After some debate, I am now against the proposed auto-industry bailout.

[Occam Bandage]

And I was entirely for the financial-market bailout.

1. The financial-market bailout was necessary to prevent the credit market from collapsing. The auto bailout would be necessary to prevent the auto industry from collapsing. The difference? If the credit market collapses, the entire economy collapses. If the auto industry collapses, then the auto industry collapses and that's it. The damage would be far more limited.

2. The problem with the financial markets was that enormous amounts of credit disappeared overnight when the housing bubble burst; as a result, the banking industry ground to a dead stop. Backing loans and buying equity stakes were solutions aimed at the immediate problem: the sudden lack of non-worthless credit in the markets. The problem with the auto industry is threefold: first, that nobody is buying their cars, second, that their supply chains and manufacturing processes are geared around inefficient cars that nobody will want to buy in the future, and third, that their production costs are too high, especially in payroll and benefits. A bailout would not solve any of these three problems; it would simply give them a few more months to post losses before they had to give up.

3. The only way to fix the auto industry would be to create more demand. The only way to create more demand would be to improve the economy. However, improving the economy would cause fuel prices to spike--and then Detroit would still find itself in a hole, since per #2 they are unable to make money off efficient cars. Even if a cash infusion would help them limp along until the economy recovers, the American auto industry would still find itself at a massive disadvantage versus foreign manufacturers.

I have to conclude that there is no taxpayer-funded solution to the problems of the Big Three. As such, I am against any proposed bailout of the American automobile industry, and have written President-Elect Obama urging him to reconsider his stance.

[Lumpsum]

1. GM/Ford have been horribly managed for years. No reason to reward incompetence.

Also, a GM exec calling global warming "a crock of shit" worries me, too.

Good post.

Edit:

Just to talk to your first point, I think the collapse of GM/Ford would indeed harm the economy more than you've stated. Check out this article:
http://www.financialpost.com/story.html?id=935684

IF they do receive a bailout, they should only get it with the promise that they will work on greener technologies for their vehicles.

[democrattotheend]

2. So you're willing to have 3 million Americans lose their jobs?

And have the UAW, which just spent millions of dollars helping Obama get elected and which has been fighting for workers for almost a century, be decimated? You're willing to have all those union (and some non-union) jobs be lost? I don't love the idea of bailing out big corporations but what is the alternative?

[lligrd]

4. Government Created Jobs Instead

The bailout is just government created jobs with bonuses for the owners. Let's eliminate the owner's bailout and create jobs for those needing them. Perhaps we can get some of our infrastructure fixed at the same time.

[democrattotheend]

9. It's not that simple. These people are skilled at making cars, not construction.

They also have lives where they live, many own homes, they have children in school, etc. Is there really enough of a need in Michigan and Wisconsin and other plant sites to reemploy all those people? Doing what?

[JuniperLea]

20. We could make a deal with Japanese automakers...

Open plants here and hire our workers... there must be some kind of concession we can make them. Though they have built plants in Canada... because of the socialized medicine, no doubt. That saves them millions in employee health-care costs.

Toyota has port facilities all over the US, and they are all Teamster shops. They are already well versed in dealing with American unions.

[Javaman]

28. and the profits go over seas. And we are back where we started.

This is what I suggested in another thread and had some good replies.

if the big 3 want a bail out they first must adhere to a few conditions...

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=389&topic_id=4437950&mesg_id=4437950

[JuniperLea]

30. Profits go overseas, but at least Americans get jobs

If we don't do something, we lose both.

I agree with conditions, no question. But unfortunately, we the people have little say in how this will pan out.

[Raineyb]

82. We can't improve the economy of this country if we have companies shipping profits overseas.

It's just not sustainable.

Regards

[democrattotheend]

29. Toyota shops are non-union

Where do you get the idea that they are Teamster shops?

[JuniperLea]

31. Because they are

I have first hand experience with the Toyota facility in Long Beach, CA, Portland, OR, among others. I have paid the union dues. I have used the health insurance, as have my three kids. What makes you think the Toyota facilities are not union? I have 30 years experience that says they are. The Long Beach facility was a Teamster shop when it was still Mort Davis Co., with a contract to process Toyotas coming off the ships. And the Longshoreman's Union take them off the ships. The facility is now owned by Toyota, and has been for over 25 years. It is now and has always been a union shop.

