" One More Reality Check
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It’s called misdirection. Point the finger at everyone else and accuse loudly. Maybe they’ll forget about you and your cronies and the mess you had a hand in.
I heard a suggestion on talk radio today. Raise the gasoline tax one cent each month for the next 5 years. That will increase the gas tax over the long term, but won’t interfere with the money needed for economic recovery now. What do you think?
Hello -
About 2 to 3 weeks ago I was listening to an afternoon show on NPR. One of the journalists said that one or more of the big 3 has stated that employees who earn $200,000 or more would not receive a Bonus.
I’m not familiar with the auto industry pay structure and how it relates to the proposed loan passed by the House of Rep. Would anyone know if those earning $75,000, $100,000, $125,000, $150,000 or $175,000 would receive a Bonus if the loan is approved?
I don’t think those employees should receive Bonuses either. I think Bonuses should be tied to a company’s performance. If anyone receives a bonus, that would be thanks, in part, to taxpayer money. If they receive loans and one or more of the companies were to fail my guess is that that money would not be repaid. I would not like to see anyone earning more than $75,000 to receive a “Bonus.”
Does anyone know anything about this part of the loan - is there a cap in terms of the salary cut-off of people eligible to receive a Bonus? Also - is there a cap in terms of the Bonus itself? Also, have any demands been made in terms of the government reviewing their pay structure in general?
Thank you.
No, for the simple reason that you can’t force people to buy their cars. How many of you will buy one? In the end, they will fail because of their product, in spite of tax supported bailouts. Put the money into unemployment benefits. If you must bail them out, at least require the government (federal and local) to buy their cars for government use (at a discount, of course).
Absolutely we should bail out the auto companies. Yes, they gorged themselves on SUVs and people bought them - people wanted them. One reason people wanted them - because they thought they were safer. After all, they were BIG - not as big as a semi which is probably the biggest cause of accidents - but certainly they wouldn’t be hurt in a crash by those little cars like my Saturn. I might be totaled, but, hey, they’ll be safe. Who encouraged this obsession with safety? Probably Ralph Nader started it but you guys don’t help. especially when you run down American cars, agreeing with the PERCEPTION of snobbish Americans that foreign cars are better in all aspects. I’ve never had a foreign car but the Chevy 409 that I bought new lasted for 285,000 miles and no work was done on the engine or needed to be done. In its later years it did chew up quite a few rebuilt starter motors but I’m sure you can see the reason for that. My Citation, also bought new, ran for 180,000 miles with no serious difficulties. I sold it only because I wanted even better gas mileage. So I got the Saturn which just rolled past 200,000 miles. It and the Citation were (are) stick shifts. No work done on transmission or clutch in either car. Saturn still gets from 40 to 47 mpg highway in the summer - mid to upper 30’s in cold weather. Anyway, I want the auto companies helped because I don’t want to buy a foreign car and I won’t buy a Japanese car because of Japan’s sham of harvesting whales for “scientific” purposes. Yes, put conditions on the bailout - certainly more conditions than were put on the financial companies. But bail them out. They make excellent cars just ones that are too large. However, I’m sure you noticed that Toyota started producing big, bad SUVs a number of years ago too.
By the way, I’m 70 and the three cars mentioned are the only cars I’ve ever bought.
Bought the 409 when I was 23.
not as big as a semi which is probably the biggest cause of accidents
Um, excuse me. Semis are involved in less than 2% of the collisions that happen nation wide. Where are you getting your statistics?
You claim that foreign car quality is only a perception, yet you have never owned one. So on what exactly are you basing that statement?
Your post is nothing but supposition and conjecture. There isn’t a single fact in it except your personal history, which seems to be quite limited.
I just heard an interesting report on the news this morning. Evidently there is no credit crunch. Companies are just being more diligent about evaluating credit worthiness. It makes sense to me. I just refinanced my house and a friend of mine just bought a new Volvo. There is credit available for those people who have good credit scores.
So it turns out financing is available for Detroit’s Big Three, but the banks don’t think they are a good risk. If the banks don’t think loaning Detroit’s Big Three is a good risk, should the government really step in and loan them our tax dollars?
What does big government know that the banks don’t? Big government knows they can count on gullible taxpayers to foot the bill.
GM has excellent products that are recognized for excellent performance and quality? Bull. I owned one. The $850 fuel pump and $1000 transmission rebuild the same month at 80K miles sent me to Volkswagen. THEY have products that are recognized for excellent performance (you should try driving a GTI for excellent performance) and their quality is outstanding. Maintain them and they will last forever.
And the banks are still lending money – they are just lending it to people who can actually pay the loans back.
