^^

Again, the question is whether we spend money on a "bail out" (which is just corporate welfare) or if we spend money on actual welfare for individuals. The Big Three can definitely be kept afloat in a similar (but pitiful) form for years with a continuing government subsidy. The only question worth asking right now is whether that quantity of money is less than the quantity of money the government will spend on alternative "stimulus" programs for heavily impacted states, interest groups, feel-good agendas, etc. etc.

12/10/2008 4:06:11 AM

Some congressman from CO (sorry I dont' recall which) proposes not a bailout, but instead suspending Capital Gains tax on anyone that invests in the Big Three. Sounds like an interesting idea.

12/10/2008 10:14:08 AM

yeah, it's nice to see alternative suggestions.
I like the idea that the US Gov't should commit to replacing its entire fleet of cars between 2010~2014 with cars exclusively from the Big 3 and with tight emissions and mpg restrictions (and a certain percentage of hybrid and electric cars)
The gov't can put down a large downpayment now, ten of course pay additional as they receive the cars.

12/10/2008 10:21:40 AM

Quote :

"Again, the question is whether we spend money on a "bail out" (which is just corporate welfare) or if we spend money on actual welfare for individuals. The Big Three can definitely be kept afloat in a similar (but pitiful) form for years with a continuing government subsidy. The only question worth asking right now is whether that quantity of money is less than the quantity of money the government will spend on alternative "stimulus" programs for heavily impacted states, interest groups, feel-good agendas, etc. etc."

Okay, but again - assume the problems are intractable. We bail them out, it buys them three years. Suddenly they're back asking for another bailout.

So, again - assuming the premise that their problems are institutional and largely intractable - essentially we keep them on life support indefinitely, or eventually pull the plug. Whenever we do pull the plug, we still have all those social welfare claims sitting there - bailing out the automakers doesn't seem to make this go away. All it seems to do is punt it down the line by a few years at best.

Unless somehow we'll escape being politically sucked into paying those claims once the automakers do fail; although it's hard to see how that would happen. Especially in light of the fact that we already had bailed them out at least once.

12/10/2008 10:26:09 AM

^ Bingo. It appears our options are billions now on individual welfare or billions now on corporate welfare, and billions for years to come on individual welfare. I'd prefer none at all, but since that will never happen, I'd rather see the big 3 sink than keep them afloat and still have to pay after they sink.

12/10/2008 11:54:35 AM

Fuck that "Car Czar" nonsense. This noise about nationalizing the auto industry is downright crazy.

I don't want Congress or some shill for the President to dictate business decisions to the automakers.

12/10/2008 2:10:33 PM

Quote :

"I don't want Congress or some shill for the President to dictate business decisions to the automakers."

when other countries have done this, they've simply become the majority shareholders by buying the majority stake in the company to keep it afloat. this isn't going to result in congress doing day-to-day business operations if it's done the way it used to be with Renault and Volvo.

[Edited on December 10, 2008 at 3:30 PM. Reason : .]

12/10/2008 3:19:49 PM

yeah ... i didn't read anything in this thread ...

The "Big 3" should all go down in flames. They can take the union workers and their inflated wages with them. They can all go pick lettuce for all I care. WooHoo! USA #1!

12/10/2008 4:28:08 PM

^^ Because congress of all governing bodies is best known for staying out of other people's business and not meddling where it doesn't have experience or belong. Never mind that government ownership of these things is completely contrary to the design of this country, even if they are doing nothing other than being a sugar daddy for the big 3.

12/10/2008 4:37:26 PM

So how is it that industrial policies work out for other countries but not this one? Who runs things there?

You might not care if you're ideologically opposed to intervention of that sort, but I'm not asking about whether or not you ideologically approve, I'm asking what has worked in driving stable industrial economies.

12/10/2008 8:04:27 PM

Quote :

"I'm asking what has worked in driving stable industrial economies."

Generally, the removal of government intervention in the ability of citizens to conduct business and trade. Note the rise of China and Russia as they removed government interference, and current unemployment problems in much of modern Europe as government interference has increased.

[Edited on December 10, 2008 at 8:59 PM. Reason : dsf]

12/10/2008 8:58:43 PM

Quote :

"Generally, the removal of government intervention in the ability of citizens to conduct business and trade. Note the rise of China and Russia as they removed government interference, and current unemployment problems in much of modern Europe as government interference has increased."

