Living Car Free - Should we bailout GM?

On the one hand, it could lead the US into a devastating depression.

Of course, it doesn't really make sense to keep alive a company that makes a crappy, inefficient product.

Crappy. Who says... ? The new chevy aveo gets 38..

Crappy. Who says... ? The new chevy aveo gets 38..

Point made...thank you. The Chevy Aveo is built in KOREA by a GM-Daewoo consortium...not by union workers in the USA. I have not been overly impressed with the build quality of them either. If in the market I would rather spend money on a Toyota or Honda.

Aaron:)

My biggest problem with the bailouts is that it seems (to me) un-American (or un-Capitalist, if you prefer). If a company provides a service or product people want, they are profitable, make money, create jobs, etc. If a company fails to provide a service or product that people find worthwhile, I think it should be allowed to fail. Saving a company that isn't serving a purpose is to just create luggage for everybody.

I think I might consider it a necessary evil if it were to help avoid a further recession/depression, though... not convinced it would, but...

I voted yes, for one reason no one seems to want to talk about. Most, if not all, GM hourly workers
that are union get what's called a "defined pension" that is held in a pension trust until the worker
retires.

If GM , or any other company with a "defined pension", were to collapse the money that is owed from
these pensions would become the responsability of the PBGC (another federal agency). The bailout
would then become the gov't problem for thousands of retirees and their surviviors.

Either way the gov't is on the hook for billions of dollars to the car makers or their employees.:rolleyes:

I don't think the government should give money directly to any of the so called big three. It would not increase there sales. Part of this entire problem is, as we buy products from other contries the money leaves this country. Thats less money for you and me. The government , in my opinion, should give us tax payers a tax insentive, say $5000, if we by an American made car from one of the big three. This would let us decide if we should and who we should bail out.

Jack

People still believe a lot of myths about the auto company.

First the quality issue. American built cars have improved to the point that they're competitive with foreign built cars. Even Consumer Reports (notoriously biased against US cars) have been rating Detroit 3 cars highly for the past decade. Most "Car of the Year" awards have gone to American cars lately.

Second is the popularity issue. The US companies have been doing very well here. They have been building exactly what Americans want--SUVs. People on this forum (myself included) would like these companies to make small green cars, but the companies think they're better off building a product that sells.

Third is the issue of why these companies are doing poorly. The main reason that nobody is buying cars is that nobody has any money. Foreign car sales are down equally. There is a credit crunch, in case anybody forgot. Manufacturers, dealers and consumers are all having trouble coming up with cash to move cars through the market system.

I voted NO.

Any bail out money should be spent on:
Electrifying the entire nations rail infrastructure.
Upgrading or creating major state capital to state capital high speed tracks and trains.
Containers should be able to automatically: offload on one coast, travel to the other coast, reload at the other coast (make the Panama canal and its upgrade redundant).
Upgrading the entire nations electrical grid to be very high voltage DC, also such upgrades could facilitate utility controlled disconnect of heavy discretionary loads, allowing more optimal (efficient) use of generating capacity. Such upgrades would also facilitate the easier inclusion of variable generating capacity (wind farms).
Both electrical and natural gas metering should support time-of-use pricing, with real-time display of consumption in-home.
There needs to be massive investment in insulation - this is especially the case for rented properties, where landlords do not care because the tenant pays the bills, and the tenant does not want to invest in the landlord's property. :notamused:
Building code requirements for new residential buildings need much higher requirements for insulation and air management - opening a window is the technological equivalent of rolling a large stone in front of a cave entrance. :notamused:
Garbage collection should be charged by volume / weight - it is a complete f-ing nonsense to be charged a fixed price for a half empty trash container. Or worse still, be charged when the container is not put out because it is almost empty! Where is the incentive to reduce waste creation? :notamused:
This is not a comprehensive list.


If the USA wants to have a future, then all of the above needs to be done.

The credit crunch was triggered by rising oil prices. It is highly likely that today's lower oil prices are only temporary - the cheap oil is gone, the cheap energy is gone. Significant change is happening today.

Adroit action will reduce the adverse impact but the future is still extremely bleak.

Maybe we should consider spending less than $800 billion a year on "defense" before spending more on corporate socialism.

s have gone to American cars lately.

