NationStates Jolt Archive

Yes, that's right folks. We've got another problem now. General Motors says it's likely going to collapse unless it receives emergency federal assistance.

http://www.nytimes.com/2008/11/08/business/08auto.html?_r=1&hp&oref=slogin

The article also notes that Ford, while better off currently, is not in good shape either.

Oh boy.

And this is capitalism's fault... how?

And this is capitalism's fault... how?

You know, you don't have to assume that if I report a news story I'm automatically implying a value judgement. :p

This is not news. Nor is it a financial crisis. It's just a big badly run company going tits up. It's a shame in a way, because not all of the company is horrible. But the management is just ugh. And it is so bloated. I hope SAAB survives, but I doubt it since they've integrated it so much into the rest of the mess.

Wagoner should have chapter 11 last year when he could still get financing for reorganization. If it doesn't get a bailout its done by end of Jan at the latest.

Ford and Chrysler will go the same way.

But it won't just be US auto companies. All of them are going to have extremely tough times since all of their markets are disappearing globally. There is going to be a wave of bankruptcy/consolidation throughout the entire sector.

I think the question floating around those boardrooms is, "Well, if the billionaires on Wall Street can get a bailout, why can't we?"

Now that the government's shown a willingness to socialize risk on private profits, we're going to see a LOT MORE Of this.

And this is capitalism's fault... how?
I've read it, re-read it, gone away and washed my face and come back and read it again, and I'm just not seeing the accusation that you seem to be replying to. Care to elaborate?

That said, back in March I thought to myself, "Wagoner should run out and write tens/hundreds of billions of dollars of naked CDS from GM, that way he's guaranteed a bailout." He's a dumb fuck basically.

This is not news. Nor is it a financial crisis. It's just a big badly run company going tits up. It's a shame in a way, because not all of the company is horrible. But the management is just ugh. And it is so bloated. I hope SAAB survives, but I doubt it since they've integrated it so much into the rest of the mess.

Wagoner should have chapter 11 last year when he could still get financing for reorganization. If it doesn't get a bailout its done by end of Jan at the latest.

Ford and Chrysler will go the same way.

But it won't just be US auto companies. All of them are going to have extremely tough times since all of their markets are disappearing globally. There is going to be a wave of bankruptcy/consolidation throughout the entire sector.

Well, front page of the Old Gray Lady herself. With how unstable the US economy is currently, and how important the auto industry is for the US economy, it has far reaching implications.

I think the question floating around those boardrooms is, "Well, if the billionaires on Wall Street can get a bailout, why can't we?"

Now that the government's shown a willingness to socialize risk on private profits, we're going to see a LOT MORE Of this.

Cascading failures. If AIG had been allowed to fail in September, the world banking system would have collapsed within 3 days, because the Euro banks were using AIG for regulatory arbitrage. This would have been bad.

GM collapses, all it does is add 2 million unemployed (more or less).

Also, GM should lobby better.

Well, front page of the Old Gray Lady herself. With how unstable the US economy is currently, and how important the auto industry is for the US economy, it has far reaching implications.

It has far reaching implications for ordinary americans who will lose their jobs and watch their towns become ghettos. But the failure of GM won't destablize (any further!) the financial system as we know it. So nobody cares.

These are the waters.

Cascading failures. If AIG had been allowed to fail in September, the world banking system would have collapsed within 3 days, because the Euro banks were using AIG for regulatory arbitrage. This would have been bad.

GM collapses, all it does is add 2 million unemployed (more or less).

Also, GM should lobby better.

That's the claim. How true it is? Not so much I suspect. The entire debacle is a re-iteration of the savings-and-loan collapse in the 1980's. That one generated a bailout too-and that bailout, the show of Government privatizing profits while subsidizing and socializing losses, taught a pattern that was faithfully copied with broader results that arrived this year.

Said "cascade failure" is a re-set to the system that is desperately needed-"Too big to fail" becomes "Big enough to dictate policy" really, really quick. On the other hand, businesses want to make money, if deceptive shuffling of paper doesn't make money, they'll do something else-you don't really think those boards want to go be serf-farmers, do you?

A short, hard crisis clears the deadwood and the choking brush and allows growth and prosperity. The current situation came off of a "Prosperity" built on deferring consequences..and surprise, they deferred, but did not (and now, can not) eliminate the consequences. It's the difference between a short Depression, and a long one. The decision in D.C. is going to give us all a very, very, long one in the end result.

It has far reaching implications for ordinary americans who will lose their jobs and watch their towns become ghettos. But the failure of GM won't destablize (any further!) the financial system as we know it. So nobody cares.

These are the waters.

Unemployed people don't buy very many goods. Clearly having less consumer spending when consumer spending is already nearly disastrously low is a problem.

That's the claim. How true it is? Not so much I suspect. The entire debacle is a re-iteration of the savings-and-loan collapse in the 1980's. That one generated a bailout too-and that bailout, the show of Government privatizing profits while subsidizing and socializing losses, taught a pattern that was faithfully copied with broader results that arrived this year.

Said "cascade failure" is a re-set to the system that is desperately needed-"Too big to fail" becomes "Big enough to dictate policy" really, really quick. On the other hand, businesses want to make money, if deceptive shuffling of paper doesn't make money, they'll do something else-you don't really think those boards want to go be serf-farmers, do you?