1. China still holds major stakes in quite a few industries including auto manufacturing, has engaged in some pretty smart selective allowance of foreign investment (to the contrary of what most would tell you), and still has tight regulations on its capital markets (which is why it survived much of the Asia downturn in the late 90s, same with Malaysia and S. Korea, who maintained more controlls over their capital markets than we do, def. More deregulated capital markets like Thailand at the time got swamped). There's also their currency manipulation.

Not to mention, the track record for long term growth has favored those nations in Asia who have been strategically interventionist (China, especially SK, Singapore) until they are prepared to compete fully and fairly on the global scale. I would argue that our automakers needs some sort of propping up right now so as to allow their engineers and execs more time to become globally competitive again, and a loan is hardly the first step we could take, but it's the best step for the time being if we want to avoid watching unemployment skyrocket (and then we'll just spend that 15 billion on unemployment insurance instead).

2. On the other side, the Russian deregulation of the 90s ended up getting it stuck in the middle of the late 90s Asian shitstorm. Remember that? The Ruble crashed, there was a run on the bank, nearly half the nation near the poverty line around 1998. Thankfully, quite a bit of the Russian economy for goods and services still runs through bartering, so that helped some people, and by the time oil prices recovered (and during the same time, the oil industry renationalized) things were alright.

3. Kinda hard to make generalizations about the whole of Europe. Let's take France. Do you really think their govt. holding a stake in Renault is what causes their labor market problems (you brought up unemployment)? Not to mention, countries you would probably consider very "interventionist" still have fairly low unemployment, below 6% or so (Sweden, Norway has freakishly low numbers but a lot of that is oil wealth, The Netherlands, Denmark, others). There's only one country off the top of my head that I know has >10% unemployment in Europe right now, and that's Poland. Also, take into account that social mobility has actually been better in a lot of these countries in recent years (which brings up the welfare state, but that's another topic for another thread) There's no silver bullet for economies, just things to avoid like not letting the market allocate goods, which is largely what we have around the world today.

[Edited on December 10, 2008 at 9:58 PM. Reason : .]

12/10/2008 9:54:44 PM

I cant wait for the govt to start reproducing the Metalic Pete. "you hate it now.. just wait until you drive it. "

12/10/2008 9:58:53 PM

this car looks cool but it must be a piece of shit cause the government owns a stake in the company



govt. protection for decades gave us this heap



oh no, the govt. owns a stake in this plane! it's must be about to crash!

[Edited on December 10, 2008 at 10:03 PM. Reason : nationalization does not equal "nancy pelosi runs GM"]

[Edited on December 10, 2008 at 10:05 PM. Reason : .]

12/10/2008 10:03:06 PM

Please watch this week's episode of Top Gear in which they revisit some of the wonderful cars made in the USSR and the Eastern Block as well as cars made at British Leyland during their semi-communist years.

It's not pretty.

Death and subsequent rebirth is the best possible thing for GM and Chrysler (I don't believe for one minute Ford is in real need of a bailout).

12/10/2008 10:05:51 PM

Quote :

"Please watch this week's episode of Top Gear in which they revisit some of the wonderful cars made in the USSR and the Eastern Block"

well it's a good thing noone has proposed a command economy and the government fully owning and operating a car company, though trabbis are kind of a hip thing to get around Berlin in these days.

Quote :

"as well as cars made at British Leyland during their semi-communist years."

[Edited on December 10, 2008 at 10:08 PM. Reason : .]

12/10/2008 10:08:19 PM

http://www.newsday.com/news/politics/wire/sns-ap-house-rollcall-autos,0,3088752.story?page=4

Whelp, it just passed the House - 237-170; 32Republicans voting "Yea," 20 Democrats voting "Nay"

Price and Miller also voted "Yea" - surprise, surprise!

12/10/2008 10:30:34 PM

boooo

i'd rather had seen the ceos and the american auto worker twitch in the wind due to choices they made in the 70s

and by choices i mean HOORAY ROADS

12/10/2008 11:05:08 PM

you need to move about 20 years earlier

12/10/2008 11:08:15 PM

i thought about the 1950s

but i held back on it

makes more sense in my usual line of "argument" though

[Edited on December 10, 2008 at 11:12 PM. Reason : BEEP BEEP]

12/10/2008 11:11:37 PM

well the whole HOORAY ROADS thing is esienhower's doing

12/10/2008 11:21:26 PM

aaaaactually, maybe it would be better to punish GM for buying up all the streetcars in the 20s and 30s by nationalizing them long enough to make them make all those streetcars and rails back and then selling off the rest later except for just enough to build and maintain new streetcars as need be.

also, bring back radio serials.