Second is the popularity issue. The US companies have been doing very well here. They have been building exactly what Americans want--SUVs.

SUVs are often used in marketing classes as an example of a product for which a market did not exist until it was created by the manufacturers. GM et al could have used the last few years to create a different market, had they any foresight.

People still believe a lot of myths about the auto company.

First the quality issue. American built cars have improved to the point that they're competitive with foreign built cars. Even Consumer Reports (notoriously biased against US cars) have been rating Detroit 3 cars highly for the past decade. Most "Car of the Year" awards have gone to American cars lately.

Second is the popularity issue. The US companies have been doing very well here. They have been building exactly what Americans want--SUVs. People on this forum (myself included) would like these companies to make small green cars, but the companies think they're better off building a product that sells.

Third is the issue of why these companies are doing poorly. The main reason that nobody is buying cars is that nobody has any money. Foreign car sales are down equally. There is a credit crunch, in case anybody forgot. Manufacturers, dealers and consumers are all having trouble coming up with cash to move cars through the market system.

I voted Yes, but would like to point out that the people running these car companies lack even the vision level that seems to prevail at Toyota. Bob Lutz of GM now touts the Chevy Volt as the next big breakthru, but he has been quoted as saying Global Warming is a crock of **** and was key in pushing large SUVs through an intense marketing effort.

I vote Yes, but please clear out the geniuses at the top. It's only fair.

There is an oversupply of cars in the United States, and likely world-wide. That is to say, more cars are on the market then there are available buyers. Soon, this will be true for nearly all products until de-leveraging runs it's full course.

Should we bail-out Zales? They have excess inventory too. Same for the real estate developers. And the shipbuilding industry. And Caterpillar corp. And American Eagle Outfitters. And Marriott Corp...

Hard times are upon us, and we can't bail all of them out.

We shouldn't bail out the American auto industry for the same reason you didn't chew gum in school- If you don't have enough to give to everyone, spit it out.

Obama has been talking up a prepack bankruptcy deal for the Big Three.
I think it's worth trying.

There was an op-ed suggesting that the Big 3 should rebuild the mass transit infrastructure they helped destroy as a condition of any bailout. I'm kind of liking that.

I voted NO.



Any bail out money should be spent on:

Electrifying the entire nations rail infrastructure.
Upgrading or creating major state capital to state capital high speed tracks and trains.
Containers should be able to automatically: offload on one coast, travel to the other coast, reload at the other coast (make the Panama canal and its upgrade redundant).
Upgrading the entire nations electrical grid to be very high voltage DC, also such upgrades could facilitate utility controlled disconnect of heavy discretionary loads, allowing more optimal (efficient) use of generating capacity. Such upgrades would also facilitate the easier inclusion of variable generating capacity (wind farms).
Both electrical and natural gas metering should support time-of-use pricing, with real-time display of consumption in-home.
There needs to be massive investment in insulation - this is especially the case for rented properties, where landlords do not care because the tenant pays the bills, and the tenant does not want to invest in the landlord's property.
Building code requirements for new residential buildings need much higher requirements for insulation and air management - opening a window is the technological equivalent of rolling a large stone in front of a cave entrance.
Garbage collection should be charged by volume / weight - it is a complete f-ing nonsense to be charged a fixed price for a half empty trash container. Or worse still, be charged when the container is not put out because it is almost empty! Where is the incentive to reduce waste creation?
This is not a comprehensive list.

If the USA wants to have a future, then all of the above needs to be done.

The credit crunch was triggered by rising oil prices. It is highly likely that today's lower oil prices are only temporary - the cheap oil is gone, the cheap energy is gone. Significant change is happening today.

Adroit action will reduce the adverse impact but the future is still extremely bleak.

I totally agree that investment in modern green infrastructure is the best stimulus this country could have. Unfortunately, the ingenious projects you mention will take months to years to decades before they're ready for construction. That's too long to wait--there will be much unnecessary suffering by that time.



We need to quickly create jobs and get money flowing in the economy. I think the best ways to do this are
conditional bridge loans to high-employment industries to keep them operating in the short term--and keep people working
grant federal funds to state and local governments to be spent on already designed and approved infrastructure projects such as roads, bridges, airports and light rail
grant federal funds to universities, hospitals and other non-profits to expand facilities and programs

Obama has been talking up a prepack bankruptcy deal for the Big Three.
I think it's worth trying.

