Should the Government Bailout the Car Industry?

[Eomer]

Originally Posted by Felith1

Democrats have a damn good argument for this one. I wish I could change my vote for yes.

Here is the transcript for Meet the Press. The entire video is on iTunes but I couldn't find the entire show on streaming video. They have it cut up into sound bites if you want to see it on their site.

Nov. 16: Sen. Carl Levin (D-MI), Sen. Richard Shelby (R-AL), T. Boone Pickens, Tom Friedman, Katty Kay, Andrea Mitchell, Tavis Smiley - Meet the Press, online at MSNBC

I don't know that I agree that the democrats have a good argument. Levin's head is so far up Wagoner's ass in that piece I don't know where one starts and the other ends. He sounds like a walking GM ad. "They have twice as many 30mpg models as any other manufacturer!" NO FUCKING SHIT, THAT'S HALF THE PROBLEM ASSHOLE.

And Wagoner's statement that he doesn't see why he should resign is just assinine.

[MrSpitz]

Originally Posted by Kaosu

Except GME has had nearly nothing but losses even before 2000, China is not a viable alternative, nor is korea.

GM right now has 16 billion, in terms of cash or other forms money. All of it borrowed. Lets look at this trend, shall we?

2007-12-31 +25,032.00
2008-03-31 +21,813.00
2008-06-30 +19,768.00
2008-09-30 + 16,280.00

Now, lets look at their equity. As of 2008-09-30:

-61,014.00

If we were to factor in total debt: 45,155.00.

GM apart from the other two, are not in good health.

What the fuck are you talking about?

GME posted a net income of 236 million in the second quarter of 2007.

[Gilgamel]

Detroit needs to die if that's what it takes to get out from under their current union obligations. They cannot make a competitive product with their current labor agreement. It's that simple.

[Sinter1]

Stop bailing out stupid fucks who clearly shouldn't be in leadership positions within these companies. Also, yes it will hurt short term but the other companies will come and fill the gap if GM and Ford go under. We need to start thinking long term and stop making irrational short term decisions.

[chaos]

Originally Posted by Gilgamel

Detroit needs to die if that's what it takes to get out from under their current union obligations. They cannot make a competitive product with their current labor agreement. It's that simple.

And isn't that exactly what they need the money for? To float until 2010 when their new union rules go into place?

[Gilgamel]

Originally Posted by chaos

And isn't that exactly what they need the money for? To float until 2010 when their new union rules go into place?

Their new rules still are not competitive with what an auto worker in a non-unionized southern state working for Toyota or Honda will make. UAW has basically said they will not give any more concessions. As such fuck UAW and fuck Detroit until they get their head out of their ass. Foreign companies are making cars inside our borders more efficiently than our domestic manufacturers are.

Fuck the bailout.

[Desx]

Should the Government Bailout the Car Industry?

No.

[revolreggin]

Fuck the UAW. I remember reading this article my senior year in college as I was busting ass my last semester taking 20 credit hours so I could graduate on time. I literally almost punched the fucking monitor: Jobs bank programs -- 12,000 paid not to work - 10/17/05

Yep, getting paid $30 an hour plus benefits to sit and play board games (literally) when you are no longer needed on the assembly line. Heaven forbid you have to find employment elsewhere like any other fucking person would have to do. Rot in pieces UAW and Big 3, fuck off.

[Kaosu]

Originally Posted by MrSpitz

What the fuck are you talking about?

GME posted a net income of 236 million in the second quarter of 2007.

Yet they magically had a operating loss of 630 million dollars for 2007 overall.

[I'm Rich Bitch]

Originally Posted by MrSpitz

I mean Paulson basically scammed all of us.

I think Paulson has commited the greatest crime of all time. He has stolen billions of dollars. He is the grestest criminal of all time. He will be sitting very pretty come January 20, 2009. Maybe he will get the corner office at Haliburton next to Dick Cheney.

Need to rob Vegas? Fuck that. Become the United States Treasury Secretary under an incompentent President. Get the Congress to agree to give you billions of dollars with no method to check it. Then leave office and cash your "consulting fee" checks from the people you gave an unaccounted for billions of dollars.

[chaos]

Originally Posted by Gilgamel

Their new rules still are not competitive with what an auto worker in a non-unionized southern state working for Toyota or Honda will make. UAW has basically said they will not give any more concessions. As such fuck UAW and fuck Detroit until they get their head out of their ass. Foreign companies are making cars inside our borders more efficiently than our domestic manufacturers are.

Fuck the bailout.

You think it's realistic to completely dismantle the union overnight? Hey I agree, their agreement is pretty much ridiculous, shit I wish I could be an out of work auto worker making 90k per year for the rest of my life with a guaranteed pension and health care. Let's all be outraged, TOGETHER.

And then let's be adults and get the fuck over it and realize that we need a real world solution and not some emotional response. "Fuck the bailout" is not a viable policy response to this issue.

