Detroit Bail-out

[Steverino]

Good morning folks,

Was curious as to what everyones thoughts were in the recessionary economy that we currently find ourselves in on the proposed bailout program for GM, Ford, & Chrysler.

Now before you answer, keep in mind a couple of points:

The US automtive industry, including all of the OEM's and tiered sub-suppliers in the various supply chains employ some 2.5 million people.

The 70 billion dollars proposed for the bailout plan would pale in comparison to the estimated first year losses alone of 200 billion dollars should these be allowed to implode without any further actions.

I'll chime in later with my own thoughts but considered that this would make for some lively discussion here on HC this morning as you choke down your morning coffee while contemplating yet more depressing economic news.

[wrenchman]

i voted unsure becouse i am not for the unions getting a pay out for bad managment of the pension.
But if any of them fail it will cost a hole lot of money more the state of mich has the most job loss in the country now.

[DogYeller]

I voted no.
http://theamericansentinel.com/2008/...union-leaches/

[buckhunter]

No because reguarless the auto exec's will still contuine to receive their golden parachute's. Also when you put a substandard product on the market you deserve to fail. Plus the union crap is in itself enough to collaspe the auto industry,

Has Toyota, Nisson, or any of the other Japan auto mfg asked for help? Let me answer that, hell no.

[BILLY D.]

I'm supposed to pay for the mistakes of others because they were stupid and greedy?

They ca go to he double hockey sticks and stay there as far as I'm Concerned.

Sympathy is in the dictionary right between S#!T and syphilis.

Bill

[GoodOlBoy]

I paid $28K for my last truck, had to dump it with gas being $4 a gallon and am now paying off a $21K note on a $14K car because of the overhead on the truck. I am supposed to weep for big auto because after decades of overcharging me for a vehicle with $900 at their cost in parts? Don't think so. They want to survive they need to suck it up, and figure it out like the rest of us are having to do.

Make better cars, charge less money, and eliminate the BS.

GoodOlBoy

[fabsroman]

Yeah, I'm the first to vote YES. I don't know the particulars of any bill that has been proposed, but if you think the economy is hurting right now, think how bad it will be after the Big 3 go belly up. It isn't just the executives, management, and the plant workers that will be losing their jobs, but how about all the dealers that will no longer be selling Fords? Most of these dealers are located next to other dealers, so it isn't like they can just start selling Toyota, Nissan, Honda, Hyundai, or whatever else. Essentially, Ford, GM, and Chrysler dealerships across the nation will be out of business. This means salespeople, mechanics, body men, etc. will be unemployed. If you think foreclosures are high now, and the stock market is in the tank right now, wait until after the Big 3 declare bankruptcy or go belly up.

Now, the flip side of the argument is that by giving them a bailout, the UAW is less likely to negotiate and it should. I honestly believe that some unions have long outlived their usefulness, and the UAW is one of them. I have no idea why the Big 3 hasn't moved away from union labor. None of the Japanese car makers that make cars in the US use union labor. The pension and health care is killing the Big 3. So, giving them a bailout and letting the UAW continue to bleed them dry is unwise. There would have to be some serious concessions made by management and the UAW before any bailout money is given to them.

Another thing to think about is that allowing the Big 3 to implode might mean a lot of retired workers from those 3 companies will lose retirement and health care benefits.

Simply put, those of us that have saved for years and years and been frugal with our spending, will be called upon to bail out the grasshoppers. Essentially, we are the ants in the story. The next thing I am waiting for is the homeowner mortgage bailout. Thought I saw it yesterday, but the Yahoo article was quickly changed to delete "loan principal balances will be reduced" to "principal payments will be deferred interest free for a length of time". I'm just waiting for the government to start paying off principal balances for homeowners that are upside down on their mortgages.

Sometimes, being frugal just doesn't pay, and I feel like I am getting kicked from every side in this economy.

[Tater]

This poll may be moot. I'm listening to the news and they're saying that the bailout money approved won't be used for it's origin purpose. Apparently, it's still "bailout" money but not for the auto companies, at least not as much. I'm no economist and money managing isn't my strong point so I'll have to do some more research before changing my vote from unsure.

[justwannano]

I voted no.
For years now the big 3 have been manufacturing vehicles for the affluent.
Yeah they have to make money but who really needs 2 video players in their SUV?
Instead they should have thought of the millions of folks that don't give a damn about that stuff and just want an economical vehicle to do their everyday buisness.
They have forgotten about regular folks.
The same thing wall street has done.

Let them suffer a while.

Then force them to bid on building military vehicles. That way they can work for their money just like I have to.