Could you (or someone else) please explain what this means?

There is an oversupply of cars in the United States, and likely world-wide. That is to say, more cars are on the market then there are available buyers. Soon, this will be true for nearly all products until de-leveraging runs it's full course.

Should we bail-out Zales? They have excess inventory too. Same for the real estate developers. And the shipbuilding industry. And Caterpillar corp. And American Eagle Outfitters. And Marriott Corp...

Hard times are upon us, and we can't bail all of them out.

We shouldn't bail out the American auto industry for the same reason you didn't chew gum in school- If you don't have enough to give to everyone, spit it out.

We should bail out high employment industries that have a prayer of regaining solvency. If they needs to restructure in some way to maintain employment and solvency, then restructuring should be part of the deal.

The reason there's a surplus of goods is clearly due to a decrease in demand. That's true for luxury products, cars and especially petroleum. The reason for the decrease in demand, as I understand it, is threefold. First, companies and consumers can't get enough credit to buy crap. Second, companies and consumers are scared and uncertain, so they choose to retain their cash. Third, the existence of surpluses puts deflationary pressure on the economy, so companies and consumers hold off on purchases because they think they'll get the same crap cheaper if they wait.

I don't know how to solve the problem, but looking at 1929 I'd guess that waiting for deleverage might not be the best approach--as many companies will go under before that happens, taking workers with them and making the overall situation even worse. Besides--I might be wrong on this--but isn't the auto industry of necessity always highly leveraged?

Point made...thank you. The Chevy Aveo is built in KOREA by a GM-Daewoo consortium...not by union workers in the USA. I have not been overly impressed with the build quality of them either. If in the market I would rather spend money on a Toyota or Honda.

Aaron:)

GM and Ford have on or near production a couple other , possibly less crappy , fuel efficient cars.. Might give them a test ride first.. I think the Focus looks a little sexy, if looks mean anything.. As to crappy. My Rangers and Taurus' worked out get fine.. Went well over 100 K with minimal problems..

A pre-condition of any bailout: All of upper mgt, the board of directors, and CEO, are out the door; No golden parachutes, no severance packages, no pensions.

Why should taxpayer money be poured into a company, if the short-sighted fools who ran it into the ground are still in charge?

Been nice of the rules posted above also applied to Wall Street.

A pre-condition of any bailout: All of upper mgt, the board of directors, and CEO, are out the door; No golden parachutes, no severance packages, no pensions.

Why should taxpayer money be poured into a company, if the short-sighted fools who ran it into the ground are still in charge?

Sounds good on paper, but keep in mind that in a recession a lot of well-managed companies go belly up too.

GM and Ford have on or near production a couple other , possibly less crappy , fuel efficient cars.. Might give them a test ride first.. I think the Focus looks a little sexy, if looks mean anything.. As to crappy. My Rangers and Taurus' worked out get fine.. Went well over 100 K with minimal problems..

I am a huge fan of Ford products, as well as Honda and Toyota. I have owned Escorts, Rangers, Explorer,Taurus, Windstar, F150s (had one go over 300K miles:thumb:) Still have an F150 and a F350. FordMoCo pissed me off when they dropped the Focus wagon. My mom bought one of the last ones to roll of the line. I want it willed to me! I have also had long lived Honda Civics and one Toyota Corolla. My 1982 Honda Civic wagon is still rolling around town with over 500,000 miles on the odometer. It is on it's 3 engine and second transmission:thumb: One reason I have always liked Honda was availability of parts. I was buying parts for a 15 year old Honda Civic when I couldn't get parts for a 6 year old Chevy wagon.:notamused:

Aaron:)

On the one hand, it could lead the US into a devastating depression.


not necessarily - the bailout is supported by the incoming administration and majority legislature due to union concerns and populism... if GM goes bankrupt it would still make transportation products but would be able to renegotiate contracts...

a number of suppliers would get hit, but whether or not a supply chain failure cascade would occur is being debated...

moot question anyway, as the fix is in for the unions and big business...

it will be up to the individual taxpayer and families to cough up the $25,000 - $100,000 each to pay for the current bailouts via taxes in the future - so get out there and get to work, folks!

