General Motors now wants a bail-out of 25 to 50 billion. Ford likely wont be far behind. Meanwhile, these companies are held hostage by exorbitant union demands, unrealistic benefit packages and CEO compensations that are obscene. How do taxpayes feel about subsidizing all of the above? Where in the world will this money come from and where will this end?

I hear what you're saying, Rshoffer, but I wonder how the average autoworker's pay/benefit package stacks up against the average Congressman's pay/benefit/perk package. At least the autoworker is producing something useful.

The TV Amenities fee is going up faster than the SSA inflation adjustment, and pension returns are at risk in keeping up with TV costs. Do we qualify for a bailout? ? ?

it is usually timed when others are in the dumper and bad news all around. Then they reach into their accruals and begin to write down losses they have carried for who knows how long. Then in an environment like we have right now, let's call it the bail out environment or the free money debacle, then the same executives know exactly when to time putting their hand out. All the economic indicators are pointing down, the media has only one color in their bucket, called bad news...so out comes the me too captians of industry.

For companies that have been doing forecasting for years...that have to have numbers for share holders each and every quarter....they know where they have to be production wise, sales wise, cash wise, shareholder value wise and work the plan accordingly.....does anybody think they had some idea months ago they could run out of cash if thus and so occurred or did not? Of course they did. Now that the government is handing out free money they have their books arranged to show why they deserve some too.

It is a game. Having been there I can assure you it is a well orchestrated GAME.

Not a problem though. After all we own the presses that print the money...right! Just crank out some more. Once upon a time there used to have to be something to back up the printed money. I believe that too has gone by the wayside.

ITSA GAME! And the silent majority....we the people are the losers....AGAIN!!

BTK

Financials failed last month. We the people gave them $700 BILLION
to get the credit markets flowing again.
Auto makers want a bail out, why don't they just get a loan

As Stevez said, where's our bailout?

I agree that we shouldn't bail out the auto industries. As it's already been said in these posts, too high production costs due to high labor costs, poor engineering, inferior product compared to Toyota and Honda. They have had years to turn their act around and haven't done so.

I still believe though that we had no choice in bailing out the financial industries. Look how bad the economy is now and guess how much worse it would be without the bailout. It does irritate me that ther is little to no controls in place as to how the monies are to be used. Bonuses for the execs shouls be outlawed when we are footing the bill.

At the outset, I must say that my oldest son is a Ford middle manager. His wife and three of my five grandchildren depend on him. We certainly can't be of much help should he become unemployed.

My son knows as I do how much time even a huge company like Ford has. By our calculations, if the economy remains stagnant for another year, Ford cannot survive alone. GM and Chrysler will have preceded them into insolvency and liquidation. We will no longer have a U.S. auto industry. Try to imagine that in terms of the total eventual unemployment that will cause...the destruction of communities...and the effect on our national security.

Capitalism has failed our country and economy. Was it the cause of the economic system itself? No. It failed because it was abused by greedy executives and politicians. It failed that all of us became mesmerized with our growing wealth even though we knew we hadn't earned it. We let the greed happen. And it ruined our economic system which had worked so well for decades.

Now the government is the only party with the financial capacity to fix the problems which have resulted. Call it socialism because that's what it is. But if the government stands aside and lets economic forces alone try to correct the problems we face, they may not get corrected. If they do, it will almost certainly take years and years.

I disagree with those who say don't make a move to support the auto industry (or put another name of an industry important to our economy and national security in where "auto" is). There is no alternative than for all of us to collectively help solve the economic problems we face...and that we have helped cause.

All I pray for is that whatever socialism or nationalizing that we begin in 2008 can be reversed sometime in the future so that we might return to a strengthened and reinvigorated capitalism.

There is another thing to consider other than throwing cash directly at the manufacturers, and our trading partners will not be pleased - Buy a new car with over __% content US-made and receive a tax deduction for the next 3 years at __% of the car's purchase price!

If you want the economy to move forward, give the consumer a darned good reason to buy the product, rather than subsidize manufacture of a product people avoid for mainly cost and value reasons.

That's as good as giving a tax cut for any income bracket, keeps the money out of politicians' hands to spread according to their favorite lobbyists, and makes everyone actually feel pretty good at the same time.

Capitalism hasn't failed, and Socialism only leads a country into deep mediocrity and eventual socio-cannibalism. The USSR showed the world that having a two-class system (as Socialism creates) leads nowhere.

Capitalism always worked when people worked, and did not always try to get-rich-quick and buy things with no money through schemes and eco-magic. The growth of the "financial advisor" industry which exists to get people to "invest" (a.k.a. GAMBLE) with the notion of getting rich without sweat occurred due to greed. Capitalism provides those who work better and harder than the next guy will do better than the next guy. Capitalism and gambling provide the same as ANYTHING and gambling - probable failure as the odds are aways in the house's favor.

Socialism - wealth redistribution - economic balancing -- they are all the same and all are lead a nation and a society to live via the lowest common denominator.

