Should the US bailout the big three automakers?

[Dan40]

Originally Posted by RedBarchetta

I love the condition they set on the $17.4B loan. If they don't have a reasonable game plan in place by March 31, they have to pay it back.

With what, spare parts for a '98 Camaro?!? Hellooooo! Mr. Government, we're not THAT stupid!

Methinks we does be that stupid.

Dan

[What'saCobra?]

Friday, December 19, 2008
http://www.ocregister.com/articles/t...7-kennedy-land
We're in the fast lane to Bailoutistan
By MARK STEYN
SYNDICATED COLUMNIST


"See the USA in your Chevrolet!" trilled Dinah Shore week after week on TV.

Can you still see the USA in your Chevrolet? Through a windscreen darkly.

General Motors now has a market valuation about a third of Bed, Bath & Beyond, and no one says your Swash 700 Elongated Biscuit Toilet Seat Bidet is too big to fail. GM has a market capitalization of about $2.4 billion. For purposes of comparison, Toyota's market cap is $100 billion and change (the change being bigger than the whole of GM). General Motors, like the other two geezers of the Old Three, is a vast retirement home with a small money-losing auto subsidiary.

The UAW is AARP in an Edsel: It has three times as many retirees and widows as "workers" (I use the term loosely). GM has 96,000 employees but provides health benefits to a million people.

How do you make that math add up? Not by selling cars: Honda and Nissan make a pretax operating profit per vehicle of around $1,600; Ford, Chrysler and GM make a loss of $500 to $1,500. That's to say, they lose money on every vehicle they sell. Like Henry Ford said, you can get it in any color as long as it's red.

In the 20th century, most advanced nations made automobiles but only America made them mythic: "Drive the USA in your Chevrolet!" sang Dinah. "America's the greatest land of all!" America had road movies. With car chases. Thelma and Louise drove their vehicle off the cliff and, unlike the Old Three, they didn't demand American taxpayers come along for the ride. But, if you didn't want to hit the open road, you could just hang around, being cool. In Chuck Berry's immortal quatrain:
"Riding along in my automobile
My baby beside me at the wheel
Cruising and playing the radio
With No Particular Place To Go."

Not if you were a European teen. Cruising was an American activity. A Saturday night out for a Brit meant hanging around at a rain-streaked bus shelter hoping the night service would show up. Even if you had a particular place to go, you had no means of getting there.

So many areas of endeavor that once embodied the youth and energy of this great land are now old and sclerotic. I include, naturally, my own industry. I loved the American newsrooms you saw in movies like "The Front Page," full of hard-boiled, hard-livin' newspapermen. By the time I got there myself, there were no hard-boiled newspapermen, just bland, anemic newspaperpersons turning out politically correct snooze sheets of torpid portentousness. The owner of The Los Angeles Times and Chicago Tribune recently filed for bankruptcy protection. The New York Times is mortgaging its office to fund debt repayment. The Detroit Free Press is cutting out home delivery except on Thursdays, Fridays and Sundays, thereby further depressing sales of delivery trucks in the Motor City.

The newspapers blame the Internet, just as Detroit blames Japan. But the Japanese have problems of their own. One day they'll get theirs. That's the beauty of capitalism. Nothing is forever. The big railroad barons smoking cigars and enjoying pheasant under glass in the dining car on the Atchison, Topeka and Santa Fe thought Henry Ford was a schmuck. Who'd want to ride around in that thing? Next thing you know, everyone's getting their kicks on Route 66:
"You'll see Amarillo
Gallup, New Mexico
Flagstaff, Arizona
Don't forget Winona
Kingman, Barstow, San Bernardino."

Ah, California. The Golden State! To a penniless immigrant named Arnold Schwarzenegger, it was a land of plenty. Now Arnold is an immigrant of plenty in a penniless land. What's the motto on the license plates? "Ah'll be back …for more of your money!" In California you don't have to be an orange to have your pips squeezed. The Terminator makes Gray Davis look like Calvin Coolidge. Care to terminate a government program, Governor? Hey, great idea! We'll hire 200 people to do an impact study on terminating the Department of Impact Study Regulation and get back to you in a decade. And when Gov. Girlyman has run out of state taxpayers to fleece for his ever-more-bloated bureaucracy, he'll go to Washington to plead for a federal bailout of Cantaffordya.

