Auto industry: to bail or not to bail

O

Onceler

New member
I've gotta admit, this is one where I see strong arguments on both sides. On the one hand, what would the gov't be saying by essentially rewarding bad management?

On the other, letting the big 3 wither would likely end up costing our economy much more than any bailout package they put together. There are so many jobs both in & outside of the industry that rely on those companies; it's hard to imagine the pain that their collapse would cause.

I say bail.
 
It would be one thing if they were basically sound companies who had just reacted poorly to events beyond their control. Instead we are propping up mediocrity and just plain failure. In essence, we are throwing good money after bad.

The capacity for failure has not diminished because somebody suggests more energy efficient vehicles. The foundational basis for these companies is flawed and not compatible with the current market.
 
Im against bailout on this one. Its inevitable bankruptcy and a waste of money. Break them apart into smaller companies let the good product survive.
 
Damocles said:
It would be one thing if they were basically sound companies who had just reacted poorly to events beyond their control. Instead we are propping up mediocrity and just plain failure. In essence, we are throwing good money after bad.
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Yeah, I hear that. Are they just destined to fail, then?

Even if they are, I'd probably still say bail, if only as a temporary measure. As a country, we really have to get through this next year or so: slow the downward spiral, and start to reverse the trends. Having the auto industry just tank without assistance right at this juncture could be devastating and have some serious long-term consequences as far as recovery is concerned.

It's probably still more cost-effective to prop them up now, even if it's just for the short-term...
 
Damocles said:
It would be one thing if they were basically sound companies who had just reacted poorly to events beyond their control. Instead we are propping up mediocrity and just plain failure. In essence, we are throwing good money after bad.
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I read that Obama sees a revitalized auto industry as one of the keys to a revitalized american economy. The auto industry would have to green-up so to speak in exchange. Stop making the same old gas-guzzlers that no body wants, and start competing in the global market.

If that is how they work it, then I am for it. We already make nothing in this country, when is this shit going to stop? I think it's important for the United States to make stuff. Otherwise we're just the servant class in the global economy and that's a long term bad decision. Though it might sound good short term.
 
Darla said:
I read that Obama sees a revitalized auto industry as one of the keys to a revitalized american economy. The auto industry would have to green-up so to speak in exchange. Stop making the same old gas-guzzlers that no body wants, and start competing in the global market.

If that is how they work it, then I am for it. We already make nothing in this country, when is this shit going to stop? I think it's important for the United States to make stuff. Otherwise we're just the servant class in the global economy and that's a long term bad decision. Though it might sound good short term.
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The foundational basis for failure is still there. Retooling and forcing them to make a different product notwithstanding.

I understand that it is fundamental to his plans to have new technology, but to use the failed businesses of the past to create such technology isn't the best of his ideas. We already know they are full of failure and incapable of adapting, this won't change because the government pushes strict control of a private business. We aren't Spain of the 1930s, we can learn from the past.
 
Damocles said:
The foundational basis for failure is still there. Retooling and forcing them to make a different product notwithstanding.

I understand that it is fundamental to his plans to have new technology, but to use the failed businesses of the past to create such technology isn't the best of his ideas. We already know they are full of failure and incapable of adapting, this won't change because the government pushes strict control of a private business. We aren't Spain of the 1930s, we can learn from the past.
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well, i was very much leaning towards supporting this after reading what obama said, but now that you have come out against it...it's definite!
 
Onceler said:
Yeah, I hear that. Are they just destined to fail, then?

Even if they are, I'd probably still say bail, if only as a temporary measure. As a country, we really have to get through this next year or so: slow the downward spiral, and start to reverse the trends. Having the auto industry just tank without assistance right at this juncture could be devastating and have some serious long-term consequences as far as recovery is concerned.

It's probably still more cost-effective to prop them up now, even if it's just for the short-term...
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Yes, under current management they are destined to fail. They are unbelievably short sighted.

IF they proceed with a bailout, then the entire management of the big three needs to be fired.... no golden parachutes. Hire a line worker from the Japanese firms and you will end up with better results than allowing the current morons to continue managing the firms.

Better yet, sell them to Nissan, Honda, Toyota dirt cheap in exchange for keeping some of the jobs in Detroit.
 
GM stock is at about 3 dollars right now. if there is a major govt bailout, what happens to the stockholders who buy in now? couldn't they lose it all rather than make money?
 
