Critics of Auto Bailout Decry Fallout of Government Intervention

[fivepoint]

Wondering what everyone's thoughts are on Rep. Dan Burton's bailout position. Do you agree that the government has no business nationalizing industry, consider it to be a necessary evil, or generally think that "government owned" is better than "privately owned"? This is a very complex and important issue to discuss.


Congressional opponents of a taxpayer-funded bailout of America's Big Three automakers -- an action that would, in effect, at least partially nationalize a major American industry -- are raising their voices in hopes of keeping private enterprise just that ... private.

"Having the federal government involved in every aspect of the private sector is very dangerous," Rep. Dan Burton, R-Indiana, told FOX News. "In the long term it could cause us to become a quasi-socialist country. We need to let the free market system work as much as possible.

"Just how far does the taxpayer go and how many industries do we get involved in?" Burton asked. "Do we get involved with banking? Now the newspapers are about to go belly-up. Do we start helping the Chicago Tribune and The New York Times? At some point, we have to let the free-market system work."

Tense talks were continuing in Washington Tuesday on a bill to provide a multibillion-dollar aid package to the Big Three. The White House and congressional Democrats are currently negotiating consequences to General Motors, Ford and Chrysler if they fail to bring costs under control.

But despite general optimism that a swift agreement can be reached on the rescue bill, some conservatives on and off Capitol Hill are holding fast to the principle that the U.S. government shouldn't be in the business of nationalizing private industry.

"History shows Congress is not good at making good decisions," said James Gattuso, a senior research fellow in regulatory policy at the Heritage Foundation, a conservative think tank.

Gattuso said the real danger of another bailout is that the concept will "morph into a generalized concept of economic stimulus and government spending rather than bailing out companies when they're in trouble....

"I'm worried about the next step being a trend toward pumping money into industries as a way to prop up the economy," he said, calling the tendency toward intervention a "well-oiled slope."

"Slippery doesn't even begin to describe it," Gattuso said.

On Tuesday, an aide to one Republican senator told FOX News that a group of GOP lawmakers is "very skeptical" of the existing package and considering its options. Nevada Sen. John Ensign said he is willing to "be the one senator" to hold up the bill via filibuster, which could very seriously affect a proposed bill's chances of passing at this time. Many members in Washington for the lame-duck session leave after this weekend for long-planned congressional delegations overseas, followed by the holiday break. And representatives of labor unions and the Big Three have said they aren't sure the companies can last until the next Congress convenes in January.

Senate Minority Leader Mitch McConnell, one of the Republicans considering filibuster options, said he doesn't see the benefit of bailing out an industry that hasn't provided a plan for "long-term viability."

"The draft plan released yesterday fails to require the kind of serious reform that will ensure long-term viability for struggling auto companies. By giving the government the option of canceling government assistance in the event that reforms are not being achieved -- rather than requiring it -- we open the door to unlimited federal subsidies in the future," McConnell, R-Ky., said.

"I want to support a bill that revives this industry. But I will not support a bill that revives the patient with taxpayer dollars yet doesn't secure a commitment that the patient will change its ways so future help isn't needed," he added.

Gattuso believes that, instead of a bailout, the government should provide the auto industry with regulatory relief (such as abandoning the imposition of fuel efficiency standards), tax provisions and possibly accelerate the purchases of vehicles it makes each year.

"None of that would solve the problem, but it would be helpful," he said.

Daniel Mitchell, a senior fellow at the libertarian Cato Institute, said the government should have no role in helping the industry, except to provide positive economic conditions -- "a lower corporate tax rate, less red tape and things like that," he said.

Mitchell added that if the government takes control of the auto industry, it will be a recipe for disaster.

"The free markets allocate resources and reward people for doing good things and punish them for doing dumb things," he said. "Government misallocates resources and rewards people for doing dumb things and punishing them for doing good things.

"We're in this very dangerous situation where you're going to have people, Harry Reid and Nancy Pelosi, making these decisions," he said. "I wouldn't trust these people mowing my lawn, much less running a private company."

Gattuso said government taking an ownership role in private -- or even public -- industries could block necessary changes to improve them. He gave an example from earlier this decade, when Congress prevented any post office from closing despite the U.S. Postal Service's desire to do so in a restructuring plan.