[Yet, no one mentions drilling for oil off-shore as an excellent solution, like Alaska. But, THAT gov. is a woman, so we know that cannot possibly work...]

California! The state that symbolizes the American Dream! If you can make it there, you'll make it anywhere!

No, wait, that's New York. "This is the worst fiscal downturn since the Great Depression," announced New York Gov. Paterson. So what's he doing? Why, he's bringing in the biggest tax hike in New York history. If you can make it there, you'll be paying state tax on it, sales tax, municipal tax, a doubled beer tax, a tax on clothing, a tax on cab rides, an "iTunes tax" on downloads from the Internet, a tax on haircuts, 137 new tax hikes in all. Call Albany today and order your new package of tax forms, for just $199.99, plus 12 percent tax on tax forms and 4 percent tax-form application fee partially refundable upon payment of the 7.5 percent tax-filing tax. If you can make it there, you'll certainly have no difficulty making it in Tajikistan.

Hey, and who needs to make it therewhen you can just get appointed there? Gov. Paterson is said to be considering appointing Princess Caroline of Kennedy to Hillary Clinton's vacant Senate seat. After two and a third centuries of republican experiment, America has finally worked its way back to the House of Lords.

"Friends Say Kennedy Has Long Wanted Public Role," Anne Kornblut assured readers in an in-depth Washington Post tongue-bath. She hasn't "long wanted" it to the extent of, you know, running for dog catcher in Lackawanna and getting – what's the word? – "elected," but, if you have a spare Senate seat, she's graciously indicated that she'd be prepared to consider accepting it. As lady-in-waiting Anne Kornblut pointed out, Caroline is highly qualified, being "the author of several books." It's true! She's an experienced poetry editor. She edited "The Best-Loved Poems Of Jacqueline Kennedy Onassis." Jackie Kennedy wrote poems? Of course! She wrote so many poems that some are better loved than others.

See the USA from your Chevrolet: An hereditary legislature, a media fawning its way into bankruptcy, its iconic coastal states driving out innovators and entrepreneurs, the arrival of the new Messiah heralded only by the leaden dirge of "We Three Kings Of Ol' Detroit Are/Seeking checks we traverse afar," and Route 66 looking ever more like a one-way dead-end street to Bailoutistan. Boy, I sure could use a poem by Jacqueline Kennedy Onassis right now, even one of the lesser-loved ones.

"I feel like I lost my country," the Hudson Institute's Herbert London said the other day, wondering whatever happened to the land of opportunity and dynamism. But I'm more of an optimist. Maybe Princess Caroline will be appointed CEO of GM and all will be well. Or maybe Bed, Bath & Beyond will put wheels on the Swash 700 Elongated Biscuit Toilet Seat Bidet.

And on that cheery note let me wish you a very Hopey Changemas.
------------------

[Keithc8]

The country is going to hell in a hand basket. I can not believe that the Goverment is trying to bail out these guys when they will go under anyway. Just a waste of tax payer money. We get to watch the value of our dollar go down the tubes everyday with this stupid stuff.
If they can't make it and there is a demand for more cars someone will come along and do it better and make a profit. If there is no demand then you do not deserve to be in bussines to just to keep people working.
Everyone says that we have to keep the UAW going because they and the car makers help support so many other jobs. I know with the UAW gone that there would be more jobs available because the car companies would not have to get stuff done out of the country. They could have more stuff built here and create more jobs. Has anyone thought about that in Washington. All they are worried about is taking care of their union buddies.
If I had to pay the money to my guys that the UAW makes no one could afford to buy an engine from me and I would be out of business. I just saw the other day where a robot loaded a mini spare into a trunk and all the guy had to go was set it of and bolt it down. You talk about lazy, these guys do not know how good they have it. This is the problem with this country compared to the world. We are spoiled and lazy as a whole and we can see where that has got us. These UAW guys would not last 2 weeks in my place because we have to pick some stuff up and work more than 8 hours a day.
A lot of us have worked hard just to see all of the greedy, lazy, stupid, theiving and corrupt people take us all down with them. When will it end? Is there a way we can start another country without all of these losers in it. We did that once and we ended up with them anyway. I guess us dumb people will just keep working. I just wish I had half the benfits of these UAW people. Good luck to all we need it.