A short, hard crisis clears the deadwood and the choking brush and allows growth and prosperity. The current situation came off of a "Prosperity" built on deferring consequences..and surprise, they deferred, but did not (and now, can not) eliminate the consequences. It's the difference between a short Depression, and a long one. The decision in D.C. is going to give us all a very, very, long one in the end result.

It's completely true. Euro banks didn't want to put their minimum capital into anything boring like Bunds, so instead they put it into more exotic instruments and had them covered by AIG CDS (thus giving it theoretically the same rating as government bonds, or AAA paper). If AIG collapsed, the next day tonnes of big european banks would have been undercapitalized and would have collapsed. Counter party failure would then have finished the job. Just look at the chaos Lehman collapsing caused. Multiply that by 1000.

It's not a matter of clearing the deadwood. It's a matter of everyone waking up to find that no ATMs, debit cards, credit cards and all that stuff doesn't work. Also no-one can get cash. Basically a shut down of all commerce in the western world. A good chance of a 'permanent' depression if you will.

TARP, and the fed rolling commercial paper were completely necessary to prevent that. As was the AIG bailout. (TARP, because the US banks were facing cross border electronic runs, commercial paper because regular businesses couldn't fund).

That said, none of these things were done properly, so lots of the complaints about them are legit. The charge that it was privatizing profits socializing losses is true. The banks should have faced cram downs in addition to measures to restore depositor confidence, sort of the treatment AIG shareholders got. People needed to know that banks weren't going to pull a lehman however.

I agree about the deferring consequences thing though. I also have sympathy with the people who claim that if the bankers got their bailout then millions on main street should also. I'm just describing the reality of why it may not happen however.

Unemployed people don't buy very many goods. Clearly having less consumer spending when consumer spending is already nearly disastrously low is a problem.

I won't rule out a bailout for GM. But the urgency isn't there, and it's not from a global financial system perspective all that important.

Issues like US consumer spending are as about as important as wages. (Actually, less probably, since it has been the policy of the US government to depress wages for the lower four quintiles for the last twenty odd years). Fertile stuffs for the political stump, but not something that anyone really cares about very much if they can get away with it.

Politicians aren't as dumb as people think. They know what has been going on for umpteen years, and had little inclination to stop it.

It's completely true. Euro banks didn't want to put their minimum capital into anything boring like Bunds, so instead they put it into more exotic instruments and had them covered by AIG CDS (thus giving it theoretically the same rating as government bonds, or AAA paper). If AIG collapsed, the next day tonnes of big european banks would have been undercapitalized and would have collapsed. Counter party failure would then have finished the job. Just look at the chaos Lehman collapsing caused. Multiply that by 1000.

It's not a matter of clearing the deadwood. It's a matter of everyone waking up to find that no ATMs, debit cards, credit cards and all that stuff doesn't work. Also no-one can get cash. Basically a shut down of all commerce in the western world. A good chance of a 'permanent' depression if you will.

TARP, and the fed rolling commercial paper were completely necessary to prevent that. As was the AIG bailout. (TARP, because the US banks were facing cross border electronic runs, commercial paper because regular businesses couldn't fund).

That said, none of these things were done properly, so lots of the complaints about them are legit. The charge that it was privatizing profits socializing losses is true. The banks should have faced cram downs in addition to measures to restore depositor confidence, sort of the treatment AIG shareholders got. People needed to know that banks weren't going to pull a lehman however.

I agree about the deferring consequences thing though. I also have sympathy with the people who claim that if the bankers got their bailout then millions on main street should also. I'm just describing the reality of why it may not happen however.

The fundamental problem here It was a "Hurl money and hope it sticks" move. The Bailout isn't solving the problem, it's delaying the outcome and making it BIGGER when it finally can't be massaged any further. It's Aspirin to a Cancer patient, when what's needed, is a radical mastectomy and Radiation/Chemo.

The fundamental problem here It was a "Hurl money and hope it sticks" move. The Bailout isn't solving the problem, it's delaying the outcome and making it BIGGER when it finally can't be massaged any further. It's Aspirin to a Cancer patient, when what's needed, is a radical mastectomy and Radiation/Chemo.

The bailout did solve the instant problem, which was that pretty much every bank was about to go tits up. It did restore enough confidence to stop/slow the runs. More or less.

But the bigger problems really can't be solved. And the way the bailouts have been handled have created a whole set of other problems, like with convertible bonds.

So it's not really delaying the outcome. The bottom line is that, in general, americans and europeans are broke. Nothing can fix that.

That is not to say that I am against throwing money at the problem. These are deflationary times. The problem is that it is not being thrown sensibly, and nor are losses being forced where they should. There is too much interest in protecting the value of 401ks and Warren Buffet, and not enough in shoving it where it would actually circulate.

I would say that perhaps rebating the last ten years of personal income tax would be a good start, because that would repair balance sheets as well as get money back into circulation. Politicians will never allow that sort of thing though.

Since I read the Detroit Free Press every morning this is very old news to me. Most newspapers in Michigan have been proclaiming that the end is nigh for a while.

Since I read the Detroit Free Press every morning this is very old news to me. Most newspapers in Michigan have been proclaiming that the end is nigh for a while.

Well, it's in the Old Gray Lady now, so it must be true... "All the news that's fit to print" :D

*Waits for Michael Moore's film about it, which ends up actually being about himself...*

I blame Obama

*Waits for Michael Moore's film about it, which ends up actually being about himself...*

Actually, his first big documentary was about the auto industry.

http://en.wikipedia.org/wiki/Roger_and_me

I blame Obama

I blame you.

