Posted on 12/14/2008 11:24:20 AM PST by Star Traveler
If government were run on the business principles of profit and loss, the decision on a bailout for the Big Three automakers would be obvious: Absolutely not. Companies that make poor investments and unpopular products end up in bankruptcy court —- without salvation from the taxpayers.
But the decisions of government are not simple balance-sheet calculations. Political leaders must take into account additional considerations, including this one: What’s in the best interest of the country? Aiding Detroit, as Congress is now considering with $15 billion in bridge loans, is the right move because failure to do so poses even graver economic risks.
If this scenario were occurring a few years ago, with a healthy economy and low unemployment, the failure of General Motors, Chrysler and even Ford would still jolt the nation’s economy. But the free market would do its work to limit the damage. And business executives who made bad decisions would squarely face the consequences.
But we are not in such a time. The American economy has been in freefall for months. Confidence in American business —- as measured by investment in corporate stocks —- has plummeted, with the Dow down 33.6 percent this year, on track to be the worst yearly loss since 1937. The economy shed 533,000 jobs in November, the biggest one-month drop since 1974, and unemployment is projected to go far higher as the recession deepens.
Now is simply not the time for Congress to watch two, maybe three, companies go under when they directly employ 227,500 workers and indirectly employ thousands more. In the midst of the present turmoil, the U.S. economy needs steadying, not more body blows to the system.
(Excerpt) Read more at ajc.com ...
First of all, GM agreeing to give insanely generous benefits to their workers is not Socialism, it is stupidity. You don’t reward stupidity with Billions of dollars, you punish stupidity.
Also, the 2010 pay and benefit cuts still leave GM with a labor cost way out of line with the free market and this bailout won’t change that, so we would end up just throwing tons of money at the problem and still have to take over the pensions anyway.
G
A.) You can’t save a terminally ill patient. You can only make them comfortable until the inevitable occurs.
B.) Bankruptcy (chapter 11) doesn’t mean the end, it means a “timeout”, if you will. It allows for complete re-organization of the entity. It offers the opportunity to take a breather, think, plan, and then start anew. All the while the entity keeps functioning under the supervision of a Court appointed guardian or guardianship.
Debts and expenses are paid, according to priority. The priority established is in order of importance to the continued functioning of the entity. So, vendors will get paid. Life doesn’t cease, and the Sun still shines.
C.) The amount of money they are asking for is chump change for them. Many experts (the majority of what I’ve seen and read), and I’m not one-but I do agree with them, have serious doubts that this small amount of money will suffice to cover their recovery. IOW, it’s money tossed into the wind, and will never be paid back.
D.) Furthermore, these same experts, and again-I am convinced that their conclusions are correct, are certain that a Chapter 11 Re-Organization Bankruptcy Protection action is the very best option that would give, GM in particular, even a calculable chance of being solvent and profitable again.
It is now being discussed that perhaps the reason that, again GM in particular, is resisting a Bankruptcy filing so strongly, at this time, is to receive as much “free” money as possible, and then filing for Protection. And that is disgusting and criminal, IMO.
Do we really want to punish the workers? Well, no, but why shouldn’t they receive their fortunes, good or bad, as we all do? Are we now to be expected to save everyone’s jobs, or are the auto workers now, somehow, the “holy grail” of the American workforce?
If autoworkers lose their jobs, they have the same mechanisms available to them as do non autoworkers that have lost theirs and, in fact, they have better and they have more financial resources available to them, than do the majority of the American working population.
So, they now want us to save them in order to save ourselves? I think not.
We must all remember, for every door that closes, another opens. It’s been my lifelong experience that the door that opens, is the door of a new opportunity.
The labor cost is coming down with the 2 tier employees and if more current line guys would take packages it would be at the Vaulted Toyota "$48/hr total compensation". Ford is claiming they are at $53, down from the $70 something.
Yes the benefits were insane, they did it to avoid a strike that would have driven them to chapter 11 in 2 weeks, instead they bled them dry for 20 years.
