Discuss.

I know it's almost cliché by now, but you don't hear Toyota or Honda whining about needing taxpayer's money.

While the socialist side of me understands the need to keep these bastards afloat for the time being, the consumer in me has wanted to see them go down for years.

To plays the devils advocate though, I can see two outcomes of this bailout that might make one reconsider their position (and please spare me the die-hard idealist free market rant):

1. They actually come out of this with a solid plan and produce a quality product, resulting in a highly competitive and healthy market.

2. Their is a marked difference in quality between cars produced by Toyota/Honda in Japan, and those produced by Toyota/Honda in North America. The demise of a massive chunk of competition combined with the contemporary economic reality may result in a further decline in quality.

Anyway, just some thoughts. I don't really know where I stand on this as I can't see all the lines in the water. On one hand I'm loathe to support all these corporations with tax-payer money. But on the other hand, their abrupt end will mean hardship for a whole lot of people, and the trickle down effect associated with that.

Edit: I just realized that on your end these fat cats have already gotten money. Our government has pulled a third world move and dissolved parliament, so nothing is going to happen here until February...

If there really must be a bailout, rather than just give a company a bunch of money for nothing, why not use the money to buy cars from the company? They're in trouble because they don't sell enough cars, right? That'll solve that problem, and then let the government either donate those cars to the poor, or figure out how in Hell to sell them. What business experience does Congress have? They're used to being able to spend all sorts of money they don't have. They're not qualified to have an opinion about the private sector, and yet they give themselves unconstitutional power to regulate it.

The problem isn't that these car companies are producing universally shitty products, but that they're regulated to death by the government, now they'll be bailed out so the government is the primary shareholder and can force these companies to make even shittier cars, i.e. no SUVs, nothing anyone wants.

It's amazing to me that the whole bailout, no matter whose number you use, will cost thousands of times as much as the Marshall Plan, which rebuilt a whole war-ravaged continent!

Are you suggesting the vast majority of North American's actually want SUV's?

http://www.lightningcarcompany.co.uk/home.php

The Tesla has nothing on the Lightning. And it almost makes me cry that bleeding-edge engineering can't come up with an idea to circumvent the central engine-transmission problem in the Tesla (they managed in the Lightning). It's as if they knew nothing about the advantages of electrical motors. The design is top-notch, though, I even like it better than the Lightning.

Here's a bailout plan I fully endorse.

As for the auto makers specifically, they made overpriced, inferior products. The market has granted them the natural consequence of those actions. They had ample opportunity to change, but got hung up on their own self-importance. Not letting them fail is an affront to all the other car companies who managed to thrive, and sends the message that making the effort to make the best possible product is wasted effort.

Quite frankly, if (and only if) it is possible for a company to be too big to fail, then it becomes necessary to create regulations to prevent a company from reaching that size. The possibility of complete failure needs to exist for companies to be motivated to avoid it.

The problem is NOT that they can't sell cars.. It's that they cant make money.

GM and Toyota both sold basically the same amount of cars in '07. Toyota made money, GM lost money..

What's the difference here? Union vs Non Union

My home state has THREE DIFFERENT auto companies building cars here.. Mercedes builds their SUV here. Hyundai has a plant here. Honda has one as well.. These companies are not asking for any bailouts. They don't need any.. They also don't have unions demanding unreasonable wages and retirement benefits.

Detroit has the UAW...

Let em go down. In this day and age, unions are nothing more than political machines anyway.. Let em burn.

Well said, break. Even more, the Big Three sell cars overseas at plenty of profit, almost enough to offset their losses here. The difference there is environmental regulations.

Congress says "you have to make cars that run on hope and emit rainbows, and they have to look awesome and be free, and you have to pay even your janitors at least as much as your CEO even if they don't take out the trash, plus you aren't allowed to make a profit because that's evil." Then they say, "how come you're failing? You should all be fired because you don't know how to run a business. We should run your business, so we're buying shares."

And yes, Snax, lots of Americans want SUVs. Americans in general love big cars.