[ogneopasno]

44. Not all of them are. The ones in the south are not.

[JuniperLea]

58. The port facilities absolutely are...

I know there are some truck production shops I don't know about, so you could be right about production. But all of the port facilities are union shops... they have to be. Only Longshoremen can unload the ships, and they are very firm about the vehicle processor plants being union as well.

[Kalyke]

45. And I don't want to drive a Toyota.

I hate foreign cars.

[JuniperLea]

75. Why? Because they are foreign?

I don't want to drive one either! I've always bought GM vehicles... until I couldn't afford them, or the gas they require. I was forced... it was beyond my control... I could either buy a gas efficient foreign car or do without. I have a problem... I'm not wealthy. I didn't have a choice. Had any of the American auto makers made me a deal I could afford, I would have taken it. They did not. And I gave them many, many chances before I bought my Mazda. It's six years old now and has never had a major problem... I change the oil, air filter, oil filter, tires and brakes, and it's taken me 130,000 miles so far. It was a lot less expensive to buy and to own than anything else I could afford.

What the fuck was I supposed to do? Walk? What if one of my kids needs me? Do I take the extra time to travel 22.1 miles from work on a fucking bus, catch the blue line train? Sorry. My family comes first. I won't be guilted into taking food off the table so I can be true to an American auto company that has fucked us all over royal.

[olkaz]

36. For the record, many of us and our families have had to adapt to situations like this.

That type of attitude isn't going to get us any closer to a solution.

[Occam Bandage]

5. I think those jobs are already lost.

If Obama were to present a realistic way of ensuring that the automobile manufacturing industry could survive another twenty years, then I'd be more favorably inclined towards it. From where I'm sitting, though, it looks like trying to irrigate the Sahara with a 5-gallon bucket of water.

Your point about the UAW is right on the mark, though--this is only happening because of the union's strength in the Democratic party.

[GoesTo11]

13. Screw them - they shouldn't work for car companies.

Just kidding. I don't see anything wrong with a very heavy-handed bailout where the country basically buys the car companies and uses them to transform our transportation industry to one that's much more fuel efficient. They are still employing people and making and selling cars - although the recession hurts - they're just not making a profit.

[Occam Bandage]

19. I don't think anybody's talking about nationalizing the auto industry, though,

all arguments about the quality of that idea aside.

[GoesTo11]

22. Just handing cash w/o strings would be dumb

Car Co. CEO's would just use it to invest in more SUV plants, SUV advertisements and SUV sales incentives. Short of nationalizing, the Gov't could put on some mighty tight strings about what it takes to get the money with provisions about calling in the loans if they're not used as intended.

[taught_me_patience]

24. Please stop spreading this bullshit around.

GM is not going to completely go away. They will enter bankrupcy, continue operations, and renegotiate loans. They will get sold or emerge a much stronger company. Even if they are sold, they will likely continue to operate under the GM name until a time when they can be resold to the public. There will be some layoffs, but they will occur whether they enter bankruptcy or not. Please educate yourself on corporate bankruptcy laws.

[pampango]

35. Exactly right. There is a huge market for cars and trucks in the US, plenty of skilled workers,

and plenty of capital and resources to make the industry viable. The problem has been incompetent management and ownership. A bailout would reward these incompetents and insure that the industry emerged little changed and prone to the same problems that got them into this trouble to begin with.

Large automobile manufacturing companies will emerge from this crisis. Whether they have different names, whether they are new or different versions of the existing companies and whether, hopefully, they have different management are different questions.

[uponit7771]

60. ...and at the same time peopel are going to buy a car from a bankrupt company? Come on people!!

[LisaM]

3. The car companies have financing arms, too

So, in effect, they ARE a financial institution. Frankly, I'd rather bail out the auto companies, and move forward having them be more of a government partner. I think they should share technology, and the government should also help subsidize things like greener technology.

I also think that they need to re-tool to make more mass transit. I don't see why this can't be done. Seattle buys buses from Italy (or at least they have) for God's sake. Why can't the auto companies build our buses?

[uponit7771]

61. EXACTLY!! The Bush admin is giving the middle finger to GMAC and that is the real issue

[zulchzulu]

6. I'm for giving them money if and ONLY IF they immediately begin production of electric cars

If you've seen the documentary "Who Killed The Electric Car", you know we have the technology to make amazing electric cars.