I blame you.

oh :(

That'll teach them to make shit cars, eh?

oh :(

OMG, I just started a depression!

OMG, I just started a depression!

A global depression...

Eh.. let them sink. buy a toyota

Cerean;14184722']Eh.. let them sink. buy a toyota

As this guy said in an interview with the Huffington Post.

You often say, "It's clear Americans don't care about Michigan." Why should we?

Peter M. De Lorenzo: The Detroit automakers are either directly or indirectly responsible for at least 1 in 14 jobs in the U.S. If people in this country don't think a bankruptcy at one or more of the Detroit manufacturers won't affect them -- no matter where they live -- they're sadly mistaken. On top of that, the continuing erosion of our manufacturing base in this country has reached the crisis stage. We cannot exist simply as a Starbucks Nation of mindless consumers. If we lose the ability to manufacture hard goods in this country, then I fear for our long-term future as a nation.

http://www.huffingtonpost.com/diane-tucker/suddenly-obamas-auto-poli_b_128349.html

As this guy said in an interview with the Huffington Post.



http://www.huffingtonpost.com/diane-tucker/suddenly-obamas-auto-poli_b_128349.html

So much for the old "ownership society" eh?

The problem here isn't JUST that they're throwing money down a black hole. The problem is that we're seeing that money used to lobby the government to allow the failing businesses to have more say in how the money should be spent. No good is going to come out of this action, unless you think that protecting the uber-rich from the consequences of their bad acts is a good thing

Well, the government is going to own everything, now. Does that count???

As this guy said in an interview with the Huffington Post.



http://www.huffingtonpost.com/diane-tucker/suddenly-obamas-auto-poli_b_128349.html

Americans don't want a manufacturing society though. Or if they do, they certainly haven't acted like it.

It's all Bill Clinton's fault!

The bailout did solve the instant problem, which was that pretty much every bank was about to go tits up. It did restore enough confidence to stop/slow the runs. More or less.

But the bigger problems really can't be solved. And the way the bailouts have been handled have created a whole set of other problems, like with convertible bonds.

So it's not really delaying the outcome. The bottom line is that, in general, americans and europeans are broke. Nothing can fix that.

That is not to say that I am against throwing money at the problem. These are deflationary times. The problem is that it is not being thrown sensibly, and nor are losses being forced where they should. There is too much interest in protecting the value of 401ks and Warren Buffet, and not enough in shoving it where it would actually circulate.

I would say that perhaps rebating the last ten years of personal income tax would be a good start, because that would repair balance sheets as well as get money back into circulation. Politicians will never allow that sort of thing though.


Um, actually it won't.

The problem is much more fundamental. When people can vote themselves a benefit, without considering the consequence or the cost, they are likely to do so. Why should business or government be any different?

The first step, in fixing this mess, is moving the government to the GAAP. Until you do that you won't have a true picture of what they are really taking in and what the true liabiliities are. Doing anything else will just make the problem worse.

The problem here isn't JUST that they're throwing money down a black hole. The problem is that we're seeing that money used to lobby the government to allow the failing businesses to have more say in how the money should be spent. No good is going to come out of this action, unless you think that protecting the uber-rich from the consequences of their bad acts is a good thing

An article that deals with that.

http://www.freep.com/article/20081108/COL06/811080390

Americans don't want a manufacturing society though. Or if they do, they certainly haven't acted like it.

Americans don't, no. Michigan seems either unwilling or unable to give up it's manufacturing society, despite US policies being quite harmful to it. That's precisely why Mr. de Lorenzo says "Americans don't care about Michigan".

Americans don't want a manufacturing society though. Or if they do, they certainly haven't acted like it.

CONSUMERS don't want a manufacturing society, especially if they have to pay more for it.

Government doesn't want a manufacturing society. If they did they wouldn't have facilitated the off-shoring of jobs.

The uber-rich, (including CEOs and CFOs) don't want a manufacturing society because their salaries are directly linked to profitability- which means they have a huge incentive to NOT manufacture domestically.

The "American people" want manufacturing.

If I were the U.S.A government, bailing out any major manufacturer would also entail the cheap nationalisation of unused factories, then retooling them for current needs (I'd suspect there is a lot of unused capacity for producing vehicle/building parts and the such). That'd go a long way to fixing their infrastructure problems.

Um, actually it won't.

The problem is much more fundamental. When people can vote themselves a benefit, without considering the consequence or the cost, they are likely to do so. Why should business or government be any different?

The first step, in fixing this mess, is moving the government to the GAAP. Until you do that you won't have a true picture of what they are really taking in and what the true liabiliities are. Doing anything else will just make the problem worse.

It's beyond political theory and ideology at this point. This week's unemployment figures... tip of the iceberg. This is not the time for speeches about how it ought to be. It's also not really a time to care about whether or not the government is GAAP compliant.

Things are really, really, really bad. Like global trade shut down bad. Anyway, if things aren't seen to lickety split, we'll have plenty of time to debate this later on when we are chasing each other around the desert fighting over tins of dog-food.

Money isn't circulating. The velocity is dropping to zero so to speak. Very bad. All I am suggesting is a way to get it circulating again. It's worth a shot.

I also don't see how returning people's taxes is giving them an unearned benefit.

Americans don't, no. Michigan seems either unwilling or unable to give up it's manufacturing society, despite US policies being quite harmful to it. That's precisely why Mr. de Lorenzo says "Americans don't care about Michigan".

