Should we have an auto bailout?

[logainofhades]

The economy would worsen and the mortgage crisis will get even worse if the big 3 fail.

[TechnologyCoordinator]

Originally Posted by logainofhades

The economy would worsen and the mortgage crisis will get even worse if the big 3 fail.

I really don't think all three would fail. If one would fail (and stop shipping product) the other two would immediately have much larger demand for their product and their sales volume would go up.

[SuperFly03]

Originally Posted by TechnologyCoordinator

I really don't think all three would fail. If one would fail (and stop shipping product) the other two would immediately have much larger demand for their product and their sales volume would go up.

*SF gets out his ginormous coffin*

Where are you Rick Wagoner?

[Sailer]

Originally Posted by Mandrake

Agreed 100%. It's not the job of the US government to bail out automotive companies.

Fine, let them die. Then you can flood the unemployment lines with tens of thousands of laid off auto industry workers. Not just the UAW, understand, but those people who are not UAW. Do you work for Borg-Warner, making transmissions for GM and Ford? Your job is gone. Do you work for Phillips, making electronics for the cars? your job is gone. Do you work for any industry that supplies the American auto industry in any way? Your job is gone. Lets see, how many hundred thousand people can we put out of work?

Of course, these out of work people will then be unable to make the payments on the house, car, and whatever else for which they might have loans. That further loads the banks with defaults, thus bringing them down as well. Employees in a variety of industries and other commercial stores get laid off because there's fewer people who can buy something. And the unemployment lines get longer.

Welcome to 1929 and the followup of 1932. Lots of people out of work, unable to buy anything beyond the most basic necessities, and sometimes not even those. Few or no jobs to be had. You get to know the real meaning of hunger, cold in the winter and hot (no air conditioning) in the summer because you can't afford the bills. Oh yes, as this is a computer site, you probably won't be able to afford the latest tech stuff or games, if they're even being made. Its a wonderful life, isn't it?

[Gneisenau]

Originally Posted by Sailer

Fine, let them die. Then you can flood the unemployment lines with tens of thousands of laid off auto industry workers. Not just the UAW, understand, but those people who are not UAW. Do you work for Borg-Warner, making transmissions for GM and Ford? Your job is gone. Do you work for Phillips, making electronics for the cars? your job is gone. Do you work for any industry that supplies the American auto industry in any way? Your job is gone. Lets see, how many hundred thousand people can we put out of work?

Of course, these out of work people will then be unable to make the payments on the house, car, and whatever else for which they might have loans. That further loads the banks with defaults, thus bringing them down as well. Employees in a variety of industries and other commercial stores get laid off because there's fewer people who can buy something. And the unemployment lines get longer.

Welcome to 1929 and the followup of 1932. Lots of people out of work, unable to buy anything beyond the most basic necessities, and sometimes not even those. Few or no jobs to be had. You get to know the real meaning of hunger, cold in the winter and hot (no air conditioning) in the summer because you can't afford the bills. Oh yes, as this is a computer site, you probably won't be able to afford the latest tech stuff or games, if they're even being made. Its a wonderful life, isn't it?

You know, sometimes I wonder if humans in general don't need to live through something catastrophic once every generation or so, just to remember how to really live. (Not that I want to have to do it myself mind you.)
Failure of the auto industry would certainly suck huge, and wouldn't just push our economy over the edge, it would throw it over and stomp on the remains. For us living now it would be horrible, but maybe it would be better for the next generation in the long run.
Of course there's probably an even chance it would ultimately result in Armageddon as the world's economy followed us over the edge and people starting fighting for food and water again.

As our favorite submarine captain said "A little revolution now and then is a healthy thing, don't you think?"

[BaldEagle]

Originally Posted by BaldEagle

Does anyone find anything surprising in this?

Failure of auto industry could set off catastrophe: Financial News - Yahoo! Finance

I'll have to say I was stunned can you guess why?

If the industry failed, among the hardest-hit communities would be Lordstown, Ohio, a village of 3,600 people about 50 miles east of Cleveland that has been home to a GM factory since 1966.

If the plant closed, Lordstown would lose up to 70 percent of its budget, a scary scenario that proponents of a multibillion dollar bailout say would be repeated across the industrial Midwest.

"If they went completely under, obviously it would financially devastate us," said Michael Chaffee, a school teacher and Lordstown's part-time mayor. "It would be catastrophic for our whole area."

Without GM and nearby parts factories, he said, Lordstown's $4.2 million budget would take about a $3 million hit that would almost certainly require layoffs of police and drastic cuts in park programs.

Since nobody caught on let me explain my sticker shock. Does anyone know what their local Municipality spends per capita each year?

Take where I used to live:
Officials

Population 2,678 ( 2000 Census )
Municipal Budget $ 1,512,127

$565/person
Just a little smaller and 1/2 the per capita expense.

Where I grew up:
http://www.ci.waukesha.wi.us/Finance...mittal2007.pdf
Waukesha, Wisconsin - Wikipedia, the free encyclopedia

Population 64,826
Expenditures of 51,455,226

$793/person
20X the size and they still spend less per capita!!!

and at Lordstown:
Budget of 4,200,000
Population of 3600
$1167/person

Looks like they have a spend like a drunken sailor problem.....