So, it's either retool for electric cars for 50% of the plants or... piss off.

[eleny]

23. The kind of cars is critical for a bailout

Isn't Obama talking about that as part of his economic/environment plan?

For auto companies to get help, they need to retool and manufacture cars that meet environmental criteria. At this point, hybrids, E85s and electric.

I included E85s in the list because they're developing other cellulose based E85 fuels. Corn won't be the only game in town down the road. My car accepts this fuel and I've used it. There isn't even an odor when you fuel up and it's way less expensive. I understand the controversy and don't quarrel with it. But with O as president, I think we'll see an acceleration and expansion of this technology.

Did you read Al Gore's Op Ed in the Times this Sunday? Makes me wish in was back in my 20s. There's so much to look forward to now that an adult is in charge.

[Cosmocat]

50. It is an OPPORTUNITY for the government to LEAD ...

this country in the direction is needs to go.

It just is beyond unacceptable that the auto industry stagnated for almost two decades in terms of MPG for vehicles.

The bank buyout had FAR TOO LITTLE control over what was done with the money. IMO, the opportunity exists for the government to point the auto industry in the right direction, and the country as a whole. You want the help, you get it ONLY if your entire fleet of cars have increased their MPG by 50% within five years.

[Alcibiades]

Of course!

Let's not bail out the companies that employ thousands of middle class Americans that make useful products people actually use. Let's bail out the parasites and weasels who have turned the economy into a giant Ponzi scheme. Let's give them all their bonuses, too.

Nobody is buying their cars? I have two American-made cars in my driveway right now. I have never, however, used a hedge fund.

Screw the gamblers in the FIRE sector who have made bad bets with other people's money. We actually don't need them. They are useless. Save American manufacturing.

[Occam Bandage]

12. The purpose of the Federal government is not to reward morality and punish immorality.

Whether they are "parasites" and "weasels," or they are "employers that make useful products," is entirely beside the point. We have to ask not, "do the Big Three deserve to survive?" but rather "can the Big Three survive?"

[Alcibiades]

39. It's not a moral issue, but an economic one

By parasitic, i mean that so much of the activity in the FIRE sector is parasitic on the actual, productive economy. There's something messed up when we let insurance companies operate hedge funds and then bail them out.

[OHDEM]

66. I think I love you!

Very well said!!
:applause:

I drive an American car and my husband has 4 work vehicles - all AMERICAN made!!:patriot:

[Alcibiades]

73. I've always bought American

Though with the global nature of the auto industry it's impossible to get a 100% US content car.

It irks me no end to hear folks defend the bailout of Wall Street but say things like "We shouldn't bailout GM because they have a bad business model." Oh, like the business model that has enabled all these Wall Street firms to go belly up in a matter of weeks and months is so much better. At least the big 3 lose their money at a slightly slower rate. Plus, if the taxpayers bought them out, we would own auto plants and stuff that actually is useful to make stuff folks need. Bailing out Wall Street leaves us with nothing but a mountain of worthless paper and some expensive Manhattan real estate.

:patriot:

[Ganja Ninja]

7. I say offer the money to Toyota and Honda to take over GM and Ford.

Then just stipulate that everything must be made here.

[democrattotheend]

14. Only if they agree to unionize their workforce

They have undercut the Big Three in part by putting their plants in locations where there are no strong unions and paying lower wages and less generous benefits. That's one of the reasons the Big Three are in so much trouble. So Toyota and Honda should only take over if they will keep the unions in place at the Big Three and preferably unionize their own workforces.

[liberal N proud]

8. When all American are out on the street...

You will be OK with that?

It is a snowball effect you know. Tell the day care worker who no longer has a job because the Auto worker used to bring their kids there. Or the nurse at the local doctors office who is out of a job because the GM employees no longer have health care and quite going to the doctor.
Or tell the waitress at the local Denny's that she no longer has a job because the 3rd shift will not be stopping by for breakfast.

The mechanic at the local GM dealership.


People just don't get it, it's not just the workers at the auto plants who will lose their jobs, it could be Your ass sitting in the street.

[Occam Bandage]

16. This argument is purely a supply-side one, and I'm not sure it holds water.

Yes, jobs are lost, and yes, the Detroit area will suffer. However, that does not mean that the amount of cash that would be necessary to save the automobile industry (and I do not believe for a minute that the currently debated package will do so long-term) could not be used to fuel job creation elsewhere, and more efficiently to boot.

