Detroit bailout (from "Hay gaiz!")

[Deacon]

As directed by Jez, we are taking this elsewhere, because Mav has said some silly shit.

First, a recap of the posts so far.

Given current events, this has been floating around the Internet. For those who haven't already seen it.

That's so beautiful.

"The Big Three Bailout. By Democrats, for Democrats. Don't worry, Congress can run the car business better than the car businesses can. We'll just make them all hybrids. If GM made more hybrids, everything else would've been fine."

Congress can run the car business better than the car businesses can.

Well at the moment it's not like they could do much WORSE...

You can't really believe that.

On the one hand, no, it was a joke.

On the other hand ... "we can't function, we need a bailout or we're gonna fail" is pretty much scraping the bottom of the barrel, there's no much lower you can go, after that.

Don't tempt fate, my friend. It can always go lower.

They could take the money, ask for more, ask for more, ask for more, and THEN fail.

Or they could take the money by force and much more with it, increasing revenues at gunpoint year after year after year while producing little to nothing at all of value and yet simultaneously racking up astronomical levels of debt.

No, that is Congress.

Nancy Pelosi's Congress. The only body of government that has to look up at Dubya's approval rating. They know what the people want and are the best at giving it to them.

No no no, you're right, they're FAR better at making a giant, global, union-crippled industry lean, mean, and successful. Car design by congressional committee. Excellent.

They could take the money, ask for more, ask for more, ask for more, and THEN fail.

This is their second bailout in the last few years.....

Also, the problem is not the fact that they don't make hybrids. FFS, they are developing that plug-in electric car. The PROBLEM is that they are saddled with HUGE union legacy costs and the government forcing them to develop higher fuel efficiency. The problem with the second: when you are forced to develop something, you have to do it even if you don't have enough money to do it on the government's time schedule, so you end up in debt....

From what I've read, January 1st will be too late to prevent bankruptcy proceedings. The Detroit CEOs have three weeks max.

Last I heard Ford is just going to use this as insurance.

Deacon, your paticular stupidity never ceases to amaze me. I mean, everyone else gets to me as well, but people actually seem to respect you, which is frightening.

It was the Republicans who pushed for a bail out for the financial industry. But 30 billion for an industry that produces a tangible product? No, we can't do that. It's the democrats. And that's just what I've stolen from John Stewart's take on the issue.

The real problem is, are you willing to watch unemployment jump 1 to 2% over night? From car dealerships down the street to factory towns, to what would probably amount to all of Detroit - is this really the best time to lose it all? I'm not saying it doesn't need to happen at some point in time, I believe a lot of the economic downturn has been just a process of trimming excess waste and fat. But, with everything else that has happened, are you going to argue we can lose another American industry right now?

So, we're going to pay some stop-gap measures to keep the economy from completely tanking, because your republican led government helped fuck up the financial and housing industries over the last eight years. Great fucking job.

And before anyone else says something stupid, markets and economics in general are cyclular. It's just not common for multiple markets to hit the bottom of their cycle at the same time, which is where the real issue is coming from. A bad housing market or a bad financial market could be weathered relatively easily in individual incidents. But right now you're going to have to choose really carefully what else you think we can run out of with all the other simultaneous low points. And I'll also point out that the loan to Chrysler resulted in a strong turn around for Chrysler in the following years, as well as a 300+ million profit for the government in loan fees and what have you.

In closing, fucking blow me.

[Deacon]

It was the Republicans who pushed for a bail out for the financial industry.

You're mistaken, but perhaps that's what's lead to your misunderstanding about the rest of it, too. Pelosi had to work to get enough Republicans on her side to get it to pass, remember? She failed the first time she tried, even. All the conservative talking heads have been putting it down without notable exception that I can think of. The only Republican who was pushing hard for it was Bush, but he doesn't really count because he left Republican ideals behind long ago and was pushing to make his own office more powerful, something he doesn't have a problem doing, obviously. And it looks like it's backfiring a bit, considering that the bailout funds distributed so far have not been used in the manner intended and have done little to resolve the alleged problems of the "credit crunch" and such. At an individual level, credit card companies are sometimes even lowering credit limits on established card holders.

But 30 billion for an industry that produces a tangible product? No, we can't do that. It's the democrats. And that's just what I've stolen from John Stewart's take on the issue.

I don't think Jon Stewart (note the lack of an H) would really be that incorrect on the issue. He's been known to be extremely skewed and to play loose with the facts for comedic and ideological purposes, of course, but that's too far off the mark to be believable. And no, the bailout isn't really for the car companies' operations, it's primarily to fund the outrageous contracts held with the unions representing both current and past auto workers. In fact, even if the unions dissolved altogether or went ahead and made sweeping concessions to get things back to anything even near reasonable, it would only be part of the issue, as the incredibly cushy contracts that exist with former auto workers aren't under the authority of the unions to renegotiate. That's part of the reason chapter 11 has been suggested, because it allows the company to move on without having to honor old, crippling contracts. Granted, it's the (often former) CEO's faults for surrendering to such ridiculous demands and binding their companies into the contracts in the first place, but in the past they figured they could just foist it off on the next guy to come around, that it was better to give in and get the plants back to work to keep the short-term numbers good than to secure the long-term viability of the company, but it seems like that cliff they've been charging toward has finally come upon them.