He's right, sadly. He's also right that you do need manufacturing. What else are people going to do?

It's a shame that this wasn't explained to people earlier however, because they are now going to have to learn the hard way what it means.

If I were the U.S.A government, bailing out any major manufacturer would also entail the cheap nationalisation of unused factories, then retooling them for current needs (I'd suspect there is a lot of unused capacity for producing vehicle/building parts and the such). That'd go a long way to fixing their infrastructure problems.

I disagree. The first question is this: Does the GOVERNMENT need to do anything? If the answer is yes, then it would appear that the answer is NOT to throw money at the banks, insurance companies, and auto industry.

The answer is to invest in infrastructure (roads, public transit, power grid and etc). Why? Because this investment would (a) allow an influx of new cash into the economy (rather than the wallets of fat cats) thereby bringing the multiplier effect into the equation. Second, because investment in infrastructure will drive the cost of production and shipping down- thereby reducing the potential cost of production in America, and third, the benefits are equally distributed among business and the public. Because we are a consumer debt based economy the money needs to get into the hands of the people-not AIG, Ford, or Investment banks.

It's beyond political theory and ideology at this point. This week's unemployment figures... tip of the iceberg. This is not the time for speeches about how it ought to be. It's also not really a time to care about whether or not the government is GAAP compliant.

Things are really, really, really bad. Like global trade shut down bad. Anyway, if things aren't seen to lickety split, we'll have plenty of time to debate this later on when we are chasing each other around the desert fighting over tins of dog-food.

Money isn't circulating. The velocity is dropping to zero so to speak. Very bad. All I am suggesting is a way to get it circulating again. It's worth a shot.

I also don't see how returning people's taxes is giving them an unearned benefit.
The people have been garnering unearned benefits for decades. These things cost money and so, before you can return anything to anyone, you need to ensure that there is something TO return. Since any analysis of government accounting rates it as a cross between fantasy and quantum string theory, the first step is to find out how much you REALLY have and how much you are paying out.

Then you cut what you can and IF you have money you put it back into the hands of the people.

Doing otherwise will only make the situation worse.

The people have been garnering unearned benefits for decades. These things cost money and so, before you can return anything to anyone, you need to ensure that there is something TO return. Since any analysis of government accounting rates it as a cross between fantasy and quantum string theory, the first step is to find out how much you REALLY have and how much you are paying out.

Then you cut what you can and IF you have money you put it back into the hands of the people.

Doing otherwise will only make the situation worse.

Government finances aren't the problem. Not right now.

I blame Obama
It's all Bill Clinton's fault!
You're both wrong. It was Reagan, in the Dining Room, with the Jaw Bone of Lee Iacocca.

I disagree. The first question is this: Does the GOVERNMENT need to do anything? If the answer is yes, then it would appear that the answer is NOT to throw money at the banks, insurance companies, and auto industry.
Currently? No, money should not be thrown at the issue, though money needs to be pumped in.

If we're operating under current U.S.A tradition then of course some money needs to go to the lending institutions, to allow the temporary loans to continue.

Bailing out the insurance groups ties in with preventing crappy loans from affecting everything else, and helps to garner some support from overseas groups (such as various european banks/governments).

If I were operating the system then the bailouts would enact further regualtion on the lending groups (such as compelling the elements [people/divisions] that are simply administrative, not the ones who decided to shoot for 'gold' to help create and run a government system), with some kind of federally funded (micro)finance system (with very little profit margins) being developed to ensure the stable, accessible liquidity for loans for businesses and smaller (local or state) governments.

Bailing out the manufacturing sector (well, just the auto sector in this case) would allow the nationalising of unused/underused capacity to go much smoother, without lengthy legal challenges, if the bailout contains these conditions.

Currently? No, money should not be thrown at the issue, though money needs to be pumped in.

If we're operating under current U.S.A tradition then of course some money needs to go to the lending institutions, to allow the temporary loans to continue.

Bailing out the insurance groups ties in with preventing crappy loans from affecting everything else, and helps to garner some support from overseas groups (such as various european banks/governments).

If I were operating the system then the bailouts would enact further regualtion on the lending groups (such as compelling the elements [people/divisions] that are simply administrative, not the ones who decided to shoot for 'gold' to help create and run a government system), with some kind of federally funded (micro)finance system (with very little profit margins) being developed to ensure the stable, accessible liquidity for loans for businesses and smaller (local or state) governments.

Bailing out the manufacturing sector (well, just the auto sector in this case) would allow the nationalising of unused/underused capacity to go much smoother, without lengthy legal challenges, if the bailout contains these conditions.

I continue to respectfully disagree. I'm not sure that the government needs to do ANYTHING. I certainly don't agree that subsidizing the S&L bailout (part II) or the Chrysler loan (part II & III) is the best plan. More to the point, the REASON I want to start with government finance is so that we WON'T be stampeded into a series of bad decisions by those who have a financial stake in this issue. We were stampeded, and mislead, into a war of choice in Iraq. We have been stampeded into allowing the government to spy on us. Now they want us to act without due consideration AGAIN. Sorry, but I got off the "fear bus" before the war in Iraq. To paraphrase Shakespeare "Something is very much amiss in the state of Denmark" and I thiink we have a duty to find out what is REALLY going on here before we start pissing money away again.

This administration and this congress have shown a singular lack of understanding of good governance and world economics. They have rushed from bad decision to bad decision- and now they want to throw hundreds of billions down a black hole.