There is only one way out of all of this - give the consumer what s/he wants (half-decent product at a better price than the foreign competition) and the economy rockets to the sky. How we get that price to be better than the competition is where industry and government can work together. Lower the individual's tax consequence, that's other money to spend elsewhere, and more of the economy grows in parallel. There is no mystery here.

Originally Posted by SteveZ

There is another thing to consider other than throwing cash directly at the manufacturers, and our trading partners will not be pleased - Buy a new car with over __% content US-made and receive a tax deduction for the next 3 years at __% of the car's purchase price!

If you want the economy to move forward, give the consumer a darned good reason to buy the product, rather than subsidize manufacture of a product people avoid for mainly cost and value reasons.

That's as good as giving a tax cut for any income bracket, keeps the money out of politicians' hands to spread according to their favorite lobbyists, and makes everyone actually feel pretty good at the same time.

But Steve, that would make far too much sense.

Boomer

Originally Posted by Villages Kahuna

At the outset, I must say that my oldest son is a Ford middle manager. His wife and three of my five grandchildren depend on him. We certainly can't be of much help should he become unemployed.

My son knows as I do how much time even a huge company like Ford has. By our calculations, if the economy remains stagnant for another year, Ford cannot survive alone. GM and Chrysler will have preceded them into insolvency and liquidation. We will no longer have a U.S. auto industry. Try to imagine that in terms of the total eventual unemployment that will cause...the destruction of communities...and the effect on our national security.

Capitalism has failed our country and economy. Was it the cause of the economic system itself? No. It failed because it was abused by greedy executives and politicians. It failed that all of us became mesmerized with our growing wealth, even though we knew we hadn't earned it. We let the greed happen. And it ruined our economic system which had worked so well for decades.

Now the government is the only party with the financial capacity to fix the problems which have resulted. Call it socialism because that's what it is. But if the government stands aside and lets economic forces alone try to correct the problems we face, they may not get corrected. If they do, it will almost certainly take years and years.

I disagree with those who say don't make a move to support the auto industry (or put another name of an industry important to our economy and national security in where "auto" is). There is no alternative than for all of us to collectively help solve the economic problems we face.

All I pray for is that whatever socialism or nationalizing that we begin in 2008 can be reversed sometime in the future so that we might return to a strengthened and reinvigorated capitalism.

My question was... WHERE DOES THIS END? Who decides where the end of the line is for the bailouts? This is so out of control.

Originally Posted by rshoffer

My question was... WHERE DOES THIS END? Who decides where the end of the line is for the bailouts? This is so out of control.

This ends when different special interest groups discover that they can no longer talk congress into giving them money. Congress is the locus of the problem. They are the ones who authorize bailouts, tax incentives, earned income tax credits, etc. They are the ones who put barriers in front of our automobile companies being fully competitive, they are the ones who started this crazy system of lending to people who cannot repay and they are the ones who stand squarely in opposition to a reasonable and understandable tax system - we desperately need either the 'Fair Tax' or the 'Flat Tax.'

My great concern is that this can only be solved through either revolution or a dictatorship. These are the normal paths when a nation's economy has been destroyed.

Originally Posted by BBQMan

This ends when different special interest groups discover that they can no longer talk congress into giving them money. Congress is the locus of the problem. They are the ones who authorize bailouts, tax incentives, earned income tax credits, etc. They are the ones who put barriers in front of our automobile companies being fully competitive, they are the ones who started this crazy system of lending to people who cannot repay and they are the ones who stand squarely in opposition to a reasonable and understandable tax system - we desperately need either the 'Fair Tax' or the 'Flat Tax.'

My great concern is that this can only be solved through either revolution or a dictatorship. These are the normal paths when a nation's economy has been destroyed.

When one group gets Congress to bail them out with taxpayer money, ALL groups eventually try the same path. After all, "the other guy got it, so why not me" is what's dumped on Congress (with good reason) who cannot say no to pools of voters.

The "big" bailout was destined to create more, especially when it was "we gotta do this now, without thought, debate or examination of options." Hurry-up deals usually backfire in some fashion, and the bailout may have looked good at the onset, but there was no thought to the downstream effect. Once again, the "Law of Unintended Consequences" proved to reign supreme.

So, after being impulsive once, let us hope we don't keep the dumb streak going. I'm not against bailouts, but they need to be smart bailouts. Anything that puts money back into consumers pockets to encourage them to buy Chinese-made goods, or European-made goods, or Anywhere-Else-made goods does nothing to keep the money within the shores and circulating here to create more jobs of all kinds. That's why I like the tax-deduction-for-US-Goods-Purchase approach - everyone in the country wins!

Kahuna,

With due respect, I think you are naive if you think any socialist bent will be reversed in the future without blood in the streets. The circumstances we find ourselves in now are exactly the ones that breed dictatorships because the citizenry will accept any solution to "ease the pain". This is precisely why I am concerned about the Obama win, because of his known past associations and leanings in this direction. Hopefully the congress will not be asleep at the switch....but I'm not optimistic.

