Bailing out the US auto industry

The "Big Three" US auto manufacturers are requesting a bailout to avoid bankrupty. I\'ve been thinking about this for a few weeks, and I still can\'t decide on the correct course of action. I guess I\'m glad I\'m not the one making the decision!
 
On the one hand, Republicans seem to be against a bailout, and I have to admit I agree with their reasoning.
 
Chances of ‘Big Three’ bailout looking slim
http://www.msnbc.msn.com/id/27718233/
 

The likelihood of a government bailout for the struggling U.S. automotive industry looked slim Friday, after a senior Democrat said the measure will face overwhelming Republican opposition during a lame-duck session of Congress next week.
 
Congressional Democrats are reportedly pushing forward with a $250 billion rescue package for U.S. automakers, but Sen. Chris Dodd, chairman of the Senate Banking Committee, said Thursday the package lacks the support to pass because of Republican opposition.
 
...powerful senators like Richard Shelby of Alabama appear willing to let the U.S. automakers collapse. Shelby said in a statement recently that the problems facing the Big Three are the product of their noncompetitive structure and not the current economic downturn.

I agree that Ford, GM, and Chrysler largely brought this on themselves. I think we have all seen the writing on the wall for years, but the Big Three ignored it. I\'ve been reading the industry journal Automotive News for years, and it seems that every other issue has a cover story about the decline of US manufacturers\' market share, and the overwhelming success of Toyota and Honda in the US market. Maybe other areas of US manufacturing are more deserving of a bailout than these guys.
 
On the other hand, representatives from the auto industry claim that failure of the Big Three would result in a catastrophic blow to our overall economy. I think that\'s very true also.
 
The cost of GM\'s death
http://www.autonews.com/apps/pbcs.dll/article?AID=/20081114/ANA02/811149966/1078

If Congress thinks a bailout of General Motors is expensive, it should consider the cost of a GM failure.
 
Let\'s be clear. The alternative to government cash for GM is not a dreamy Chapter 11 filing, a reorganization that puts dealers and the UAW in their place, ensuring future success.
 
No, even if GM could get debtor-in-possession financing to keep the lights on (which it can\'t), Chapter 11 means a collapse of sales and a spiral into a Chapter 7 liquidation.
 
GM\'s 100,000 American jobs will die. Health care for a million Americans will be lost or at risk. Hundreds of GM\'s 1,300 suppliers will die. Their collapse could take down Ford Motor Co. and Chrysler LLC, perhaps even North American transplants. Dealers in every county of America will close.
 
The government will face greater unemployment, more Americans without health insurance and greater pension liabilities.
 
Criticize Detroit 3 executives all you want. But the issue today is not whether GM should have closed Buick years ago, been tougher with the UAW or supported higher fuel economy standards.
 
In the next two to four months, GM will run out of cash and turn out the lights. Only government money can prevent that. Every other alternative is fantasy.
 
The $25 billion in loans that Congress approved to partially fund improvements in fuel economy? Irrelevant. Dead automakers do not invest in technology.
 
The collapse of the global financial system has crushed the American car market, dried up revenues for the Detroit 3 and highlighted their weaknesses.
 
Each of the Detroit 3 is in crisis. But Ford, which borrowed big two years ago and thus has more cash today, may skip a bailout and the strings attached. Cerberus, which bought Chrysler last year, doesn\'t deserve money. Government cash might help sell Chrysler to a strategic owner.
 
Some Detroit critics want their pound of flesh: Throw the bums out and install a government czar. Treasury Secretary Henry Paulson won\'t use any of his $700 billion bank bailout money to help manufacturers. In any case, he\'d need a guarantee that a bailout would make Detroit "viable."
 
Well, nobody -- not even AIG -- is insuring guarantees for viability.
 
The taxpayer needs protection and an upside. GM\'s top management may need to go. Government-as-shareholder deserves a big voice. Those details can be worked out.
 
The Detroit 3 CEOs and UAW President Ron Gettelfinger had better tell two critical congressional hearings next week what sacrifices they are prepared to make.
 
But the stark fact remains: Absent a bailout, GM dies, and with it much of manufacturing in America. Congress needs to do the right thing -- now.

What the hell do we do in a situation like this? As distasteful as it may be, I think we might have to bite the bullet and pay for GM\'s mistakes.

[GmanJoe]

True. If your product is less than competitive, naturally, your company profit as much. A lot of Japanese labeled cars are built here in the US and they sell much better than the Big Three. They\'re hurting from lack of sales too but at least they\'re not in the red.

Fuck em\'  Bad business plans will eat bailout money even faster than when the money belonged to them.

The banks are one thing,( that I dont agree with) but at least larger ramifications are at stake in that area.

We don\'t want our banking industry owned by foreign countries.

Bad enough Miller and AB are owned by them......

[videoholic]

US foreign car plants are non unionized and make a far superior car than GM. I saw something like 1300 bucks or something of every car goes to just employee benefits. Oof.

One more thing I was just thinking about:
 
Assuming we do give GM this huge handout, do you think US consumers are going to be very enthusiastic about buying GM products after costing us $50B (or whatever) due to their poor business practices?  
 
The point being, maybe the bailout wouldn\'t even work.

The sad thing is that GM and Ford would probably be much more competitive without the Unions, and yet they are holding on to it and will all be out of jobs, I\'d rather see these morons take pay cuts so that the companies can stay afloat, but they won\'t. The people making the cars are making more than the people buying the cars. Imagine if the people making your clothes got paid 80,000 grand a year, your clothes would be much more expensive and unaffordable...

[clips]

I don\'t think the u.s. could afford the job loss....if we lost even just GM, our economy would sink into an even more depressing scenario. Yes the big 3 are to blame for their own lackluster production, but i honestly feel that the quality of american vehicles are much better than what they were years ago. Still, i guess there\'s a reason why i prefer either nissan or toyota as my car of choice.

As far as the rest of the bailout situation goes,...the banks have money, but now they don\'t want to lend anybody any loans...geez wasn\'t that the point of the bailout?..to get the currency movin\' thru the economy again? They\'re doing everything else with the money except lending to folks....and i understand the risks of lending to shady folks, but they aren\'t even lending to people with good credit.

The housing crisis?...i\'ll keep it simple,..re-structure those sub-prime loans so folks can pay their mortgage,...let the banks take a hit on the interest, at least money is flowing back into the economy and the bailout money they recieved should recoup at least some of those losses. Now let me say it\'s not going to work for everybody, for ex. let\'s say we have a married couple makin\' 70 grand a year, now that couple has no business buyin a home worth $400,000 with no money down....that is a scenario that cannot be helped or rectified.

I think there should be some sort of clause that requires the removal of certain executives if some of these companies wanted to receive the money.

[videoholic]

A bailout is not going to do much.  I mean would you buy a car from a company that is so fucked up that the government is bailing it out when there are better cars out there made by companies who are doing fine?

can we stop bailing out companies and just let them fail?  they won\'t learn anything if we bail them out and its costing me tax dollars.  Make mistakes on your own dime.

After this, I\'d like a bail out as well.

You are not the only one!

Is there an application form for bailouts?

I want to fly to DC in private jets too...

[clips]

Hmmm....i\'m not sure if i have so much sympathy for the big three after this exchange....it seems like they\'re begging....any amount they receive will be sufficient?........and i\'m sure these bigwig ceo\'s are not willing to reduce their bonuses or to stop flyin\' those private corporate jets to help save some money,...nope none of them are willing to do that.


http://www.cnn.com/video/#/video/business/2008/11/19/sot.kanjorski.wagoner.bailout.cnn?iref=videosearch