[Ron61]

The Big Three at feeding time.

[What'saCobra?]

Several things we can bet will happen, the only question is the timing and sequences:

1. We will experience significant inflation from spending extra trillions of dollars on "infrastructure", without receiving trillions of dollars of new revenues. We will print more money to make it happen.

2. No matter how much money we "give" to the banks, they will not loan it out until the newly imposed "Mark to Market" accounting rule is revised. We will remain in a "credit crunch" until that happens. As long as we have this crunch, neither home or auto sales will improve.

3. Until the SEC disallows Short Sales of oil, gas, banks, etc. by folks that do not own a position or shares of those commodities, our financial economy will remain vulnerable to our enemies (Soros, Russians) large enough to cause crashes.

4. With such low car sales, there will is a growing demand for new cars, which someone with courage, brains and who does not currently hold crappy mortgages/paper can satisfy with proper credit lines and "normal" credit terms. Expect one of the larger foreign car companies to find both the funds and restructuring to make this happen. My bet? Toyota will figure it out first.

5. Under no circumstances, except chapter 11, will the UAW negotiate significant wage/benefit reductions. Without that, the "big 3" cannot close the 1500-2500 cost gap to the "foreign 3". Therefore, only Ch11 will help. We will see this happen this year.

6. FORD, not in such a cash crunch, actually has a disadvantage in not being in such bad shape. Their Ch11 terms may not be available as soon, giving them a competitive disadvantage in the initial bargaining. Gov't may solve this problem, however, by finally "allowing them to arrange" an "orderly" bankruptcy, together. This used to be called "knocking heads together".

7. There will be a knock-down, drag-out political fight between the political parties and within the political parties about the entire auto wage/credit affair. Pelosi & the UAW will absolutely go to the wall against this reduction of wages/benefits to union workers. They absolutely control the Congress at the moment. (Rahm Emanuel's bringing more Conservative ex-military democrats into the party against incumbent RINO's, while a successful strategy on the surface of apparent party control of Congress, will become her own poison pill in this battle. Personally, Rahm is likely dead-meat on the Blago issues.) But, the country as a whole wants to see UAW wages/benefits drop in-line with "right to work" home states of the foreign-owned factories.

8. If the conservatives/Republicans wish to retake the Senate and perhaps the House, these will be the best issues upon which to turn things around in 2010:
Overspending waste (they cannot spend huge amounts this fast without error, big error)
Stagflation (a la Jimmy Carter, increased taxes and low growth mean disaster)
Dem party corruption as a policy, Chicago style
Failure to contain Russia, Venezuela, etc.
O'Bambi decision errors and subsequent dithering
Another attack
-----------
... whereupon he gets down off his decrepit and wobbly soapbox, folds it up under his armpit, spits in the gutter and shuffles away... more later.

[sparks]

It strikes me kinda funny that the well off keep blameing the uaw? If the labor cost is only 1o-15% of the car cost then the major part of the problem lies some where else. The only thing thats gonna happen if they pay the same as the scabs is the ceo's are gonna get bigger salaries and bonus's !!! You all know this. Cut the uaw's package buy 10% and that would be more than fair. Why should we lower are standards? Instead we should RAISE import tax's Unions,unions ,unions thats all you guys whine about. Go to a lexus dealer (non-union) then go to a caddy dealer (union)is there a diff. in labor cost? at most $5 hr. Explain that ! It all comes down to the rich get richer and the little guy gets poorer. If you want $15 an hour than buy a trailer and move down south. Nothing wrong w/ that, if thats what you want. No matter what you say if the unions were gone the wages and the standards of living would for sure decline. To all you working scabs out there,(not owners)if the trade unions werre gone your wages and job conditions would def. decline. Its only from the unions that your bennys are even close to what they are.Remember that! I have worked both sides of the fence and my family is much better off now being a IBEW member!!!!!Yes I do know that the union is just a buiss. But the fact is united we stand and divided we fall......The other fact is These hard times are just used by the smaller buiss. owners and well to do to just bust the unions to fill there pockets up w/ more $$$$. I do agree that some reform does need to be done. There is so many more ways to cut costs than just from the bottom....Just my $38 hr. worth

You guys should give the new regime a chance, you should ***** when times get worse. I dont here anyone complaining about bush( what a great man), I would have rather seen hundreds of billions go to americans than to helping towel heads!!!How much money do we send overseas a yr.????We should take care of america before worrying about anyone else.