I am a huge fan of Ford products, as well as Honda and Toyota. I have owned Escorts, Rangers, Explorer,Taurus, Windstar, F150s (had one go over 300K miles:thumb:) Still have an F150 and a F350.

Me, too. My 14yr old Aerostar van has been the most trouble-free vehicle I've ever owned. After 140k miles it still runs like new. I still have it and it's now the official tandem hauler.

Could you (or someone else) please explain what this means?

I believe it's Chapter 11, preplanned, with the guarantee of government backing as soon as the papers are filed.

The claimed advantages are that it'll do the stuff that GM needs and can only be done through bankruptcy: Cull the number of dealers, drop car lines with a questionable future, and renegotiate union contracts - while not going through the risk of filing Chapter 11 and then discovering that nobody is willing to lend the money for reorganization.

Whether or not it'll work that way, I can't say. Actually, NOBODY can say for sure - a great part of the motivation for a government bailout is the stark fear of what could happen if GM goes under, it goes badly, and they take the rest of the American car industry with them (anyone for 1932 again?). It does seem to give a chance at a badly needed reorganization while trying to minimize the risk.

It does seem to give a chance at a badly needed reorganization while trying to minimize the risk.

The re-organization is desperately needed. GM, for instance, has 7000 dealerships against Toyota's 1500.

If it doesn't happen, seems like the re-org will never happen and the North American presence in the car industry will fade away, like so much manufacturing that used to happen here, but has now moved to SE Asia.

The re-organization is desperately needed. GM, for instance, has 7000 dealerships against Toyota's 1500.


Do you (or anybody else) understand how the dealership agteements work? I have read that many of these agreements date back to the 1920s and are protected by law in various states. I've read that GM and Ford originally sold directly to consumers and/or small retailers until they were more or less forced into these protective agreements with dealers.

If it doesn't happen, seems like the re-org will never happen and the North American presence in the car industry will fade away, like so much manufacturing that used to happen here, but has now moved to SE Asia.

Free trade proponents will gloat that this will prove that globalization works--different countries specializing in industries that they can be most competetive in. However, much of the competetive edge in Asia has to do with poor labor practices (lousy health care, no pensions, substandard wages) and especially, a lack of environmental regulations. Of course they can build stuff cheaper, but at great cost to their people and their environment.

If there is a huge over-supply of cars, how does it make sense to prop up the three weakest companies in the sector? Let them go out of business. Then the better managed companies will prosper sooner. The better managed companies can hire more workers and expand operations sooner as well.
It is too bad that folks will lose their jobs. If you want job security, be a government bureaucrat. :twitchy:

If there is a huge over-supply of cars, how does it make sense to prop up the three weakest companies in the sector? Let them go out of business. Then the better managed companies will prosper sooner. The better managed companies can hire more workers and expand operations sooner as well.
It is too bad that folks will lose their jobs. If you want job security, be a government bureaucrat. :twitchy:

It's hard to say which company is weakest. Within a few months, Toyota is going to be crying as loudly as GM is now. I'll bet you that the Japanese government will bail them out in a hurry.

These companies are always highly leveraged, and hard times always hit them the hardest. None can survive without continuous infusions of cash. They can't get cash now because their usual sources are refusing to loan--even though the government already gave them 15 times more cash than the auto makers are asking for.

But the main thing is the unemployment issue that you so blithely pass over. You have not begun to see foreclosures--wait until millions lose their jobs--billions of $. You haven't begun to see state governments going broke because of unemployment benefits--billions of $. The pensions are backed by the government--more billions. Health care costs will skyrocket when millions lose their employer-paid coverage--still more billions.

You're right--it really is too bad that folks will lose their jobs. (I assume you won't be one of them!)

When the 5 came to Canada's bailout meetings only Honda and Toyota said they didn't need money. If they'd spent their R&D budgets properly and developed new products in the past 30 years that reflected the actual world vs. the one the Bushies et al were pushin' for we'd not be in this mess. We need a new batch of 300-400HP+ muscle cars remakes to give aging/retiring boomers feel young once more wood, like we need, say, a multipronged war on idealism in the middle east.

It was these companies in the 70's that created the SUV market as opposed to making better cars, because we knew back then this was going to happen to oil/gas. They decided that they'd rather skate on the thin ice than lose weight. If it weren't for the ppl employed by them I'd say good riddance.

