An Introduction, and a Point of Discussion

Famov

Famov

Secular Conservative
Hello there! An online friend of mine goes to this site from time to time, and I recently discovered it myself. I was particularly intrigued at some of the discussions currently being held, like the inherent silliness of the gender of our elected (or appointed) officials mattering in the slightest, the media, and that crazy guy known as Blagojevich.

But there is one issue I wish to bring up that I do not see on the front page here: The various bailouts. One, for our financial institutions, and the other for the auto industry.

As a self proclaimed conservative, I am very troubled by the idea of corporate welfare. Actually, I have trouble with the concept of welfare to begin with, but certainly I do not support it for large corporations that cannot engage in intelligent business practices.

Now I'm no economist, but I do know that a billion dollars is a lot of money, and 800+ billion dollars is really a lot of money, and more importantly its a lot of our money (at least for the Americans here).

Is there any justification for these bailouts? Bush, McCain and Obama supported them, and the latter two convinced me not to vote for them this election.

So what is it? Is corporate welfare good or bad? And if its bad, can you look past it and accept McCain/Obama, or whomever you voted for that supported it (if the person you voted for supported it; the guy I voted for most certainly did not.)?
 
Let me be the first to welcome you famov although, I just returned myself.

Bailouts?

Personally, as a conservative, I think the idea is terrible. But, when we get right down to it, I am not sure what else we can do? We can't let these two industries fail... or can we? What would happen if we did? Chaos for a time I think, but in the long run, wouldn't America be stronger if we did?

Immie
 
No one likes bailouts, and $800 billion is a lot of money. It pales in comparison to the amount we would lose without them, which is certainly in the trillions when all if factored in.

The banks have quietly stabilized over the past few weeks, and credit is somewhat fluid again. That doesn't happen without the bailout. The market is also much more stable, and seems to have found the bottom, though all bets are off if the auto industry fails.
 
Immanuel said:
Let me be the first to welcome you famov although, I just returned myself.

Bailouts?

Personally, as a conservative, I think the idea is terrible. But, when we get right down to it, I am not sure what else we can do? We can't let these two industries fail... or can we? What would happen if we did? Chaos for a time I think, but in the long run, wouldn't America be stronger if we did?

Immie
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That's the thing, I'm not sure what should have been done, since my knowledge of economics is rudimentary at best. I'm just of the opinion that whatever the correct course of action is, this can't have been it.

Onceler said:
No one likes bailouts, and $800 billion is a lot of money. It pales in comparison to the amount we would lose without them, which is certainly in the trillions when all if factored in.

The banks have quietly stabilized over the past few weeks, and credit is somewhat fluid again. That doesn't happen without the bailout. The market is also much more stable, and seems to have found the bottom, though all bets are off if the auto industry fails.
Click to expand...

For the financial institutions, I have no doubt that the bailout worked if what you've said is true. I just feel... stolen from. Again, I have no answers myself, but there has to be a better way.

For the auto makers, we're doing nothing but delaying the inevitable. If they survive to the next recession, we'll have the same problem again. This is mostly because the Japanese auto makers have been very successfully competitive, and in fact they employ many US workers.

GM, Ford and Chrysler have been corrupt to the bone since the days of Jimmy Hoffa. I would gladly see them go for auto companies with vision and, more importantly, the ability to support themselves.

Edit: Damocles, a friend from elsewhere on the interweb comes here, though at the moment I do not know his username. He mentioned this place in passing and I decided to check it out. My normal forum for political discussion has been dead for some time now.
 
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Welcome to the board Famov, good to see another conservative voice here. If you listen to some of the liberal pinheads here, you'd almost get the idea we've become all but extinct since the election of The One.

I am also a Conservative, but I did vote for McCain/Palin, because to me it came down to pragmatism, McCain or Obama were the ones who could be elected, and it was a choice between $800 billion in bailouts, or $2-3 trillion in bailouts. I chose the worse of two evils. I do agree with you, government should not be in the corporate welfare business any more than the social welfare business.