If it were a matter of waving a wand and saying magic words that would keep Detroit stable and prosperous for all eternity, of course I would be in favor of it. That isn't what we're talking about; we're talking about a massive financial infusion that would do absolutely nothing to keep the automobile industry afloat past 2010.

[Lumpsum]

18. Detroit wouldn't just suffer.

Like I said, read the article.

http://www.financialpost.com/story.html?id=935684

[liberal N proud]

38. Detroit will not be the only city that will suffer, Michigan will be destroyed

And other cities and states where GM has facilities or suppliers will be devastated beyond recovery.

GM has facilities in 28 states, Europe, Latin America, Asia Africa and the Middle East.

GM collapse is a global collapse.

You will not even be able to get a job as door greeter in Wal-Mart.

Supply side, trickle down what ever you want to call it, they fail we all will be in deep SHIT!

[Blue Diadem]

10. yep, it's just the auto industry that would collapse.

:eyes:

[poverlay]

11. If the Chevy Volt was available right now in any color and a variety of options I would buy two-

right now.
If these companies want to save their butts they need to present a product that people with intelligence want to buy. They've already saturated the ignorant-dumbass market with SUV's and large trucks.

I don't think this country can withstand the loss of all those jobs, but if the big 3 continue making F-150s and minivans and sedans that are lucky to get 20-25 mpg, they deserve to die a painful death.

[hogwyld]

69. And they also need to get their quality up to snuff

For too long, the big 3 have brought up the rear to it's Japanese and European brethren in terms of quality. Hell, even the Koreans are committed to building a quality car. People aren't going to shell out $30,000 for a car that falls apart after 4-5 years with a shitty resale value when the foreign cars last 7-10 years without major problems, and maintain a high resale value. I know the unions are beyond reproach here, but they really need to be more quality conscious and take more pride in a job well done.

[yardwork]

15. We can't keep pretending to have it both ways in this country.

For longer than I've been alive (and I'm older than dirt) the U.S. government has been dominated by so-called free market capitalists who have deregulated everything in sight, privatized everything they could get their hands on, demonized the collective good as "socialism," and dragged the country further and further to the right. We now spend more on our military than the rest of the world combined, while boasting one of the least effective (albeit most expensive) health care systems among the developed world.

And yet, like clockwork, every decade or so we the taxpayers are called upon to "bail out" corporations and entire industries that have been run into the ground by incompetents paid hundreds of millions annually.

It's time to put up or shut up. Either run the country on free market principles like "survival of the fittest" and let poorly managed industries fail or admit that the idea of a free market is a laughable fantasy dreamed up by a bunch of losers at the University of Chicago (no offense intended to anyone here) and start regulating industries and goods in a reasonable, equitable manner like most of the rest of the developed world.

[JuniperLea]

17. Seems like the US automakers have been resistant to change

And that was their undoing. I agree with those who say bail them out with strict stipulations on how the money is to be spent... not on bonuses and high salaries for those who screwed the business up, that's for sure. Re-tooling and green cars only.

Think about it. All the while the US automakers were whining about Japanese automakers "stealing" all their business, they were edging toward making big muscle cars again! Hummers and Magnums and other big beasts... when instead, they should have been following the Japanese automakers brilliant lead by making smaller, more fuel economic cars. To say they couldn't have anticipated the American consumer's desire for these more ecology friendly cars is asinine at best. Every year the Japanese companies were showing greater and greater profits, while the American companies were posting larger and larger losses. Get a brain, morans! It took money to retool for the bigger gas hogs, never forget that. It would have been far smarter to retool for smaller, less penis enhancing autos.

[raccoon]

54. And the morans did the same thing in the 1970's. nt

[blueclown]

21. If the Big 3 go under, it hurts a lot more than the auto industry.

There would be a good deal of collateral damage if Ford, GM and Chrysler were to go under. It would effect not only the automotive industry, but the numerous other industries that are reliant on the automotive industry.

The domino effect would be just as large.

[ogneopasno]

42. Exactly. Parts suppliers, parts retailers, mechanics, dealerships, insurance, etc.

The comparison I have heard is that it would equal a business being closed in every town. EVERY TOWN. And many of those are good middle-class jobs.

