Say no to the auto bailout

[ABikerSailor]

Sorry, I was trying a different tactic to enlighten the 2 wheelin' Squid

Hey man......still had to POS REP YOU for the cartoon.......

Good Job!

 

[Annie]

If this link has already been posted, my apologies. Best authoritative reasoning I've seen to say, NO!

Just Say No to Detroit - WSJ.com

Just Say No to Detroit
Given the abysmal performance by Detroit's Big Three, it would be better to send each employee a check than to waste it on a bailout, says David Yermack.

Before Michael Moore became famous for documentaries like "Fahrenheit 9/11" and "Sicko," his first big success came in 1989 with "Roger and Me." In that film, Mr. Moore followed General Motors chairman and chief executive Roger Smith with a camera crew, asking him why the company was closing plants and producing low-quality vehicles. Mr. Smith looked flustered and inartfully avoided Mr. Moore's camera crew while it lingered outside his country club or GM's executive offices.

"Roger and Me" was entertaining, but it missed the real story about Roger Smith, who turned out to be a forward-thinking genius. Mr. Smith made big investments in information technology and satellite communications, acquiring Electronic Data Systems in 1984 for $2.5 billion and Hughes Aircraft in 1985 for $5.2 billion. Mr. Smith's successors divested those businesses at huge profits -- EDS was taken public in 1996 for more than $27 billion, and Hughes, renamed DirecTV, went public in 2003 for more than $23 billion. (The man who sold EDS to Roger Smith at a bargain price was H. Ross Perot, who then convinced many people that the experience qualified him to be president.)

Mr. Smith understood all too well that GM shouldn't continue investing in its failing automobile business. That was 25 years ago. Today, our government is being asked to put tens of billions of dollars in GM, Ford and Chrysler, but we would be much better off if Washington allowed these companies to go bankrupt and disappear.

In 1993, the legendary economist Michael Jensen gave his presidential address to the American Finance Association. Mr. Jensen's presentation included a ranking of which U.S. companies had made the most money-losing investments during the decade of the 1980s. The top two companies on his list were General Motors and Ford, which between them had destroyed $110 billion in capital between 1980 and 1990, according to Mr. Jensen's calculations.

I was a student in Mr. Jensen's business-school class around that time, and one day he put those rankings on the board and shouted "J'accuse!" He wanted his students to understand that when a company makes money-losing investments, the cost falls upon all of society. Investment capital represents our limited stock of national savings, and when companies spend it badly, our future well-being is compromised. Mr. Jensen made his presentation more than 15 years ago, and even then it seemed obvious that the right strategy for GM would be to exit the car business, because many other companies made better vehicles at lower cost.

Roger Smith, who retired as chairman in 1990, seemed to understand that all too well, and so did Chrysler's management, which happily sold their company to Daimler Benz for $30.5 billion in 1998. That deal, one of the savviest corporate divestitures ever, ended very badly for Daimler, which essentially paid Cerberus a few billion dollars (by agreeing to retain pension liabilities) to take Chrysler off its hands in 2007.

Over the past decade, the capital destruction by GM has been breathtaking, on a greater scale than documented by Mr. Jensen for the 1980s. GM has invested $310 billion in its business between 1998 and 2007. The total depreciation of GM's physical plant during this period was $128 billion, meaning that a net $182 billion of society's capital has been pumped into GM over the past decade -- a waste of about $1.5 billion per month of national savings. The story at Ford has not been as adverse but is still disheartening, as Ford has invested $155 billion and consumed $8 billion net of depreciation since 1998....

It just gets worse and worse...

 

[NOBama]

If this link has already been posted, my apologies. Best authoritative reasoning I've seen to say, NO!

Just Say No to Detroit - WSJ.com


It just gets worse and worse...

Isn't it amazing that a bunch of people on a internet website can see the problem with this bailout, yet the people we elect to represent us think they know better. Maybe we should take a vote on it here to get a better sampling. God know's, this is a diverse group!

I'll start the poll/post and take the heat from the admins for creating a duplicate post

 

[editec]

So next time we go to war, Toyota and BMW will be the foundries that produce the US's arsenal?

Rather short sighted don't you think?

America is becoming a third world colony, folks.

And what exactly is turning us from the most productive and wealthiest society on earth to its largest debtor nation?

Predatory mercantilism.

Exactly the problem that our founding fathers had a revolution to end.

You neo-cons and libertarians are damned fools, as are, I might add, the leaderships of BOTH parties.

 

[NOBama]

So next time we go to war, Toyota and BMW will be the foundries that produce the US's arsenal?

Rather short sighted don't you think?

America is becoming a third world colony, folks.

And what exactly is turning us from the most productive and wealthiest society on earth to its largest debtor nation?

Predatory mercantilism.

Exactly the problem that our founding fathers had a revolution to end.