Now let me share my rant from another post because it really belongs here:

The UAW is nearly entirely to blame for the current state of the US auto industry so letting them go under would be justice indeed. Factory workers make upwards of $30/hour or more than $60K per year, without overtime, (Why go to college when you can make that money as a HS graduate that can turn a bolt) and thousands of them sit idle at those wages reading or playing games 8 hours a day (the "labor pool") due to the union rules. They pay $0 for health care, boots, uniforms, get hundreds of dollars in tool credits, $1/hour to their 401K, $30K in relocation expenses if they move due to changing plants, Paid shutdown (and no it's not vacation), 17 holidays per year, and they have probably the most generous vacation schedule there ever was. So management was left to produce profitable vehicles and of course they choose to produce the largest and most expensive vehicles SUV's in huge numbers.
New Contract Protects UAW Jobs - UAW/GM Contract 2007

GM also agreed to a moratorium on outsourcing, a pledge to insource more than 3,000 UAW jobs and a commitment to hire 3,000 temporary workers as permanent GM employees.

On jobs we see -3000 +3000 =0 (Doesn't look to help GM's bottom line there)

The agreement will deliver more than $13,000 in economic gains for a typical UAW member, including a $3,000 signing bonus, two 3 percent lump sums and a 4 percent lump sum.

Along comes $4.00 GAS and guess what nobody wants an SUV that gets 17MPG when they can get a smaller import car at 30 mpg for less money.
Health care issue slows UAW-GM bargaining - Autos

GM, as well as Ford and Chrysler, are trying to cut what they say is about a $25 per hour labor cost gap with their Japanese competitors. Industry analysts say the costs must be reduced for the U.S. companies to survive.

Enough of ranting how the unions have screwed all the domestic automakers.

Now on the more practical side though much of the US GNP is tied to the auto industry so to simply allow it to collapse would wreck the economy and plunge us into a 1930's depression so we have basically two choices:

Option 1: A well planned and coordinated BK of all three auto makers could just bust the UAW for good and make them profitable again.
Option 2: A bail out of the big two/ maybe three (chrysler? maybe, maybe not after Damlier screwed them over BK may be their only out).

Cars sales have simply evaporated as people concerned about the economy retrench and put off new car purchases. Something has to be done on the demand side of the problem or any bail out will simply be unemployment on steroids. What they need to start with is a plan to provide incentives to buy new cars such as a tax credits and then make the banks sucking up federal money loan it back out again instead of hoarding it as they currently are doing.

White House to banks: Start lending now: Financial News - Yahoo! Finance

In short we have to hold our nose and bail them out or we'll probably get to try out a 1930's style depression.

[arisythila]

I say let them die..... Bye bye Ford, Chrysler, and GM

[BaldEagle]

Originally Posted by SuperFly03

*SF gets out his ginormous coffin*

Where are you Rick Wagoner?

Can you put the whole economy in there???

Oh never mind it should fit nicely after the contraction/collapse of the auto, electronics, steel, aluminum, tool and die, plastics, and rubber industries.

Originally Posted by arisythila

I say let them die..... Bye bye Ford, Chrysler, and GM

My heart is with you but the head says no they have to be saved or we tank the whole economy.

[TechnologyCoordinator]

Originally Posted by BaldEagle

The UAW is nearly entirely to blame for the current state of the US auto industry so letting them go under would be justice indeed. Factory workers make upwards of $30/hour or more than $60K per year, without overtime, (Why go to college when you can make that money as a HS graduate that can turn a bolt) and thousands of them sit idle at those wages reading or playing games 8 hours a day (the "labor pool") due to the union rules. They pay $0 for health care, boots, uniforms, get hundreds of dollars in tool credits, $1/hour to their 401K, $30K in relocation expenses if they move due to changing plants, Paid shutdown (and no it's not vacation), 17 holidays per year, and they have probably the most generous vacation schedule there ever was. So management was left to produce profitable vehicles and of course they choose to produce the largest and most expensive vehicles SUV's in huge numbers.
New Contract Protects UAW Jobs - UAW/GM Contract 2007

WOW, we fully agree. That hasn't happened much! And yes, I know Obama is for an auto-bailout, but I'll make you a bet he doesn't do one; because Bush will beat him to it.

[TechnologyCoordinator]

Originally Posted by BaldEagle

Something has to be done on the demand side of the problem or any bail out will simply be unemployment on steroids. What they need to start with is a plan to provide incentives to buy new cars such as a tax credits and then make the banks sucking up federal money loan it back out again instead of hoarding it as they currently are doing.

I'm not sold on incentives for people, but if we do incentives I feel it should be only on cars that get X amount of MPG or better. For example, 36 mpg or better. Force the automakers to squeeze a few more MPG out and then we can start to solve three problems with the incentives. (Three problems: Climate Change\Oil Imports\ and sluggish auto sales)

[SuperFly03]

Option 1:Chapter 11: Sheds the UAW and reemerge competitive and profitable

Option 2:Chapter 7: Great Depression round 2.

Option 3:Bail them out and curtail the union.

America, you decide!

Personally, I prefer Option 1.

[TechnologyCoordinator]

Originally Posted by SuperFly03

Option 1:Chapter 11: Sheds the UAW and reemerge competitive and profitable

Option 2:Chapter 7: Great Depression round 2.

Option 3:Bail them out and curtail the union.

America, you decide!

Personally, I prefer Option 1.

I prefer 1, but I'll settle for 3.


I remember when the UAW walked out on American Axle because they wanted $30\hour for a $15\hour job.

Screw the UAW. The purpose of the UAW has been served.