Americans don't, no. Michigan seems either unwilling or unable to give up it's manufacturing society, despite US policies being quite harmful to it. That's precisely why Mr. de Lorenzo says "Americans don't care about Michigan".

poor michigan. well and truly fucked now. even more so than before, when it was also well and truly fucked. really probably should have tried harder to shift away from being a company state back when the company originally went under a few decades back...

And this is capitalism's fault... how?

:rolleyes:

And on the second post, too.

That's the claim. How true it is? Not so much I suspect. The entire debacle is a re-iteration of the savings-and-loan collapse in the 1980's. That one generated a bailout too-and that bailout, the show of Government privatizing profits while subsidizing and socializing losses, taught a pattern that was faithfully copied with broader results that arrived this year.

Said "cascade failure" is a re-set to the system that is desperately needed-"Too big to fail" becomes "Big enough to dictate policy" really, really quick. On the other hand, businesses want to make money, if deceptive shuffling of paper doesn't make money, they'll do something else-you don't really think those boards want to go be serf-farmers, do you?

A short, hard crisis clears the deadwood and the choking brush and allows growth and prosperity. The current situation came off of a "Prosperity" built on deferring consequences..and surprise, they deferred, but did not (and now, can not) eliminate the consequences. It's the difference between a short Depression, and a long one. The decision in D.C. is going to give us all a very, very, long one in the end result.

I agree, to an extent. It seems to me that GM, Chrysler and Ford have been so woefully behind the times for so long that even though their cars are better in comparison to their Asian and European counterparts now than they ever have been, it's too late. They allowed Japanese/German and now Korean manufacturers to ascend to levels of consumer trustworthiness and value -- while relying only on patriotism as a response. I was just in Port Huron, MI last month, and my rented Toyota didn't get half the number of glares that a foreign-badged car used to ten-plus years ago. I think it's because Michiganders finally realize that it's the Company that's fucked them, not the Japanese -- that, and the fact that a lot of Toyotas and Hondas are built in the USA, and lots of US cars are either assembled or part-sourced from abroad.

That being the case, I don't think the absolute failure of a major manufacturer like GM can possibly be absorbed by anything other than alternate manufacturing jobs. This "thinning of the deadwood" may indeed make room for smaller, more innovative auto manufacturers to start up and thrive, but I can't imagine how many of those it would take to make up even half the jobs of the Big Three, should they all fold.

Add to that the multiple number of support and related industries: parts, machine tools, robotics, rubber, steel, aluminum, glass, and quillions of other car and truck component makers in direct or indirect support of the auto industry, and all those jobs. Then there's the companies who depend on those subsidiaries. That backlashes into the companies that sell to those families -- food, clothing, housing, and so on -- and the impact becomes a catastrophe throughout the economy.

Those jobs simply must be replaced. Not the CEOs, they're set, and fuck them, too. Re-training for service industry jobs is not the answer, not halfway at least.

CONSUMERS don't want a manufacturing society, especially if they have to pay more for it.

Government doesn't want a manufacturing society. If they did they wouldn't have facilitated the off-shoring of jobs.

The uber-rich, (including CEOs and CFOs) don't want a manufacturing society because their salaries are directly linked to profitability- which means they have a huge incentive to NOT manufacture domestically.

The "American people" want manufacturing.

Well said.

I agree, to an extent. It seems to me that GM, Chrysler and Ford have been so woefully behind the times for so long that even though their cars are better in comparison to their Asian and European counterparts now than they ever have been, it's too late. They allowed Japanese/German and now Korean manufacturers to ascend to levels of consumer trustworthiness and value -- while relying only on patriotism as a response. I was just in Port Huron, MI last month, and my rented Toyota didn't get half the number of glares that a foreign-badged car used to ten-plus years ago. I think it's because Michiganders finally realize that it's the Company that's fucked them, not the Japanese -- that, and the fact that a lot of Toyotas and Hondas are built in the USA, and lots of US cars are either assembled or part-sourced from abroad.

That being the case, I don't think the absolute failure of a major manufacturer like GM can possibly be absorbed by anything other than alternate manufacturing jobs. This "thinning of the deadwood" may indeed make room for smaller, more innovative auto manufacturers to start up and thrive, but I can't imagine how many of those it would take to make up even half the jobs of the Big Three, should they all fold.

Add to that the multiple number of support and related industries: parts, machine tools, robotics, rubber, steel, aluminum, glass, and quillions of other car and truck component makers in direct or indirect support of the auto industry, and all those jobs. Then there's the companies who depend on those subsidiaries. That backlashes into the companies that sell to those families -- food, clothing, housing, and so on -- and the impact becomes a catastrophe throughout the economy.

Those jobs simply must be replaced. Not the CEOs, they're set, and fuck them, too. Re-training for service industry jobs is not the answer, not halfway at least.


It was the legacy costs. GM just couldn't compete financially with anyone because of them.

Thing of it is, GMs problem was that it wasn't ruthless enough. It should have either chapter 11'd in 94 just after Clinton lost congress, or closed all its US based manufacturing.

Too late now. Gonna really screw the midwest though.

poor michigan. well and truly fucked now. even more so than before, when it was also well and truly fucked. really probably should have tried harder to shift away from being a company state back when the company originally went under a few decades back...

Yes, we probably should have but given the cyclical nature of the auto industry we believed it would always come back.