To answer Immie's questions, what would happen is not as dramatic as advertised. The Big 3 would simply file Chapter 11 bankruptcy, and restructure. They would not go out of business, they would not shut down entirely or stop producing cars. Instead, they would be forced to restructure management and their business models, as well as debt and union commitments. I personally think the reason most politicians favored this bailout in direct contradiction of the vast American public, is the union lobby. This was a bailout of UAW, in my opinion. Before I am bashed for hating the UAW, let me say, I think the unions perform a legitimate and valid function for the most part, but they have gotten way out of control in America, in many sectors. The burden they have put on the American auto industry, is mostly responsible for the current financial crisis they are experiencing.

Now, the Big 3 argued, if they went bankrupt it would be horrible, because no one would want to buy a car from a bankrupt company, but that is absurd. We flew on bankrupt airlines! It didn't seem to bother us to put our lives on the line and get on a jet operated by a bankrupt company, I can't see that buying a car would be any worse. The bottom line is, Americans will buy American cars if the quality and value is there. This bailout, all but insures it won't be.

My main problem with the 'bailout binge' is... where will it end? At what point will politicians have to say, no, I am sorry, we can't bail you out? I guess, as long as China is willing to lend us money for this stuff, we can continue to do it, but eventually that time is going to come. We will have a day of reckoning for this. Meanwhile, we continue to saddle future generations with the burden of debt, mainly to the Chinese. It doesn't take a genius to figure out, that's not a good thing.
 
"Now, the Big 3 argued, if they went bankrupt it would be horrible, because no one would want to buy a car from a bankrupt company, but that is absurd. We flew on bankrupt airlines! "

This is the only comparison anti-bailout people bring up, and it is horrible. There is no comparison at all.

When people buy cars, it's a long-term investment, with warranty & service considerations. Bankruptcy would hurt the auto industry much, much more than the airline industry.

Use your head.
 
Famov said:
That's the thing, I'm not sure what should have been done, since my knowledge of economics is rudimentary at best. I'm just of the opinion that whatever the correct course of action is, this can't have been it.



For the financial institutions, I have no doubt that the bailout worked if what you've said is true. I just feel... stolen from. Again, I have no answers myself, but there has to be a better way.

For the auto makers, we're doing nothing but delaying the inevitable. If they survive to the next recession, we'll have the same problem again. This is mostly because the Japanese auto makers have been very successfully competitive, and in fact they employ many US workers.

GM, Ford and Chrysler have been corrupt to the bone since the days of Jimmy Hoffa. I would gladly see them go for auto companies with vision and, more importantly, the ability to support themselves.

Edit: Damocles, a friend from elsewhere on the interweb comes here, though at the moment I do not know his username. He mentioned this place in passing and I decided to check it out. My normal forum for political discussion has been dead for some time now.
Click to expand...


I hate corporate bailouts. But as Oncelor stated, in this case they are a necessary evil. The costs to not do them would be complete devastation of our economy.

That said, I think they should have done more to limit executive pay/bonuses and in many cases fire boards of directors and top execs.

As for what else could we do.... well that comes back ultimately to politicians changing the rules. When they took away the safeguards put in place during the Depression (due to the Rockefellers/Kennedies etc... abuse of the system) they opened the doors for the same type of runaway corruption and greed among the financial institutions, lenders and borrowers.

What do we need to see immediately...

1) Re-implement Glass Steagall

2) Without question re-implement the uptick rule.

3) Regulation and transparent reporting by Hedge Funds. Put them under the SEC and NASD just like the rest of the investment world.

As for the autos... I really don't like this particular bailout, especially if they don't get rid of Wagoner at GM. I do like the fact that the unions have made some good concessions, but the overall business model needs a complete overhaul. It has been shown to be a failure for the last three decades (at least). When we see the relative success of foreign autos made in the US, there is clearly a tremendous room for improvement. Giving money to the same people and expecting them to do something different is especially naive.
 
Dixie said:
To answer Immie's questions, what would happen is not as dramatic as advertised. The Big 3 would simply file Chapter 11 bankruptcy, and restructure. They would not go out of business, they would not shut down entirely or stop producing cars. Instead, they would be forced to restructure management and their business models, as well as debt and union commitments. I personally think the reason most politicians favored this bailout in direct contradiction of the vast American public, is the union lobby. This was a bailout of UAW, in my opinion. Before I am bashed for hating the UAW, let me say, I think the unions perform a legitimate and valid function for the most part, but they have gotten way out of control in America, in many sectors. The burden they have put on the American auto industry, is mostly responsible for the current financial crisis they are experiencing.
Click to expand...

