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Do you think American automakers deserve to be bailed out? (Merged with GM email)

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Do you think American automakers deserve to be bailed out? (Merged with GM email)

Old 11-18-08, 09:05 AM
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The argument is that if they go out of business the UAW is screwed, right?

I think they should do their best to uphold their current obligations but they should renegotiate contracts and try not to get more obligations. The unions should be smart enough to realize a bankrupt company is no good for them.
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Old 11-18-08, 09:12 AM
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Originally Posted by Venusian View Post
The argument is that if they go out of business the UAW is screwed, right?
That seems to be the motivation of those who are liberal-leaning. Conservative-leaners are motivated by the precedent set by the government giving public funds to a particular company.


Originally Posted by Venusian View Post
I think they should do their best to uphold their current obligations but they should renegotiate contracts and try not to get more obligations. The unions should be smart enough to realize a bankrupt company is no good for them.
That all needs to happen BEFORE any government assistance is considered.
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Old 11-18-08, 09:12 AM
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Originally Posted by wendersfan View Post
See, I can't agree with this at all. All they did was buy into the American model of the middle-class - the government doesn't cover your health care and retirement, your employer does. This was an accepted fact of the post-war environment. Now they're being told, "No, we were wrong about that. Sorry, you'll just have to die penniless instead..."

Or look at it another way - the deals that factory workers got from their unions built the middle class in this country. Without the deals, without the unions, and without those workers America would be a far less prosperous nation today.
I agree that unions have had positive effects, but I also think they've pushed things way too far. I know anecdotes aren't the best evidence, but I'll throw one out anyway. I used to volunteer for an adult literacy non-profit. One of my students was a guy in his mid 50's that worked third shift for GM. He bragged to me of how for years, he'd go in, meet his quota in 3 hours and sleep out the rest of his shift on a cot he'd set up in his work station. He'd been there 25+ years, was making over $100k a year and obviously would be drawing retirement when he left. I know that's just one instance and probably fairly extreme, but it's absurd to think unions haven't severely restricted the productivity of US auto makers. In a global economy, that just doesn't work. If you're unproductive, you're not competitive. If you're not competitive, you're going to lose business. If you lose business, you don't have the money to pay billions in retirement benefits.

Originally Posted by classicman2
I don't.

Why is it when companies have lousy management, the union gets the blame?
Because the unions, on principle, take the starting point of 'fuck you' any time management wants to change something, regardless of if it might promote the health of the organization. And they have the power to make that 'fuck you' mean something. Not saying that puts all the blame on them, but it's silly to pretend they deserve none of it.

Originally Posted by classicman2
Unfortunately, the bailout plan for the auto industry may not make it through congress.

Therefore, the companies will be going to bankrupticy court in a short time.

The bankruptcy judge, again unfortunately, will allow the companies to escape their obligations.
I'm curious what your ideal solution is. GM is likely too unhealthy to ever meet its obligations. In the event of a bailout, the government will pretty much be meeting its obligations for it and only postponing the inevitable. Or do you see a way that GM can get the bailout and eventually emerge profitable enough to sustain its obligations down the road?
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Old 11-18-08, 09:16 AM
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There is no ideal solution.
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Old 11-18-08, 09:53 AM
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Originally Posted by JasonF View Post
I'm OK with that in terms of going forward. I have some problems with voiding the pensions of people who worked for GM for decades (and planned their retirements) in reliance on the belief that they were entitled to certain benefits upon retirement.
They chose to vote for union contracts that had the company take care of their retirement instead of getting a higher up-front salary and investing that themselves. Turns out that was a bad decision that made their companies uncompetitive with non-union Japanese-owned factories. Why should the American taxpayer be on the hook for them?

If the Big 3 go bankrupt, they're going to lose their bennies any way.
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Old 11-18-08, 09:57 AM
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Originally Posted by Ronnie Dobbs View Post
I think Obama should offer them the 25 billion if they make all their cars hybrids by 2012. See that ripple effect on the oil indusrty.
I missed the part of the election where Obama revealed that he owned a magic wand.

