rickair7777

Autoworkers got their job out of HS (if they bothered to finish).

They did not pay $100K-$300K in training and lost opportunity costs to get an entry-level job.

Their personal liaibility risk is zero.

They go home each night.

Ultimately, they had a good deal for a very long time. I do not begrudge them their good deal, because it was legitimate in the past...post WW-II the industrial nations of the world were smoking ruins, all except the US of A. We had a good run of being first the only viable heavy-industry economy, and then the best heavy-industry econmy for decades.

Now we have legit competetion, and the big three did not keep up...time to pay the price.

I think if we do a bailout we have to look at the cost vs. benefit.

The only benefit is keeping a heavy-industry infrastructure which could support a large-scale war effort if needed. I see no benefit in simply subsidizing unimaginative designers, weak quality assurance, and untenable union packages...that would be throwing good money after bad.

I think the big three should be forced to bid against each other for bailout..their proposals for reorganization and new business practices would be compared for likelyhood of success and taxpayer return-on-investment, and the best one would get bailed out.

If you just give them $75B, they will pee that away in a year or so and come looking for more. The economy is bad, their products represent exactly the opposite of where we need to going re. energy independence, and they have no recent history of innovation, flexibility, or change.

Winged Wheeler

I am a Michigander and I have a bias toward the US automakers. That bias does not, however, blind me to the reality of what is going on.

Here are two thoughts on the current goings on that I do not believe have been discussed here:

The management of the companies will have a decision to make very shortly. A bailout will not happen before the Great Helmsman takes office. A bailout will happen if the Big 3 wait until the new administration comes in. If the automakers go into ch 11 now, they can regroup as much smaller, but hopefully more competitive companies. If the management at the Big 3 sees an eternal gravy train of federal subsidies, they won't file and will milk the taxpayers into the forseeable future. It'll be interesting to see if they opt for capitalism or for the other route.

Longer term, I am not sure if automaking, as a vast 24/7 operation can continue. If the era of "easy money" has come to an end, then there is no rational reason to buy a new car on credit.

One of the most basic rules of personal finance is that you shouldn't buy on credit something that does not appreciate in value. So a mortgage for a house has traditionally been a good idea (if you assume the value of the house will go up). If you finance your car, you are upside down as soon as you drive off the lot. Lots and lots of Americans have financed cars in spite of this rule. Car values are much higher than what they once were, employment is tenuous across the economy, credit is more difficult to get, and the value of the dollar is largely supported by overseas speculators and governments. Debt is a bad deal, no matter how nice your car is.

I predict that the auto industry will stop making vast numbers of cars. If you buy a new one you will order it and wait for it to be delivered. Most people will buy used cars. The after market industry, to include innovative engine technology will grow dramatically.

Written in one sitting--hopefully my brain didn't go fsaster than my fingers.

WW

Stetson20

"Longer term, I am not sure if automaking, as a vast 24/7 operation can continue. If the era of "easy money" has come to an end, then there is no rational reason to buy a new car on credit.

One of the most basic rules of personal finance is that you shouldn't buy on credit something that does not appreciate in value. So a mortgage for a house has traditionally been a good idea (if you assume the value of the house will go up). If you finance your car, you are upside down as soon as you drive off the lot. Lots and lots of Americans have financed cars in spite of this rule. Car values are much higher than what they once were, employment is tenuous across the economy, credit is more difficult to get, and the value of the dollar is largely supported by overseas speculators and governments. Debt is a bad deal, no matter how nice your car is."

Unfortunately, most Americans don't think rationally and are addicted to easy credit.

Stetson20

ewrbasedpilot

One thing I'd like to see is the pipeline cut off for all the Japanese cars (you certainly don't see OUR cars over in Japan like theirs are here) for a few months. The trade imbalance is staggering. Why are we so worried about keeping the Japanese automakers employed anyway? While I agree this is a wake up call to the US auto industry, it's not like the LABORERS caused this situation. Hard to sell cars when the banks are hoarding all the money WE gave them. I just wish a $35,000 car was worth more than $5,000 after two years. THAT is what's so pathetic. Buying a new vehicle is such a waste of money.

Winged Wheeler

The only reason that GM and Ford have made it this far is that they sell cars that do well in China and Europe. Starting a protectionist trade war would hurt our automakers in the short and long term. Additionally, there are lots of Japanese cars that are assembled in North America, I doubt if the many thousands of employees in those plants would like your plan.

WW

AL E NEWMAN

Here is an article that encapsulates GM's downfall.

Where GM went wrong: Let me count the ways - Nov. 24, 2008

atpwannabe

I was watching the CBS Evening News last night and a UAW worker told the reporter that he was against having to perform the same job and getting paid less for it. I said to myself that "maybe the UAW needs to talk to members of ALPA". I found this guy's statement to be quite interesting.

Another observation was the fact that the Big 3 pay their employees to sit "on reserve" so to speak and that the average salary was around 50K. These workers sit around and play cards, work crossword puzzles and even nap. UAW management has no real explanation to the viableness of this practice and admits that it contributes to the crisis that the auto industry is facing right now, do you think that that same premise could or will be extrapulated to the airline industry in terms of pilots sitting "on reserve".

Just something to think about.



atp

DWN3GRN

What I dont understand is why don't these auto companies furlough, reduce force until they start making money again. Just like my company did to me. Why give these A$$@#$#$ money when in turn they are the ones that ran it into the ground... If they are awarded bailout money then my company should be next in line at the free money counter. my .0233 cents

jungle

The companies have furloughed and shut down plants. The unfortunate truth is that the bailout has nothing to do with economics or saving a viable business and everything to do with rewarding a political ideology.
Consumers will continue to decide which cars sell and without a restructure and change of business model it is unlikely that bailout money to the big three will do anything but forestall their inevitable failure.

Their success in other countries has been much better.

At the current stock prices all three could be bought for much less money than has been proposed in the bailouts.

atpwannabe

Two very true statements.



atp