[RedBarchetta]

Originally Posted by sparks

We should take care of america before worrying about anyone else.

Of everything you just said, at least we agree on one point. That's progress!

[sparks]

At least your learning.

[Dan40]

Originally Posted by sparks

It strikes me kinda funny that the well off keep blameing the uaw? If the labor cost is only 1o-15% of the car cost then the major part of the problem lies some where else. The only thing thats gonna happen if they pay the same as the scabs is the ceo's are gonna get bigger salaries and bonus's !!! You all know this. Cut the uaw's package buy 10% and that would be more than fair. Why should we lower are standards? Instead we should RAISE import tax's Unions,unions ,unions thats all you guys whine about. Go to a lexus dealer (non-union) then go to a caddy dealer (union)is there a diff. in labor cost? at most $5 hr. Explain that ! It all comes down to the rich get richer and the little guy gets poorer. If you want $15 an hour than buy a trailer and move down south. Nothing wrong w/ that, if thats what you want. No matter what you say if the unions were gone the wages and the standards of living would for sure decline. To all you working scabs out there,(not owners)if the trade unions werre gone your wages and job conditions would def. decline. Its only from the unions that your bennys are even close to what they are.Remember that! I have worked both sides of the fence and my family is much better off now being a IBEW member!!!!!Yes I do know that the union is just a buiss. But the fact is united we stand and divided we fall......The other fact is These hard times are just used by the smaller buiss. owners and well to do to just bust the unions to fill there pockets up w/ more $$$$. I do agree that some reform does need to be done. There is so many more ways to cut costs than just from the bottom....Just my $38 hr. worth

You guys should give the new regime a chance, you should ***** when times get worse. I dont here anyone complaining about bush( what a great man), I would have rather seen hundreds of billions go to americans than to helping towel heads!!!How much money do we send overseas a yr.????We should take care of america before worrying about anyone else.

Numbers have been tossed around as gospel by every party, for or against, all the bailouts. It would be no surprise to me if EVERY number mentioned to date proves to be bogus.

Left, right, red, blue, Dem, GOP, liberal, conservative, I'm at the point that I no longer believe any politician.

Corruption, 100%, that I could believe.

Dan

[clayfoushee]

Originally Posted by Keithc8

The country is going to hell in a hand basket. I can not believe that the Goverment is trying to bail out these guys when they will go under anyway. Just a waste of tax payer money. We get to watch the value of our dollar go down the tubes everyday with this stupid stuff.
If they can't make it and there is a demand for more cars someone will come along and do it better and make a profit. If there is no demand then you do not deserve to be in bussines to just to keep people working.
Everyone says that we have to keep the UAW going because they and the car makers help support so many other jobs. I know with the UAW gone that there would be more jobs available because the car companies would not have to get stuff done out of the country. They could have more stuff built here and create more jobs. Has anyone thought about that in Washington. All they are worried about is taking care of their union buddies.
If I had to pay the money to my guys that the UAW makes no one could afford to buy an engine from me and I would be out of business. I just saw the other day where a robot loaded a mini spare into a trunk and all the guy had to go was set it of and bolt it down. You talk about lazy, these guys do not know how good they have it. This is the problem with this country compared to the world. We are spoiled and lazy as a whole and we can see where that has got us. These UAW guys would not last 2 weeks in my place because we have to pick some stuff up and work more than 8 hours a day.
A lot of us have worked hard just to see all of the greedy, lazy, stupid, theiving and corrupt people take us all down with them. When will it end? Is there a way we can start another country without all of these losers in it. We did that once and we ended up with them anyway. I guess us dumb people will just keep working. I just wish I had half the benfits of these UAW people. Good luck to all we need it.