In the meantime, the Federal Reserve has declined to lend money to the Big Three automakers, saying it is not satisfied that the companies have the assets to secure the loan.

"The ability of the Federal Reserve to provide credit ... to an auto manufacturing company depends critically on the ability of the auto manufacturer to provide sufficient collateral or other security to ensure repayment of the credit. It is unclear whether the auto manufacturers have unencumbered assets of sufficient amount and quality to meet this requirement," reads a Dec. 5 letter signed by Federal Reserve Chairman Ben Bernanke to Democratic Sen. Chris Dodd, chairman of the Senate Banking Committee and obtained by FOX Business Network.

FOX News' Trish Turner and The Associated Press contributed to this report.

[.Andy]

Wondering what everyone's thoughts are on Re. Dan Burton's bailout position. Do you agree that the government has no business nationalizing industry, consider it to be a necessary evil, or generally think that "government owned" is better than "privately owned".
I wasn't aware your government was going to own the Auto companies with the bailout?


edit: Fox news conservative buzz word bingo for those playing :D!
nationalize
become a quasi-socialist country
free-market system
nationalizing private industry.
"well-oiled slope." (i.e. even worse than a slippery slope!)
Conservative think tank
Cato institute
"a lower corporate tax rate, less red tape and things like that,"
"The free markets allocate resources and reward people for doing good things and punish them for doing dumb things,"
"Government misallocates resources and rewards people for doing dumb things and punishing them for doing good things."
Free market.

[dukebound85]

from what i gather, its going to be private owned with governmental oversight as it should be when taxpayer money is being used to rescue it

[.Andy]

So really the Fox News article is just using buzz words like nationalise and quasi-socialist to try and demonise the initiative which has the intention of helping the economy. Wouldn't a more mature/intelligent stance be to discuss the pros and cons of the bailout, the logical extent of it, why it would/won't work, the short and long term ramifications, and the caveats/conditions that should be attached?

[skunk]

Wouldn't a more mature/intelligent stance be to discuss the pros and cons of the bailout, the logical extent of it, why it would/won't work, the short and long term ramifications, and the caveats/conditions that should be attached?Why do you use the words "mature" and "intelligent" in the same paragraph as "Fox News"? :confused:

[fivepoint]

edit: Fox news conservative buzz word bingo for those playing :D!

Why do you use the words "mature" and "intelligent" in the same paragraph as "Fox News"? :confused:

Do not troll in my thread by turning this into a "FOX SUX" debate. Discuss the topics posed, or don't participate at all.

[skunk]

Do not troll in my thread by turning this into a "FOX SUX" debate. Discuss the topics posed, or don't participate at all.I do not recall addressing you.

[Dont Hurt Me]

from what i gather, its going to be private owned with governmental oversight as it should be when taxpayer money is being used to rescue it
True, we should be asking where is the oversite on the banks,wall street, Fannie and Freddie. Congress gave these guys billions without even questions. Could it be the millions and millions paid to congress for campaigns?

We wont have any problem as long as these company's pay it back which Chrysler has done in the past though I dislike how they are owned and structured at the moment. LLC has plenty of money for Chrysler if it so wanted to help them and it does not want to. I think Chrysler should be yanked away from LLC in some fashion and even nationalized or merged with GM if you will.

[rdowns]

I think the loans are a necessary evil but I do have a problem with Chrysler getting anything. First, they have been doing nothing other than trying to get themselves bought out or merged. They have little of value other than Jeep.

Second, Cerberus (they own Chrysler) is a huge private equity firm with billions in assets. If they are not willing to try and save Chrysler, why should the taxpayers?

[fivepoint]

... I do have a problem with Chrysler getting anything. First, they have been doing nothing other than trying to get themselves bought out or merged. They have little of value other than Jeep.

Second, Cerberus is a huge private equity firm with billions in assets. If they are not willing to try and save Chrysler, why should the taxpayers?

+1

I also find it a bit ironic that we've already bailed them out once. "Those who cannot learn from history are doomed to repeat it."

[Dont Hurt Me]

I think the loans are a necessary evil but I do have a problem with Chrysler getting anything. First, they have been doing nothing other than trying to get themselves bought out or merged. They have little of value other than Jeep.