[Jennicut]

25. I propose help with conditions, they need to change with the times too

[Bread and Circus]

26. I think a "bailout" would buy them time till Obama is in office and they then can workout

a long term deal/restructuring.

[Atman]

27. The financial industry bailout was NOT necessary. It was a scam. It is a scam.

Credit didn't disappear. That's bullshit. These people MAKE MONEY by LOANING MONEY. The fact that they refused to loan money -- which would appear to be shooting themselves in thine own footage -- was the BLACKMAIL they used to get you and me to pony up the Social Security fund to bail them out. What would have happened if we said no? Again, they make money by lending money, yet they refused to do so until we the people covered all their risk.

Get over it. The auto industry "bailout" is BushCo's coup de grace; they're finally breaking up the unions. And they'll do it with gusto, because the unions supported Obama.

Do not believe the lies the GOP-run, GOP-backed, GOP-totally defense-contractor media is telling you. They're just reading the script for their masters.

The Wall Street bailout was to fully drain the coffers and make Social Security, Medicare and welfare unsupportable. The Detroit bailout is to destroy the unions. Period.

.

[DU GrovelBot]

32. ## PLEASE DONATE TO DEMOCRATIC UNDERGROUND! ##

==================
GROVELBOT.EXE v4.1
==================



This week is our fourth quarter 2008 fund drive. Democratic Underground is
a completely independent website. We depend on donations from our members
to cover our costs. Please take a moment to donate! Thank you!

[Occam Bandage]

33. After some debate, I am now against the proposed Grovelbot bailout. nt

[elkston]

34. I am with you here. At some point we have to put our foot down.

If GM & Ford can't compete in the marketplace, then let them fail. The financial industry was a special case - a one time only rescue for vital institutions which controlled the free flow of credit.

The Autos are corporations that didn't adapt and now it's time to pay the price for that. New investors will emerge and fill the void, possibly bolstered by new incentives from Obama's "green jobs" fund.

I think Barney Frank (or was it Bernie Sanders?) had a very astute quote about this very situation: "If a company becomes too big to fail, they are too big to exist". Translation: Instead of one BIG GM/Ford there should have been more moderate sized American autos to create a diverse marketplace and more employment opportunities.

[doc03]

37. We bailed their ass out in the 70s, they claimed they

needed to retool because they weren't making the small cars people wanted and the foreign makers were. They did nothing but make bigger and more inefficient cars over the last 30 years. Now they are back again with the same argument. Did they support the steel industry a few years ago, hell no they didn't they lobbied Congress to allow them to import cheap illegal foreign steel. The steel industry was forced to give up pensions (I lost two of them), consolidate and we lost 100s of thousands of jobs. I feel sorry for the workers caught in the middle of this but I say let them go under.

[Kalyke]

46. And they paid it back with interest.

God, people, learn some history.

[frickaline]

40. I completely agree

There are better ways for our government to spend money employing people. If we lose these jobs because the market cannot support their employment then we do these people a bigger favor by having the government pay to re-employ them in a more sustainable way. Regardless of what happens to GM these people are in dead end jobs.

K&R

[Honeycombe8]

41. I agree. UNLESS they tie some heavy duty strings to it, AND it's a loan. nt

[ogneopasno]

43. I'd rather save an industry that actually makes something and employs the middle class over one that

just pushes a bunch of paper around.

[Kalyke]

47. Well, I disagree.

I support PEO's stance on this because I see the big picture.

I also hate foreign cars and don't ever want to own one. If the American auto industry failed, I'd have to keep my Mustang for the rest of my life (and, you know something, it would hang tough and make it - they ARE better built than foreign cars now. This is NOT the 1980s.)

[1776Forever]

48. I want to hear and read more about it before I make my mind up. Looks like a monumental task to me

I don't have the knowledge to make a knowledgeable decision and that is why I voted for President-elect Obama. I put my faith in him that he will do the best thing that he thinks is needed for the country. Time will tell if that decision is correct or not. I give him my support, and I won't always agree with what he does either.

[wroberts189]

49. After they rob us they will send the jobs overseas n/t

[The Hope Mobile]

51. The money needs to go into research and design

of alternative fuel autos that will finally make them competitive again.