What would be the cost for them to retool all their factories for hybrids in four years, and could they turn a profit while selling the cars at a price that the average consumer can afford?
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Old 11-18-08, 10:01 AM
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Originally Posted by Sean O'Hara View Post
I missed the part of the election where Obama revealed that he owned a magic wand.
Shhh!

"Yes we can"!!!

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Old 11-18-08, 10:30 AM
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Originally Posted by wendersfan View Post
See, I can't agree with this at all. All they did was buy into the American model of the middle-class - the government doesn't cover your health care and retirement, your employer does. This was an accepted fact of the post-war environment. Now they're being told, "No, we were wrong about that. Sorry, you'll just have to die penniless instead..."
While I tend to agree, it has more to do with being unhappy about the state of things than actually thinking this can be sustained and workable. The biggest mistake was not grasping the continued increase in health care costs and not putting a cap on them, and not stopping coverage when people are eligible for medicare/medicade. So the government does cover your health care when you are old, but not if you are an employee of GM, then they continue to take care of it.

Look, GM made the deal. I'd love for them to live with it. But at what cost? Have them go bankrupt and now they can't offer health care to anyone because they are out of business? If people want to blame management completely, I'm fine with that. But now what? Rather than talk about the past, how do you make GM viable in the future? It comes down to cost. So you either have the taxpayers pay for health care for GM employees, or you let the market take its course.

I don't oppose a bailout, actually. I think more lost jobs, etc. at this point isn't worth it. But if I bail them out, I let them fail next time, and their problems are systemic and they will fail in the future.
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Old 11-18-08, 10:30 AM
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Yes, unions are one of the problems plaguing the Big 3.....but they aren't the only problem. The leadership up in Detroit can't tell their bottom end from their top. They canceled R&D on future electric car technology (EV-1), launched behemoths like the Hummer and Ford Excursion, and then claimed they can't build cars average Americans like because of unions. Crap leadership leads to crap results. Then when they do finally discover something the public would be interested in.......it takes them 5 years to get it to market. The new Camaro <i>still</i> hasn't hit the market yet! The Transformers 2 movie will be released before the "new" Camaro. It's not like they are designing stealth technology here either. Everything the Camaro needs can be adapted from the current Corvette!

In contrast....

"Hyundai conceived the idea for the Genesis in 2003. The body design took three years and the total cost of the program was $500 million over a development period of 23 months."

Last edited by wabio; 11-18-08 at 10:36 AM.
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Old 11-18-08, 10:32 AM
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Chances are if this happens, much of the money will go to an "executive retreat" in Costa Rica and the rest will go into golden parachutes -- and the companies will go under anyway.
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Old 11-18-08, 10:43 AM
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CEO directive leadership is overrated IMO. Especially for larger established companies like Target and Home Depot. I think strong leadership is more essential for the smaller or mid-cap sized companies who are still swimming in a barrel of sharks. IMO, for established companies like Home Depot.....focusing on your ground floor personnel makes much more of a difference in terms of customer loyalty and possible future sales. When I can go to Home Depot and get solid, knowledgeable service quickly.....I'm much more likely to go back.
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Old 11-18-08, 10:50 AM
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Originally Posted by kvrdave View Post
While I tend to agree, it has more to do with being unhappy about the state of things than actually thinking this can be sustained and workable. The biggest mistake was not grasping the continued increase in health care costs and not putting a cap on them, and not stopping coverage when people are eligible for medicare/medicade. So the government does cover your health care when you are old, but not if you are an employee of GM, then they continue to take care of it.

Look, GM made the deal. I'd love for them to live with it. But at what cost? Have them go bankrupt and now they can't offer health care to anyone because they are out of business? If people want to blame management completely, I'm fine with that.
So, GM won't be able to offer healthcare to anyone. That's what happens when a company goes out of business.... or lays people off.



