I do fear a recession. In fact, I fear a depression. But there is some reason to hope. You mention Bernanke and Volker, but I mention Obama as our best hope right now. I'm familiar with some of his policy speeches and papers. He saw this **** coming a few years ago. He's prepared to respond vigorously and intelligently, and he quotes Krugman--"It's more dangerous to do too little than to do too mauch." So I think there will be a bailout, if the auto companies can make their case. And I believe it will have strong conditions and expectations for the execs, labor, creditors and finance institutions. They might convince private investors to help also, which would make the conservatives a little happier, I think.

Even tho I think a significant minority of motorists rude, insane.. I never expected the elimination of cars. All, I expect is decent infrastructure for bikes.. With the loss of up to 3 million jobs, they won't be biking ; they'll be walking- if not rioting.. You think those jobs can be re-created all that quickly without the economy sinking deeper into a huge morass. You are dreaming. ...
Besides... The auto market has plunged everywhere. This is a world wide sales slump.. Toyota included in that scenario.. EU governments are considering auto loans to their auto makers. Canada even floated the idea...
If Wall Street's failures and the credit crisis had not stopped credit, who is to say the auto industry would be in such dire straits.. Auto analysists say if auto sales would go back up to the normal 13 million, even now the auto companies would be solvent.

Ford predicts a profit and repayment of any loans in 2011. I don't think the other two have released their forecasts yet.

Well, we are in a recession - I just don't fear it. It happens. Must be tied to my outlook on life, but I do agree that is it not a good thing and fear is not the most irrational reaction.

Obama is for change, but did you know that according to N Greg Mankiw, who was appointed by Bush (W) for something economic in the 1st term, that Obama's economic appointments contain his (Mankiw's) teacher, student, and classmate? How much change can that really be - I know that my classmates, be it Republicans or Democrats, are learning and essentially believing pretty much the same thing.

"As a student of Alan Blinder, Larry Summers, and Stanley Fischer, I was trained to view the short-run effects of fiscal policy through the lens of Keynesian macroeconomic theory. I am sure that many of the economists in the new Obama administration share that intellectual framework. After all, they are being drawn from my teachers (Larry Summers), my fellow students (Christina Romer), and my own students (Jason Furman)."

-from Mankiw's blog

Dr. S. Fischer was also the doctoral advisor for Dr. Bernanke. My textbook is by Dr. Bernanke and I can say first hand it very much reflects what Dr. Mankiw wrote.

As a side note, economists have a fondness for never ever noting the fact that they all have PhDs...

As for Krugman, Ph.D. (lol), he may be great as a Keynesian, but he seemingly failed in dealing with Japan's liquidity crisis that still is lingering and many are saying we are entering something similar - a perfect storm to say the least. Even so, I am not worried. Economics is making leaps and bounds and I am certain I can make some amazing discovery to save us all :-)

Is that how they worded it? I would assume "profit" is net income and repayment to be interest payments. Assuming any Big 3 bailout will be in form of a loan, then shouldn't they be paying it back regardless of if they are making a profit? I mean, I know student loans are sometimes deferred until you graduate, but...

No, I don't. You just want to spin it that way because you think it helps to advance your point, in contention with what you (erroneously) believe my point to be.

And to call me "arrogant or elitist" marks you as a fecal-agitating thrower-about of fighting words.

The media seems to have really latched onto the collateral damage issue of late - things like all of the related industries and jobs, and really centering on tax revenue. The problem is, they're making it sound as if local governments are dependent on this bailout to maintain their tax base. People will, barring a full-on depression, resume buying cars at some point. It's just a matter of whose cars.

My point is, that we have really done ourselves a disservice by allowing corporations to get so large that we cannot afford for them to fail. It puts the country in a horrible situation, and allows them to dictate policy even more than they already do.

All that said... why are we so fixated on the auto industry? We're dicking them around over 25/34 billion while we've already dropped over 4 trillion into the financial markets.