Free trade proponents will gloat that this will prove that globalization works--different countries specializing in industries that they can be most competetive in. However, much of the competetive edge in Asia has to do with poor labor practices (lousy health care, no pensions, substandard wages) and especially, a lack of environmental regulations. Of course they can build stuff cheaper, but at great cost to their people and their environment.

That fact is very real. But weigh it against the tendency in the US to avoid any type of strategic, "what kind of industry do we want to develop" thinking. You can bet that if this was happening to Volvo in Sweden, a majority of Swedes would be behind some kind of a move to keep the auto industry jobs in their country. But at the same time, I think the Swedes would make every effort to ensure the industry was as competitive as possible, even if that meant replacing the company leadership.

It's very strange in the US. Everyone is now quite happy to see lots of jobs going down the tubes and in 5 years they'll be complaining about how the auto industry disappeared... blaming everyone from the Japanese to the Koreans to their own politicians. Still, right now, they see a bailout as being "socialist" or "unfair" or something... I don't get it.

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Do you (or anybody else) understand how the dealership agteements work? I have read that many of these agreements date back to the 1920s and are protected by law in various states. I've read that GM and Ford originally sold directly to consumers and/or small retailers until they were more or less forced into these protective agreements with dealers.

I really don't understand these agreements. I read this fact in the NY Times a few weeks ago. It was also mentioned against another fact: GM has a large number of models that compete against each other. I'm sure there are historical precedents for this, but I think at a certain point GM leadership needed to deal effectively with history, rather than basing the bottom line on performance over a particular quarter of the year.

This discussion about GM being in trouble is not a new one either. You'd think it first came up last week, based on the way people talk about it (and the urgency GM leadership is now -- suddenly -- injecting into the conversation.)

But... rooting around on the Internet, I came across an article by Thomas Friedman from June 17, 2005. It sounds like a story from last week, but it was a fact that GM was facing more than 3 years ago.

http://www.nytimes.com/2005/06/17/opinion/17friedman.html?_r=1&scp=3&sq=GM%20versus%20Toyota%20%20friedman&st=cse




So I have a question: If I am rooting for General Motors to go bankrupt and be bought out by Toyota, does that make me a bad person?

It is not that I want any autoworker to lose his or her job, but I certainly would not put on a black tie if the entire management team at G.M. got sacked and was replaced by executives from Toyota. Indeed, I think the only hope for G.M.'s autoworkers, and maybe even our country, is with Toyota. Because let's face it, as Toyota goes, so goes America.

Having Toyota take over General Motors - which based its business strategy on building gas-guzzling cars, including the idiot Hummer, scoffing at hybrid technology and fighting Congressional efforts to impose higher mileage standards on U.S. automakers - would not only be in America's economic interest, it would also be in America's geopolitical interest.

Because Toyota has pioneered the very hybrid engine technology that can help rescue not only our economy from its oil addiction (how about 500 miles per gallon of gasoline?), but also our foreign policy from dependence on Middle Eastern oil autocrats.

Diffusing Toyota's hybrid technology is one of the keys to what I call "geo-green." Geo-greens seek to combine into a single political movement environmentalists who want to reduce fossil fuels that cause climate change, evangelicals who want to protect God's green earth and all his creations, and geo-strategists who want to reduce our dependence on crude oil because it fuels some of the worst regimes in the world.

The Bush team has been M.I.A. on energy since 9/11. Indeed, the utter indifference of the Bush team to developing a geo-green strategy - which would also strengthen the dollar, reduce our trade deficit, make America the world leader in combating climate change and stimulate U.S. companies to take the lead in producing the green technologies that the world will desperately need as China and India industrialize - is so irresponsible that it takes your breath away. This is especially true when you realize that the solutions to our problems are already here.

As Gal Luft, co-chairman of the Set America Free coalition, a bipartisan alliance of national security, labor, environmental and religious groups that believe reducing oil consumption is a national priority, points out: the majority of U.S. oil imports go to fueling the transport sector - primarily cars and trucks. Therefore, the key to reducing our dependence on foreign oil is powering our cars and trucks with less petroleum.