You neo-cons and libertarians are damned fools, as are, I might add, the leaderships of BOTH parties.

There is a solution: Paragraph 1

BTW, you forgot to add yourself to that list of damn fools.

 

[editec]

There is a solution: Paragraph 1

BTW, you forgot to add yourself to that list of damn fools.

Where are those startups?

 

[NOBama]

Where are those startups?

There all over the country, man. There are companies making cars that state governments won't even allow on the roads because either they don't get it or they have some other agenda.

I don't have time right now but, when I get back I'll try to find a recent article I read about a guy in Massachusetts who bought one of these high tech (I think it was electric) cars last year. Well, he got it titled, registered, and insured. Shortly afterwards, the MA, DMV sent him a notice revoking his title and registration.

I've also seen documentaries on channels like The Discovery Channel, about new startups that are making high mileage, alternate energy cars trying to get into the auto industry.

Their only problems are MONEY and LOBBYISTS.

Go figure...

 

[Annie]

So next time we go to war, Toyota and BMW will be the foundries that produce the US's arsenal?

Rather short sighted don't you think?

America is becoming a third world colony, folks.

And what exactly is turning us from the most productive and wealthiest society on earth to its largest debtor nation?

Predatory mercantilism.

Exactly the problem that our founding fathers had a revolution to end.

You neo-cons and libertarians are damned fools, as are, I might add, the leaderships of BOTH parties.

There's nothing predatory about competitors challenging a company or industry to 'get moving' or bite the dust. The auto industry clearly chose the later.

People refer to the Chrysler under Iocca, why pray tell, didn't GM and Ford look at what he accomplished in 5 years, only to watch it spin away after leaving? They figured they could dance while others worked. What do you think the average accountant, lawyer, teacher make? Pretty decent. As much as a UAW worker? No way.

Sorry, working in a modern auto factory is not close to hazards of sanitation workers, yet they make much more. Their retirement packages out perform most civil servants, something not seen in other private industries.

 

[ABikerSailor]

There all over the country, man. There are companies making cars that state governments won't even allow on the roads because either they don't get it or they have some other agenda.

I don't have time right now but, when I get back I'll try to find a recent article I read about a guy in Massachusetts who bought one of these high tech (I think it was electric) cars last year. Well, he got it titled, registered, and insured. Shortly afterwards, the MA, DMV sent him a notice revoking his title and registration.

I've also seen documentaries on channels like The Discovery Channel, about new startups that are making high mileage, alternate energy cars trying to get into the auto industry.

Their only problems are MONEY and LOBBYISTS.

Go figure...

There is a car that is electric powered with a 4 cyl engine that gets 300 mpg.

There is a car in Europe that someone has invented that runs on air, and can easily be refilled from a high pressure pump and it runs for over 100 miles on 1 fill up.

The problem with our current auto industry is that the people at GM had themselves convinced that they were bullet proof and no other country could touch what we had here. The oil companies helped out by lobbying the car companies to keep producing high power/low mileage vehicles. For the most part the mantra was bigger and faster, to hell with the mileage.

Well.....big oil decided to jack up the prices of gas to over 4 bucks a gallon. When people could no longer afford to drive, they started to trade in their gas guzzlers for smaller economy cars.

That is why GM is going under. And to tell the truth, good enough for 'em if they were that stupid to be that short sighted.

Know whats even better? Big oil has finally managed to piss off the American people when we had 4 dollar/gal. gas. Now? They've stopped using it, and prices have dropped. Even better? The free fall created a ripple that is now affecting the OPEC countries, because they are considering cutting production because oil is now below 60 bucks/barrel. 6 months ago the ME was building anything and everything they could, islands, buildings, you name it, and they were spending money like there was no tomorrow, because they had all our money.

I hope that Saudi Arabia goes broke.

 

[Annie]

There is a car that is electric powered with a 4 cyl engine that gets 300 mpg.

There is a car in Europe that someone has invented that runs on air, and can easily be refilled from a high pressure pump and it runs for over 100 miles on 1 fill up.

The problem with our current auto industry is that the people at GM had themselves convinced that they were bullet proof and no other country could touch what we had here. The oil companies helped out by lobbying the car companies to keep producing high power/low mileage vehicles. For the most part the mantra was bigger and faster, to hell with the mileage.

Well.....big oil decided to jack up the prices of gas to over 4 bucks a gallon. When people could no longer afford to drive, they started to trade in their gas guzzlers for smaller economy cars.

That is why GM is going under. And to tell the truth, good enough for 'em if they were that stupid to be that short sighted.

Know whats even better? Big oil has finally managed to piss off the American people when we had 4 dollar/gal. gas. Now? They've stopped using it, and prices have dropped. Even better? The free fall created a ripple that is now affecting the OPEC countries, because they are considering cutting production because oil is now below 60 bucks/barrel. 6 months ago the ME was building anything and everything they could, islands, buildings, you name it, and they were spending money like there was no tomorrow, because they had all our money.