Second, Cerberus is a huge private equity firm with billions in assets. If they are not willing to try and save Chrysler, why should the taxpayers?I think Chrysler is worth saving but lets face it they have been raided by the Germans and now raided by the investment class who only care about the short term profit. I dont know how you do it, but they should be taken away from cereberus who really could give a hoot about it as is clear by the lack of any investment in the future. Have the govt buy them out and .......need some help here. Also the ceo of chrysler is the same guy who got millions for being fired from Home Depot. He needs to go work on the assembly line or sweep floors or just eliminated from the company.

[j/k/Andy]

+1

I also find it a bit ironic that we've already bailed them out once. "Those who cannot learn from history are doomed to repeat it."

It is a loan with the money to be paid back, not a bail out, and Chrysler paid the 1979 loan (1.5B) off by 1983, with interest

[fivepoint]

It is a loan with the money to be paid back, not a bail out, and Chrysler paid the 1979 loan (1.5B) off by 1983, with interest

It's a bail-out. The loan is more valuable than the company itself. (GM's market cap is currently less than 3 billion dollars) What happens if they can't pay it back, which is more than likely considering the recent trends in auto sales? If the business model couldn't succeed in the last 5 years, it can't succeed, period.

IT's not simply a loan. That much is clear.

[dukebound85]

so you say the loan Chrysler paid back with interest was a bailout

by that logic, every loan given to every individual/buisness/etc is a bailout huh

[fivepoint]

http://www.boingboing.net/images/x_2008/youwouldntbuyour.jpg

[leekohler]

from what i gather, its going to be private owned with governmental oversight as it should be when taxpayer money is being used to rescue it

Duke- you impress me more every day.

That's about the extent of what will happen, yes. That said, I'm against bailouts for the most part. But since this may be necessary, I want people fired and better ones put in place. And NO golden parachutes!

so you say the loan Chrysler paid back with interest was a bailout

by that logic, every loan given to every individual/buisness/etc is a bailout huh

Exactly- and let's see just how much we get back from the banks. I'm betting nothing. I'd expect to get most of it back from the auto industry.

[rdowns]

What's really pissing me off in this whole fustercluck are Senators like Shelby and McConnell fighting it so fiercly while they have been perfectly happy with foreign (non-union) manufacturers setting up shop in their states and getting huge tax breaks.

[dukebound85]

Duke- you impress me more every day.

That's about the extent of what will happen, yes. That said, I'm against bailouts for the most part. But since this may be necessary, I want people fired and better ones put in place. And NO golden parachutes!



Exactly- and let's see just how much we get back from the banks. I'm betting nothing. I'd expect to get most of it back from the auto industry.

thanks lee

What's really pissing me off in this whole fustercluck are Senators like Shelby and McConnell fighting it so fiercly while they have been perfectly happy with foreign (non-union) manufacturers setting up shop in their states and getting huge tax breaks.

tell me what is wrong with foreign companies setting up plants in states. it creates jobs and helps the economy. or are you simply against anything unamercian in the US?

of course tax breaks are needed to entice the companies to set up there in the first place

id rather have foreign companies with successful buisness models create jobs here than have companies on the verge of failing that would employ those same people and when they go away, leave 1000's without work

i dont know why people are against companies like toyota when a lot of their cars are built in the US

[rdowns]

I'm not against foreign manufacturers at all. I think they are being hypocritical in that the govt. did a lot to help them locate there but they are unwilling to help out our auto industry. GM failing could bring down our economy.

[Thanatoast]

I'm surprised that the WTO isn't getting involved in this mess. Handing out tens of billions to domestic industries (while shutting out their foreign competitors) is something we've treatened massive sanctions for when other countries have done it.

I'm also pissed at the Congress and the free-marketers. Each of these companies has been trundling down the same short-sighted path for years if not decades while their counterparts have been looking at trends and where the market is going to be. The truly free market would see the weak companies fail, but I suppose lobbyists are also part of the free market, so there's that.

I'm okay with the economy tanking. We need a massive correction and having the Congress and the Fed throw money at things will only make the situation worse in the long run. Ditch the Fed and go back to having the government control the money supply. Take a look at an inflation graph covering the existence of the US. Right after the Fed is created inflation starts climbing and never stops. And who's earning all that cash? The same bankers who just got capital guarantees in the trillions of dollars from the US taxpayer.