I was just in Port Huron, MI last month, and my rented Toyota didn't get half the number of glares that a foreign-badged car used to ten-plus years ago. I think it's because Michiganders finally realize that it's the Company that's fucked them, not the Japanese

Yes, I think that is finally occurring, but the question is what to do about it. I approve of Granholm's attempts to diversify the economy, but the sort of high tech manufacturing she's after wants to be in economically healthy states, which Michigan isn't. It's sort of a chicken and egg situation.

It was the legacy costs. GM just couldn't compete financially with anyone because of them.

Thing of it is, GMs problem was that it wasn't ruthless enough. It should have either chapter 11'd in 94 just after Clinton lost congress, or closed all its US based manufacturing.

Too late now. Gonna really screw the midwest though.

Well and truly. And for the most part, those are good people, and a few are my relatives. It makes me sad...and angry at the corporations' leadership.

Yes, I think that is finally occurring, but the question is what to do about it. I approve of Granholm's attempts to diversify the economy, but the sort of high tech manufacturing she's after wants to be in economically healthy states, which Michigan isn't. It's sort of a chicken and egg situation.

Understood. Biotech and the like are doing well in the Pacific Northwest because we've always had a slightly faster reaction time to changes in the economy. True, lumber and fishing were slow to react to the unsustainability of their industries, but they've sussed it now and either fish/log responsibly or have gone tits-up or diversified.

Well and truly. And for the most part, those are good people, and a few are my relatives. It makes me sad...and angry at the corporations' leadership.


Yeah. I've got some friends in MI. They've sort of always known the writing was on the wall, but they actually really love the state so they've stuck it out for the past five odd years. They are really thinking about bailing now though.

Understood. Biotech and the like are doing well in the Pacific Northwest because we've always had a slightly faster reaction time to changes in the economy. True, lumber and fishing were slow to react to the unsustainability of their industries, but they've sussed it now and either fish/log responsibly or have gone tits-up or diversified.

though large parts of the inland northwest are way slow on this front. people still think of themselves as 'logger' families, despite nobody having done any logging in 20 years. at least the inland urban areas are doing better.

Yeah. I've got some friends in MI. They've sort of always known the writing was on the wall, but they actually really love the state so they've stuck it out for the past five odd years. They are really thinking about bailing now though.

There's a lot to love about the state itself. MI is a lovely place -- the fall was amazing. I almost think it could be turned into a giant agricultural center and national park or something. Use Detroit as a museum and get everyone to work producing food and setting the place up with only a few roads and lots of trails. Let the wildlife take over much of it and call it paradise. Except in winter, when it'll be snowplace.

Actually, his first big documentary was about the auto industry.

http://en.wikipedia.org/wiki/Roger_and_me

Uh, honey, that's the joke.

Film student.

Okay?

There's a lot to love about the state itself. MI is a lovely place -- the fall was amazing. I almost think it could be turned into a giant agricultural center and national park or something. Use Detroit as a museum and get everyone to work producing food and setting the place up with only a few roads and lots of trails. Let the wildlife take over much of it and call it paradise. Except in winter, when it'll be snowplace.

Yeah. They are really cut up about the whole thing, but they just see it circling the drain and they have kids so... Even then they really love it up there (I've actually liked it every time I've visited, even though I make fun of everything not the tri-state area). It really is a shame.

Fortunately they aren't tied to any particular state income wise.

The "American people" want manufacturing.
Some do, but not all.

Uh, honey, that's the joke.

Film student.

Okay?

Hey, don't be snide with him because you didn't use sarcasm tags. How is he supposed to know what you study?

That'll teach them to make shit cars, eh?

That's the sad thing. (Well, one of many sad things.) GM just doesn't make great cars. It almost deserves to fail, but at the same time that seems unfair to all of their employees.

They need to go under and be sold off or dismantled to meet obligations just like the financial firms. Personally, I think any "bailout" they receive should go solely to helping laid-off workers retrain and find new jobs either in the remaining automakers or an entirely new sector. Those workers weren't the ones that made the decisions that put the company out of business; it is definitely true their unions made huge mistakes by demanding outrageous levels of benefits and compensation despite the deteriorating condition of the company, but it's also far more true that top management failed to prepare for such costs by making terrible business decisions and flat out failing to achieve any kind of profitability outside of trucks and SUVs. The fact is that we really could not, and can definitely can't now justify paying the equivalent of $100+/hour in wages and benefits to perform semi-skilled labor, especially to make mediocre and inefficient cars and trucks people simply don't want.

Perhaps GM should have thought of this when they fought to prevent CAFE standards from being increased. Had they kept up with technology and market trends rather than attempt to preserve an outdated line of vehicles totally out of touch with consumer needs, they wouldn't be hemorrhaging $6.9 billion of cash.

There's a lot to love about the state itself. MI is a lovely place -- the fall was amazing. I almost think it could be turned into a giant agricultural center and national park or something. Use Detroit as a museum and get everyone to work producing food and setting the place up with only a few roads and lots of trails. Let the wildlife take over much of it and call it paradise. Except in winter, when it'll be snowplace.

I've bolded the problems with your suggestion. Key word being 'work'. Getting Detroiters to work is like Iran complying with all US demands at dismantling it's nuclear program. Not gonna happen. Don't get me wrong, I love your idea and I think it would be an exceptional thing to do; but it's not realistic with the current populous that lives in Detroit.

