Comments on Saving to Inve$t: US Automakers Bailout - A Bridge to Bankruptcy or ...

It seems everyone is affected by the global crisis...

2009-02-12T23:20:00.000-05:00

It seems everyone is affected by the global crisis. Let us just hope and pray that our new government can do something with the situation.

Is this still because of the recession? Let's just...

2009-01-20T22:09:00.000-05:00

Is this still because of the recession? Let's just hope and pray that newly elect president can do something drastic about it. God bless America!

Thanks for all the great comments, clearly this is...

2008-12-05T11:53:00.000-05:00

Thanks for all the great comments, clearly this is a dividing issue with folks taking strong stances on either side of the argument.

Here are some updates from recent developments as the auto maker head made their cases (with plans this time) to Congress:

- (WSJ.com) Lawmakers from both parties voiced concern that a collapse of one of the auto makers is imminent and would pose a catastrophic threat to the economy. But there remained little momentum behind a rescue plan as Democratic leaders struggled to craft a proposal that would address the various concerns expressed in Congress over the past month. "In the midst of the worst economic situation since the Great Depression, it would be an unmitigated disaster" if a U.S. auto maker failed, House Financial Services Chairman Barney Frank said as he opened Friday's hearing.

- The case against the automakers was reemphazized by
Republican Donald Manzullo who called the auto makers' turnaround plans "woefully insufficient," saying they didn't address rapidly declining car sales, and suggested another proposal. "We need to encourage Americans to start buying cars again, and that is not in any of the plans," suggesting that tax incentives for car purchases might be more effective than direct aid to the manufacturers.

- GM Chief Executive Officer Rick Wagoner said GM needs $18 billion in aid to survive. The automaker is working to align operations with dwindling demand after the slowest pace of industrywide U.S. sales in 26 years last month.

Lawmakers have said they may schedule votes next week. My bet is that they will approve an interim bailout (as done for the TARP).

Let them fall, its out with the old in with the ne...

2008-12-03T21:47:00.000-05:00

Let them fall, its out with the old in with the new, the automakers were already warned in 1996 about building more fuel efficent cars to compete with the foreign market. Even if US auto fall, the factories and cars will still be there. Let someone or other investers come in and buy it. They will and they will create a new market. Shit will fall then rise...like its suppost to.

LET THE PEOPLE WHO MESSED UP PAY FOR THERE MISTAKE DONT TAX US WITH IT!

First off thanks for a very informative article. I...

2008-12-02T16:52:00.000-05:00

First off thanks for a very informative article.

I vote for the bridge loans (the US made money on the last Chysler Loan!). I think there should be some strings like CEO compensation cuts and use the money for Electric and Fuel Cell car development only. GM and Ford spend billions on Research and Development here in thsi country and loosing that would really hurt this country. I also think we should start a grassroots movement to BUY AMERICAN before its too late. GM and Ford have really closed the quality gap with their new products. Malibu (JD Powers) beat Accord AND Camry. We should support the home team. Toyota still imports more than 50% of their cars - not from China or India but from Japan. Ever read about a plant closing in Japan - no way, they support their own companies. Everyone sure seems quick to use 20 year old data to describe GM and Ford products. The first Honda and Toyotas were trash cans on wheels. All the new models from Domestics are of high quality, good design and segment leading fuel economy.

So I say give them the money - then we as Americans should buy their products to support our investment.

Love the debate here, and while I sympathize with ...

2008-11-28T15:32:00.000-05:00

Love the debate here, and while I sympathize with the average guy working the line, I'm afraid his plight is being used as a media ploy to bailout piss poor executive management and greedy union executives who are afraid they're going to lose their meal ticket.

I've gone so far as to call the automakers a gangrenous limb that needs to be amputated, and in fact, that's precisely what they are. Any business can make money in "good times", but now that times are bad, they're acting as if their actions didn't lead to unrealistic operational costs, poorly designed/marketed vehicles, and poor resale values.

Fact is, if we give them money, they'll be back begging for more. They're exactly like that loser relative who calls twice a year for a personal loan just to help them "get by". In reality, you know they'll ask for another one next year and the year after that, and of course, they'll never remember that you've already given them several that has never been paid back.

My best question would be this... ask a non-Union autoworker (who works much harder) from Honda if his tax dollars should go for an autoworker bailout?

What about the other 9 out of 10 jobs (I don't buy 1 in 10 jobs crap for a second) that could use this money?

If you can justify the fairness here, I'm all ears.

Joel - Yep, they are well paid and I think the bai...

2008-11-19T09:25:00.000-05:00

Joel - Yep, they are well paid and I think the bailout (if approved) will need to address this.

Mr TML - I would say the bailout should be a UAW breakup. They don't have much room to negotiate given the perilous state of the companies.

Lyndsay - Thanks for the GM side of the debate. Some powerful numbers here, which are disputed by the next commenter (mark). Either way I think we all realize how important the US auto industry is. It just needs reform to stay competitive.