I agree with you in regards to the Auto Industry. My post was more in regards to the financial industry. Say the banks and mutual fund companies failed and filed bankruptcy. They'd take our money (401ks, IRA, Savings etc) with them and that in my opinion would be a national disaster.

Am I right on that? Those funds are not insured by the FDIC and our retirement funds would not just drop... they'd disappear completely. Right?

Dixie said:
My main problem with the 'bailout binge' is... where will it end? At what point will politicians have to say, no, I am sorry, we can't bail you out? I guess, as long as China is willing to lend us money for this stuff, we can continue to do it, but eventually that time is going to come. We will have a day of reckoning for this. Meanwhile, we continue to saddle future generations with the burden of debt, mainly to the Chinese. It doesn't take a genius to figure out, that's not a good thing.
Click to expand...

I also completely agree with you here. "We" can go on as long as our credit holds out... how long that is can only be a guess.

Immie
 
Onceler said:
"Now, the Big 3 argued, if they went bankrupt it would be horrible, because no one would want to buy a car from a bankrupt company, but that is absurd. We flew on bankrupt airlines! "

This is the only comparison anti-bailout people bring up, and it is horrible. There is no comparison at all.

When people buy cars, it's a long-term investment, with warranty & service considerations. Bankruptcy would hurt the auto industry much, much more than the airline industry.

Use your head.
Click to expand...

They bring this comparison up because it is valid. Is your life worth more than a warranty or service? Is your life a "long-term investment?" We can understand and comprehend what bankruptcy is, and it's 2008, not 1900. Grown ups understand that bankruptcy is merely a business accounting measure, it has no real bearing on actual retail-level sales, service or warranties. Except that, it would insure a return to quality and value for the customer, instead of maintaining the status quot, which is what will happen with a 'golden parachute' provided by good ol' uncle sam. You may as well have thrown billions of dollars down a hole, it will not change a thing with regard to how the Big 3 are operated, and thus, it will not act as a 'bailout' at all, just a temporary solution to the inevitable.

I seem to be the one using my head when I consider, where does this 'bailout mentality' end? You haven't answered that conundrum. Virtually ANY sector can present the exact same argument for a government bailout, and what are we going to do? We simply don't have the ability to bail out everything! We just don't! Forget the fact that we don't have the money for this bailout, we are borrowing the money from China, whom we are already over our heads in debt to, we fiscally CAN'T continue to borrow money to bail out industries.

It's absolutely amazing to me that you are so duped by political speech, you will completely abandon your rants about "tax cuts for the rich" and "sock it to big corporations" and adopt this idea of benevolence for the very same people you have waged war against. The CEO's of Ford, GM, and Chrysler are still going to be making their 7-figure salaries, only WE will be paying them now! But that's okay, just don't let them keep more of their income, right?

I would tell you to use your head, but that would require you pull it out of your ass first.
 
Onceler said:
No one likes bailouts, and $800 billion is a lot of money. It pales in comparison to the amount we would lose without them, which is certainly in the trillions when all if factored in.

The banks have quietly stabilized over the past few weeks, and credit is somewhat fluid again. That doesn't happen without the bailout. The market is also much more stable, and seems to have found the bottom, though all bets are off if the auto industry fails.
Click to expand...

I can tell you from a real estate investment standpoint there is almost zero credit available.
 
Immanuel said:
I agree with you in regards to the Auto Industry. My post was more in regards to the financial industry. Say the banks and mutual fund companies failed and filed bankruptcy. They'd take our money (401ks, IRA, Savings etc) with them and that in my opinion would be a national disaster.

Am I right on that? Those funds are not insured by the FDIC and our retirement funds would not just drop... they'd disappear completely. Right?



I also completely agree with you here. "We" can go on as long as our credit holds out... how long that is can only be a guess.

Immie
Click to expand...

I look at it like this, Immie, even the financial bailout was the wrong way to go. If we are going to live in a Capitalist society, we need to learn to let Capitalism work. Whenever one business (or bank) fails, there will be another one, probably a smaller upstart, to take its place. Yes, investors may experience heavy losses, we may indeed suffer in our 401k's as a result, but look at the consequences of what we are doing now! What are these same 401k's going to be worth, if the value of the dollar is worthless? I guess what I am saying is, it doesn't matter, either way we are screwed.
 