Have a good one
just

[fabsroman]

Tater,

What you are hearing about is the initial $700 billion that was supposed to be used to bailout the banks. Essentially, that money was supposed to be used to buy bad mortgages from the banks so that their balance sheets would look better and they could go out and raise additional capital from outside sources. Now, what Paulson is saying is that they (i.e., the gov't) are not going to buy these bad mortgages from the banks and hope that not all of them go bad and that the gov't can recover on some of them. Instead, what they are thinking about doing is buying an interest in the financial institutions so that if the financial institution does well down the road, then the government will get its money back, and maybe even a decent return on the investment.

What the democrats are trying to do now is set aside $70 billion of the bailout money for the Big 3.

Everybody else,

From what I have been reading, the demise of the Big 3 would lead to about 2.5 million more unemployed in the US. Just think about what that will do to the economy? Two thirds (2/3's) of the US economy is made up of consumer spending. About a month ago, the forecast was that consumer spending would not start to turn around until the 4th quarter of 2009, and maybe even later. Throw 2.5 million unemployed people into the fray, and you might be looking at 2 years or more before consumer spending picks up, and I am not talking about getting back to a level that it was in 2005, just a level above what it is now. If you think your 401(k)'s and other retirement accounts look bad now, wait until 4th quarter reporting comes out from the retailers after the Christmas season. Me, I have already lost close to 35% in my retirement accounts, and the only silver lining is that I have about 30 years to make that back and that I will be buying cheap right now. I feel for people that are in their 50's with their retirement assets heavily invested in the stock market.

By the way, I am heavily against baling out anybody, because I know I will never get a bailout myself. However, for the government to just sit back and let all of this sort itself out might be a complete disaster.

[44mag]

mechanics won't be out of work. with no new
vehicles being built, there will be plenty of work
for mechanics.

just a thought.

[justwannano]

Originally posted by 44mag
mechanics won't be out of work. with no new
vehicles being built, there will be plenty of work
for mechanics.

just a thought.

If there are parts.
There is maybe the key.
Instead of importing parts make the big 3 mfg them for 15 years.
Of course they won't want to because their focus is on selling new cars. But, since the answer to fixing this financial thing is jobs ,there may be more jobs in repairing older cars than mfging new ones.
have a good one
just

[fabsroman]

There won't be plenty of work for mechanics because people will not need to drive since they do not have jobs. Americans have already cut back on their consumption of gas. Why do you think oil futures are below $60 a barrel right now? It is because the demand for oil has decreased significantly compared to last year. I think the number of miles driven by Americans has been cut back by the billions. I think it is something like 6 billion or more.

Another example I have is a homeowner in a HOA I represent. The homeowner owns his own auto mechanic shop and he has been over a month late on his dues for the past couple of months.

If people don't have money, do you think they are going to change the oil as often? How about changing tires before they are down to the radials? Will they bring the car in for a noise they hear, or wait until it really breaks and they really do not have the money to pay for the repair. Better yet, what happens when they bring the car in for the repair and after the work is done they cannot pay for it? Do you think people will be getting their regular maintenance done if they don't have money? 30,000 mile check ups will turn into 60,000 mile check ups, if that.

I know my wife and I have cut back on our driving, and we really aren't even close to struggling for money yet. However, I have noticed that some of my clients are taking longer and longer to pay me each month, which isn't a good sign, and it has me a little worried. For those of you receiving a steady pay check, it isn't a problem until it really is a problem (i.e., pink slip, layoff). Business owners start to feel the pinch way before employees do.

[wrenchman]

I work on trucks for a liveing and i have never seen a slow down like right now.
There is still a shortage in my area for truck mechanics but its getting hard to get the better job with the larger companys they just are not hireing becouse freight is not moveing.
My nephew just got laid off i didnt think it would happen i hope things turn around real soon.

[LoneWolf]

If you think the economy is bad now, just let the big3 fail and see what happens. 1 out of 10 americans job is directly related to the auto industry. As for the question about bailouts for the foreign makes, they don't need them because they have and lawyas will be subsidized by their respective governments.
Believe me, I don't want the government in anything more than they need to be. But I put the government to blame for a lot of the problems the Big 3 are in right now. If they had imposed half the standards and regulations on wallstreet and banking as they have on the big3, we wouldn't be in the mess we are in.


added: as far as the cars and truck they built. If it didn't suit your needs fine. But all those suvs and guzzlers everyone bitches about wouldn't have been built if they weren't selling. Sure, when the gas prices finally went through the roof every body wanted out of theirs. Each automaker has cheaper and more effiecent vehicles too. And btw, now that prices have dropped guess what? Trucks and SUVs are selling again.