And both are a lot better off than the average worker, who earns a fraction of a UAW worker's hourly wage, who does not have a "jobs bank" that essentially pays laid-off workers their full salary (plus benefits) for up to two years, who does not have a pension, and who may very well not have employer-paid health insurance. I understand the desire not to have the UAW line worker pay a price when the executives who are primarily responsible for the situation are still rollin' in it, but the executives won't pay the price of the bailout -- the American taxpayers will. And who are the American taxpayers? It's those very same workers who are a lot less well off than the UAW workers. A bailout forces workers with no pensions to pay for the pensions of others. How can you claim that that's justice? And how can you claim that it's necessary? So the UAW worker can't survive without a pension -- just how are all the rest of us supposed to survive without a pension, then?

+1... Pensions are a thing of the past. Most companies offer matching 401K and stock options today, but few PROFITABLE corporations still offer pension plans. A bailout perpetuates this ancient practice. A big 3 employee costs $29 per hour more than a Euro/Asian car employee working right here in the USA. Not that they are bringing home $29 an hour more, they cost the company $29 an hour more.

The big three are not sustainable at present.

It'll take a LLOOONNNGGGG time for the slowdown to equal less cars on the road. 99% of new car buyers don't need a new car. They're replacing a perfectly good, practically brand new car.

Yeah, the UAW workers are WAY better off than "the average worker" that's why places like Flint, Michigan are such thriving, upper crust communities.

You weren't promised a pension so you didn't make decisions based on your pension. Once upon a time, pension contributions were put into an untouchable, conservatively managed fund. Now days management raids those funds, often to enrich themselves.

Personally I think the entire upper management structures of the "Big 3" should be out on their butts without a dime of severance pay.

Average high-school educated worker? Hell yes they are. The new hires? not so much, but then again I can't imagine there will be any new hires for a looong time.

Those towns are in no worse shape than any other town that builds up around a single industry... just a disaster waiting to happen.

I agree, in fact i don't think any relationship between the auto industry slowdown and cycling can be made for the reason stated above.

I also didn't sign up to pay for someone else's pension. Why should I be forced to? I wasn't part of that deal, not as a worker, not as a consumer, and certainly not as a Big Three decisionmaker. Why do you want to force me to pick up the tab now for something that I had nothing to do with?

My employer does not offer a pension. If my employer decides tomorrow to stop offering health insurance, that's it, we're done. If they decide to cut wages or lay off half the company, same deal -- we collect our last paychecks and we're out the door. Why do you think it's just for you to make me pay for security for others that I do not myself enjoy?

You mean like you do with social security? No, it's not just. It sucks pretty bad, but we really have no say in the matter.

Most people I know buy a new car because they are tired of the old one, or are jazzed up about the new model. Cars last a long time, nowadays, and that fact makes them more of a luxury item than ever before. Luxury items don't do well in a recession!

I say we bail them out. But I'm from Detroit and live in Cleveland, both heavily dependent on this industry. The banking deregulation started this--so in a lot of ways it's the government's fault. I suggest we give the big 3 a chance and go from there. Actually, I could see us letting Chrysler fail. They are private anyhow and are doing the worse. They could sell off Jeep and fold. Ford and GM's chances for survival are better without Chrysler.

Social security is a social safety net that, at least in theory, I will draw on when my time comes. There is no comparison with auto industry worker benefits. Thanks for playing.

How does the auto industry having problems lead to less cars on the road? It's a complete non-sequitur. They'll buy foreign cars, or used cars. The only result would be maybe more older cars putting out more pollution.

Personally, I'm done with buying new cars anyway; I think it's a sucker move. Anyone who's at all handy (and if they're not, they can teach themselves) can buy a used car for pennies on the dollar and keep it running until it rusts away for not much money. I've got a friend who's been driving a $400 Saturn for 5 years now. It looks like ****, but he (and I) don't require our possessions to scream to the world how great we are. I actually kind of like to drive old heaps, they have personality.