They are already restructuring. The government can tie strings to the loan to make them further restructure, and maybe make some progress and we don't have to raise our children in a depression. This same kind of emotional response reminds me of certain people before the bailout who were FREAKING THE FUCK OUT, running around in a panic saying we HAD to do the bailout without thinking, just gogogo, give them buckets of money! We need rational thought and solutions.

[Soriak]

They can't reduce the number of brands and dealers without incurring massive costs. As for the bailout, it's the equivalent of $200,000 per GM employee in NA. Not a lot of people could get that kind of severance pay... The reduced retiree medical obligation is currently underfunded by $34bn, more than the bailout asks for.

GM solution: Chapter 11 with government restructuring finance | vox - Research-based policy analysis and commentary from leading economists

Sixth, GM must emerge from Chapter 11 without enormous retiree medical care liabilities. By negotiating with its white-collar employees, GM has been able to get the unfunded part of this liability down to a “mere” $34 billion. Furthermore, GM and the United Auto Workers (UAW) have agreed to a special fund for a Voluntary Employee Beneficiaries Association (VEBA). Under this agreement, however, billions of dollars of additional cash contributions are due from GM in the next several years. The agreement will have to be revisited in Chapter 11.

They can throw the bailout money in there and go right back to Congress to ask for more. You'd be kidding yourself if you didn't think they would be back within a year. Then the argument will be that the government has a huge stake in their survival, after all they have to repay the loan eventually.


Copied from my post in the finance forum, but really illustrates how screwed GM is: Why Bankruptcy Is the Best Option for GM - WSJ.com

After 42 years of eroding U.S. market share (from 53% to 20%) and countless announcements of "change," GM still has eight U.S. brands (Cadillac, Saab, Buick, Pontiac, GMC, Saturn, Chevrolet and Hummer). As for its more successful competitors, Toyota (19% market share) has three, and Honda (11%) has two.

GM has about 7,000 dealers. Toyota has fewer than 1,500. Honda has about 1,000. These fewer and larger dealers are better able to advertise, stock and service the cars they sell. GM knows it needs fewer brands and dealers, but the dealers are protected from termination by state laws. This makes eliminating them and the brands they sell very expensive. It would cost GM billions of dollars and many years to reduce the number of dealers it has to a number near Toyota's.

Foreign-owned manufacturers who build cars with American workers pay wages similar to GM's. But their expenses for benefits are a fraction of GM's. GM is contractually required to support thousands of workers in the UAW's "Jobs Bank" program, which guarantees nearly full wages and benefits for workers who lose their jobs due to automation or plant closure. It supports more retirees than current workers. It owns or leases enormous amounts of property for facilities it's not using and probably will never use again, and is obliged to support revenue bonds for municipalities that issued them to build these facilities. It has other contractual obligations such as health coverage for union retirees. All of these commitments drain its cash every month. Moreover, GM supports myriad suppliers and supports a huge infrastructure of firms and localities that depend on it. Many of them have contractual claims; they all have moral claims. They all want GM to be more or less what it is.

[Silence]

Originally Posted by chaos

You think it's realistic to completely dismantle the union overnight? Hey I agree, their agreement is pretty much ridiculous, shit I wish I could be an out of work auto worker making 90k per year for the rest of my life with a guaranteed pension and health care. Let's all be outraged, TOGETHER.

And then let's be adults and get the fuck over it and realize that we need a real world solution and not some emotional response. "Fuck the bailout" is not a viable policy response to this issue.

They are already restructuring. The government can tie strings to the loan to make them further restructure, and maybe make some progress and we don't have to raise our children in a depression. This same kind of emotional response reminds me of certain people before the bailout who were FREAKING THE FUCK OUT, running around in a panic saying we HAD to do the bailout without thinking, just gogogo, give them buckets of money! We need rational thought and solutions.

Except that restructuring only goes so far. There's only so many ways you can restructure failed laws and agreements and contracts. The foundation of the problem is that neither the current management of GM nor the UAW are offering anything in the way of change that is a positive departure from their current model that does not work. Neither party are willing to change from a model that does not work in favor of one that does work. In this light, the non-emotional response is Fuck You.

Rational thought starts out with axing GM's executive staff and board members with NO parachutes, no nothing. Goodbye. Your golden parachute is the last paycheck we gave you. Stock options, any other means of remuneration? Gone.

UAW? No more jobs bank, no more compensation that far outstrips the actual value that your labor contributes to the company. No more $60k per year to put door panels on. Want to move up? Go get an education and WORK FOR IT like the rest of the people in the USA have to do.

So far, neither the top echelon of GM nor the UAW are willing to give up business as usual that they need to give in order to move forward.

As it stands, any type of bailout without massive reforms is just giving keys to the bar to the family alcoholic.

[chaos]

Can the government even legally do any of those things? I mean, it sounds good to me, axe the leadership and hit the union benefits hard, maintain salaries and health care for the time being. They already hit the union starting wages down to 15 an hour. What can the government realistically do?

[aychamo_aycono]

So is the government going to bail out Circuit City employees too?