Keith, your perspective is interesting considering what you do for a living. You might want to think about what happens to all the automotive suppliers, who also are in the aftermarket parts business. Without the steady income stream from US manufacturers, many of them would likely not make it. This is the very situation that Ford is currently most concerned about, even though their situation is stable at present, and they are not planning to seek Gov-backed loans.

What happens to you, when your parts supply begins to dry up? I guess you could start building high-performance versions of Asian-origin engines and importing your parts. The days of the internal combustion could be somewhat numbered anyway, so maybe you should start getting into high-performance hybrid technology.

Even backers don't like this situation, but the consequences of letting them fail appear to be very far reaching. I don't think anyone fully understands the extent of those possible consequences, and the question everyone should be asking is whether it is worth the risk. Do you like high-stakes "games of chicken?"

[CobraDan]

[Bartruff1]

Yes, life is not fair, even Jimmy Carter knows that....if this was a rational world men would ride side saddle... there was never a doubt in my mind that the auto companies would get a loan and no doubt that they will get more loans and as a tax payer I think that is fine...there is also not a doubt in my mind that the cost to the taxpayers would be far worse if they failed. I bought Ford common stock at a buck a share and sold it for three twentyfive and that was a nice profit (short term). In every single case that I am aware of, the tax payers have actually made money on these loans...eg...the Savings and Loans....Chrysler #1....Harley Davidson...get over it... Happy Soltice from a Secular Progressive.....

[Jamo]

CobraDan...muy perfecto.

The argument that we must bail out phukups because we have to is only less full of BS than the argument that no worries...we'll make money out of it. That's why we're bailing out a company that we bailed out before that got sold to a German company with an Armenian money-trader screwing around with the accounting, followed by private owners (not the American stockholders). In today's world...whether it's a loan or a gift, it's still a bailout.

I can confirm with assolute certainty Fred's point that you cannot lose weight by eating more donuts.

[Bartruff1]

You can lose weight by eating more donuts...IF your total calorie balance (intake-burn) is less than 10 calories per pound per day....for example, if you weigh 200 pounds you can have 2000 calories per day and maintain that weight, if you take in less or burn more , you will lose weight and it doesn't matter a damn what you eat...the net benefit of bailing out Chrysler before has far exceeded the cost...no mas

[What'saCobra?]

Let's assume the new 2008 GMC BlunderBus sells at 50K USD and costs perhaps 40K. If labor is 10-15%, that is about $4K to $6K. The loaded labor cost variance, Toyota v GM might be about 30% (or more), which is about $1200 to $1800 more per car. When you also include the millions of retired family members getting "free" health care, you might get up to $1000 additional costs, totaling 2000-2800 additional costs per BlunderBus.

Looking at my prior post from Mark Steyn, that cost just about equals the total difference between making a marginal profit and shipping money with each BlunderBus. While this is not a rigorous analysis, it is about correct in explaining why Toyota can make a marginal profit and GMC is losing on each car shipped at the moment.

Given the disaster in the entire market (euphemistically referred to as the "credit crunch"), the total unit costs are much higher at these very low volume levels. While the labor might be the same per unit, given that a shift is reduced, the plant overhead remains high, loading each BB with more "fixed" costs than planned. This is an absolute killer. No one can operate successfully in this market, only the strong and fleet of foot will survive.

A careful reading of these posts will evidence considerable angst against W for failing to allow markets to operate as they will, rather than federalizing the auto companies and their decisions. Hardly pro-W. Mostly pro-market.

People who wish to disrupt market-forces and make political decisions based on false or idealistic theories always claim these are "special times" that require "special actions". Like FDR's nationalizing of "make-work" government jobs, nothing got better until the war stimulated proper investments in production and services. We won the war and our investments were seen as wise and long-lasting. Germany lost the war and lost their investments of almost a generation.

Like it or not, the blessed Union Management and Corporate Management have both hitched their wagons to anti-market political forces which will fail and be seen to fail by any rational beings other than the in-the-tank media who are hell-bent upon "helping O'Bambi succeed" at any cost to their honor, honesty or OUR fortunes.

It has NOTHING to do with pro-W and much to do with anti-W. Like McCain, he had an opportunity to do the correct thing, but just couldn't live with the thought that the media would blame him for a while.

News flash!... the media will blame him for everything anyway, so go and do the right thing. But, too late. Gonna' be worse and harder to fix.