Classic comment from some one completely uninformed and knows nothing about.
Even if the funding goes through, detroit has shed thousands of jobs already from their white collar work force at a level that has never been seen, and it can be traced back to nearly 7-8yrs of having to consistently sell vehicles off at 0% financing to keep product selling (example: the camaro stopped selling. Why? due to 0% financing a corvette is almost the same cost, hence that is what the customers bought) .
On top of a vehicle market that is increasingly stagnant due to even more people not purchasing vehicles, the big 3 have large and heavy legacy costs that span back for decades of retired employees pensions and health care. Up until GM's recent decision to cut that legacy cost of retirees health care the company had not been an auto manufacture for years, they were a healthcare provider that just happened to build cars to pay for it. It was to the point where GM had more retired employee's +dependents than actual people working for the company. When $1300 of each vehicle you produce is having to go directly to healthcare costs you cannot survive and sell a cheap low cost product, you are screwed no matter what.

These problems are common though out the US auto industry, with decades upon decades of having to shut down plants due to decreasing amount of product sold they also had to push higher margin vehicles to keep products flowing for both blue collar and white collar jobs, hence the american flood of SUV's which were the vehicles with the highest rates of return on both investment and time.


Area's of the US that have been most effected by this are indeed the great lakes area and michigan, half if not more than half of the state is completely reliant upon the auto industry in some way, may it be through service industry, child care, health care, schools, universities, the whole economy of the state.

Besides current job losses/possible bankruptcy in the auto industry, nothing is actually that different here in Michigan (we're used to plants shutting down all the time), we've had high unemployment, low growth, stagnant and slowing economy, an intellectual and generational exodus from this state for many many years.

The money is needed for a large part to just stay afloat and keep hundreds of thousands of people in jobs, GM themselves have chevy volt ready to hit the market, the other auto makers have products extremely close to come out already (vehicle development can take 4-5yrs), and with how long it takes to get a product such as a car into market, none of us knew 4-5yrs ago we would all be hitting this wall.

HAHAHA wow. Yes i agree UAW workers have it pretty well off. BUT you have pretty much no clue about Flint or the UAW from anything other than Michael Moore.

Flint - stagnant, rotting, gangland anarchy, a resident population that has no job skills, 80% of residents are renters, a bankrupt city, lack of police enforcement. GM pulled it's large plant(buick) out of there about 4-5yrs ago, but the city was already dead. Flint died with the 70's, it's mfg&engineering work force moved out of the city to the outskirts of flint and oakland county and the people that were left didn't care and still don't that they are living in a city that is so rampant with crime that they think it is alright the way it is.

Grand Blanc/Fenton/Clarkston/Upper Oakland County - Populated primarily big 3 employee's, White and Blue collar, an area with some of highest amount of intellectual knowledge in regards to engineering and manufacturing in world. Good schools, low crime.

GM has wanted to buy Jeep for years, same with Benz when they bought chrysler, if chrysler folds gm will without a doubt buy up the brand because they need something to replace the extremely tarnished hummer brand.

To me it just looks like anti-labor people lining up against pro-labor people and taking potshots at environmentalists when they can (and vice versa).

I think the slow down is temporary.
As soon as the world population regains their financial confidence and security, the same level of purchasing and use of cars will be back. Likewise, it will increase as before.

What I'd like to see is for the OPEC/Oil nations to cut oil production and cause the increase in oil prices again.

This I believe will have a better and longer resulting affect in decreasing the dependency on combustion vehicles and strengthen the global populace in refocusing and strengthening their minds on trying, developing, and using, alternative energy, and transportation.

What will happen to OPEC? Will they get richer? I don't think so, I believe that an act like this will be the nail that seals the coffin. Let's just see how smart and or really greedy they are.

Let's not forget, it was the rise in oil prices that started the dominos falling.

Also, it may steer China now into alternative fueled vehicles. China I forsee will be a big player in filling in the void left by the Big Three here in th US of A.