There are two ways we can do that. One is electricity. We don't import electricity. We generate all of our needs with coal, hydropower, nuclear power and natural gas. Toyota's hybrid cars, like the Prius, run on both gasoline and electricity that is generated by braking and then stored in a small battery. But, says Luft, if you had a hybrid that you could plug in at night, the battery could store up 20 miles of driving per day. So your first 20 miles would be covered by the battery. The gasoline would only kick in after that. Since 50 percent of Americans do not drive more than 20 miles a day, the battery power would cover all their driving. Even if they drove more than that, combining the battery power and the gasoline could give them 100 miles per gallon of gasoline used, Luft notes.

Right now Toyota does not sell plug-in hybrids. Some enthusiasts, though, are using kits to convert their hybrids to plug-ins, but that adds several thousand dollars - and you lose your Toyota warranty. Imagine, though, if the government encouraged, through tax policy and other incentives, every automaker to offer plug-in hybrids? We would quickly move down the innovation curve and end up with better and cheaper plug-ins for all.

Then add to that flexible-fuel cars, which have a special chip and fuel line that enable them to burn alcohol (ethanol or methanol), gasoline or any mixture of the two. Some four million U.S. cars already come equipped this way, including from G.M. It costs only about $100 a car to make it flex-fuel ready. Brazil hopes to have all its new cars flex-fuel ready by 2008. As Luft notes, if you combined a plug-in hybrid system with a flex-fuel system that burns 80 percent alcohol and 20 percent gasoline, you could end up stretching each gallon of gasoline up to 500 miles.

In short, we don't need to reinvent the wheel or wait for sci-fi hydrogen fuel cells. The technologies we need for a stronger, more energy independent America are already here. The only thing we have a shortage of now are leaders with the imagination and will to move the country onto a geo-green path.

^^One of the few times I think Friedman is all wet.

But as for GM's divisions....Years ago each division was autonomous, and they also had Fisher Body and Delphi making car parts that they actually sold to their parent company. In the 1980s (I believe) they grouped divisiond together, like B-O-C (Buick-Oldsmobile-Cadillac). Currently they are all together, basically--even Saturn, and they build similar models at the same plants. For example, all the crossover SUVs are built at one factory. One division (Olds) is gone and it's been rumored for years that another one will be eliminated. But this is where they run into problems with dealers, as I understand it.

All this auto trivia isn't really important. I guess my point is that even GM--by far the stodgiest of the three--has made some pretty radical changes in their corporate structure. All this stuff was headline news in Michigan, but people in other regions--like Tom Friedman--probably hear less about it.

The thing is, cars are so complex and expensive that auto companies have to be highly leveraged (take on a lot of debt) in order to design and build new models. This is especially true when those new models are radically innovative, like hybrids and plug-ins. If they can't borrow, they can't build new cars. And right now--through no fault of their own--they can't borrow. The old saying is more true than ever: "When the economy catches a cold, Detroit gets double pneumonia."

On the one hand, it could lead the US into a devastating depression.

.

Don't believe the hype. Just because a company claims that they are going to close their doors and put people out of work if they don't get free money doesn't make it true.

People, we have to stop believing all the fear mongering. The Bush Administration walked all over us with their culture of fear. We need to start asking questions and saying "NO!".

"Weapons of mass destruction!" OMG!, so we go to war, overthrow two countries, and spend Trillions of dollars in sink-holes in Middle-East sand.

"Bail out Wall Street, or the USA economy will have a meltdown!" A meltdown! OMG! Then we hand over $700+ Billion in hard-earned tax money with no strings attached. All the banking executives that I know just got big bonuses and raises this year.

"The auto industry is collapsing. Millions of jobs lost!" OMG! Until a year ago, the USA auto industry was making money hand-over-fist. Now, they are going to close their doors for good?

As long as we remain so naive, we will continue to be abused. Say "NO!" to this craziness. Raise your hand if you are willing to pay more in taxes for these "lottery-winnings" to the richest and fat-est companies an executives in the USA.

Not me! :mad:

If there is a huge over-supply of cars, how does it make sense to prop up the three weakest companies in the sector? Let them go out of business. Then the better managed companies will prosper sooner. The better managed companies can hire more workers and expand operations sooner as well.
It is too bad that folks will lose their jobs. If you want job security, be a government bureaucrat. :twitchy:

Good point. After all, this is a bicycling forum.

Doesn't the downfall of the automakers suggest that there are enough automobiles in the USA, resulting in weak demand and slow sales?