If there is not enough business in the USA for the big 3, why are the Japanese so successful? Have labor costs and frozen work rule buy-outs and automation conversion speed NOTHING to do with unit costs? Give me a break, Sonny.

GM, FORD and Chrysler have been playing nurse-maid to Detroit's and Michigan's dem party politics since WWII. Go play a round of golf at the UAW's country club for me. The automotive industry must change big-time. THe UAW isn't going to allow it and Pelosi isn't going to allow it, but would rather all their members starve to death first, right down to the last card-check.

i watched it happen at TWA & Eastern. i watched it happen at PATCO, except Reagan cut their "toes" off at the pass. He didn't mind being unpopular, either with the FAA, Congress or Gorbachov. He MADE things change. These wimpy poll-sycophants can't change squat, except down-hill and off-the-road.

If you think only we have tough financial times, take a look at Belgium:
http://uk.reuters.com/article/UKNews...4BJ0XL20081220

Hopey Changemas.

[Tom Kirkham]

I hope W has proven that "compassionate conservatism" is a failure...

Iceland is not doing so well either...

[sparks]

Whatsa what, I'm pretty sure that once medicare kicks in that the union ins. takes a back seat to it. There health care isnt free, they payed for it out of there own wages over the years. I'll take my blunderbus over your jap chit any day of the week. 250k mi. on my last american made POS, 10 below to 100+ never let me down. Keep supporting china and what not as long as it benefits YOU! Thats a big reason why where in this mess in the first place(corprate greed). Support america and it will come back!!!

[What'saCobra?]

Sir,
1. i daily drive a Blunderbus, a Trailblazer. Fine car. 7 place seating. Wouldn't have anything else at the moment, that i could afford. 15mpg if i baloon-foot it.
2. More typically, medicare pays part, GM pays more up to higher coverage, small co-pay.
3. There was no "lock box" for their health care insurance that would have made it fully funded. It is paid, like our SS system, out of current auto sales revenues.
4. i spend considerable sums each year on Chevrolet and FORD motors & bits. i buy no jap parts.
5. Wifey drives 29mpg in her own newish Honda CR-V. Great car. Expensive. Fun to drive. Full advanced safety features included, not options. US/Canadian made Michelin tires (also expensive)... also on Trailblazer (very expensive). Foreign isn't always cheaper, but frequently it is better. Read Consumers Union's tests.
6. i always prefer US made in everything. Not always possible.
7. Every client i've ever had tried like hell to keep as many shifts working as possible, forever if possible. It is not a matter of greed. The profitable can invest from operations ROI and tell the bankers to go suck. Lowest cost producer is the best insurance policy to keep jobs. Lots more than wage rates are involved.
8. i used to explain to the union bosses of the United Shoe Workers of America that if they didn't let the companies improve the production piece-rates with new methods and equipment, they would go out of business. How many shoes are made in the USA today? They're all gone.
9. i am not greedy and "greed" is not good. Self-interest, however, is good, normal and you are not from Mars. With all your erroneous bluster and presumptions, you are likely a Veneusian. Like my first wife.
10. My 250K Dodge Caravan went through 4 transmissions, about 60K miles each. Never again.
11. Wake-up and smell the cordite. Unlike Detroit, plan for rainy days ahead. Wish it wasn't so for any of us, but it is.
12. You want greed?
Everyone in the tobacco industry, farmer to retailer, knew that it caused the big C.
Everyone in the aviation industry knew airplanes would kill people as a result of human error.
Everyone in the asbestos industry knew it caused the big C.
Everyone in the mining industry knew black lung would occur very frequently after 8 years.
Everyone in the Panama Canal project knew malaria would likely kill them.
Were all these miserable greedy bastarditos? Are they different?
13. Read what actually happened to PATCO.

[Cobrabill]

[quote=What'saCobra?;13. Read what actually happened to PATCO.[/QUOTE]

No need to-they did it to themselves.



Sparks-my next purchase(s) will be a Digital SLR and a flat panel TV in that order.


Tell me how to buy American.

[sparks]

I guess as long as we try, thats all we can ask. I would be willing to pay 10% more for something made here. Alot of electronic stuff ,well Sometimes we can only do so much!