[blackfox]

I know this will be a tangent to the discussion here, but I can't help but think about this:

Why are the models sold overseas (europe/australasia etc) not put in the market over here?

There seem to be so many superior cars and technology available outside of the US. There are multiple diesel offerings, practical small cars, and great styling.

The American car companies own offerings overseas seem to be quite superior to their domestic offerings, if only to compete in these foreign markets.

I guess I find all of this pretty confusing when these companies do make decent products (and competitive ones), but don't sell them at home.

[rdowns]

I'm surprised that the WTO isn't getting involved in this mess. Handing out tens of billions to domestic industries (while shutting out their foreign competitors) is something we've treatened massive sanctions for when other countries have done it.


How are we shutting out foreign competitors? We welcomed the Japanese and Germans here with open arms and millions in tax breaks. We allow the Koreans to sell tens of thousands of cars here while they let us sell like 5,000 a year there.

[fivepoint]

thanks lee

There wasn't supposed to be any governmental ownership of the banks either, but look at Citi. The government now has a vested interest and partial ownership. It's unconstitutional, unfair, and unnecessarily extends the recession by propping up failing companies and not allowing the market to correct itself. Ron Paul would tell you the same thing, duke.

The same is true for the proposed auto-bailout. The government would gain partial management control over private businesses, some of the largest out there by the way, and would be handing over billions upon billions of taxpayer dollars which they may not get back. GM lost over 6 BILLION dollars last fiscal quarter. What do we propose we do to fix the problem? Give them 11 billion. Less than enough to stop the bleeding for 2 quarters! This is a massive problem, and one that won't be fixed by a short-term increase in cash, small UAW concessions, or the death of a few brands. This is a fundamental ground-up failure of the system and is only curable by bankruptcy. This is not only a bailout, it's a worthless bailout band-aid doomed to fail.





tell me what is wrong with foreign companies setting up plants in states. it creates jobs and helps the economy. or are you simply against anything unamercian in the US?

of course tax breaks are needed to entice the companies to set up there in the first place

id rather have foreign companies with successful buisness models create jobs here than have companies on the verge of failing that would employ those same people and when they go away, leave 1000's without work

i dont know why people are against companies like toyota when a lot of their cars are built in the US

+1

[dukebound85]

There wasn't supposed to be any governmental ownership of the banks either, but look at Citi. The government now has a vested interest and partial ownership. It's unconstitutional, unfair, and unnecessarily extends the recession by propping up failing companies and not allowing the market to correct itself. Ron Paul would tell you the same thing, duke.

The same is true for the proposed auto-bailout. The government would gain partial management control over private businesses, some of the largest out there by the way, and would be handing over billions upon billions of taxpayer dollars which they may not get back. GM lost over 6 BILLION dollars last fiscal quarter. What do we propose we do to fix the problem? Give them 11 billion. Less than enough to stop the bleeding for 2 quarters! This is a massive problem, and one that won't be fixed by a short-term increase in cash, small UAW concessions, or the death of a few brands. This is a fundamental ground-up failure of the system and is only curable by bankruptcy. This is not only a bailout, it's a worthless bailout band-aid doomed to fail.



i know that's what Ron Paul would say. however, we have to deal what is actually happening now. its no longer speculation but a certainty. with that said if taxpayer's money is going to be used, then there needs to be governmental oversight of these businesses

if it were up to me, id let the whole thing work itself out without any government interfering. however, thats not the reality

[Counterfit]

I know this will be a tangent to the discussion here, but I can't help but think about this:

Why are the models sold overseas (europe/australasia etc) not put in the market over here?
In part because Ford ditched the guy who wanted to do just that (Euro Focus, Ka (which would go over great in Boston), Mondeo, etc.), and chose a CEO who wanted to redesign the US Focus, wasting millions.

[quagmire]

In part because Ford ditched the guy who wanted to do just that (Euro Focus, Ka (which would go over great in Boston), Mondeo, etc.), and chose a CEO who wanted to redesign the US Focus, wasting millions.

You talking about Billy boy right? As Mullaly is bringing over the Euro Focus, Fiesta, and the C-Max.