"They bring this comparison up because it is valid. Is your life worth more than a warranty or service? Is your life a "long-term investment?" We can understand and comprehend what bankruptcy is, and it's 2008, not 1900. Grown ups understand that bankruptcy is merely a business accounting measure, it has no real bearing on actual retail-level sales, service or warranties."

You're such an idiot. An airline ticket is a one-time thing. There are people who will not invest in something like a car if the company declares bankruptcy, because a car is a long-term investment. This has nothing to do with my opinion or what 'grown ups' understand, as if you can speak for that. It just is what it is. Bankruptcy would be the final nail in the coffin for this industry. Very few think that any one of the big 3 would survive chapter 11.
 
Dixie said:
I look at it like this, Immie, even the financial bailout was the wrong way to go. If we are going to live in a Capitalist society, we need to learn to let Capitalism work. Whenever one business (or bank) fails, there will be another one, probably a smaller upstart, to take its place. Yes, investors may experience heavy losses, we may indeed suffer in our 401k's as a result, but look at the consequences of what we are doing now! What are these same 401k's going to be worth, if the value of the dollar is worthless? I guess what I am saying is, it doesn't matter, either way we are screwed.
Click to expand...

I think that was basically what I was saying in post #2.

We're looking at this thing in the short term. We should be looking at it long term. We can not continue to bail out every industry that struggles. We simply don't have the capacity to do so.

Letting the banks fail would be a disaster for many of us, but what exactly is going to be the result of bailing them out? Corporate bankruptcy is not a disaster because another supplier will simply fill its spot in the market. Financially speaking if my mutual funds and 401ks were lost, I'd be pissed of and the future would look bleak, but I would survive.

Will America survive the bailouts? That is the question.

Immie
 
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Superfreak said:
What do we need to see immediately...

1) Re-implement Glass Steagall

2) Without question re-implement the uptick rule.

3) Regulation and transparent reporting by Hedge Funds. Put them under the SEC and NASD just like the rest of the investment world.
Click to expand...

SF - you want to place our economy under the control of a bunch of irrelevant college football teams? Just, wow.
 
Onceler said:
"In a survey conducted by CNW Marketing Research, 80 percent of people close to buying a new car said they would abandon an automaker if it were to file for bankruptcy"

http://www.usnews.com/blogs/flowchart/2008/8/22/how-bankruptcy-would-wreck-gm-and-chrysler.html

I assume the respondents were grown-ups.
Click to expand...

Trust me, I would abandon them too.

While I have reservations about the financial institutions, I have none about the auto industry: I am more then willing to let them bite the bullet.

When I eventually have my own place to live and need my own vehicle, I may very well buy a Japanese car simply for the security of the company at that time.
 
Famov said:
Hello there! An online friend of mine goes to this site from time to time, and I recently discovered it myself. I was particularly intrigued at some of the discussions currently being held, like the inherent silliness of the gender of our elected (or appointed) officials mattering in the slightest, the media, and that crazy guy known as Blagojevich.

But there is one issue I wish to bring up that I do not see on the front page here: The various bailouts. One, for our financial institutions, and the other for the auto industry.

As a self proclaimed conservative, I am very troubled by the idea of corporate welfare. Actually, I have trouble with the concept of welfare to begin with, but certainly I do not support it for large corporations that cannot engage in intelligent business practices.

Now I'm no economist, but I do know that a billion dollars is a lot of money, and 800+ billion dollars is really a lot of money, and more importantly its a lot of our money (at least for the Americans here).

Is there any justification for these bailouts? Bush, McCain and Obama supported them, and the latter two convinced me not to vote for them this election.

So what is it? Is corporate welfare good or bad? And if its bad, can you look past it and accept McCain/Obama, or whomever you voted for that supported it (if the person you voted for supported it; the guy I voted for most certainly did not.)?
Click to expand...


The economy was wrecked precisely to necessitate these bailouts. It's an excuse to implement fascism.
 
Famov, my old friend! How are you?

This is WinterBorn. Glad you found the place. Tek comes by occasionally.

Welcome to the forums. Don't take any of the insults too seriously. The moderators are a little more lenient with flaming and trolls.

But it is a good spot.
 
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