12/11/2008 12:06:06 AM

Quote :

"well the whole HOORAY ROADS thing is esienhower's doing"

good lord don't i know it

here's what the initial deal was

in the 1950s we were promised all sorts of things...issues arose when whitey remembered they hated the blacks instead of the nazis and that it would be waaaaaaayy more awesome to move away from them when plastic was invented...so they did just that

instead of rebuilding infrastructure in step one, they decided to move to a new house far away from immediate smoke that they built since they just spent 4 long years fighting a uniformed army

but i can't blame those guys

they had just fought a world war and it was time for their kids to take it easy

12/11/2008 12:14:45 AM

^^ Look I'm not saying that everything owned by every world government is shit. Nor am I saying that government involvement in certain things is always a bad thing. I am saying that on the whole, governments historically fuck things up in the long run, and our particular government has a craptastic record of destroying almost everything it touches.

12/11/2008 12:49:38 AM

Quote :

"governments historically fuck things up in the long run, and our particular government has a craptastic record of destroying almost everything it touches"

surely you realize that this is dependent on what task it is we're talking about doing, how democratic they are, the state of the global economy, allowance for corruption, etc. the idea that any body which ultimately reflects humanity is inherently a fuck up sorta makes for a cynical view of humanity.

moreso, i'd argue above all that governments reflect the values of the societies they represent, and we've never really valued good government (b/c it makes for bad tv). you'll find that those that value good government the most, in my opinion, aren't necessarily fans of "big government" either, nor are they exclusively extreme individualists.

anyway, before i go further off track, might i add that I don't find it particularly helpful that noone is discussing ways to sell off chrysler, because I think that by breaking it up and selling it to some of the more stable international companies is inevitable and the gov. might as well make the money dependent on that.

here's how I'd do it:

Dodge truck: Nissan already wants it, they're gonna have it sooner or later. Package it with Jeep.
Dodge sports cars/racing: Use the Viper and racing cars/engines to start a private company primarily for enthusiasts, like Lotus.
Chrysler: I have a soft spot here since one of those was my first car. Fiat wants into the American market. Sell it to them, along with the factories. That way they already have the platform to bring Fiat to America and assemble them here.

Regardless, I would hope that by unloading these to people who really want access to the US market like Fiat might preserve more of the factories and thus more of the jobs.

[Edited on December 11, 2008 at 1:12 AM. Reason : .]

12/11/2008 1:05:53 AM

Quote :

"1. China still holds major stakes in quite a few industries including auto manufacturing, has engaged in some pretty smart selective allowance of foreign investment (to the contrary of what most would tell you), and still has tight regulations on its capital markets (which is why it survived much of the Asia downturn in the late 90s, same with Malaysia and S. Korea, who maintained more controlls over their capital markets than we do, def. More deregulated capital markets like Thailand at the time got swamped). There's also their currency manipulation. Not to mention, the track record for long term growth has favored those nations in Asia who have been strategically interventionist (China, especially SK, Singapore) until they are prepared to compete fully and fairly on the global scale."

While it is true that most of Asia's tigers have maintained controls and had pet-industries, it is also important to point out most of their other markets were free to operate under a stable and defensible rule of law, and while we will never know if Hyundai would have been a success without government help, it is undeniable that the people of SK were going to be a success whether they ended up working for Hyundai or someone else.

I remember reading the story of Japan's automotive policy in the early days. The government decided that Toyota would be its pet company, so it received export subsidies, government secured loans, and tax breaks, Honda had no people in Tokyo and therefore did not. However, Honda had the plans for a cheap 4-cylinder sports car that American teenagers loved, so it became a success dispite the rules actually being stacked against it as policy.

It bears pointing out that in absolute terms China, SK, and Singapore are still substantially poorer than their freer counterparts. Yes, it takes time to modernize, but when your starting position is communist destitution it is not hard to achieve 10% growth rates. As such, it is still impossible to tell if China's policies make it more productive or less productive, as it is too poor to compare. What we do know is that SK's per-capita income is still low by rich-world standards (2/3rd that of France or 1/2 that of the U.S.).

12/11/2008 11:38:11 AM

Obligatory Ron Paul video:




To add to ^, China's economy has also grown because restrictions have been loosened on their markets. It isn't as if China had a free market economy and only after government take-over did they prosper. There is also the effect on the Chinese economy of a net influx of wealth, as opposed to the net outflow of wealth experienced in the US as we take on more and more debt to fund our lifestyle.

The concept that "the average American is better off than the average (insert nation here)" is asinine however when viewed separately from long term trends. That kind of thinking is what got the auto industry where it is today.