[fivepoint]

You guys (or a Mod) should probably move your discussion to another thread. Sounds like you could get pretty in-depth regarding analysis of individual car models and specific business practices.

Just a suggestion.

[synth3tik]

It's harsh, but we should have just let them fail.

Bail outs do not end recessions they only prolong them.

So GM is going to want to come back in a few months and ask for $4B more?
Totally unacceptable.

Yes, no one will want to by a new car from a company that is in Chapter 13. Yes, we're talking hundreds of thousands of jobs.

Just like a bankrupt company I see people being Leary of a bailed out company. Government run or not.

A lot of these people unfortunately will loose their jobs later when the big 3 burn through the bail out.

It is not my best area but a friend who is well versed in the matter has pointed out that a big big reason the US auto manufactures are having issues is the labor unions. We are talking exporting and all other things like that and not anything like safety or performance. I'm not an expert on it, but Andrew explained it quite well to me. Wish I could return the favor to you all.

As a lawyer Andrew worked with labor.

[leekohler]

You guys (or a Mod) should probably move your discussion to another thread. Sounds like you could get pretty in-depth regarding analysis of individual car models and specific business practices.

Just a suggestion.

Actually, it's kind of relevant. If these companies end up with bailout money, these are the kinds of cars they should be making.

[j/k/Andy]

What many people don't understand is that outside of engines and transmissions, auto companies foreign and domestic depend on the same third party suppliers for the majority of components. This is having a major impact in all domestic made vehicles and will slow foreign makes even with their governments help.

[fivepoint]

What many people don't understand is that outside of engines and transmissions, auto companies foreign and domestic depend on the same third party suppliers for the majority of components. This is having a major impact in all domestic made vehicles and will slow foreign makes even with their governments help.

Companies short-sighted enough to limit their production to one industry alone, and not diversify their production, deserve the death they have coming to them. Regardless of which country they operate out of or do business with.

Those suppliers clairvoyant enough to see the potential for these problems to arise, and who planned accordingly, should not be denied the opportunity to benefit from the failure of their competitors and to continue to grow and prosper.

[Dont Hurt Me]

Busco is going to grab some tarp $$$ and give it to these guys for the short term then everything will get a good going over with the next congress and Obama.

[dukebound85]

Companies short-sighted enough to limit their production to one industry alone, and not diversify their production, deserve the death they have coming to them. Regardless of which country they operate out of or do business with.

Those suppliers clairvoyant enough to see the potential for these problems to arise, and who planned accordingly, should not be denied the opportunity to benefit from the failure of their competitors and to continue to grow and prosper.

to play devil's advocate


even if it means unemploying thousands of workers who specialize in the car industry? what do you propose we do? just act like they dont exist?

just say "tough luck" and hope you recover from mistakes made from others?

you advocate pulling out plants that are the livelihood of the community? pulling them out and suddenly havong the town experience poverty that can last generations? the bailout wouldnt affect our lives nearly as much as it would affect those families



while i agree with you on the principle that the companies deserve to fail, the reality is that there has to be a comprimise to them failing and screwing the community and some sort of assistance program. the government isnt bailing out the car companies for the car companies' sake, but rather the sake of the people whose jobs depend on it whether it be those working in the plants, side companies, etc

[leekohler]

to play devil's advocate


even if it means unemploying thousands of workers who specialize in the car industry? what do you propose we do? just act like they dont exist?

just say "tough luck" and hope you recover from mistakes made from others?

you advocate pulling out plants that are the livelihood of the community? pulling them out and suddenly havong the town experience poverty that can last generations? the bailout wouldnt affect our lives nearly as much as it would affect those families



while i agree with you on the principle that the companies deserve to fail, the reality is that there has to be a comprimise to them failing and screwing the community and some sort of assistance program. the government isnt bailing out the car companies for the car companies' sake, but rather the sake of the people whose jobs depend on it whether it be those working in the plants, side companies, etc

OK- have you started taking smart pills or something? I remember when you were just one of those posters who reacted with emotional rants. Now we have a very reasonable, intelligent conservative MR member. Yay! You may take a seat next to desertrat. Now he won't feel so lonely. Duke, we need more of you!