[susanna]

78. FYI...about R&D.

I get tired of seeing this point constantly raised. Automakers routinely rank as some of the highest research & development investors in the world:

http://www.duemotori.com/news/auto_news/7545_Ford_in_UK_to_invest_1_billion_to_reduce_emissions_and_fuel_comsumption.php

http://www.aaas.org/spp/rd/xxvi/chap4.htm

http://www.carcontracthireonline.co.uk/blog.asp?BL_ID=119

http://www.autoblog.com/2007/10/07/ford-is-biggest-spender-on-randd/

[The Hope Mobile]

81. That may be but apparently they're not researching or developing the right things

to stay competitive. R & D needs to go in a different direction. That's where the money should go.

[susanna]

83. It's not "that may be," it IS. You choose to gloss over that fact.

Your post is nice and vague: "R&D needs to go in a different direction. That's where the money should go." I am very, very glad that you are not an R&D engineer for these companies. They'd be in even worse shape.

To elaborate a bit, I find it interesting that investments in alternative fuels and emissions (first link) don't meet your criteria for the "right thing." Hybrid technology? Ford is about to launch its second generation hybrid at the end of this year on the Fusion/Milan platform (both Consumer Reports recommended vehicles). Is that good enough for you? GM's hybrid technology on the Chevy Tahoe is really something fantastic, and I am excited and hopeful about the Volt. I guess those R&D measures are not the "right thing" for you either? Oh yeah, and the green building technology that Ford put on its Rouge plant (green roof, recirculating water use, natural light to start) is probably not the "right thing" either. I wait with bated breath to hear what the "right things" are from your advanced technological perspective.

I do know something about these companies, having spent twenty years inside. They are working on a many of the things everyone is asking for and have been for years. But here's a newsflash: the technologies they are researching are not MARKET READY yet (meaning repeatable, reliable*, and profitable). That is what takes so long and that is why they dump tons of money into new technologies year after year after year; they know one day they'll get where they need to be.

But do keep spouting off on something you know very little about, as it gives me a platform to get some actual facts out there.

* Until the technologies are reliable - ten years durability at the least - the companies would not dare put it out there, because consumers would gripe about their "piece of shit" domestic electric/hybrid/alternative fuel vehicle. Yes, really.

[lumberjack_jeff]

52. Disagree. This country cannot survive without manufacturing capacity and skills.

It is a bigger deal than "just" a few million people losing their jobs.

[DemocratSinceBirth]

53. In The New Service Economy We Can Each Pick Up Each Other's Garbage

~

[lumberjack_jeff]

56. Will that be a tall double-grande vente or a vente double short half-caf? n/t

[LatteLibertine]

55. Too bad the financial market

bail out is mostly going for dividends and CEO bonuses. You folks are aware that they made it so banks that take over other banks can use that as a 140 million dollar tax shelter now, yes?

[bunnies]

57. Let 'em file bankruptcy like everybody else.

People act like these companies will shut down. Please. That'll never happen. No bailout. Maybe they'll learn a lesson this time.

Free market, Baby!

[uponit7771]

59. Number 1 is DEAD wrong which negates 2 and 3. Yes, GM is TOO big to fail.

[Every Man A King]

62. I hope you get fired tommorrow...

and Bush agrees with you btw.

[jakefrep]

63. Part of the bailout should center on regulation.

Motor vehicle regulations (safety and emissions) should be standardized with Europe's to make it easier to bring the more fuel-efficient cars, including diesels, sold elsewhere into the US market.

[MarjorieG]

64. An infusion to keep jobs and prevent ripple effect, also an industry to be retooled for energy jobs

[OHDEM]

65. I have a few problems with your theories.

1. The financial-market bailout was necessary to prevent the credit market from collapsing. The auto bailout would be necessary to prevent the auto industry from collapsing. The difference? If the credit market collapses, the entire economy collapses. If the auto industry collapses, then the auto industry collapses and that's it. The damage would be far more limited.

But the financial bailout didn't fix the credit market. The banks that got money have gone and bought up weaker banks only making themselves bigger while NOT freeing up credit. Plus they're spending our funds on vacations for themselves and bonuses! :mad: I was AGAINST that bailout because I think they are nothing but greedy and unethical and they've proven me right. I made many phone calls to try to stop it.