Let's send $300 Billion dollars to Trek instead of the USA automotive industry and see if it has a positive effect on jobs, the economy, the trade deficit, the environment, and reducing USA's dependency on foreign oil.

If the government had sent a ton of money to Schwinn back in the 1980's, do you suppose they would still be making bicycles in the USA today?

Good point. After all, this is a bicycling forum.

Doesn't the downfall of the automakers suggest that there are enough automobiles in the USA, resulting in weak demand and slow sales?

Let's send $300 Billion dollars to Trek instead of the USA automotive industry and see if it has a positive effect on jobs, the economy, the trade deficit, the environment, and reducing USA's dependency on foreign oil.

If the government had sent a ton of money to Schwinn back in the 1980's, do you suppose they would still be making bicycles in the USA today?

No...

Aaron:)

Doesn't the downfall of the automakers suggest that there are enough automobiles in the USA, resulting in weak demand and slow sales?


Weak demand and/or slow sales can be caused by any number of things.

Don't believe the hype. Just because a company claims that they are going to close their doors and put people out of work if they don't get free money doesn't make it true.


Company credibility to legislators and to the commons is important and I find it hard to believe that they would lie.

Bailouts should always be restrictive, but the problem with that is if you get a government bailout, then you know you are necessary and important. You can run free and will barely get punished. What're they going to do? Sue you. You can repay with bailout money or complain that any monetary restituions can cause you to collapse.

Let's tweak the laws and throw white-collar criminals in super-max prisons.

Free trade proponents will gloat that this will prove that globalization works--different countries specializing in industries that they can be most competetive in. However, much of the competetive edge in Asia has to do with poor labor practices (lousy health care, no pensions, substandard wages) and especially, a lack of environmental regulations. Of course they can build stuff cheaper, but at great cost to their people and their environment.

Who's to say what is standard for wages, health care, and regulations? What you know isn't necessarily the standard, just what you are used to.

I am a free trade proponent, but I wouldn't jump the gun and say this is a prime example of my beliefs since I don't know about the government regulations involved. Free trade implies free market and I think this case proves globalization does not work as it should (such as promotionally described by Friedman in his works) because true free trade/market would also imply comparable purchasing powers (which I would argue takes into account taxes, regulations, etc. - anything that will affect an individual's bottom line when buying any good or service).

And didn't we already burn through 20 pages of posts on this topic already?

Company credibility to legislators and to the commons is important and I find it hard to believe that they would lie.

Bailouts should always be restrictive, but the problem with that is if you get a government bailout, then you know you are necessary and important. You can run free and will barely get punished. What're they going to do? Sue you. You can repay with bailout money or complain that any monetary restituions can cause you to collapse.

Let's tweak the laws and throw white-collar criminals in super-max prisons.

:roflmao2: They don't lie...they "misrepresent" facts, leave out facts, spin...and the list goes on and on. Anything that involves large sums of money and government/business is suspect!:notamused:

Aaron:)

It is not so much that, it is more if they say they will go kaput in the 2nd quarter of 2009 and we ignore them and they don't go kaput when or near when they said, the next time they say anything, there'll be more chance of them being ignored the next time around.

This is a considerable issue with larger corporations and national banks.

:roflmao2: They don't lie...they "misrepresent" facts, leave out facts, spin...and the list goes on and on. Anything that involves large sums of money and government/business is suspect!:notamused:

Aaron:)

When they're testifying to Congress, they're under oath and subject to perjury charges or contempt charges. From what I saw, these CEOs didn't prepare well enough to lie. Usually perjurers have a smooth delivery and are well rehearsed. The CEOs sounded more like habitual weasels than liars.

Who's to say what is standard for wages, health care, and regulations? What you know isn't necessarily the standard, just what you are used to.


The standards are pretty obvious. A worker anywhere in the world should be able to afford shelter, health care and food for his/her family, education for the children, and have income security for old age or disability. Until these standards are met, we shouldn't have a free trade agreement with a country, because their exploitative practices give them an unfair edge in manufacturing costs.

The US is a wealthy country so our standards should be much higher. They should include adequate recreation and vacation time, college education for the children, etc. Any factory worker in the US should have this--long before we have CEOs making in excess of $20 million.