Americans use to pay $25,000 for a decent, reliable, and safe mid size car, and now the Chinese will be selling them (exporting) at half the cost with little competition. Cheap, less safe, less efficient. They'll cut corners to keep that price down, and I forsee droves of poor desperate Americans getting in line to buy one.

Don't forget the Chinese. The more established car companies have been training them on manufacturing vehicles for the past three decades. They have the technology and know how, but not the ideals and standards the more established car companies have.

The missing link here is that all foreign governments prop up their car businesses, and developing ones are working like heck to create such an industry. They understand that the process of developing cars (not building them) drives a huge center of competence in all kinds of manufacturing specialities.

I'm in a non-automotive heavy industry in Detroit and I can call on hundreds of companies with huge expertise in thousands of subjects here locally because they support the big three. Lose the big three and those companies all go.

Sure, lose the big three and Toyota will still build them in Alabama or Tennesee or whatever. But the expertise will be gone forever.

When this bailout fails, in a few decades the US will be eclipsed permanently in manufacturing by China, India and the E.U. (if they can hang on). We will look back at losing our ability to develop this stuff (and all the other heavy industry we have been happy to shed) as our long decline. We cannot be rich by all becoming expert baristas at Starbucks. We need to know how to create real things.

I'd like to think that the execs are both American and taxpayers.

Crystal ball sez:

Gas tax of a buck and a half coming.
1) partially pays for national retiree health care plan (freeing up some 20 billion or so in lump sum payments to a fund by the automakers - effectively covering the cost of some of bridge loans). To buy a foreign brand car is to accept that nations subsidies to the cost for the health care of the workers. I'm not convinced the US automakers haven't been getting a short deal on this.
2) recover funds for infrastructure
3) demand side assistance for retooled automakers. A big chunk of the problem has been cheap fuel. It probably needs to be expensive enough (around $3.20/gal) to drive demand for the efficient cars and even some passenger car diesels.

The US market for passenger vehicles was around 16,000,000 in 2007. This year looks to be around 12,500,000 - comparable to 1982. Next year is forecast to be somewhere in the same range, with numbers not picking up until 2010 or 2011.

Nardelli (Chrysler) has been in the auto industry about thirteen months, having previously been in Home Depot. Mulally (Ford) since 2006. The Ford family pried him away from Boeing where he bet that companies future on a more efficient jet rather than a faster one. These two men are outsiders; only Wagoner has been in the industry any length of time. Those who've suggested that all three should be tossed and replaced with outsiders may want to study on it a little.

As previously noted, the cost of labor should not be confused with the wage of the laborer. Something like $13/hr - I understand - goes toward benefits for retirees.

As far as that goes, BMW, Mercedes, Audi, VW, Peugeot, Renault, etc. are mostly built in union shops. I've seen some stupid UAW excesses (gotta have a "wheelwright" to carry a lunchbox computer 150 ft inside the building, said the three people standing around the loading dock. Forty minutes later, a wheelwright appeared. Cost to the big three? only a couple hundred.) but as much as it pains me to admit it, I don't think the union is the biggest problem here.

http://news.bbc.co.uk/2/hi/business/7763531.stm

Bankruptcy will not happen if we listen to SoH Nancy Pelosi.

I recieved an Email from Tom Regan, one of a few whose working on making a South Eastern Michigan city bike friendly. The city of Royal Oak is about 8 miles West of GM's Technical Center. Below is his latest report on how it's going with the advocacy....

I just want to bring into light how the economy is affecting cycling here in Michigan. I'm sure if one or all the Big Three go bankrupt we can pretty much erase any future progress from the work below off the face of the Earth for a time being.....

Of course, this is just my thinking for the basis for Mr. Hoover's reply, but then again.....


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Biking and Walking in Royal Oak‏
From: Tom Regan
Sent: Sat 11/29/08 10:30 AM
To:

This is an update about our campaign to improve conditions for bicyclists and pedestrians in Royal Oak.