Oh- and I agree with you, BTW. I'm in the same boat as far as this goes. It's such a tough call.

[fivepoint]

to play devil's advocate


even if it means unemploying thousands of workers who specialize in the car industry? what do you propose we do? just act like they dont exist?

just say "tough luck" and hope you recover from mistakes made from others?

you advocate pulling out plants that are the livelihood of the community? pulling them out and suddenly havong the town experience poverty that can last generations? the bailout wouldnt affect our lives nearly as much as it would affect those families



while i agree with you on the principle that the companies deserve to fail, the reality is that there has to be a comprimise to them failing and screwing the community and some sort of assistance program. the government isnt bailing out the car companies for the car companies' sake, but rather the sake of the people whose jobs depend on it whether it be those working in the plants, side companies, etc


Not only to they "deserve" it, but we are all better off in the long run because of it. This is fundamental to the free market system. Why WOULD you want to shore up failing companies? It's a battle between short term benefits and long term viability. How much sense does it make for the government to prop up failing companies while at the same time hurting the successful ones? All you end up with in the end is LARGER crappy companies who employ more people and who will hurt a lot more people when they do eventually die.

You say that we're doing people a favor by bailing out the Big 3, but what you're really doing is delaying the inevitable. Do you also support the endless printing of more money in the hopes of keeping interest rates low? That way you can prevent the short-term hurt of the housing bubble, but what is the long-term result? HUGE bubbles and massive inflation. This is a simple idea... do the right thing now to prevent bigger and more widespread problems in the future.

It's like rearing children. It may hurt you and them to be strict at the moment, but in the end everyone will be better off. Your kids will have more respect for you, they'll be more comfortable with meaningful guidelines, and will be less apt to get into bigger trouble in the long run. You benefit to by having a child who is more respectful, easier to handle, etc. The 'right' thing and the 'easy' thing are rarely the same.

Yes, I would tell them "tough luck". Yes, I would advocate for the car industry to go through bankruptcy. Not because I am heartless or want the worse for people... far from it. But because I do care. Because I do want the country to be healthy and our job market to be healthy. Not just in the short-term, but in the long term. I want it to be viable and healthy when my kids go to get a job, and when your kids do too. Of course it's not easy, but the tough decisions need to be made. And the system being maintained is far more important than a few companies being maintained.

These are the principles which have brought so much prosperity to the world... It's amusing to me now that while the U.S. is in the middle of nationalizing industry during this downturn, that China is in the middle of lowering corporate tax rates to stimulate growth.

[quagmire]

You do realize that a 100% free market system doesn't work? For the US to remain viable in this economy, it needs its major industries intact and the auto industry is a major US industry that is also tied into a lot of jobs outside of its own employees( suppliers is a big one). There needs to be some protectionism. Nothing like Japan's strict protectionist policies which has caused their economy to slow before this credit crisis, but enough to keep our industries competitive.

100% free market, 100% capitalism, 100% protectionist, etc won't work. You need mixes of each ideal. You can't run off just one ideal as it will eat you alive which is quite evident seeing foreign companies taking over our consumer market.

[robanga]

If we do provide a bailout, I believe they should resurrect the design of a 1984 Chevrolet Chevette and make sure every taxpayer gets one for free.

[itcheroni]

I think the fear of socialism isn't the real threat. I've noticed one crucial assumption that I disagree with:

Giving the big 3 a bailout will:
1) save current jobs, and if it works to save them in the long run, great, but if it doesn't, it was worth a try.

The assumption is that the bailout will not make things worst.

Difference in perspective: Every time government intervenes to stave off an economic downturn, they are in fact just delaying the downturn and increasing its impact. It's like owing a loan. Delaying it feels good for the short term, but it makes the problem larger in the long term. I would agree with the sentiment that it's worth trying to save the big 3 if America had money or the ability to pay it back.

Other countries have money, America doesn't. Out deficit will be over $1 trillion this year. Just our interest on our current debt will be close to $1 trillion a year probably in a few years. Every dollar we give as a bailout will be also borrowed from foreign countries.

It's not that I have some mantra against government involvement in private industry, it's that I believe (for now) that such bailouts could actually make the problem worse. People are worried about 2.5 million jobs now. Imagine a larger problem in 2-3 years, exacerbated by our good intentions.