You and might agree upon the UAW needs to step up and ask these hold overs to leave or take the lower overall pay. The patient is Ill and need surgery, G-Finger thinks they can wait, I don't.
Whatever. There are a lot of workers who are NOT making $70+/hr, and who do NOT have outrageous pensions or free healthcare with no deductibles or copays, but whose jobs nonetheless depend on whether or not the auto companies stay in business.
And remember this 15-20 billion is just a “bridge loan” until the next Congress approves the real bailout. So when your children are paying 50% of their income to the government to pay down this debt all so an unskilled laborer with a high school education can make six figures doing a job that a machine could do, just remember, you asked for it.
I have to be honest with you, I think Chrysler will not make it and their money will be for the orderly dis-assemblage of them, Sad as it is to say, GM and Ford will be stronger without them as they pick up their market share.
It is not just unskilled line guys they are paying for as far as retiree bennies, it is salaried as well, many my wife's former coworkers many good engineering types.
I am well aware of the debt we leave my kids, This is a warning shot to the lugs in all three branches to Fix SSI/Medicaid/Medicare or spin them off into a 501(c)(3) like the Canadians did with their Air Traffic Control system to make it work.
I’m sorry if your wife’s job is in jeopardy, not sorry enough to send a big chunk of my family’s income to Michigan, but still sorry.
You might want to think about moving out of the People’s Republic of Michigan. I’m sure your wife wouldn’t have a problem getting on with one of well run auto companies down south.
Ironically NV, you and I would agree that a 12.5% Corp Tax for the Big Three with the normal tax payment going to the VEBA would work, yet this wouldn't get by the likes of Rangel and the class warfare crowd. Tort Reform would be nice too, as well as a portable IRA style health care system instead of company 3rd party payer centric.
So?? I’m must be missing something in where in the Constitution that we are guaranteed a good paying job for life.
Apparently the big 3 are busy building plants everywhere but Amerika, making the same old crap and selling it I guess, to us and the local peasants. Do the Chinese pay 40,000 dollars for a SUV? Do the Mexicans? How about the Brazilians? What do they pay?
In reality, you all are in a state of mourning and are experiencing grief, but the patient hasn't died, just yet. I do believe he spent all your inheritance though on good times and women and your tears now will turn to anger soon enough.
I had a family business in the late seventies through most of the eighties. The world of technology changed quickly and we found ourselves feeling like what I used to call "the ice-men of the eighties". Most of our historical competitors had already folded. Our options were mortgage the houses for cash to re-tool or call it a day and move on. Either option required facing a degree of hardship....but that's life.
When we closed our doors it was the end of an industry that had supported scores of small to mid sized businesses for decades. Under today's social mores we should have been looking for a tax payer's money bail-out.
Instead we did what we had to do on our own.....that's life.
I don’t think the Constitution guarantees each of us a good paying job, and I don’t think my family will starve if the auto companies go under, although I do think times may be a bit tighter around here for a while if it happens.
My point is that the automakers will not be the only ones affected, and some of those affected, at least in the short term, are not “guilty” of the excesses and abuses of the car companies and UAW.
The question I have is related to yours, and I don't know the direct answer to your question.
I can understand why companies would rather pay $50 per week instead of $50 per hour for labor, and I can understand that they'd rather build in countries with lower taxes and fewer environmental and labor laws.
What I don't understand is how we will be able to maintain the standard of living to which we've become accustomed as all our good paying jobs go overseas.
Sometimes that way the ball bounces..
The only hope I see is for people to regroup. Live below your means for awhile. I think we have to take the country back, one family, one church, one business at a time. Don’t buy from big chain stores, patronize local businesses. Don’t eat from chain restaurants, eat at a local diner, etc.
I have started businesses with 1500 dollars, be inventive. And everybody in a family has to work to help out, give up cigarettes, give up liquor, drugs whatever, video games, tv, and wake up to what is going on
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