Not exactly to the point, but you should all take some time to view "The Crash Course" on Chris Martenson's web-site. Read his background. A pretty insightful presentation me thinks. It's probably pretty accurate on where we are headed, sooner or later.

http://www.chrismartenson.com

Here's another idea that could save the auto companies and not cost us taxpayers any more than it would if nothing was done.

If we stand by and do nothing the auto companies will go into bankruptcy and probably be liquidated. The creditors who would be involved in a reorganization under bankruptcy are so diverse that the companies would never come out. In the meantime, who would buy cars from a bankrupt company with an uncertain future?

If the auto companies were liquidated, a huge amount of the unfunded pension liabilities would be dropped on the doorstep of the Pension Benefit Guaranty Corporation (PBGC). They would wind up paying the auto worker's pensions, but significantly less generously than the terms of the UAW contracts call for. PBGC is limited by law as to how much they can pay to individual pensioners. But the payments would still be a huge number, which us taxpayers would have to fund.

So, as long as we're going to be presented with the bill for the auto worker's pensions, why not try to save the auto companies without spending more money than we would anyway? The single biggest cost factor that is making our auto companies uncompetitive and in financial distress is the cost of pensions and healthcare for both active and retired employees. If they could get out from under those costs, they would very likely be able to compete quite well with any foreign manufacturer. Behind that are hourly labor rates that are somewhat higher than reasonable--not egregiously high, but somewhat higher than their non-union competitors.

So what an enlightened and proactive administration could do would be to call the auto company management and unions together and make the following proposals. They could tell them that they are inclined to make an investment in the auto companies to assure that they can be sustained, but only with the following conditions...

• Government contributions would only be made to the PBGC, not to the auto companies themselves.

• All pension obligations for current and retired employees above a very basic and reduced pension benefit (far less than currently required under the UAW contract) would be transferred to the PBGC. PBGC would pay those benefits as required by the union contracts. The lower, more basic pension benefits would continue to be paid by the auto companies (see my proposal for a new UAW contract below).

• Such an agreement would be conditional on the UAW agreeing to a new contract with the auto companies that provide pension benefits to all yet-to-be hired, new U.S. workers that are substantially reduced, something akin to pension plans available to the foreign auto companies operating in the U.S. or other comparable manufacturing companies. That contract would be required to be permanent, non-negotiable and "non strikable" in the future.

• Further, the new contract shall provide for hourly pay rates that are comparable to other non-U.S. auto makers in the U.S. or other manufacturing companies. These new rates would go into effect immediately and any future raises negotiated by the union would be pegged to inflation.

• Similarly, the healthcare benefits and premiums paid by auto workers shall be immediately modified to reperesent some average of halthcare benefits provided to other large U.S. manufacturing firms. Those benefits should be permitted to remain totally negotiable in future contract negotiations and "strikable" if agreement cannot be reached. (My thought here is that some changes in government-provided healthcare, which is a high Obama priority, will likely occur before such negotiations become necessary.)

• Lastly, there could be other terms negotiated having to do with executive compensation and benefits and some requirements for Congressional oversight of auto companu research and development and future product planning.

So what woud this accomplish and how much would it cost? It would relieve the U.S. auto companies with the costs that have made them uncompetitive. It would cost the U.S. taxpayers a pretty penny in contributions to the PBGC. But probably no more--maybe less--than the costs we would incur if we simply let the U.S. auto makers fail and be liquidated.

I guess I'm thinking that as long as we're going be stuck with the bill anyway, why not try something different and save the auto compamies at the same time? Is it socialism? No, the government wouldn't own any part of the auto companies. But the new oversight regulations would reserve a considerable influence that the government could place on the still privately-owned companies. The price of government assistance, one might say.

Now, what do you think the chances are that members of Congress would do such a thing and incur the wrath of union members throughout the country that somehow have negotiated unreasonably generous benefit packages over the years that are now actually threatening the survival of the companies they work for?

Yep, your right. No chance. I guess we'll just have to get ready to pay the bill and live without any U.S. auto companies.

Kahuna for Congress!!

However remote the chances are for these ideas to work, what we DO need is creative thinking. BTW, I don't think liquidation is a forgone conclusion. Ch.11 is for reorganization and perhaps under the hand of a smart turnaround guy the companies would have a chance, e.g. Chrysler and Iacocca.

I realize times are different now, but unique challenges call for unique ideas and thinking out of the box. It would also require the unions to take what they can get so to speak.

I regret the situation with the pensioners, but it wouldn't be the first time this happened. Take Polaroid for example. Great company, great product, great benefits. Many folks gave their whole working lives to that company only to have it all go up in smoke as the big wigs made lots of bad decisions. Result, bankruptcy, all pensions lost. Many folks who were retired had to go back to work as a result of this debacle. Meanwhile, the execs were re-appointed by the BK court to reorg the company at stupendous salaries. They should have gone to jail instead.

The Big 3 have been completely stupid in their marketing and design. While Toyota, Honda, etc. have been working on their eco-cars Big 3 have been continuing to guzzle gas. I have little sympathy I'm afraid.