12/11/2008 12:45:11 PM

Quote :

"Dodge sports cars/racing: Use the Viper and racing cars/engines to start a private company primarily for enthusiasts, like Lotus."

You know you're pretty much talking about the Viper exclusively here.

And regarding Renault being partially owned by the French gov't, there's a reason they left this market...

12/11/2008 12:45:14 PM

i hope that clip is available in 30 years

12/11/2008 7:15:07 PM

http://news.yahoo.com/s/ap/congress_autos

1 min ago

12/11/2008 9:05:00 PM

Quote :

"WASHINGTON – A $14 billion emergency bailout for U.S. automakers collapsed in the Senate Thursday night after the United Auto Workers refused to accede to Republican demands for swift wage cuts. The collapse came after bipartisan talks on the auto rescue broke down over GOP demands that the United Auto Workers union agree to steep wage cuts by 2009 to bring their pay into line with Japanese carmakers."

Surprise surprise. Those fucks would rather help drive the American auto industry to destruction than to have their wages fall in line.

12/11/2008 11:43:07 PM

^ haha, I just read this on MSN and ran over here to say basically the same thing. At this point I almost welcome the failure of GM and Chrysler, even if it means a much bigger recession. I think thats the only thing that will finally put those greedy fucks in their place.

12/12/2008 12:45:21 AM

Aren't the union workers going to lose more money by not having jobs than by taking a wage cut?

12/12/2008 7:06:24 AM

The Union doesn't give a fuck about the laborers. They are hardlining because if they make concessions the union leaders will be replaced when the dust settles.

They are going to keep hardlining and try to force the senate to switch their vote like they did for the tarp or stave off bankruptcy until obama gets in office and passes it through.

And it'll probably happen those sick fucks.

12/12/2008 8:40:00 AM

You guys are so typical. BLAME THE UAW ITS ALL THE UAW LETS TAKE THE TALKING POINT AND BUST THOSE UNIONS! WOOOOOO WEEEEE.

No surprise the leading senate republicans challening this shit live in states where they have foreign auto makers investing in their area. While repubs near Michigian and the midwest support the bailout. HMMMMM.....

I agree with this quote from a forum post I read this morning...


I don't think it'll be hard to explain why Senate Republicans had the final say: that's what the Constitution and Senate rules require. How else would we have passed anything?

I do think it'll be hard for Senate Republicans to explain themselves.

They were invited, repeatedly, to participate in more than a week of negotiations with a Republican White House. They declined.

They were asked to provide an alternative bill. They refused.

Finally, one of their members - Senator Corker of Tennessee - participated in a day-long negotiation with Senate Democrats, the UAW, and bondholders. Everyone made major concessions. Democrats gave up efficiency and emissions standards. UAW accepted major benefit cuts and agreed to reduce workers' wages. Bondholders signed off on a serious haircut. But when Senator Corker took the deal back to the Republican Conference, they argued for two hours and ultimately rejected it.

Why? Because they wanted the federal government to forcibly reduce the wages of American workers within the next 12 months.

Heard this morning that President Bush may still use TARP money to rescue the automakers. He reportedly doesn't want to end up as the next Hoover.

12/12/2008 10:16:07 AM

Personally, I couldn't agree with Kainen more...

Quote :

"No surprise the leading senate republicans challening this shit live in states where they have foreign auto makers investing in their area. While repubs near Michigian and the midwest support the bailout. HMMMMM...."

Senate support for the bailout is concentrated in areas where the companies and its workers represent their constituencies. This should lead the rest of us to be suspect of any argument that bailing out the big-three will help America as a whole. After all, how does propping up failing, American oligopolists help you or me????

Oh wait. Kainen was somehow using concentrated local support as an argument FOR the bailout?? hmmmm. Interesting. Ever heard of James Buchanan?

PS* Before anyone complains "BUT D'ELL LOSE DUR JERBS!", this is exactly why we have unemployment insurance. If your true worry is about putting a bunch of people out of work during a recession, you should probably be more concerned with expanding and enforcing unemployment benefits, not nationalizing companies.

This would not only more directly attack the problem, but also help people losing their jobs at companies that can't afford teams of lobbyists to beg for a bail out.

[Edited on December 12, 2008 at 10:30 AM. Reason : ``]

12/12/2008 10:26:43 AM

Quote :

"Surprise surprise. Those fucks would rather help drive the American auto industry to destruction than to have their wages fall in line."

Kainen, notice I didn't solely place the blame on the UAW, b/c they're not singularily responsible. But they are a big part of the problem.

12/12/2008 10:47:06 AM

Man fuck Waffleimages.