However, the auto industry collapse will destroy us. Mark my words! I don't know where you live, but I'm in NE Ohio. I grew up in a town that built cars, heavy equipment and steel until all the jobs were shipped away. (Think - Roger and Me) Auto workers (& by extension steel and parts) are probably the last of the truly good, middle class jobs you can get without a college degree. Much of my state as well as Michigan and others will be completely destitute without this industry and it's effects on everything from restaurants to retail.

2. The problem with the financial markets was that enormous amounts of credit disappeared overnight when the housing bubble burst; as a result, the banking industry ground to a dead stop. Backing loans and buying equity stakes were solutions aimed at the immediate problem: the sudden lack of non-worthless credit in the markets. The problem with the auto industry is threefold: first, that nobody is buying their cars, second, that their supply chains and manufacturing processes are geared around inefficient cars that nobody will want to buy in the future, and third, that their production costs are too high, especially in payroll and benefits. A bailout would not solve any of these three problems; it would simply give them a few more months to post losses before they had to give up.

Okay, so why do you think the bubble burst? Bubbles aren't normal - what it means is that values of things were inflated fraudulantly or erroniously. (I vote fraud having worked in the mortgage industry.) Basically, the lenders and brokers went after any loan they could get out of greed throwing ethics and good business practices to the wind. Why are we rewarding that? If they were willing to take these risks on what THEY KNEW WERE QUESTIONABLE LOANS - then they should suffer the consequences PERIOD.

As far as the auto industry - nobody is buying their cars because 1. They're still making the gas guzzlers Americans were demanding up until $4 gas and 2. The economy is bad so people are buying NOTHING. How do you advise to cut their production costs? Take away employees retirement? Their healthcare? It's not the fault of the industry that they actually pay their union workers a decent wage, retirement benefits (which many folks used to get) and for skyrocketing healthcare which is not an "optional" thing. A bailout, as well as a complete overhaul of the greedy, unethical health insurance industry can and would help. I also think the bailout should be tied to fuel-efficiency requirements as well as dates and incentives for green autos.

3. The only way to fix the auto industry would be to create more demand. The only way to create more demand would be to improve the economy. However, improving the economy would cause fuel prices to spike--and then Detroit would still find itself in a hole, since per #2 they are unable to make money off efficient cars. Even if a cash infusion would help them limp along until the economy recovers, the American auto industry would still find itself at a massive disadvantage versus foreign manufacturers.

Of course we need to improve the economy. But allowing millions of good jobs to evaporate certainly won't help the economy! Creating more demand can also be achieved by making more efficient and green vehicles. I don't understand your logic. If we bailout the industry with the stipulations that they make more effecient vehicles, then they would cut the foreign advantage. As far as the advantage foreign makers have by paying less and giving crappy benefits, I argue that destroying good jobs to make a cheaper product is what led us to this mess in the first place!

We need to protect American jobs and bailing out the auto industry is part of that. I am drafting a letter to President-elect Obama to that effect because I believe that you are way off base on this issue.

[Stand and Fight]

68. I agree with you on this.

I think the rippling effect of allowing the Big Three to fail would be far more devastating than what the OP is saying. Someone up thread pointed out the very succinct point that there are jobs that are seemingly unrelated to the auto industry that would suffer -- such as the mother who works for GM, but loses her job and has to take her kids out of daycare, etc...

Your finely worded and direct response to the OP's post is one of the reasons I originally joined DU. Happy to have people like yourself around, because on issues like this we MUST hear multiple viewpoints.

[OHDEM]

71. Thank you.

One of the things that impresses me about the President-elect is that I've heard he likes to surround himself with smart people with different viewpoints to help him make important decisions. What a change from the current gang of know-nothings and yes men!!

DU helped get me thru this election! There are a lot of very smart, good people here and I enjoy seeing the many perspectives. This place may not represent all of America, but I like to think it represents the BEST of America!

[Stand and Fight]

67. Just a thought.... 3.5 Billion is enough to employ 100,000 for a year...

3.5 Billion is enough to employ 100,000 for a year with a salary (no benefits) of $35,000.
3.5 Billion is enough to employ 50,000 for a year with a salary (no benefits) of $70,000.
And so on and so forth.
Why not give the money AMEX is requesting to the auto industry instead with preconditions?

Just a thought. Numbers and facts always persuade me more than emotional appeals.