Darla said:
GM stock is at about 3 dollars right now. if there is a major govt bailout, what happens to the stockholders who buy in now? couldn't they lose it all rather than make money?
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If you buy now and there is a bailout it is likely you will make money. If there is none, it is possible to lose all of the money.

Basically SF and I state the same thing. You cannot continue to allow the people who failed so miserably for so many decades to run the company if you give them our money. If we bail them out, the leadership must be replaced or we are just setting ourselves up for demonstrable failure.
 
Damocles said:
If you buy now and there is a bailout it is likely you will make money. If there is none, it is possible to lose all of the money.
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yeah i get that part. my question is more complicated - is there a scenerio where the govt takes over the auto makers, like GM, and the taxpayer becomes the stockholder, and the current stockholders get stiffed?
 
Darla said:
yeah i get that part. my question is more complicated - is there a scenerio where the govt takes over the auto makers, like GM, and the taxpayer becomes the stockholder, and the current stockholders get stiffed?
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I don't think they will. However, is the plan to nationalize the industry with no private ownership?

If the government simply seizes the means of production you would lose your money, but I doubt that is what has been suggested.
 
Darla said:
I read that Obama sees a revitalized auto industry as one of the keys to a revitalized american economy. The auto industry would have to green-up so to speak in exchange. Stop making the same old gas-guzzlers that no body wants, and start competing in the global market.

If that is how they work it, then I am for it. We already make nothing in this country, when is this shit going to stop? I think it's important for the United States to make stuff. Otherwise we're just the servant class in the global economy and that's a long term bad decision. Though it might sound good short term.
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convert those plants to solar and wind manufacturing facilities.
 
Damocles said:
I don't think they will. However, is the plan to nationalize the industry with no private ownership?

If the government simply seizes the means of production you would lose your money, but I doubt that is what has been suggested.
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but they have done it, just recently. so it wouldn't be unprecedented. you know, it's not called socialism when bush does it, but you know they did it, right?
 
Chapdog said:
convert those plants to solar and wind manufacturing facilities.
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i don't think these two things are seen as mutually exclusive. rather that we can have a revitalized american auto industry, making cars that people actually want, and invest separately in solar and wind tech.
 
Darla said:
but they have done it, just recently. so it wouldn't be unprecedented. you know, it's not called socialism when bush does it, but you know they did it, right?
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However they didn't do what I stated and you suggested. And it was called socialism and fascism by people on this board. Only in your imagination do you find some sort of happy-happy thoughts about it from the right that we have heard from.

While the government took control of two government backed companies, they did not exert full ownership or simply devalue the stock in the company. So, if they did as they did with FM & FM you would likely make money on the bailout, as I stated the first time.

If they do as you suggest and seize entirely the means of production, then you would lose everything. If they don't do anything it is likely the companies will fail and be parted out to smaller and more energetic companies with leadership not so full of fail. By investing in such sleeker and better run companies I think we'd get a better return on our tax dollar.
 
The auto industry is one of the few things in the "downward spiral" that is the economy that is close to me. Well that and cheaper gas. My father-in-law got forced into early retirement by GM and goes from making $80,000 per year to whatever he gets from retirement which won't be enough to meet his bills. It is going to be a rough time for them for a while. To bail or not to bail......I'm not smart enough to answer that but I do know the loss of jobs if something isn't done will be extremely detrimental to the overall economic future. At least with my father-in-law he was nearing retirement....still a couple of years away....but at least he had some plans for it. They'll tighten their belt for a year or two and will be OK. I worry about the younger person who gets laid off. At this point in my feeble mind I say bail.....with stipulation and oversight.
 
Darla said:
GM stock is at about 3 dollars right now. if there is a major govt bailout, what happens to the stockholders who buy in now? couldn't they lose it all rather than make money?
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Depends on how it is structured. IF the government takes equity (like they did with AIG) then yes, the stockholders will lose (as they should). If the government simply gives money to GM, then they will likely make money in the short term.
 
Darla said:
but they have done it, just recently. so it wouldn't be unprecedented. you know, it's not called socialism when bush does it, but you know they did it, right?
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Yes, and I was definitely against that bailout....and the way it was done.
 
Darla said:
i don't think these two things are seen as mutually exclusive. rather that we can have a revitalized american auto industry, making cars that people actually want, and invest separately in solar and wind tech.
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That sounds like the right plan. I don't know the business part of it at all; one thing I have never understood is why America lags behind so noticeably in some of these areas. Why does Japan always have a leg up on us in something like auto manufacturing, and new technology?

That's gotta change if we're going to get back on track...
 
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