Our task force met with Royal Oak City Manager Tom Hoover and members of his staff on Tuesday, November 25th. We discussed four items.


We gave Mr. Hoover and his staff literature from the League of American Bicyclists on how a city can seek certification as a "Bicycle Friendly Community," http://www.bikeleague.org/programs/b...a/communities/ . We suggested that winning this certification should be our long-term goal.
We asked Mr. Hoover if the city would hire an outside consultant to write a Non-Motorized Transporation Plan. We estimated that this would cost about $40,000. Mr. Hoover and his staff agreed that Royal Oak would benefit from writing a non-motorized transporation plan, and that it should be done by an outside consultant. However, Mr. Hoover noted that Royal Oak (like nearly all Michigan cities) faces an extremely tight budget. Mr. Hoover stated that our task force should investigate thoroughly if any outside funding sources exist before asking the city commission the question. Several task force members agreed to investigate possible funding sources.
If you know of any possible funding sources please let me know immediately by responding to this email.
We asked Mr. Hoover about scheduled street repavings that offered immediate opportunities for making streets more bicycle-friendly, such as road diets and bike lanes. The city engineer agreed to investigate this.
We discussed special needs and opportunities along Woodward Avenue. Heather Carmona of the Woodward Avenue Action Association agreed to investigate potential funding sources and potential cooperation with neighboring cities.

The task force will meet again in mid-December to report on our separate searches for possible funding sources.

Reminder, please join us at the next Royal Oak School Board meeting to speak at public comment. Our purpose it to explain why a Non-Motorized Transportation Plan would benefit Royal Oak school children and to ask the school board to support the effort:

Thursday, December 11
7:00 pm
1123 Lexington Blvd., Royal Oak, MI 48073

Reminder, please write letters to the editor and call on Royal Oak to take steps to improve bike and pedestrian safety:

Royal Oak Mirror ksmith@hometownlife.com
Royal Oak Review clangrill@candgnews.com
Royal Oak Daily Tribune editor@dailytribune.com
Oakland Press vop@oakpress.com

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What happens when your tax base starts to dry up?

http://www.radioreference.com/forums...&highlight=Gas

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In fact, not to long ago when gas was at $4.00 the Michigan State Police were put on a limited mileage of 40 mi/day.

What about your local police, Fire Department...etc..How about the National Guard?

Draw your own conclusions...

The fact that as a taxpayer I may end up funding the bail-out of auto companies who have been struggling with cost, quality, marketing, and labor relations issues for my entire adult life (I'm over 50) is very troubling to me.

Most of the media coverage and PR by the auto industry in my opinion confuses the issues of employment levels with the survival of the companies. If the corporations survive, that still doesn't mean we'll be able to save all the job of the hourly workers in plants and at suppliers. Production needs to continue falling until production meets near-term demand; that will mean more jobs disappear. So a lot of the "domino" effect of problems of the auto industry are going to occur anyway (at least until the economy improves). I hope we aren't going to bail out the car companies so that they can keep producing cars no one needs right now. Nor do I see why we should help support so many domestic car dealerships when clear the car companies could efficiently distribute cars with many fewer dealerships than they have today.

For that matter, if they're going to use taxpayer money to support the companies, do the taxpayers get a say in what kind of cars are made. Do we need cars that produce over 200 horsepower or go 0 to 60 in less than 8.0 seconds? Do we need sunroofs? Should people with bad driving records be able to take out an 84-month car loan for a high performance sports car, or should they be forced to buy cheaper, used, beater cars until they clean up their records? Is the engineering talent at GM really focused on an energy efficient car of the future or how to squeeze yet another cup holder into the next generation of minivans?

I think if it's a slippery slope - if the industry wants public money to stay alive because having them alive is a public good than the taxpayers should force them only to build "good cars," and then sit back and watch while we figure out no one can agree what "good" is.

In the end, seems to me that the market makes better decisions on what kind of companies should survive than governments do.