[itcheroni]

to play devil's advocate


even if it means unemploying thousands of workers who specialize in the car industry? what do you propose we do? just act like they dont exist?

just say "tough luck" and hope you recover from mistakes made from others?

you advocate pulling out plants that are the livelihood of the community? pulling them out and suddenly havong the town experience poverty that can last generations? the bailout wouldnt affect our lives nearly as much as it would affect those families



while i agree with you on the principle that the companies deserve to fail, the reality is that there has to be a comprimise to them failing and screwing the community and some sort of assistance program. the government isnt bailing out the car companies for the car companies' sake, but rather the sake of the people whose jobs depend on it whether it be those working in the plants, side companies, etc

The question should be, Should we be subsidizing jobs that shouldn't exist? In that sense, we would be wasting two things, our money (which we don't have) and our labor (making products that aren't viable).

Rather than having our auto workers, an asset to our country, making products that lose money on each sale in an company that probably can't survive even with the bailout, we should have their labor put to actual use. When these workers lose their jobs, they're going to eventually get other jobs. Viable jobs. And that should help our economy recover with a better footing.

[JG271]

I think the fear of socialism isn't the real threat. I've noticed one crucial assumption that I disagree with:

Giving the big 3 a bailout will:
1) save current jobs, and if it works to save them in the long run, great, but if it doesn't, it was worth a try.

The assumption is that the bailout will not make things worst.

Difference in perspective: Every time government intervenes to stave off an economic downturn, they are in fact just delaying the downturn and increasing its impact. It's like owing a loan. Delaying it feels good for the short term, but it makes the problem larger in the long term. I would agree with the sentiment that it's worth trying to save the big 3 if America had money or the ability to pay it back.

Other countries have money, America doesn't. Out deficit will be over $1 trillion this year. Just our interest on our current debt will be close to $1 trillion a year probably in a few years. Every dollar we give as a bailout will be also borrowed from foreign countries.

It's not that I have some mantra against government being involved in private industry, it's that I believe (for now) that such bailouts could actually make the problem worse. People are worried about 2.5 million jobs now. Imagine a larger problem in 2-3 year exacerbated by our good intentions.

I don't think a bailout will increase a downturn, more like a shot in the arm- it won't be such a deep recession, in the sense that the companies will probably just take longer to fail, slowly shedding jobs as opposed to axing them all in one go. When the motor companies do fail after a longer time than they would otherwise, my thought is that the rest of the economy will have picked up sufficiently for it not to cause too much of an impact.

America is in a large amount of debt, but so are most western democracies. America's debt is more like $10 trillion, which is surprising since it doesn't have a large benefits system or free at the point of service healthcare. The UK's national debt is expected to be £1.1 trillion next year.

It would seem like all countries run out of money...

In response to your other post, jobs will need to be created before you can get people into new jobs, which is why I think the auto bailout will do more good than bad - it'll keep a lot of people in a job, even though I think it is wrong on principle.

[erickkoch]

I have mixed feelings about all this. I'm still making payments on my GMC truck and I bought the extended warranty (seemed like a good idea at the time:rolleyes:).
Toyota trucks were rated better but the GMC fit my budget and needs so I leaned American and took out a $21,000 loan. Now they want more of my money.

The auto industry is a business, not a jobs program. I want them to succeed but not with my tax dollars. I wish there was another way to help them out. I don't want to see people out of work but there must be a better use for the money.

[Dont Hurt Me]

It needs to be said that chrysler is going to shut down all of its plants for 30 days cnn is reporting. Ouch!

[fivepoint]

It needs to be said that chrysler is going to shut down all of its plants for 30 days cnn is reporting. Ouch!

http://money.cnn.com/2008/12/17/autos/chrysler_shutdown/index.htm?postversion=2008121717
http://i2.cdn.turner.com/cnn/2008/images/12/17/t1home.chrysler.01.gi.jpg

NEW YORK (CNNMoney.com) -- Chrysler LLC announced late Wednesday that it is stopping all vehicle production in the United States for at least a month.

All 30 of the carmaker's plants will close after the last shift on Friday, and employees will not be asked to return to work before Jan. 19.

Chrysler blamed the "continued lack of consumer credit for the American car buyer" for the slow-down in sales that forced the move.