Jimmy- I have been meaning to do an update on this post. I have blown passed my blog target of $50 a month (about $300 a month now). But dividend and interest income has dropped below target because of economic factors. Look for an updated post soon

hi andy,this is a question regarding your post on ...

2008-11-19T02:08:00.000-05:00

hi andy,

this is a question regarding your post on $300 passive monthly income target. Have you reached your monthly income target of $50 p/month from this blog?

thanks !

From the Economix blog today, the 1 in 10 employee...

2008-11-18T10:01:00.000-05:00

From the Economix blog today, the 1 in 10 employee figures is shown as not entirely true :

The widely cited 1-in-10-jobs figure appears to come from a 2003 study conducted by the Center for Automotive Research on the “economic contributions of the motor vehicle to the U.S. economy, to a multitude of U.S. industries in retail, manufacturing and service sectors, and to individual Americans.” (C.A.R. is a nonprofit research organization with industry, labor, academic and government ties; this particular study was commissioned by the Alliance of Automobile Manufacturers, an industry group).

The study concludes that “new vehicle production, sales, and other jobs related to the use of automobiles are responsible for 1 out of every 10 jobs in the U.S economy.” The term “responsible for” is interpreted quite broadly, and covers jobs in steel, glass and electronics (the so-called “upstream” jobs) as well as those in taxi-driving, travel and advertising companies (”downstream” jobs), among others.

The study, which came out on Election Day, estimates “the economic impact — in terms of jobs, compensation and tax revenues — of a major contraction involving one or more of the Detroit Three automakers,” under two separate scenarios. In both cases, there would be major short-term shocks to employment; depending on which scenario you use, a contraction of the Detroit Three would result in direct and indirect job losses of 2.5 million to 3 million in 2009. (This figure was also cited by Governor Granholm.)

That statistic is nowhere close to 1 in 10 American jobs, but it’s nothing to sneeze at.

Full article: http://economix.blogs.nytimes.com/2008/11/17/how-many-jobs-depend-on-the-big-three/

Hello, Andy.I'm writing today to tell you about wh...

2008-11-17T17:20:00.000-05:00

Hello, Andy.

I'm writing today to tell you about what the collapse of General Motors and the American auto industry could mean to the country.

I'm sure you've heard about some of the issues facing GM, but did you know that:

- One out of every 10 people in America is employed in a service that is related to the U.S. auto industry.
- More than 239,000 Americans are directly employed by the Big Three.
- If GM were to discontinue operations, the cost to local, state, and federal governments could reach $156.4 billion over three years in lost taxes, and unemployment and health care assistance.

I wanted to share this information with you because you often write about economic issues that affect your readers' lives.

This week, Congress will meet to decide whether to provide immediate relief to U.S. automakers. I'm hoping you'll consider learning more about the situation at http://gmfactsandfiction.com/ and sharing the information with your readers. The site offers comprehensive information about the current crisis as well as ways to get involved, spread the word and share your opinions. You and your readers can even e-mail your U.S. Senators and Representatives directly from the site.

You can also check out this YouTube video:
http://www.youtube.com/watch?v=72cHfOKoA1c

Best regards,
Lyndsay
New Media Relations
mslworldwide.com

This is a UAW bailout, not a carmaker bailout. Th...

2008-11-17T15:26:00.000-05:00

This is a UAW bailout, not a carmaker bailout. The Dems are just afraid to call it that. The unions know that if bankruptcy is filed, their contracts will be rejected and concessions will be forced. That is why the urgency now. The rescue will only delay the inevitable.

With the average US automaker earning $55,000 (muc...

2008-11-17T14:43:00.000-05:00

With the average US automaker earning $55,000 (much above tje US average) surely wage cuts for all workers are the first step. They need to earn a real wage like the rest of us. I work in retail and I can assure you those who are uncompetitive don't last for long and are not missed when they close down.

I would be against a bailout normally, but current...

2008-11-17T14:41:00.000-05:00

I would be against a bailout normally, but current economic circumstances call for a suspension of "normal" actions. If the US car makers go into bankrupty, they will have to do massive layoffs and send unemployment soaring. A similar scenario will occur at their vendors and suppliers. This would definetly tip the economy into a depression like climate with unemployment going towards 20%. While the foreign makers will pick up some of they slack, they too are struggling. If we wanted to let the US automakers become more efficient we should have forced them to reform years ago in boom times. Now is not the time to do it.

I am decidedly anti-bailout. It will only prolong...

2008-11-17T11:57:00.000-05:00

I am decidedly anti-bailout. It will only prolong the problem, not eliminate it. Better to allocate that capital towards something productive rather than to a dying industry.

The bailout will not stop the job losses. Their is...

2008-11-17T10:20:00.000-05:00

The bailout will not stop the job losses. Their is nothing the government can do. If they bailout the auto's they will be spending money that could have been used to start several new businesses who would have added jobs to the economy. If they don't bailout the auto's many will be unemployed. Either way, millions of jobs will be lost. This is a disaster.