The biggest problem is that the Big Three don’t have the backbone to stand up to the UAW, and the UAW leadership is so intent on maintaining their jobs and positions of authority that they don’t care that the membership is going to be tossed out on the street. If the foreign automakers are having it so rough, why is Hyundai (another quality auto – my wife drives one) building the largest auto plant in the world down south, and why has VW committed to making a multi-billion dollar investment in Chattanooga, TN?
Greetings! To my way of (non-expert) thinking, I would guess
that the bankruptcy route might be attractive to the car companies.
This is what several airlines did a few years ago. Bankruptcy allows
the company to re-structure their debt, re-negotiate the union
contracts, and reorganize their management structure.
Here is a list of the Airlines that used bankruptcy protection:
(This is from Wikepedia)
? August 11, 2002 - US Airways enters protection
? December 9, 2002 - United Airlines under protection
? March 31, 2003 - US Airways emerges
? April 1, 2003 - Air Canada files
? September 12, 2004 - US Airways re-files for protection
? September 30, 2004 - Air Canada emerges
? December 30, 2004 - Aloha Airlines files
? September 14, 2005 - Northwest Airlines files
? September 14, 2005 - Delta Air Lines files, putting 4 of the top 7
carriers in the United States under bankruptcy protection
? September 27, 2005 - US Airways emerges, in conjunction with its
acquisition by America West
? February 1, 2006 - United Airlines emerges
? February 17, 2006 - Aloha Airlines emerges
? April 30, 2007-Delta Airlines emerges
? May 31, 2007 - Northwest Airlines emerges
? Dec 26, 2007 - Maxjet Airways files
? March 31, 2008 - Aloha Airlines files and discontinues passenger
transporting operations
? April 03, 2008 - ATA Airlines files and discontinues operations
? April 05, 2008 - Skybus Airlines files and discontinues operations
? April 10, 2008 - Frontier Airlines files
? April 26, 2008 - Eos Airlines files and discontinues operations
The bankruptcy laws are there for a purpose and should be used where
it makes sense. I can understand the UAW’s violent opposition to this
strategy, it tends to loosen their chokehold on the industry.
But I don’t fault the Union totally for the terrible financial
condition of the US auto industry. Every union contract was signed
and agreed to by management.
As an aside, people tell me I am not patriotic since I do not drive an
American car. I make purchase decisions, whether for cars, computers,
or cheeseburgers, based on the value I receive for the money I pay.
The last American car I owned was a 1974 Dodge Dart – and it was a dog!
earle
*
I agree with Mountainbike. Read the Constitution: It says that the job of the government is to build my highways, deliver my mail, defend my shores, and stay out of my business. That’s it. The job of government (notwithstanding the sorry state we are in today) is NOT to pay welfare benefits, shore up faltering industries, or control the marketplace.
If we bailout Detroit, all we will be doing is kicking the can down the road. In a few months the Big 3 will be back with their hands out again, and if we don’t help them again , “Think of all the thousands who will be hurt,” ad infinitum. What are they going to do when the government coffers are empty, those still working are taxed to the extent that it no longer pays to work, nobody can buy an automobile because their income has been eaten up with taxes to pay for the bailout, and the UAW workers are still on the street?
It goes agains my free market principles but yes, we should help out the auto industry for the following reasons:
- The industry has made good progress in the past four or five years. The american car companies, in terms of labor costs per car, are as efficient as the Japanese auto manufacturers. Their quality has improved considerably where Ford, for example, has actually outpaced the Japanese in many cases. Their most recent labor agreements extracted quite a few concessions from the UAW. Not enough but clearly a step in the right direction.
- The current recession has really hit the car companies hard. The market has gone from 17million cars per year to an annual rate of 10 or 12 million. This is recession is certainly no fault of the auto industry - it is primarily the result of greedy money lenders and speculators - Wall Street and their evil henchmen (henchpeople?). Why is it ok to GIVE wall Street 700 BILLION DOLLARS and not LOAN the auto industry 14 Billion (ok, it will certainly be more than that but much less than 700Billion)?
- It would end up costing the taxpayers considerably more than the risk of default on the loans if the big three declared bankruptcy. In 1980, GM alone employed 850,000 people. Today, it has about 85,000 employees. Although some of that number is due to sold businesses, many of that number are people who have retired with pensions and benefits - all or most of which would fall to the tax payers to cover. The job losses from the collateral damages (the big three, suppliers, and local businesses who support them etc.) would be staggering - all requiring considerable unemployment benefits of some kind or another. It would cause significant further harm to an already lousy economy.
Granted, the big three need to do a better job of making cars that are attractive to US buyers - and they are working on them. GM is probably the worst and could, as many others in this space have pointed out, benefit from true car guys. I worked under Roger Smith - and he was the worst of a lot of bad leaders that ever ran GM.