EDIT: Here's a great article about how the CAFE standards are responsible for the failure of the auto industries, at least in part. And after reading it I need to revise my statement, and say the reason GM, etc. can sell cars just fine in Europe is because with gas twice as expensive there as it was here at its peak, it actually makes sense to buy a crappy little car instead of an SUV. I love my Jeep, but if gas hit $10/gallon, I'd start thinking about going back to an Altima.

And seriously, if Congress wants to spend all this money on them, why don't they buy $20,000,000 in cars and give them to the poor?

Don't get me wrong, I've never been a union fan (or member), but to put this off on the unions is BS.

- The car companies are up to their eyebrows in the 'easy-loan' fiasco as much as anyone, and now want a slice of the gov't handouts.

- The Import vs. US car argument has been giving Detroit hell for years, and they still keep cranking out the same crap.

- Obviously, when oil went sky-high and the financial markets start to tank, people start deciding to wait before buying that new Navigator.

What's unfortunate is, now that Wall Street is expecting the gov't to bail out the car industry, things will only get worse until they do, and even then will only be 'less-worse'.

edit: the passed couple week I've been driving around in the UK in a french sport/coupè (rental) that get's 35mpg...

I'm sorry, it pretty much IS the Unions.
Without the legacy costs of overly generous pensions, free/uber-cheap healthcare for life, job banks where you get paid for being laid off, etc, then the Detroit automakers are more competitive than the imports.

The only way out is bankruptcy. Going bankrupt will allow GM, Ford & Chrysler to renegotiate their union contracts on just about everything. Once that is done, and their labor costs are similar to those of Honda, Toyota, Hyundai, BMW and Mercedes, they will come roaring back.

However, UNLESS they shed their legacy costs, they will never be profitable. And, to turn it around, the unions will HAVE to offer these concessions, or the companies they work for will just *poof*, and then they will have nothing. Better to have something than nothing, I say. Welcome to the global economy, Detroit.

The pendulum is FINALLY swinging back the other way... unions are losing power, and it's slowly becoming easier for businesses to compete with cheap labor overseas.

Unions are a problem across the board, and especially here. The combination of unions and CAFE standards are working together to kill the auto industry, but you're probably right Leber that the unions are a bigger problem in this specific case.

I'm sorry, it pretty much IS the Unions.
Without the legacy costs of overly generous pensions, free/uber-cheap healthcare for life, job banks where you get paid for being laid off, etc, then the Detroit automakers are more competitive than the imports.

The problem with Unions is they are a direct response to shitty working conditions. While I agree that many of them have adverse effects on a company's ability to be competitive, there's really no one to blame but that company. Unions are a reactionary enigma; set the conditions where they are necessary, and you'll be paying for it long after you've made your amends.

On the other hand, they're also directly responsible for the practices of companies who manage to keep them at bay, not to mention the furthering of workers rights. If it wasn't for Unions, then those companies would have no reason to keep working conditions "union-esque".

I would love to see a market in which there was no need for unions. In fact, I think we may be on our way. Unfortunately it seems the only way to do so is for those companies who set the stage for them to exist, pay the ultimate price.

Speaking of which:

http://www.cbc.ca/money/story/2008/12/11/usautobailout.html

The other problem with Unions is, once they've been created, they cannot be destroyed until the company they feed off of has.

They have not been necessary in this country in close to 30 years. Don't like your job's conditions? Get another one..

And don't give me this crap about being unable to find a job.. Move if you have to..

US car makers have vehicles that get excellent fuel mileage.

If you live in other parts of the world..

Ford makes a small diesel car that gets about 85mpg. Won't sell it here because the last time any manufacturer attempted to sell diesel passenger cars in the USA, they nearly lost their shirt.. Too many morons associate diesel engines with 18 wheelers and think it's a "truck and tractor fuel"

Well.. guess what, it's just about the most efficient fuel out there.. Not to mention pure, unadulterated POWER. 300hp gasoline engine: about 300-400lb/ft of torque. 300hp diesel engine: about 1800lb/ft of torque.

Which means, basically, you don't need as much hp to get the same kind of power.. Less hp = better fuel economy.

Torque does the accelerating. Put a high-torque engine, with highly-geared transmission, you could be running 100mph while only turning 1800rpm..

break19

Snax28 said:While I agree that many of them have adverse effects on a company's ability to be competitive, there's really no one to blame but that company.