[Edited on December 12, 2008 at 11:17 AM. Reason : .]

12/12/2008 11:10:24 AM

http://www.economicpopulist.org/?q=content/epi-if-big-3-fail-18-unemployment-michigan

12/12/2008 11:34:28 AM

Nice prediction there. Of course, thats all it is.

12/12/2008 11:44:10 AM

It doesn't really take a huge mental leap to extrapolate the impact of an entire industry going under.

I mean, at least, for intelligent folk. Lonesnark and others clearly lack such magical abilities.

12/12/2008 12:03:03 PM

Good thing the Big Three aren't being liquidated. If they were then I'd believe your illustrations.

12/12/2008 12:09:55 PM

I still have yet to see someone with their "magical abilities" tell us how throwing money at the problem will actually solve anything, rather than delay the inevitable.

But hey, obviously we're the dimwitted ones, here.

12/12/2008 12:13:09 PM

UAW needs to get its head out of its ass and realize now's not the time to make demands.

12/12/2008 12:23:53 PM

Good read on GM and the decisions that have led to it's demise.

It's not a pretty picture.

http://www.bloomberg.com/apps/news?pid=20601170&refer=home&sid=ai5KpbywxqiQ

12/12/2008 12:51:40 PM

Quote :

"After all, how does propping up failing, American oligopolists help you or me???? "

A lot, goddammit. I work for a large American manufacturing company that was started in 1911 and roots in the midwest that is suffering because we are a manufacturer of equipment, parts, and components to automotive and truck manufacturers domestically and abroad. We are laying off tons of people here - people that have become my friends, coworkers, people around me and my job is threatened big time right now. If the big three go under, we'll continue to decline as a company....and all we do is do things right here...we just supply that industry, like millions of others affiliated.

So yes, it has alot to do with me.

Try to take a second and challenge yourself to stop thinking in a fucking silo, it's not just people on a line in a plant in Michigan, or a dealership lot in Kentucky that are impacted. There's an enitre industry based around automotive manufacturing in the United States that will be impacted.

[Edited on December 12, 2008 at 1:21 PM. Reason : -]

12/12/2008 1:19:49 PM

If the legislators can't pass a bailout, i'm all in favor of taking it out of the TARP allocation.

Chrsyler got their bailout a few decades ago -- they don't get one now. someone needs to tell this to Nardelli and the the private equity douchebags at Cerberus.

Tata should make a bid for the Jeep brands & someone else could probably make good use of Dodge trucks and Caravan minivans -- maybe Tesla can take it over and turn all the vehicles electric -- just my vagrant thoughts.

Nardelli having wrecked Home Depot and worsened Chrysler will get atleast two more CEO positions with golden parachutes before humanity says 'enough'.

12/12/2008 1:23:00 PM

LOL, Tesla is begging for handouts themselves.

They are not in any position to take over a major brand.

12/12/2008 1:26:30 PM

Quote :

"A lot, goddammit. I work for a large American manufacturing company that was started in 1911 and roots in the midwest that is suffering because we are a manufacturer of equipment, parts, and components to automotive and truck manufacturers domestically and abroad. We are laying off tons of people here - people that have become my friends, coworkers, people around me and my job is threatened big time right now. If the big three go under, we'll continue to decline as a company....and all we do is do things right here...we just supply that industry, like millions of others affiliated."

So when GM and/or Chrysler reorganizes under Chapter 11 am I to assume that other supplier companies will magically appear to keep selling vehicles parts to them? (while yours and the entire industry [apparently] crash to the ground)

12/12/2008 1:37:05 PM

They will be liquidated.

See what you guys fail to understand is that Bankruptcy != capital flow. While the car makers won't have to pay money, they won't actually get any loans at all either. That means they have to start selling something to keep the lights on or fall into insolvency.

Will consumers pay even invoice for the cars of bankrupt american auto makers? If they don't, then those cars will have to be sold at a huge loss. Its nowhere near the same thing as an airline or retail bankruptcy.

I really want to see the math where a company that has 0$ on hand is going to somehow pay for parts and manufacturing.

Furthermore, bailout is a retarded term for Government loan. The auto companies have to pay the money back, as chrysler did when the government saved it a decade ago, with interest. Which actually in the chrysler case, meant the government made money.

Also,

http://www.businessweek.com/globalbiz/blog/europeinsight/archives/2008/11/push_for_europe.html?campaign_id=rss_eu

Lets not forget that US automakers aren't the only ones looking for emergency loans.

[Edited on December 12, 2008 at 1:42 PM. Reason : >.<]

12/12/2008 1:40:48 PM