Enough… you get my drift
I’m tired of the “Big Three” complaining and asking for a bailout! GM let the union demand ridiculous concessions, and now they’re in deep trouble. Chrysler has built lousy cars for years – just look at Consumer Reports’ ratings, and their recent smaller cars are really bad! Ford has been doing better, they’re in better financial shape, but they build really UGLY cars! And now the union has refused to lower wages!!
Having said that, I’m not in favor of any bailout. Chapter 11 is the only way I could support the Big Three re-inventing themselves.
Dan
The headlines in my morning paper said that the UAW leadership scuttled the bailout. They didn’t want to give any concessions until the present contract ran out.
I was a union member in the very highly unionized U.S. Merchant Marine. Ever hear of the U.S. Merchant Marine? Probably not, because, to all intents and purposes, it doesn’t exist any more. Sure, we had great wages and benefits, and the unions kept on kicking the American companies until they took the ships to foreign flag. My old company is now under Marshall Islands flag, still working the same ships on the same trade routes. SeaLand is no more – Maersk (Denmark) bought them and placed all the ships on foreign trade routes under foreign “flags of convenience.” The only American ships left are the ones in the coastwise trade (because U.S. protectionist laws require that ships in that trade are U.S. flagged and U.s. crewed) and the ones working in the Gulf of Mexico alongside the foreign ships down there. And the Gulf of Mexico boats are non-union. That is the only way they are surviving.
Let the Big 3 enter Chapter 11. That is where they are going to end up, no matter how much money we throw at them. Let the UAW membership realize what their leadership has done to their jobs – maybe we’ll see a few heads on pikes outside the gates of Ford, GM, and Chrysler.
But quit picking my pocket! The $700 bailout to Wall Street was wrong, and this bailout will be wrong, too.
NO! Not until the big three have a chance to succeed. Union contracts that pay far and above the fair wages used by foreign companies building cars in America pretty much guarantee the failure of the big three. Cut the pay, eliminate the two year pay for not working then demand that the government get OUT of the harsh regulation business by removing CAFE standards and mandating small cars thjat no one wants. T%hen, and only then, should we consider a LOAN–not a bail-out.
I am not totally opposed to the bailout because bankruptcy would bring down too many others at this time. However, as part of the program, if the government is asking the unions for Japanese like wages, then the government should also be asking that management and executives do the same foregoing huge stock options and golden parchutes and do allow for tying pay to performance.
Detroit does need to be helped. Yes the big three have again designed and marketed cars no one wants. There are far too many employees and and other related industries that rely on the bid three. Legislation can be designed to insure the American people get their money back. If the Big 3 go under the effects will be massive. It needs to be done. We might have to hold our collective noses while doing it but it really does need to happen
Oh heavens no - we’ve spent all our money bailing out fat cats in the financial industry with no accountability at all. Tbere’s none left for the little guy. The financial CEOs are still free to rob and steal and drag down massive bonuses - 'scuse - “retainment incentives” to the tune of 700 Billion. Why should we attempt to help the average working stiff stave off unemployment with a 15 billion dollar LOAN. This country is about the monied - who do those common workers think they are anyway? We’ll need more money for Congress to give themselves another raise anyway.
Yes, when private industry can’t or won’t do the job government should step in and do it.
No one seemed to be pointing out the consequences of previous government actions on the auto business. Specifically, the CAFE standards rules. As I understand it, each company’s fleet average has to meet some standard. In order to meet that standard, the companies have to build and price models that sell. since the legislation prohibits averaging in small cars built outside the country but carrying a domestic mark, the companies are forced to build small cars that sell at a loss in order to meet the fuel economy standards over the entire product line. As I understand it, auto companies based outside the US can calculate their fleet average over the entire product line sold domestically, regardless of where the vehicles are built. It is possible for the domestic companies to build small, well built, high fuel economy vehicles at home, but these vehicles would need to sell at premium prices compared to imports and would lose in the market. The CAFE standards would not be met, and so the domestic manufacturers would not only be fined by the government but lose market share in the small car segment to their foreign competitors.
Stupidity got us into this mess. Why can’t it get us out?
We should definitely extend a helping hand to our own struggling industries, just as other governments do. I’m so tired of hearing ideologues ranting and raving about “the market”. The financial market didn’t regulate itself in the years and months leading up to our current crisis. The real estate market didn’t regulate itself during the run-up that created the “bubble”. We have bailed out the crooks in the banking world who got us into this mess, why can’t we help GM survive? It is not only domestic automakers who are suffering, it EVERYONE. EVEN TOYOTA WAS DOWN 30 % IN OCTOBER.