Originally Posted by kvrdave View Post
But now what? Rather than talk about the past, how do you make GM viable in the future?
That is just another way of saying, "there's no time to point fingers, we need to act now." Why should anyone who is not a shareholder care about making GM viable in the future. I thought that is how free-market capitalists justified CEOs obscenely high salaries... that it was their job.


Originally Posted by kvrdave View Post
It comes down to cost. So you either have the taxpayers pay for health care for GM employees, or you let the market take its course.
If we were willing to let the market take its course for CEOs to secure golden parachutes and unions to strongarm unreasonable benefits, then we should let the market take its course now.

Originally Posted by kvrdave View Post
I don't oppose a bailout, actually. I think more lost jobs, etc. at this point isn't worth it. But if I bail them out, I let them fail next time, and their problems are systemic and they will fail in the future.
Don't kid yourself. The argument that you use to support a bailout now will not be any less valid the next time.
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Old 11-18-08, 10:54 AM
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Originally Posted by Groucho View Post
Chances are if this happens, much of the money will go to an "executive retreat" in Costa Rica and the rest will go into golden parachutes -- and the companies will go under anyway.
Even if you gave a bailout, fired all execs, hired the best in the country, gave no parachutes, etc., most will go under anyway. Ford could survive. But GM is screwed no matter what.
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Old 11-18-08, 10:57 AM
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Originally Posted by JasonF View Post
As an aside, I find it laughable that many of the same people who insist that private contracts should be sacrosanct and free from government interference turn around and with a straight face argue that contracts with unions should be torn up. I heard Sean Hannity argue the other day that Congress should void the UAW contracts and all I could think was "where does this guy get the cajones to call Democrats anti-capitalist?"
The car companies should honor their contracts as long as they can afford to stay in business. But the US government is not a car company. We're already violating free-market principles by bailing these bastards out. Why should taxpayers have to pay for every bad contract these idiots signed?
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Old 11-18-08, 11:07 AM
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Bailout or no bailout, I think the best thing our country can do right now is getting Hank Paulson out of office ASAHP. That guy is seriously FUBARing and hijacking our gov't for his own personal agenda.
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Old 11-18-08, 11:31 AM
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Does GM or Ford pay their stockholders a dividend?
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Old 11-18-08, 11:42 AM
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Originally Posted by wabio View Post
Bailout or no bailout, I think the best thing our country can do right now is getting Hank Paulson out of office ASAHP. That guy is seriously FUBARing and hijacking our gov't for his own personal agenda.
I disagree. Although Paulson is the face on this thing, he really isn't the cause. We have an entire congress that is going along with these plans, and mayors, governors, and CEOs coming out of the wordwork to jump on the bailout bandwagon.
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Old 11-18-08, 12:03 PM
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Originally Posted by wabio View Post
Bailout or no bailout, I think the best thing our country can do right now is getting Hank Paulson out of office ASAHP. That guy is seriously FUBARing and hijacking our gov't for his own personal agenda.
What would that agenda be?
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Old 11-18-08, 12:03 PM
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Originally Posted by sracer View Post
I disagree. Although Paulson is the face on this thing, he really isn't the cause. We have an entire congress that is going along with these plans, and mayors, governors, and CEOs coming out of the wordwork to jump on the bailout bandwagon.

No. Paulson was the one who proposed and intially drafted this whole bailout scheme. Him and Helicopter Ben somehow convinced Congress that if they didn't grant him sole power to the $700B, the entire world would somehow collapse and explode.
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Old 11-18-08, 12:05 PM
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Originally Posted by CRM114 View Post
Does GM or Ford pay their stockholders a dividend?
I'm pretty sure Ford did at one point, at least they were on my list of companies to look at the DRIPs, but it seems they don't now.

GM does.

Last edited by nemein; 11-18-08 at 12:07 PM.
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Old 11-18-08, 12:06 PM
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Originally Posted by nemein View Post
What would that agenda be?