Actually, you can blame the Unions. The Unions KNOW they they are the problem, and have been for at least the last 20 years. The UAW has stubbornly clung to agreements that hugely favor them, threatening to strike at the hint of cutbacks or changes in their contracts.

This is an interesting game of brinksmanship. The way I see it, the threat of "letting the company go down in flames" is the only play that the Corporate Executives have. If I was Rick Wagoner, I'd play that card to the hilt and go for bankruptcy at the earliest possible point, allow the UAW to strike, and immediately begin hiring any monkey off the street who can screw a bolt onto a frame... for $15 an hour instead of $75.

It's unclear as to if the UAW contracts are bankruptcy-proof, I'm sure there will be about a decade-long legal battle over it.

Part of my beef with the Unionized workforce is that they get paid an amazing amount of $$ to do manual labor work that a reasonably bright 16-year old could do with 2 weeks of training, without finishing high school and without even attempting college. The salaries that $75 an hour, or even $50 an hour net you are SIX FIGURE SALARIES, PEOPLE! That's what is inherently "unfair," and I think most Americans who work for living would agree with me.

Of course, "unfair" doesn't really justify destroying the Auto Companies, kind of like cutting off your nose to spite your face. I'll be the first to admit that if I worked for the UAW as a "dashboard-wire-connector" or as a "seat-screwer-downer", and I made $50 an hour, I'd be pissed at the "suits" as well for taking away my ridiculously easy job and incredibly lavish salary.

It's time for Change, like our "Fearless Leader" says, and I think we should start with a sharp reality check to the American unionized workforce. Make them accept the salaries of similar workers who do the same kind of work in North America. Hey, it will be a 50% pay cut, but if they don't want to do it, I'm sure that the Auto Industry will be able to hire PLENTY of skilled labor for $30/hour.

I'll cross any picket line for a $30/hour job.

Yes, but Leber, the CEOs make more than the union guys, and it's not fair! Like Barack Hussein Obama said, they really should give up their bonuses, because that's just not fair. The companies aren't making money because the CEOs are greedy and take all the profit in bonuses, and rape the little guy. It's not fair it's not fair!

I don't necessarily disagree with anything you say Lebes, and I'm certainly not saying the Unions are rationally thinking entities. All I'm saying is that companies that are saddled with Unions got into that situation by providing relatively poor wages and working conditions. If they had worked to ensure that their employees were looked after and their concerns were heard from the start, it would be a mute point.

Oh, but Snax, unions are rationally thinking entities, and that is part of the problem. They have only their own interests in mind, and they are harmful to the overall economy as a whole. This is not a bailout of the auto industry, it is a bailout of the unions.

Of course they have their own interest in mind. There one and only purpose is to achieve the absolute best working conditions and wages for their members. For one who believes in the mantra of "me and mine before all else" PC, I find it somewhat disingenuous that you would think they have some responsibility to the business concerning the overall health of the corporation. What are you, a socialist?! :)

Either way, that doesn't make them a rationally thinking entity. It makes them a single minded entity.

And I don't agree that they are harmful to the economy as a whole. Certain unions may be harmful to certain sectors, but in general, a happy workforce is a huge part of a successful economy. Some of the amazing working conditions and wages we enjoy today are a direct result of unionization in the past, and the fear of unionization in the present.

Hmm...

Well, as far as I see it, the difficulty with modern Unions is that they're effectively the corporations of the people, and have none (or at least less off) of the legal checks against Trusts and Monopolies that ordinary businesses do.

A Union is the natural predator against any given business, and given that in a free market, businesses already eat each-other (and are required to, by law, even), they're left at a disadvantage--especially considering that the Unions are seldom in competition with each-other.

Unions are good to have around because they help to raise salaries and improve working conditions. However, with their power and growth left unchecked, they also give rise to inflation and the decline of corporate viability. In a world where self-interest governs all, the trick is to balance opposing forces so that neither faction is truly dominant. The enemy here isn't the Unions or the Corporations--its the imbalance between them.

That being said, dumping money on the market isn't going to help much--it might treat the symptoms for a time, perhaps, but it ultimately fails to cure the disease. What we need is serious economic reform--on both fronts--not an endless cycle of bailouts.