(This is coming from experience, of living in Detroit for 16 years)

They need to go under and be sold off or dismantled to meet obligations just like the financial firms. Personally, I think any "bailout" they receive should go solely to helping laid-off workers retrain and find new jobs either in the remaining automakers or an entirely new sector. Those workers weren't the ones that made the decisions that put the company out of business; it is definitely true their unions made huge mistakes by demanding outrageous levels of benefits and compensation despite the deteriorating condition of the company, but it's also far more true that top management failed to prepare for such costs by making terrible business decisions and flat out failing to achieve any kind of profitability outside of trucks and SUVs. The fact is that we really could not, and can definitely can't now justify paying the equivalent of $100+/hour in wages and benefits to perform semi-skilled labor, especially to make mediocre and inefficient cars and trucks people simply don't want.

Perhaps GM should have thought of this when they fought to prevent CAFE standards from being increased. Had they kept up with technology and market trends rather than attempt to preserve an outdated line of vehicles totally out of touch with consumer needs, they wouldn't be hemorrhaging $6.9 billion of cash.

I 100% agree with this stuffs. The company was ruined by its crap spineless management. Lack of ruth basically. GM was the weak sister.

Still there is a lot of business end there. Properly thought about, there should be some nice pickings.

This is a huge problem. It really would affect the entire country. Think about the workers for the companies, then the dealers, and the mechanics and salesman that are employed by the dealers. Then you have parts manufacturers, transport companies, drivers for those companies. Can't forget about the shareholders in all of the companies involved in the production of an automobile.

If you think that the loss of even one US car manufacturer wouldn't affect the country, or the rest of the world, you're severely wrong. How many people overseas would lose their jobs working in the same jobs as in the US? It would be a really really bad loss.

Not to mention GM itself is over 100 years old and had how many great inventions.

In the end though, I don't think a bailout would even help them. As mentioned in the article, who would buy a car from a nearly bankrupt company?

Sad, sad, sad:(

This is a huge problem. It really would affect the entire country. Think about the workers for the companies, then the dealers, and the mechanics and salesman that are employed by the dealers. Then you have parts manufacturers, transport companies, drivers for those companies. Can't forget about the shareholders in all of the companies involved in the production of an automobile.

If you think that the loss of even one US car manufacturer wouldn't affect the country, or the rest of the world, you're severely wrong. How many people overseas would lose their jobs working in the same jobs as in the US? It would be a really really bad loss.

Not to mention GM itself is over 100 years old and had how many great inventions.

In the end though, I don't think a bailout would even help them. As mentioned in the article, who would buy a car from a nearly bankrupt company?

Sad, sad, sad:(


GM's problem isn't that it doesn't make good cars, it's that it "(like Ford and Chrysler) caved to excessive union demands in the 60s and 70s when they dominated the market. At the time they could easily pass on the costs to the consumer. However, with the arrival of Japanese cars (and the Oil Embargo) they lost lots of market share and can now no longer make enough money to cover theit massive personnel costs. It doesn't help that GMs most profitable vehicles, trucks and SUVs, had their sales killed by the spike in oil prices. Also, the current economic climate has hurt auto sales for everyone, and will continue to do so for quite awhile I suspect. That said I don't think the government will let GM fail, the economic fall out would be too severe, plus the UAW has plenty of influence with the Democrats in charge. There will be downsizing and the Midwest will continue to be hit hard of course. The end result is a thinning out of the bloated auto market, there are too many companies and they are too big for the current climate.

Hey, don't be snide with him because you didn't use sarcasm tags. How is he supposed to know what you study?

Umm, even if I didn't study film, it's not hard to understand the joke there. Perhaps if I made a comment about Michael Moore, one would assume that I would know who Moore is, and thusly I would know his films.

Umm, even if I didn't study film, it's not hard to understand the joke there. Perhaps if I made a comment about Michael Moore, one would assume that I would know who Moore is, and thusly I would know his films.

Actually, you'd be surprised how many people know of Michael Moore without knowing anything about his films.

I've bolded the problems with your suggestion. Key word being 'work'. Getting Detroiters to work is like Iran complying with all US demands at dismantling it's nuclear program. Not gonna happen. Don't get me wrong, I love your idea and I think it would be an exceptional thing to do; but it's not realistic with the current populous that lives in Detroit.

(This is coming from experience, of living in Detroit for 16 years)

Yeah, I know. Pipe dreams in Detroit are more accurately labeled "stem dreams", and they're usually not very pretty.

Umm, even if I didn't study film, it's not hard to understand the joke there. Perhaps if I made a comment about Michael Moore, one would assume that I would know who Moore is, and thusly I would know his films.

"Thusly"? Let's get this bus off the Pretentiousness Turnpike for a moment. You posted to him like he was an idiot, and he didn't deserve that. There was no way he could know you were kidding from your post, and even less way to know you're a film student. Here -- I'll refresh your memory, since you seem to have conveniently forgotten your own words:

*Waits for Michael Moore's film about it, which ends up actually being about himself...*

He saw an error and posted a simple, inoffensive correction. You replied with smugness and arrogance. Please forgive me for impugning your imagined superiority, but nothing in the above post suggest you were joking to anyone who doesn't know you or what you study.

Thomas L. Friedman weighs in (http://www.nytimes.com/2008/11/12/opinion/12friedman.html?_r=1&em&oref=slogin) on an auto industry bailout.

Last September, I was in a hotel room watching CNBC early one morning. They were interviewing Bob Nardelli, the C.E.O. of Chrysler, and he was explaining why the auto industry, at that time, needed $25 billion in loan guarantees. It wasn’t a bailout, he said. It was a way to enable the car companies to retool for innovation. I could not help but shout back at the TV screen: “We have to subsidize Detroit so that it will innovate? What business were you people in other than innovation?” If we give you another $25 billion, will you also do accounting?

