I know, I know. It’s bad economic policy and probably un-American too, but we can’t let General Motors go under; at least not right now.I know all the reasons why not, and if we weren’t already in the middle of an economic shit-storm unlike anything else in our lifetimes, I’d be arguing to let them go through Chapter 11 and emerge in a trimmed-down form more befitting the 21st Century. But we are in a terrible economic crisis, and it makes no sense to allow another 200,000 people to be added to the jobless – not to mention tens of thousands more from GM’s supplier companies, who employ as many as three million.
Whatever we lend them now we won’t be spending on unemployment checks, food stamps, job retraining, the support of a bankrupt city of Detroit, etc. I am also persuaded that a viable automotive industry is vital to the national defense.
This money should not be lent without significant strings attached that include management and labor give-backs. But it must be given lest we dig this hole even deeper. Now is not the time to worry about the deficit – we need to keep bailing this boat hard.
Posts
23 comments:
What is your problem with Chapter 11?
Doesn't it address all your concerns?
This is looking more and more like chess being played one move at a time.
I tend to agree. Letting the auto industry go through bankruptcy proceedings would be economic suicide. We're talking about 3 million jobs! Nobody will buy a Detroit car when the company is in chapter 11. It's not like the airline industry where you're only buying a ride somewhere. With a car company, you're buying into a relationship. Nobody will start or continue a relationship with a bankrupt company.
I think GM needs a face,that the taxpayer can hold accountable.I'm so impressed by the Ceo of GM that I can't even think of his name right know. When Chrysler needed loan guarantees they had Lee Iacocca;I remember that name and it's 25 years later. Make them loans and not handouts.I agree with the auto industry helps with a strong defense. GM has got to renegotiate contracts. We cannot compete with a health care cost of 1500 our cars vs 150 on the price of an auto for the Japanese.The current workers and retirees are going to have to start paying for benefits in a significant way.Otherwise, It is chapter 11.
The ten cent hamburger,home delivered milk,$1.00 gas,representational government,all history. Next on the list of things we'll never see again: competition,creativity,fiscal responsability,the middle class,a balanced budget,control of our own government.
If it has to get worse before it gets better, bring it on. Big business does'nt share the wealth. It's time to share with it the misery of its irresponsabilities.
There will always be a business for making cars.Someone will always make them & employ Americans to do it. Watch how quickly the auto industry comes up with the 70 mpg SUV when forced to.
"We'll have solar power when Standard Oil owns the sun." R Buckminster Fuller
I reluctantly agree we may need to bail the big three out, but it's pretty galling to support companies that have been on the wrong side of every issue they come across for our entire lives. Whether it was rear view mirrors, air bags, cafe standards, you name it - they were on the wrong side of the issue. And now we reward them because the potential job loss is too catastrophic to do nothing. But we do know that competitors can build a car people want and even manufacture it here in the United States. I hate to question the labor union of Walter Ruether and all the good things the UAW did for creating the middle class, but aren't the labor (and legacy) rates to high to sustain?
Excuse me, won't the Hondas, Toyotas even Huyundai and Kias of the world pick up the slack? They'll retrain workers, pay them probably the same per hour but with medical plans more in line with the rest of the world and eventually all those workers can go on mediwhatever with everyone else. I know the repercussions would trickle down to the millions employed by the suppliers to the industry but over time wouldn't it all right itself. I don't know a thing about bankruptcy but wouldn't it offer the automakers (who are really banks lending money for the purchase of cars and, oh so incidentally, make a few cars on the side) all sorts of protections to allow them to come back leaner and meaner?
Does anyone really believe that President Obama and the Democratic Congress are going to let the Big Three go bankrupt? All of those jobs are union jobs. You can count on a bailout (plus a great deal of spin).
No! It's not going to save any jobs. You're only putting off the inevitable.
The rust belt needs to reinvent itself instead of maintaining the status quo.
This would be a bail-out for GM bondholders and shareholders -- and, of course, the UAW.
Citibank just got an infusion of cash and they're still letting go 50,000 workers!
Where does this end...
Let's face reality here. Consumers are not buying goods. How long do the US taxpayers keep the pump primed for the economy to turn around and the Big 3 to come up with competitive products? They have some leverage because they can retool to make tanks and jeeps for the military at a moment's notice and are in the legacy business. Why don't we have China make our military hardware and we can give Detroit to Bangladesh?
Thomas Freidman's column yesterday was an assessment of just how vast the problem is. His conclusion was that the costs will be staggering. We need a diagnosis before we attempt to treat the problem with more huge sums. Right now, every wheel is squeaking. If you fundamentally believe in free markets, you cannot just keep writing checks.
Regarding Chapter 11 bankruptcy a couple things to know;
1) Once a company enters DIP (Debtor In Procession) a co. can not legally pay any money owed to creditors from the date of filing.
2) In order to get out of DIP they need a exit plan to pay past debt. That usually is at about 20% to 50% of the amount owed.
So in this economy is it fair to assume that businesses currently doing business with the BIG 3 would be hurt financially if they stopped getting paid at all and or be paid pennies on the dollar?
(Use to be an administrator for companies in chapter 11.)
Question: What did Wall Street investment bankers produce?
Answer: Nothing. False prosperity.
Established and helmed by people whose sole purpose was self enrichment, these enterprises deserved no bailout. Not one cent.
What is their legacy to America?
Grotesque wealth for their executive cabals. And nothing of value. Absolutely nothing.