IMO he's most likely trying to shore up the financial industry so he can guarantee himself a job and a large paycheck once he leaves office.
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Old 11-18-08, 12:16 PM
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Originally Posted by sracer View Post
So, GM won't be able to offer healthcare to anyone. That's what happens when a company goes out of business.... or lays people off.
I agree completely. My concern is the softest landing possible for the country. If GM goes bankrupt, or if it goes under, either way that's potentially millions of Americans who had benefits but don't any longer. The federal government will pick up the slack, someway, somehow. Ideology be damned, party be damned, it's politically untenable for them to not do something. So we can argue back and forth whether or not the government should do something, or realize that they will have to do something, and then figure out what's the most efficient and beneficial path to take.
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Old 11-18-08, 12:16 PM
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Originally Posted by wabio View Post
No. Paulson was the one who proposed and intially drafted this whole bailout scheme. Him and Helicopter Ben somehow convinced Congress that if they didn't grant him sole power to the $700B, the entire world would somehow collapse and explode.
Yes, he initially proposed and drafted that 3 page bailout scheme. Constituents overwhelmingly were against this bailout and yet congress passed a more comprehensive (400 page) version. You can't let congress off the hook by implying that Paulson and Bernanke mesmerized them.

Blame Paulson if you wish. And that is exactly what congress is doing as I write this. But it is a very small part of the whole picture. And quite convenient for congress to forget the role that they played in this.

I have always believed that Paulson, Bernanke, and other "experts" realized that a total financial collapse is unavoidable and that the bailouts will do nothing to prevent that. I think that they know it won't do anything but at least it will show that they tried SOMETHING.
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Old 11-18-08, 12:24 PM
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Originally Posted by sracer View Post
So, GM won't be able to offer healthcare to anyone. That's what happens when a company goes out of business.... or lays people off.
Agreed.

That is just another way of saying, "there's no time to point fingers, we need to act now." Why should anyone who is not a shareholder care about making GM viable in the future. I thought that is how free-market capitalists justified CEOs obscenely high salaries... that it was their job.
Okay, you worry about the past and see how much good it does you. I don't own stock in GM so I don't honestly care much about what they pay their CEOs or if they drive themselves into the ground. I don't mind letting them fall under. I think it is best for them over time. I just wouldn't mind delaying it 6 months to a year.

If we were willing to let the market take its course for CEOs to secure golden parachutes and unions to strongarm unreasonable benefits, then we should let the market take its course now.
Okay, I'm fine with that as well, I just don't think it is best for the short term. But I'm okay with it.

Don't kid yourself. The argument that you use to support a bailout now will not be any less valid the next time.
Okay.


I think you think I actually have a dog in this fight when I don't. I understand that a bailout for them now is no different that welfare. And I won't fight to keep them going. I think they are doomed either way.
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Old 11-18-08, 12:25 PM
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Originally Posted by wendersfan View Post
I agree completely. My concern is the softest landing possible for the country. If GM goes bankrupt, or if it goes under, either way that's potentially millions of Americans who had benefits but don't any longer. The federal government will pick up the slack, someway, somehow. Ideology be damned, party be damned, it's politically untenable for them to not do something. So we can argue back and forth whether or not the government should do something, or realize that they will have to do something, and then figure out what's the most efficient and beneficial path to take.
That's the whole diversion of the healthcare issue. The focus has all been placed on health insurance and coverage, and virtually no focus on the actual costs. There seems to be this notion of throwing one's hands up in the air proclaiming, "well, it costs what it costs" and leaving it at that. No emphasis on why medical care costs as much as it does. Or how to reduce it or control it.

We're looking to throw money on the tail end (bailing out companies with burdensome benefits packages) than addressing the sources. The $1 trillion bailout was supposedly to help thaw credit lending but rather than simply make that $1 trillion directly available for lending, the govt gave it to banks with the hopes that they would lend it.

Making smaller changes upstream, closer to the source of the issues is much more efficient than throwing large amounts of money at the tail end.

It's like the difference between producing larger quantities of a part that wears out (throwing money at the tail-end) vs. redesigning the part so that it lasts longer.
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