The blame for this travesty not only belongs to the auto executives, but must be shared equally with the entire Michigan delegation in the House and Senate, virtually all of whom, year after year, voted however the Detroit automakers and unions instructed them to vote. That shielded General Motors, Ford and Chrysler from environmental concerns, mileage concerns and the full impact of global competitionthat could have forced Detroit to adapt long ago.

Indeed, if and when they do have to bury Detroit, I hope that all the current and past representatives and senators from Michigan have to serve as pallbearers. And no one has earned the “honor” of chief pallbearer more than the Michigan Representative John Dingell, the chairman of the House Energy and Commerce Committee who is more responsible for protecting Detroit to death than any single legislator.

... if we are going to use taxpayer money to rescue Detroit, then it should be done along the lines proposed in The Wall Street Journal on Monday by Paul Ingrassia, a former Detroit bureau chief for that paper.

“In return for any direct government aid,” he wrote, “the board and the management [of G.M.] should go. Shareholders should lose their paltry remaining equity. And a government-appointed receiver — someone hard-nosed and nonpolitical — should have broad power to revamp G.M. with a viable business plan and return it to a private operation as soon as possible. That will mean tearing up existing contracts with unions, dealers and suppliers, closing some operations and selling others and downsizing the company ... Giving G.M. a blank check — which the company and the United Auto Workers union badly want, and which Washington will be tempted to grant — would be an enormous mistake.”

I would add other conditions: Any car company that gets taxpayer money must demonstrate a plan for transforming every vehicle in its fleet to a hybrid-electric engine with flex-fuel capability, so its entire fleet can also run on next generation cellulosic ethanol.

Lastly, somebody ought to call Steve Jobs, who doesn’t need to be bribed to do innovation, and ask him if he’d like to do national service and run a car company for a year. I’d bet it wouldn’t take him much longer than that to come up with the G.M. iCar.
I can only say that I've not seriously considered a car from the Big Three in the 3 decades that I've been a car owner. I remember laughing at the "Quality is Job One" commercials from Ford, as they so patently misrepresented every experience I'd ever had with that brand. I'd hate to see the economic fallout of an auto industry collapse, but I sure can't get behind handing the old guard $25 billion to go back to making crappy gas guzzlers.

Thomas L. Friedman weighs in (http://www.nytimes.com/2008/11/12/opinion/12friedman.html?_r=1&em&oref=slogin) on an auto industry bailout.


I can only say that I've not seriously considered a car from the Big Three in the 3 decades that I've been a car owner. I remember laughing at the "Quality is Job One" commercials from Ford, as they so patently misrepresented every experience I'd ever had with that brand. I'd hate to see the economic fallout of an auto industry collapse, but I sure can't get behind handing the old guard $25 billion to go back to making crappy gas guzzlers.

I agree with Friedman's take-there should be a steep price exacted and serious re-work instituted as the price for a bailout of the big-three.

I'd actually suggest hiring not just Steve Jobs for the job, but dragging Bill Gates out of retirement as well- because Bill's REALLY good at that whole "make something people will actually BUY" thing. It's not just innovation, it's innovating in ways that people will actually pay for your new gadget.

Incidentally, whatever happened to Chapter Eleven and bankruptcy protection? Why do these companies, who couldn't see the writing on the wall written in bright red ink in 1973, deserve dime one from the taxpayers? I understand, and have mentioned earlier in this thread, the number of industries and peripheral jobs involved, but where does this gravy train end?

I agree with Friedman's take-there should be a steep price exacted and serious re-work instituted as the price for a bailout of the big-three.

I'd actually suggest hiring not just Steve Jobs for the job, but dragging Bill Gates out of retirement as well- because Bill's REALLY good at that whole "make something people will actually BUY" thing. It's not just innovation, it's innovating in ways that people will actually pay for your new gadget.

Sorry, but if cars ran like Windows? Think about that for a minute.

*shudder*

I'll pass.

Sorry, but if cars ran like Windows? Think about that for a minute.

*shudder*

I'll pass.

It's still better than how GM and Ford cars run now...

It's still better than how GM and Ford cars run now...

I don't think so. The only way GM or Ford products crash as often as Windows is if Amy Winehouse is driving.








(ba-dump, *cymbal*)

I don't think so. The only way GM or Ford products crash as often as Windows is if Amy Winehouse is driving.

Hey, they didn't nickname Ford "Found on Road Dead" for no reason...

(ba-dump, *cymbal*)

Goddamnit.

Hey, they didn't nickname Ford "Found on Road Dead" for no reason...



Goddamnit.

I thought it was "Fix Or Repair Daily" or "Fucked-Over Road Debris".

I thought it was "Fix Or Repair Daily" or "Fucked-Over Road Debris".

There's a bunch of them. But then again, that's what you get when your company decides to sell a defective car because the cost of wrongful death lawsuits is less than the cost of recalls.

There's a bunch of them. But then again, that's what you get when your company decides to sell a defective car because the cost of wrongful death lawsuits is less than the cost of recalls.

Ah, American business ethics. Neat.

Ah, American business ethics. Neat.

God bless America.

I found this link interesting. http://www.portfolio.com/news-markets/national-news/portfolio/2008/11/11/The-End-of-Wall-Streets-Boom?page=0