If the companies are cash strapped why don’t they sell off some of their assets? GM and Ford own a number of European car companies and have big stakes in a number of Japanese. Volvo (Ford, small cars), Saab (GM, the car manufacturing division), Opel (GM). Even though all their European assets are struggling too, I’m sure they must be worth a few billion.
Didn’t the companies make a lot of profit in the years when the big SUV’s were popular?
According to an interview I heard on the radio, GM has already run out of things that they can use as collateral for loans. Now is a really bad time to be trying to sell a division of an auto company.
Because of CAFE, SUV profits were partly used to subsidize economy cars.
I actually work for one of those companies that supplies to the auto industry – and several of our product lines are supplied primarily to the Big 3. There is already a noticable effect on orders of those product lines; those units are all but idle, as production at Big 3 plants has either slowed or all but idled.
So, I’m not really a bystander in this (although my own product line is not tied to the Big 3, and remains strong).
That said, I really think bailing out the Big 3 is a mistake. They put their own head into this noose with eyes wide open. They knew their business model was not sustainable, and yet did nothing because they did not want to deal with the pain that making changes would entail. They still don’t want to do that, and this is their attempt to get out of the pain.
In that, they seem to have a lot in common with the politicians who do not want the backlash from those who are invested in the Big 3’s big supply chain.
And that is the part that really seems stupid, to me: this is a lame-duck Congress making this decision, just after a sweeping victory for the Democrats. They could easily delay any decision, go home from this Congress, and thus force the Big 3 to deal with their own problems – and not worry about any backlash. By the time elections roll around again, this will all be water under the bridge, and the public will have some new outrage to be disgruntled over.
Had the Big 3 come to Congress during the election, the Democrats would be under more pressure. They’re not, now. The Senate Republicans might hold strong, though.
I am sorry, I think this is not accurate. The German and many of the European makers do not, if I remember it correctly, depend on the public health system, but provide the employer supported insurances. And of course, against the free base health cares, the taxes they are higher all around. It is not free, but it may be more efficient solutions.
The big 3 have moved a lot of operations to places with very low wages and little environmental regulation. That is exporting the worst characteristics of corporations to place with no legal system to fight them. The union wages are a diminishing problem. They have eliminated millions of union jobs and have cut wages and benefits. But nobody can compete evenly with China and 3rd world places. Corporations want to slash wages and benefits ,but never stop to wonder who will buy their products . The middle class was an important engine of our economic success. To cut them off at the knees will eventually hurt everybody with a business in America. Their customers will not be able to afford to go to shows, to go out to eat or to buy products.
Child labor makes soccer balls in India. Child labor and people working with no rights and safety ,labor and environmental standards are difficult to compete with. The wage and environmental standards promised in NAFTA and other international pacts should be enforced.We should not be brought down but they should be lifted up.
Like Europe?
It seems to me you are arguing by stereotypes and it is many manufacturers that move to be close to the emerging markets because we are growing, and perhaps we don’t have to only buy buy buy what white Europeans make for us. I do not know of any industrial manufacture like cars in any country that uses childs labours and it is very insulting and racist to assert such things like that blindly to argue against investment in Brasil say.
I am not arguing that auto companies are involved in child labor do. I am arguing that if allowed ,some corporations will do that. An example is our tennis shoe manufacturers. But moving our manufacturing to Mexico involved low wages and pollution. I worked directly with a manufacturer who took advantage of that. It was an auto supplier company.
There are thousands of auto dealerships employing thousand of salesmen.mechanics,and office help. They have used car dealers attached and often collision shops. That is a lot of jobs we are pissing away.
Nobody said that people were going to stop buying cars and trucks. They just may end up buying them from someone besides GM.
man, if i had the spare cash i would buy FORD-lock, stock and barrel! Fire 80% of the senior management, repudiate the UAW contract, and make good cars!
Last year I was happily paying full price for an import, with a mfr which does not negotiate because they can’t produce enough to keep up with demand. At the same time, you could buy a Fusion for less than the sticker price of a focus, GM was offering employee pricing, and later on you could buy a Dodge with a guaranteed gas price for the life of the vehicle. I don’t recall any such bargains at the time for imported marques. Comparing those raw numbers is basically meaningless when one side is selling at either a loss or severely reduced profit. People want their cars, at 2/3 the price of the equivalent import.
Heck Ralph, let’s pool our money together and just have ford sell it’s euro market cars here. I’d bet we’d succeed.
Actually, they still have 55% of the market.
Let 55% of any market go broke and the impact will be huge.
I don’t understand how Republicans came to be on the “let 'em fail” side and Democrats came to be on the “bail 'em out” side.
Since when did Dems starts being on the side of big business?
This does fit the stereotypes. Republicans are stereotypically more free market orientated, hence it fits that they would advocate letting failing companies fail. Democrats are stereotypically more in favor of unions, welfare and safety nets, hence it fits that they would try to save a massive, unionized employer.
Although I typically align with the democrats, I believe that we should not bail out the auto companies. I think in the long term we will do more damage propping up badly managed companies than we will if we let them fail and let their resources be allocated more efficiently.
I believe there are four basic freedoms of capitalism that define its strengths and the reason why this system has produced the most for the many at the least cost:[ol][]Freedom to Buy[]Freedom to Sell[]Freedom to Try[]Freedom to Fail[/ol]Giving money taken from unwilling taxpayers to businesses that are failing violates #4 something fierce.
[quote=“Musicat, post:56, topic:473046”]
I believe there are four basic freedoms of capitalism that define its strengths and the reason why this system has produced the most for the many at the least cost:[ol][li]Freedom to Buy[]Freedom to Sell[]Freedom to TryFreedom to Fail[/ol]Giving money taken from unwilling taxpayers to businesses that are failing violates #4 something fierce.[/li][/QUOTE]
How does bailing out the financial companies fit. ?We have already committed a trillion dollars to them. They are cutting thousands of jobs every day. How is that helping the general economy? If they are getting cash infusions and are not keeping workers the long term prognosis for America is bad. Main street is taking a beating. wall street big shots are doing fine.
so far, this thread has discussed the philosophicall problem whether to bailout, but not the practical problem of when to bail out the troubled companies.
Even if you think that GM deserves to die, there is a practical issue of when to kill it.
The most immediate,critical problem today is to survive the next year or two.We are facing real danger from worldwide recession (that may last a couple of years), but also facing a potential danger from worldwide depression (that may last for a generation)if people start to panic. The GM problem needs to be solved calmly, without rocking the boat enough to cause panic.
If the headlines scream “GM closes today, MILLIONS of Americans will lose their jobs”, then millions of people actually will panic. The economy will get a lot worse. (People who are afraid of their future don’t buy much.)
It may be worth it to give GM the bailout money now, even knowing that the company will still face bankruptcy again a couple years from now. But by then the economy will be better able to withstand the shock waves.
If we don’t think they should be bailed out at all, the timing just doesn’t have to enter into it. Let them die when they die a natural death.
Does anybody know the size cutoff for companies that are too big to allow to fail? I’m just having trouble finding that line of demarcation.