Chrysler ordinarily shuts down operations between Dec. 24 and Jan. 5 for the holidays. This closure would add roughly two weeks to that shut-down.

Chrysler would not say how many fewer vehicles would be produced because this shut-down. A total of 46,000 employees will be effected by the shut down. Those employees will be paid during the shutdown through a combination of state unemployment benefits and Chrysler contributions, but they will not receive the full amount of their working pay, a Chrysler spokesman said.

"Chrysler dealers confirmed to the company at a recent meeting at its headquarters, that they have many willing buyers for Chrysler, Jeep and Dodge vehicles but are unable to close the deals, due to lack of financing," the carmaker said in an announcement. "The dealers have stated that they have lost an estimated 20% to 25% of their volume because of this credit situation."

Auto sales have been hit hard by tight credit and the struggling economy. Overall auto sales in the United States were down 37% last month compared to November 2007.

Chrysler's situation was especially bad. Its sales were down 47%.

Chrysler's financing arm, Chrysler Financial, has tightened lending terms for buyers and, earlier this year, announced it would no longer offer leases.

Chrysler, Ford Motor Co. (F, Fortune 500) and General Motors (GM, Fortune 500) have approached Congress for aid to help them get through the current financial crisis.

A congressional effort to establish a stopgap, $14 billion loan program to help Chrysler and General Motors at least until next month collapsed last week.

The Bush administration has said it is working on a plan to throw the companies, which have said they are running out of the cash they need to operate, a lifeline using money from the $700 billion bailout approved by Congress in October, the Troubled Asset Relief Program or TARP.

Ford also announced Wednesday that it will shut down 10 of its plants for an extra week due to slow sales.

General Motors recently announced it was idling 30% of its North American manufacturing capacity during the first quarter of 2009 in response to deteriorating market conditions.

"The speed and severity of the U.S. auto market's decline has been unprecedented in recent weeks as consumers reel from the collapse of the financial markets and the resulting lack of credit for vehicle financing," GM said in a Dec. 12 announcement, citing 41% drop in November sales.

Both GMAC and Chrysler Finanial have been trying reorganize so they can be classified as banks and recieve federal assistance under the TARP program. GMAC is affiliated with General Motors, which owns 51% of the finance company. The other 51% of GMAC is owned by a consortium of investorys led by Cerberus, which owns Chrysler and Chrysler Financial.

[mactastic]

Merry F'in Christmas, workers...

[.Andy]

Merry F'in Christmas, workers...
A terrible end to the year for 46 000 workers. I can only imagine what it would be like :(.

[Dont Hurt Me]

At least they arent all being fired or laid off for good, on a side note GM and Chrysler are restarting merger talks again. Whatever they do I just hope they keep making challengers so next year I can get one. Baddest looking car to come out of Detroit in a decade!:D

[rdowns]

At least they arent all being fired or laid off for good, on a side note GM and Chrysler are restarting merger talks again. Whatever they do I just hope they keep making challengers so next year I can get one. Baddest looking car to come out of Detroit in a decade!:D


If they are still making Challengers (niche car) next year, it will be a clear sign that they clearly do not get it and will be gone by 2010.

[quagmire]

All I care is that the Camaro will still be produced. Best vehicle out of the three. :D

[takao]

If they are still making Challengers (niche car) next year, it will be a clear sign that they clearly do not get it and will be gone by 2010.

exactly .. i just read that GM has stopped construction work on their plant which was expected to produce the chevrolet volt engine/drive train (or something like that)
congratulation GM for you fabulous image .. you sure keep digging that hole professionally

[leekohler]

If they are still making Challengers (niche car) next year, it will be a clear sign that they clearly do not get it and will be gone by 2010.

They can still make Challengers, just fewer of them. They'll probably still make Vipers too. But yes, they definitely need to start thinking and focusing on greener tech. That needs to be be the main focus. Who knows? With Chrysler, at least we might get a nice-looking hybrid for a change.

[quagmire]

exactly .. i just read that GM has stopped construction work on their plant which was expected to produce the chevrolet volt engine/drive train (or something like that)
congratulation GM for you fabulous image .. you sure keep digging that hole professionally

It won't delay the Volt.