Additionally, the bailout isn't just a giant amount of financial assistance to the unions that have hamstrung the companies (assisted by shortsighted leadership on the companies' part), but it's also an attempt by Congress to take even MORE control of the industry than they've already imposed with their ridiculous CAFE laws and such. They want to basically dictate what the companies produce and how and when; rather than see them become profitable, they want to see them become whatever Democrats think they should be. They want to impose a "car czar" to make decisions for the companies. It's incredibly ridiculous because companies likes Honda and Toyota and Mercedes and others that build cars in the US don't have these problems--primarily because they're not suffocating under the bloated bedmate that is the UAW. That's why this isn't a bailout for the auto industry, but rather a bailout for Detroit, and that's why the Democrats are so eager to see it happen. They're almost exclusively responsible for setting up and supporting the unions, and in turn the unions are a huge factor in getting the Democrats elected. But when starry eyed socialist projects continue to grow into naked greed, they have to face reality: either the UAW needs to sadly inform its members that they can no longer sustain their artificially inflated compensation, or EVERYONE is out of work, not just a portion of them.

The real problem is, are you willing to watch unemployment jump 1 to 2% over night? From car dealerships down the street to factory towns, to what would probably amount to all of Detroit - is this really the best time to lose it all?

That's the way you're playing it? That either we print money and take it from taxpayers to support the unions or every domestic car company goes out of business completely? If car companies are allowed to restructure, none of that has to happen, except that the shortsighted, greedy, one-egg-in-one-basket types are going to have to rethink their strategy. And yes, this means in some cases that individual parasitic people who've been engorging themselves to bursting on the auto companies are going have to face the reality that they can't suck quite so greedily anymore.

I'm not saying it doesn't need to happen at some point in time, I believe a lot of the economic downturn has been just a process of trimming excess waste and fat. But, with everything else that has happened, are you going to argue we can lose another American industry right now?

No, I'm arguing that Congress taking over the auto industry with taxpayer money isn't necessarily the best solution. And even if GM and Ford and Chrysler all go out of business, which is basically impossible (even if they don't get Congress to bail them out, they can still just restructure under chapter 11), the Toyota plant here in San Antonio is going to keep right on truckin' by the way. And that goes for all the other non-Detroit plants in the US. And all the car repair and maintenance shops and tire shops and oil change shops and used car dealerships, etc.

So, we're going to pay some stop-gap measures to keep the economy from completely tanking, because your republican led government helped fuck up the financial and housing industries over the last eight years. Great fucking job.

There are several red herrings in there, not the least of which that it's the Republican party specifically that has burst the recent bubble, and that they're "my" Republicans. That's been discussed already to a great extent elsewhere in SPPACE.

In closing, fucking blow me.

Classy.

[adciv]

I vote: "Mav has no fucking clue how the US Federal Government works"

The real problem is, are you willing to watch unemployment jump 1 to 2% over night? From car dealerships down the street to factory towns, to what would probably amount to all of Detroit - is this really the best time to lose it all?

Seriously, 2% unemployment is bad? The long term historical average has been more in the 4-5% range.

[kaiju01]

That's an increase of 1-2%, adciv, not a jump from 1 to 2 percent. Economists are forecasting an increase from the current 6.5% to possibly 8.5% in the next year though, a figure I don't believe is purely from the potential collapse of the auto industry either.

[adciv]

Ok, that makes more sense. Still, even 8.5% is within range of the past 50 years. I'm not saying it's not bad, just that the sky isn't falling.

[Binks]

From car dealerships down the street to factory towns, to what would probably amount to all of Detroit - is this really the best time to lose it all?

There are >20 car dealerships in my general area. Of them 2 would be directly affected by Detroit going under (which is in and of itself fairly close to impossible given that Chapter 11 is always a fallback plan). Now I'm not saying this is the usual case, perhaps we have more dealerships that sell used/foreign cars than is the average, but still you're implying that Detroit shutting down (again, effectively impossible) = All car dealerships/shops/factories shutting down, which is pretty darn far from the truth.

(As a side note, what in the world is my area doing with 20+ car dealerships? And that's just counting name brand ones, not the little independent used car dealerships. I've always wondered why about once a year you'd hear about a dealership shutting down around here, now I know why, because there's dozens of them!)

So, we're going to pay some stop-gap measures to keep the economy from completely tanking, because your republican led government helped fuck up the financial and housing industries over the last eight years. Great fucking job.

I would just like to point out, and I recognize that this isn't the place for such a discussion (as we're discussing something else entirely, though you did bring it up first) that A: The sub-primes were put into place during a democratic government and that B: Congress has been democratic for 2 years, and things haven't improved one bit.

BTW: 8.5% unemployment isn't really that bad in the context of even just the last 40 years. We've been over 8.5 twice in the last 50 years. It's not like 8.5% = Country death or something

[StruckingFuggle]

Isn't the impact of a certain level versus another of unemployement determined by a number of factors other than just the unemployment rate?