Doesn't the downfall of the automakers suggest that there are enough automobiles in the USA, resulting in weak demand and slow sales?


Wrong--you have this exactly backwards. The economists--liberal and conservative--believe that there is less demand, not excessive supply.

Demand is low because of unemployment, tight credit, and consumer insecurity--things the auto companies have no control over..

I am a huge fan of Ford products, as well as Honda and Toyota. :notamused:

Aaron:)

Americans come off as supernationalists. I often ask myself, why do Americans hate things American..

The standards are pretty obvious. A worker anywhere in the world should be able to afford shelter, health care and food for his/her family, education for the children, and have income security for old age or disability. Until these standards are met, we shouldn't have a free trade agreement with a country, because their exploitative practices give them an unfair edge in manufacturing costs.

The US is a wealthy country so our standards should be much higher. They should include adequate recreation and vacation time, college education for the children, etc. Any factory worker in the US should have this--long before we have CEOs making in excess of $20 million.


Roody,

When I lived in a factory I made about 33,000 per year. More than enough to do all of those things you are saying.

Of course the parking lot was full of new cars (total waste of money) and their favorite thing in the entire world was donuts and cig's.

You could give many people 100,000 per year and they would spend 120,000 per year because the average person has no ability to control their appetite or their finances.

The standards are pretty obvious. A worker anywhere in the world should be able to afford shelter, health care and food for his/her family, education for the children, and have income security for old age or disability. Until these standards are met, we shouldn't have a free trade agreement with a country, because their exploitative practices give them an unfair edge in manufacturing costs.

The US is a wealthy country so our standards should be much higher. They should include adequate recreation and vacation time, college education for the children, etc. Any factory worker in the US should have this--long before we have CEOs making in excess of $20 million.

I agree...I believe it was Ben&Jerry's Ice Cream (way back when is it was still a small privately held company) had a corporate rule that the total compensation of the highest paid executive could not exceed 7 times the lowest paid employee in the company.

Only problem with setting standards is where do you draw the line? What is a "living wage"? Right now I know people at the government poverty line that live better than some that make 10 times as much. And who sets the standards? And what about personal responsibility? A young family needs different things from a retired couple. I am fine with a small living space, but too many people insist they "need" a 4,000 square foot house for 2 people.:rolleyes: Some people might be able to afford a 4,000 square foot house, but how responsible is it, in terms of wasted energy and resources? Back to the good old life boat analogy.

Aaron:)

If Roody's rules worked than we would all be trying to move to cuba or north korea where trust me....everything is "fair."

You dont want someone dictating what you and your countrymen can or cannot make. '

Of course with freedom comes risk and rewards. Let them fail. I could not care less. Those employees made WAY more than market wages and if they saved 25% of so of every check they will be fine. I'm sure they didnt so they can eat their cell phones, new cars and cable tv for all I care.

Let them sleep under a bridge.

I agree...I believe it was Ben&Jerry's Ice Cream (way back when is it was still a small privately held company) had a corporate rule that the total compensation of the highest paid executive could not exceed 7 times the lowest paid employee in the company.

Only problem with setting standards is where do you draw the line? What is a "living wage"? Right now I know people at the government poverty line that live better than some that make 10 times as much. And who sets the standards? And what about personal responsibility? A young family needs different things from a retired couple. I am fine with a small living space, but too many people insist they "need" a 4,000 square foot house for 2 people.:rolleyes: Some people might be able to afford a 4,000 square foot house, but how responsible is it, in terms of wasted energy and resources? Back to the good old life boat analogy.

Aaron:)

Good points, and it is especially hard to set standards in a wealthy country. But if you set standards at the most minimal level, many countries don't meet them. In China, a lot of factory workers live crammed into dormitories, hundreds of miles away from their families. Nevertheless, we allow them to export goods here without tarriffs, and this has put thousands of well paid US workers out of work. In SE Asia, clothing workers make $2 a day and put their kids to bed hungry most nights. Still we allow them free access to our markets. American companies obviously can't compete with those wages. As a result, there is virtually no clothing industry in the US any more.

I know a lot of people disagree, and say that shipping those jobs overseas helped to raise living standards in those countries. If that were true, it would be wonderful. But what we're seeing now is a lowering of US standards, rather than a raising of standards in other countries. How is that good for anybody?