supplying parts if they don't know when they'll be paid. Remember that supplier has their own suppliers for materials, and they have to pay their workers. So when the money from GM stops flowing in, they don't have the money to pay for new resources to make that next axle, bumper, etc, or pay their workers their wages. Unless GM can get in and out of chapter 11 in 2-3 weeks (unlikely is a gross understatement), suppliers will have to shut down.


RE: Let's not praise the Congress
By johnbuk on 11/20/2008 11:33:07 AM , Rating: 2
I worked for suppliers to the big 3 for 8 years before changing careers. The thing that got me out of that business was the big 3 forcing their suppliers to cut costs (at the time is was a forced 10% reduction in what they were paying their suppliers each year) while not making similar cuts in their own costs. For me it equated to wage reductions and wage freezes and being forced to work weekends doing hourly work for free (yes, having the salaried exempt employees perform hourly factory work was seen as a way to cut costs since the salaried employees didn't have to be paid overtime for their work).
And I worked for management that came from the big 3 that over reacting to every single problem- I went through so many different restructurings that I lost count (I remember one month when we were restructured 3 times) and upper management promising "up times" of 90% or better on equipment despite years of empirical evidence that the old and outdated equipment couldn't possibly run full out for more than 65 to 70% of the time was comical.
My only point is that the whole industry needs an overhaul and like others have pointed out, throwing more money down the drain isn't going to get the needed changes just like cutting what you pay to your suppliers while increasing your own costs didn't ultimately save them anything.


Quite comical
By mdogs444 on 11/20/2008 9:18:49 AM , Rating: 5
It is quite comical. I look at this as being similar to someone showing up at a soup kitchen wearing a brand new designer suit while flashing off his new Rolex.

This whole thing is stupid. $25B, $50B, $100B is not going to do anything for the auto industry except for delay the inevitable - bankruptcy due to the UAW employment, health care, and pension costs. This company cannot be competitive while being forced to put in several thousands dollars more per car than foreign competition.

If they go bankrupt, they will not close down and lose 300,000 jobs. They will restructure, streamline, and hopefully get rid of the UAW which has been the biggest burden on the US auto industry. These guys making $70k/yr on an assembly line will be the first to complain about being jobless...without looking into the mirror to blame themselves and realize that their skills (or lack there of) do not warrant the pay they are receiving in a free market society.

This whole "middle class" gets screwed mentality is getting ridiculous. In this case, those auto workers (who are in the middle class) are screwing themselves out of jobs...and many of us do not feel bad about it.




RE: Quite comical
By superunknown98 on 11/20/2008 9:29:14 AM , Rating: 4
I for one do not feel a bit bad about letting any of the big three file for bankruptcy. They have been making crap products for decades, and refuse to change with market trends(for the most part). Then they ask for your money and my money to keep thier out of control unions and managment afloat. The best part is the statement: one out of every ten jobs is related to the auto industry and that 15 million people stand to lose thier jobs. Well did anyone read the actual that report? It included carwash workers and pretty much anything tied to the industry. Hey newsflash..My car still needs to be washed wethter GM is bankrupt or not. These people will do anything to save thier bonuses.


RE: Quite comical
By MrBlastman on 11/20/2008 10:08:06 AM , Rating: 3
You are right, they will not lose all of their employees nor will all of their employees be unemployed...

However, people who have retired through the automaker, that depend on their pension and are living off of it - will lose out. More than likely they will lose at least half of their pension benefit at a minimum, if not all of it. Not only that, but the bond holders (not the stock holders) will face losing a large percentage of their money that was invested through the automaker.

Do you think everyone that owns a bond is wealthy and can afford to lose it? Think again. There are plenty of honest, hard working (or were hard working) Americans with very little to their name who hold these bonds. They will lose also.

Can you shoulder this thought?

I am not saying I oppose your view, I just felt it neccessary to put another perspective out there for you to consider. It is not as easy as saying - well hey, free market economy, either cut costs, ship up and fix your operation lest you fail. There is a particular responsibility that is owed to past employees and non-employees that is being overlooked.

The CEO's - I'm positive that a couple of them have been trying to fix things and improve their operation. There is one of them, I'm not so convinced about (starts with a nar, ends with a delli). Remember Home Depot? Remeber the mess he put them in? I think if anything, restructuring needs to start from the top down. We need me and women in control of these companies who will work to:

a. De-unionize the firm
b. Transition the retirement program from existing employees and retired to just retired, while instituting a 401k - easing the burden on their books
c. Conduct market research and revitalize their brand (they have been making significant headway here but obviously they are missing the goal)
d. Cut costs even further (I feel they have already been cut significantly, or at least would hope so.)

Cutting costs only goes so far. If you cut the variable costs you achieve a temporary improvement, if you cut the fixed costs you achieve a bigger long-term benefit. I find it hard to believe though they are not operating at high efficiency to begin with. If you start cutting too deeply (which is why I said costs would be last), quality suffers, and the US Automakers are already trying to recover from negative opinion on the quality front.