[redqueen]

70. I disagree.

It won't be the auto industry and that's it. The effect of millions of employees losing their jobs will create a gigantic ripple effect across many industries around the world and also for many governments, as they'll be on the hook to support as many of those people as they can with various safety nets.

[riqster]

72. Only if they have exhausted all other revenue sources

...they could sell some brands, subsidiaries, things like that. The auto industry has many material assets that they can leverage, unlike the financial sector.

[creature of habit]

74. let them go bankrupt - it's not illegal

then restructure - most autoworkers have seen this coming and should have/ could have prepared. Shareholders will lose money initially but the company would survive and improve itself.

[olegramps]

76. I am not an economist so maybe you can help me out.

When Japan began its drive to capture a segment of the lucrative American market they made it very difficult if not impossible for American companies to market our products in their country. This was not restricted to the automobile market, but included thousands of products. Attempting to break into their markets was a nightmare. They only allowed those foreign products that they required and didn't manufacture. I can assure you that you don't succeed in Japan unless you are Japanese. The only thing they like about foreigners is the money they spend buying their products. They also adore tourists until their money runs out, then bon voyage!

While their markets were free from competition, their manufacturers also enjoyed massive government financial assistance with low cost loans. This was coupled with the advantage of lower labor costs and managers who were willing to work 60 or more hours a week to achieve their goals. The mentality of their workers was not unlike the same mentality that was shared by its citizens during WWII. They were in a new war and they were determined to win it. The management demanded absolute loyalty. They went as far as amassing before work and singing the company song in what amounted to prep rally as they hoisted the company flag. Nor were they above engaging in illegal activities such a avoiding patent rights and out right stealing of industrial secrets. In the case of the automobile industry, American manufactures were the leaders in developing robots for repetitive procedures. The Japanese bought a few robots that they disassembled and proceeded to build copies often with some enhancements. Their copying of products in the electronics industry was unrestrained. Suits against them were fruitless since our government wouldn't take any decisive measures to penalize them.

What did Americans do when they came knocking at the door with their lower priced products. Americans never regarded it as a threat but only as an opportunity to make money. Unlike the Japanese government, we placed no restrictions on their invasion of our markets. The lobbyists for the importers effectively convinced Americans that tariffs were bad for business and would result in a trade war. They never bothered to explain how you can have a trade war when your products can't even make into the competitor's market. Unlike the Japanese who were united in their effort to protect their market while invading foreign markets every decision was predicted on satisfaction of personal greed without any regard for the nation as a whole. The situation is being repeated with China and to a certain extent even with Korea both of whom have restrictive trade policies. We have allowed them to flood our markets with absolutely no protection for our manufacturers. It is absolutely criminal that we have allowed American manufacturers to out-source jobs to third world countries and re-import these products without any tariffs to equalize the markets. It is one of the biggest scams every perpetrated on the working class. Americans better realize that they are in a war. Unfortunately a war in which our government has been bought and paid for by special interest parties who are are solely driven by greed and could care less about the average working class American.

[sampsonblk]

77. I say bail them out with strings attached

No more of this SUV bullshit. The have to make fuel-efficient cars. Period. No more gluttony.

[Sensitivity]

79. German banks have valued GM stock at $0.0 -- Any good argument for value of big 3 Brands??

[RoyGBiv]

80. I'm Torn ...

I am instinctively against it for many of the reasons you cite. This is a difference in kind. I falling on the side of forcing GM to go into bankruptcy, under which it still operates while it is forced to get its affairs in order, and not establishing a system whereby essentially all of the nation's industry is nationalized.

But then I read things like this by Mark J. Perry, PhD (I read that in my mind and it comes out as J Evans Pritchard, PhD ... obscure movie reference):

"Maybe the country would be better off in the long run if we let the Big Three fail, and in the process break the UAW labor monopoly, and then let Toyota, Honda (HMC) and Volkswagen (VLKAY.PK) take over the U.S. auto industry, and restore realistic, competitive, market wages to the industry. It might be the best long-run solution."

More ...

If you follow the link, he's got a graph that is manufactured to look more lopsided than it is, and he's sloppy enough with his phrasing you can see his intent to hide behind a faulty comparison.

At any rate, some of the opponents of assistance to GM, etc. seem to be coming at it from a union-busting perspective, and that gives me pause.

Of course there are others that do not have that intent that have equally good arguments against the bailout of GM, etc., which is why I'm torn.