Nor is any financial relief owed equally greedy, stupid, home buyers whose champagne tastes wildly exceeded their beer budgets. Let them live within their means – in rentals, trailers, tents or on the street.
On the other hand, the rise of America as a world power is inextricably linked to the rise of Detroit automakers. They provided millions of jobs, while producing fantastic products that were the envy of the world. The true prosperity generated by Detroit didn’t just trickle down – it gushed.
Damn straight the big 3 deserve a loan -- not a grant.
Those who claim their products inferior are uninformed or elitist. (There was a time when Detroit quality was second-rate, but they have mended their ways)
I own 2 large sedans, domestic and imported.
They were purchased new, (for cash) and now have the same mileage on their odometers.
The Detroit iron has held up better.
I walked by about 30 vehicles in my office parking lot yesterday. I did not see one Big 3 car. Nearly a third of the vehicles were Big 3 but everyone was a SUV or truck. All the cars were foreign made. How long do we keep Detroit afloat until they make cars that most Americans want to buy?
If tomorrow the credit markets opened up, would we see people buying American cars?
The Big 3 isn't in a maelstrom because of some economic downturn, it is because they made bad business decisions.
All foreign cars are not assembled by Oriental men &women wearing lab coats,who in their spare time sit around figuring out how to make a better car. Been awhile since you had sake with your lunch? Replace your Thunderbird & orange pop with it & tell me the differance. Got any Road & Track,PBS watching friends who talk about quality who actually keep a car longer than the 3 year lease? Forget the loan/bailout. American car quality is fine. Buy one.
Being a little larger than my cousin Dennis, I would like to see a some alternatives in large car market. Plenty of room in an SUV, but over kill. Gm top of line is big enough but so is price tag. Ford hard to drive a crown vic/marquis without thinking I'm a state trooper or a blue head.Chrysler 300 is not my style. Everything else is the size of a camary /honda/lucerne/impala. Mini Vans no way.I work next to the Mahoning river.Its to tempting to want to live in the van. Can the big three sell that many cars to pay off the loans?
The quality may be fine. I really don't know but most car buyers don't think so. When I watch TV, the commercials are all "Ram Tough" or racing over mountains in some 24 hour endurance race with giant rocks falling in on the truckbed. Great, but unless I find a pill that will make me feel 18 again, what about a car that can get me safely from home to the office without me needing a small business loan to pay for the gas. Detroit said let the ferriners take the sedans, we are tough as nails Americans and we want big cars for our big fat asses as we go out and tame the west. Earth to Detroit, the last time I was off road was when I pulled off the road to pee.
KG – the Big 3 hold about 50% of the total market so your lot was significantly under-represented. People do buy domestic cars but not so many of them live on the coasts. There are probably many reasons for this but surely one of them is the perceived lesser status of domestic brands. JD Powers now finds no statistically significant differences in the quality of foreign v. domestic autos. After years of driving imports (both German and Japanese) I went back to my roots and now have 3 domestic cars (no trucks or SUVs) in the household. The quality and character of all 3 have been great, and each was significantly less expensive that the imported counterpart.
I’d be among the first to say Detroit brought most of its problems on itself. But as far as the products go, perception is badly lagging reality. Maybe it is time for Americans to realize that it isn’t corny or jingoistic to support American manufacturing if we want to remain economically strong with a blue collar middle class.
I'll put my Caddy CTS up against any import costing up to 50% more in terms of features, fun-to-drive quotient and roominess. It uses regular gas and easily gets 20 mph in town and 28 on the road. I’d be happy to recommend other models to consider in any segment.
I am surprised that 50% of the autos sold are domestic. As I said before, the American car may be just as good or better but I sure don't see nearly as many domestic cars in the mid-atlantic. A newspaper reporter friend of mine drives a Buick, but he may be the only person I know that has a domestic sedan.
The thrill is gone. Remember Septembers & seeing the new cars roll out? Remember that every year every model had a differant look? Remember being able to hear your cars engine? Remember hands on tinkering? I remember on a trip to Pittsburg my oldman & uncle pulled over,got out the tool box & fixed the car. The garage on the corner didnt plug in the car & read a printout. He got under the hood & listened.
Outside of transport & listening to tunes we have no involvment with our cars anymore. Our only need now is getting enough of an ok from Consumer Reports to spend the cash. I'm thinking CR,Road & Track,Car & Driver are on the Honda payroll.
ahhhhh michigan vs ohio state
buckeyes by 10
Reading today's comment in the Times (11/24) by Spencer Abraham, what I gather about the tipping point in Chapter 11 is the disruption to the flow of capital to suppliers during the review process. Why can't the government just cover those transition costs rather than a bulk, front-loaded loan? With luck, pension related health care issues that will arise in reorganization will be addressed shortly in the incoming administration's agenda.
v
air max, wedding dress, canada goose pas cher, ugg, toms outlet, canada goose, oakley, pandora jewelry, hollister, replica watches, baseball bats, moncler, moncler outlet, vans, juicy couture outlet, canada goose uk, hollister canada, timberland shoes, converse, hollister clothing, ralph lauren, pandora uk, moncler, iphone 6 case, lancel, moncler, louis vuitton canada, nike air max, moncler, uggs canada, links of london uk, karen millen, ray ban, louboutin, canada goose, thomas sabo uk, gucci, coach outlet, parajumpers outlet, moncler, supra shoes, converse shoes, swarovski uk, pandora charms, swarovski jewelry, moncler, montre femme, juicy couture outlet
Post a Comment