As far as the companies hosing themselves - YES, they have been doing that for the longest time. The executives are to blame for allowing the unions to become too powerful, and the employees are to blame for being unreasonable with their flexing of the union mucle. They all need to take ownership of the mess they are in.

But just to let them fail - without examining the total picture, is irresponsible. This is one of the few times that I, a capitalist, looks at a situation like this and can really say it is a tough call.


RE: Quite comical
By bribud on 11/20/2008 10:19:41 AM , Rating: 2
I agree. I know several people who work at the Ford plants that are pulling down $30-$35 per hour easy, and just pushing a broom around the place, and sitting around half the time. And then some of them actually getting overtime is insane on top of what they are already making. I don't want to sound like a bigot, but my intelligence got me my high salary and I don't feel like a mindless, repetitive job should be getting paid similarly.


RE: Quite comical
By FITCamaro on 11/20/2008 10:48:13 AM , Rating: 2
Exactly. A janitorial position does not deserve the pay of an Engineer II position.


RE: Quite comical
By Gzus666 on 11/20/2008 11:09:35 AM , Rating: 2
While I agree, I think we could say that tons of people don't deserve the pay they get. Do CEOs deserve massive pay when they fail a company? No, but they get it. Plenty of people get paid way to much for what they do, but that is the free market I guess.

Unions are part of a free market, bailouts are not. If they just let them fall, the UAW would have to either make concessions or lose all their benefits they worked for. Either way, I say screw 'em.


The US not in decline!
By NubWobble on 11/20/2008 11:12:09 PM , Rating: 2
Proof that the US is not in decline.

http://www.dni.gov/nic/PDF_2025/2025_Global_Trends...

OMG... was I right? NOOOOOO!!!

Stupid concervative pundits, I hate them all. Especially those in government who confirm that which has been said by many (Chomsky, Zinn and economists for decades).

It's a lie, I swear it's a lie!!




RE: The US not in decline!
By NubWobble on 11/20/2008 11:18:43 PM , Rating: 2
Don't forget to vote my post down, after all I have no idea what I'm talking about. Now I'm going to go buy a 400HP car because I love wasting money and I can go a whopping 40km/h with it as I don't have the time to leave town.

The truth is incredibly painful and delicious.


RE: The US not in decline!
By Ringold on 11/21/2008 4:56:36 AM , Rating: 2
Not sure what truth you are seeing, other than what your buddy Chomsky tells you. Also, as an economist, slightly offended you'd lump that philosopher in with a group of people who instead of spouting moral philosophy actually engage statistics and calculus in the analysis of data to arrive at conclusions. He's essentially an admitted communist -- well, as far as I can tell, he wants the abolishment of private property in so far as 'means of productions' go, which is essentially the gist of communism in practice. If you've ever read some economic research papers, you'll see that economists employ more Greek symbols and numbers then words; about as far from what he does as is humanly possible.

I skimmed your PDF, not sure why it had to be 30mb or why the DL so slow, but regardless, I'm not sure either what incites such hate for conservative pundits and what about this report you consider vindicating. Conservatives are correct; America is in relative decline. Obviously we won't be able to stay ahead of populations several times the size of ours forever. They're also correct, as the pdf points out, that the world is still a dangerous place and becoming more dangerous. It also confirms that, through 2025, the US will still be the sole nation capable of global projection of force sufficient to maintain international peace to any great degree. The report also tip-toes around and implies, as conservatives do, that the UN and most other multi-lateral groups are unable to effectively do much. The report confirms things I think both groups could agree on; parts of the world face resource shortages (such as severe water shortages), and energy should be diversified; liberals would say because of climate change, conservatives because of energy security from the very places on the planet that this report cites as being unstable.

Seems to me like you're looking for an excuse to beat up on people who, I guess, enjoy different leisure activities than you (cars). So far, you're just trolling, not making coherent arguments. The only thing I can see even vaguely close is perhaps a veiled reference to savings rates -- but savings rates can be increased by many ways other than giving up 400hp engines. That's apparently what you'd like them to give up, but, thankfully, we're not communist yet.


RE: The US not in decline!
By NubWobble on 11/21/2008 9:23:57 AM , Rating: 2
I'm glad a document made by a panel of three Democrats and three Republicans is Chomsky telling me to insult your feelings. And I don't hate concervative pundits, I couldn't care any less. It was a response to an earlier ignorant remark. Scroll up and you will see.

The document says the following in short:
We will have the 'capability' to invade and pulverise every nation on the planet, we just won't have the money to do so.

quote:
Also, as an economist, slightly offended you'd lump that philosopher in with a group of people who instead of spouting moral philosophy


My father has a doctorate in economics and he was offered a very well-paying job in the US. He turned it down because he said the US was unsustainable in its current form. As an economist, you must be proud of the trillion dollar debt the US has. And now that the Dollar is declining fast that Trillion is even harder to pay back. It's the sign of might, power and... well, how shall I put it... bankruptcy.

Again, they are simply saying what has been said for decades, I'm glad to see they were right.