I hope that Saudi Arabia goes broke.

Exactly. In this case GM still seems to consider itself 'bullet proof' and many use the 'poor workers' as the reason the government, meaning taxpayers for 100 years, should help them be. Well it wouldn't be good policy even if we could afford to sustain it, which we can't. In fact, someone earlier on this or another thread brought up the fact that it's the automakers that build tanks and such. Well guess what, they can declare Chap 11, reorganized and at least one of them could request to change to military production as primary industry. The only way to reinvigorate actual production of goods in the US is for the producers to produce.

 

[DavidS]

Even if we "bail them out" this time - who is to say they won't need another bailout soon? If GM is burning through 6 billion a month, how is $25 billion going to help them?

 

[Annie]

Even if we "bail them out" this time - who is to say they won't need another bailout soon? If GM is burning through 6 billion a month, how is $25 billion going to help them?

That's what many of us have been saying. GM is hoping to get enough to get to March, then hopes that the Dems will sail it through in perpetuity. They'll promise new green auto and fuel standards to help with Obama promises, problem is, they haven't been developing new for over 20 years, won't happen under the current system.

It's probably too late and perhaps the UAW workers are not hearing what the should, but it's time for someone from government or auto industry to ask them what is better; major concessions or unemployment? Their union bosses who give a rat's ass about the guys on the line have spoken: No more concesssions. They'd rather see it all go under. The precedent was set way back when with the related steel industry. Where are those jobs now? Oh yeah.

 

[editec]

The bail out can help if it is structured sensibly.

If it's just going to be used to keep the auto industry doing the same damned things they'd been doing, then of course it won't work.

The American auto industry is saddled with a huge retired population which the foreign car ASSEMBLERS are not.

So, bqsically, the question is can the autho industry live up to the obligation they made back when it was the largest auto industry in the world?

My guess is, probably not.

So while all you libertarians and laissex faire capitalists are calling for the death of this industry, do bear in mind that all those people whose pensions are going to go belly up, WILL become YOUR PROBLEMS when they have to go on welfare, get their health coverage at YOUR expense, and so forth.

There's no free lunch, folks.

 

[SwingVoter]

So while all you libertarians and laissex faire capitalists are calling for the death of this industry, do bear in mind that all those people whose pensions are going to go belly up, WILL become YOUR PROBLEMS when they have to go on welfare, get their health coverage at YOUR expense, and so forth.

The guarantee behind those pensions is funded with premiums paid to the gov't through the PBGC, they're not an endless cash pit like these automakers which have outlived their usefulness by 30 years. I've got no problem providing a safety net to retired workers, but no way we should prop up the lazy unions and incompetent managers still working at GM, Ford, and Chrysler.

 

[Annie]

The bail out can help if it is structured sensibly.

If it's just going to be used to keep the auto industry doing the same damned things they'd been doing, then of course it won't work.

The American auto industry is saddled with a huge retired population which the foreign car ASSEMBLERS are not.

So, bqsically, the question is can the autho industry live up to the obligation they made back when it was the largest auto industry in the world?

My guess is, probably not.

So while all you libertarians and laissex faire capitalists are calling for the death of this industry, do bear in mind that all those people whose pensions are going to go belly up, WILL become YOUR PROBLEMS when they have to go on welfare, get their health coverage at YOUR expense, and so forth.

There's no free lunch, folks.

How perchance can you see them doing something else in the next 3-6 months? If they had the leeway, which they don't, what do you think they could do within constraints of contracts the next 6 months to 3 years?

 

[SwingVoter]

The bail out can help if it is structured sensibly.

with what?

these companies and their unions have a 1970s culture that won't be lifted by negotiating with a congressman for a bailout

 

[SwingVoter]

why not just resurrect AMC while they're at it?

 

[dilloduck]

why not just resurrect AMC while they're at it?

Sweet---you mean I could get a brand new Rambler Wagon ???

 

[DavidS]

We should know by Wednesday. I fully expect the Democrats to pass the bailout for the automakers, (ignoring the cries against it) cause they owe the unions big time..

They won't do it without Republican support. And even if they do pass it, Bush will veto it.

 

[NOBama]

Where are those startups?

Here's one company: SANTA ANA, Calif, -- Zap (OTCBB:ZAPZ)

A Zap Xerba:

A Zap-X:

Here's the article I mentioned earlier.

There are others (companies) that build 3 wheelers and 4 wheelers.

The biggest problem I see with slower, smaller cars like the ones pictured here is that a heavy SUV would cause some serious damage to the car/occupants in a bad crash. However, no more so than if a Peterbuilt crashed into my SUV. Granted, these are not cars you would want to take on an interstate but, around town, they would be great.