Big Three Bailout?
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WNYDiscoIIErik said:
Yes, you're right, I am a republican because I believe in representative government and not a pure democracy. Of course, I think you were referring more to the Republican party and yes, I'm guilty of that too. Ain't punctuation and capitalization amazing!
I apologize for not having answered your question, so how about I go one better? I'm a law student, single but soon to be engaged, and don't currently have a job nor do I have a prospect of a job and I will graduate in early 2010 with 150k in school debt. What am I going to do? I don't know. I'll figure something out, you see, that's what is great about America, there are opportunities everywhere, you just sometimes have to make lemons out of lemonade. This is another thing that makes American capitalism so wonderful, I gambled that by taking on 150k in debt that I'd end up with a 160k/yr. job coming out of law school. That might not happen now, but do I resent the "system" for it? No, I just keep moving on, don't go to the government begging for a bailout, and hit the pavement to get employment somewhere doing something. I will never trade incentive for a handout.
Do I know what I'd do if I were a UAW worker? No, but I hope that I would have seen the writing on the wall, socked away 6 months of living expenses, paid off all my debts, and be ready to relocate my family or accept a job paying less.
We live in a fallen world, there is no "perfect" solution, but capitalism has created more wealth and raised more standards of living than any other economic system.
I understand your position, and I hope all goes well with your education and job placement. Im more concerned for the person who did not see this coming, and might end up with nothing pretty soon. They are talking about revoking peoples retirement plans. How can you do that to somebody??
WNYDiscoIIErik said:
I worked for a large bank, my 401k shit its bed pan because of failing stock price, as well as stock options being worthless. I was/am an investment banker...laid off a week ago.
so to respond to your comment, I didnt see it coming (to me specifically) but did things to take care of the basics ahead of time, on my own, not by bitching to someone else to do it for me, i.e. UAW
the benefits for UAW worker are better than a lot of displaced employees across the country during these times. If they (UAW workers) wouldn't have been biting the hand that was feeding them over all these years...maybe they wouldn't have sunk their own ship
People that work at the big 3 must have their heads in the sand to not know this was going to happen. GM has been operating at a capital loss for 19 of the last 20 years. Ford has taken away retirees medical benefits (I believe this was negotiated in the latest union contract).
It is understandable that it would be great to get paid well and have a decent/good life doing something relatively simple, but...wouldn't someone in that job wonder how the company is going to be able to continue doing what they're doing when nobody they know who doesn't work for one of the big 3 is getting paid anywhere near what they're getting paid? I would certainly ask that question, and plan for the future.
I sympathize for the people who will be out of jobs, but I do not want to be paying part of their salaries which would happen in the case of a bailout.
A recent article I read stated that the UAW was going to allow (request in court) that billions of dollars in payments to health plans be delayed, and the jobs bank be almost entirely eliminated. Well, I guess that's a start. Unfortunately the UAW did not want to make any *real* concessions. They're holding on til the last moment it seems.
It is understandable that it would be great to get paid well and have a decent/good life doing something relatively simple, but...wouldn't someone in that job wonder how the company is going to be able to continue doing what they're doing when nobody they know who doesn't work for one of the big 3 is getting paid anywhere near what they're getting paid? I would certainly ask that question, and plan for the future.
I sympathize for the people who will be out of jobs, but I do not want to be paying part of their salaries which would happen in the case of a bailout.
A recent article I read stated that the UAW was going to allow (request in court) that billions of dollars in payments to health plans be delayed, and the jobs bank be almost entirely eliminated. Well, I guess that's a start. Unfortunately the UAW did not want to make any *real* concessions. They're holding on til the last moment it seems.
I just do not understand how the Government can pick and choose who they want to bail out. Why can the bail out big banks and the Airline Industry, but not the Auto?
In the beginning the UAW did good for the workers. Clean working facilities, decent wages and guarantees of a job. Then, just like Wall Street CEOs, they got greedy. Larger and larger concessions or they shut down your company. The Union really has the company over a barrel. They have the power to strike your company so you have no income whatsoever. There are many parts of the current contract are so far out of whack, there's no easy way to fix it. Pay people to not work? Pay people the same wage to cut the lawn as to assemble an engine or wiring harness? Pay 100% of the retirees health care?
The current environment is not conducive to fixing the problem. If there was a way to throw out the current contract, create one that is fair to both workers and employers AND enable the company to have more control of their own factory it should be done. The easiest/best way I can see to do that is file chap 11, re-org everything and start over. Next step after that is Chap 7 and have the Chinese buy the factories and molds. They need to take a page out of Toyota's American plant book and figure out how to work with the employees to make a quality product at an affordable price.
It's not only the Big 3, it's their Union supported suppliers too. Every bit of their supply chain needs to figure out where to cut fat and make a quality product at a decent price. I think with some hard work from everyone in the supply chain, we can keep more jobs in the US. That will help the economy far more than bailing out the current situation. More money stays in the US, more money gets spent at Wally-Borg.
Now from the gov't: Dump this CAFE shit. The automakers aren't going to make it without selling us disposable shit cars. Come up with reasonable pollution goals for all 50 states. (yes, California is still a state). Remove the high taxes and tariffs on Diesel fuel used for passenger cars and non commercial light trucks. Europe has been using very fuel efficient diesel cars for years. We need to start thinking more than high-cost, environmentally non friendly (to build) hybrid Tahoes. The current (no pun intended) plug in cars are nothing more than them thumbing their noses at us. They have no plans to mass produce those cars. They'll kill em just like the EV-1. We know we need to get off petroleum based cars, but the near-time solution is smaller more efficient cars and trucks and continue to develop hydrogen fuel cells and algae based fuels.
OK, rant off.
atriot:
The current environment is not conducive to fixing the problem. If there was a way to throw out the current contract, create one that is fair to both workers and employers AND enable the company to have more control of their own factory it should be done. The easiest/best way I can see to do that is file chap 11, re-org everything and start over. Next step after that is Chap 7 and have the Chinese buy the factories and molds. They need to take a page out of Toyota's American plant book and figure out how to work with the employees to make a quality product at an affordable price.
It's not only the Big 3, it's their Union supported suppliers too. Every bit of their supply chain needs to figure out where to cut fat and make a quality product at a decent price. I think with some hard work from everyone in the supply chain, we can keep more jobs in the US. That will help the economy far more than bailing out the current situation. More money stays in the US, more money gets spent at Wally-Borg.
Now from the gov't: Dump this CAFE shit. The automakers aren't going to make it without selling us disposable shit cars. Come up with reasonable pollution goals for all 50 states. (yes, California is still a state). Remove the high taxes and tariffs on Diesel fuel used for passenger cars and non commercial light trucks. Europe has been using very fuel efficient diesel cars for years. We need to start thinking more than high-cost, environmentally non friendly (to build) hybrid Tahoes. The current (no pun intended) plug in cars are nothing more than them thumbing their noses at us. They have no plans to mass produce those cars. They'll kill em just like the EV-1. We know we need to get off petroleum based cars, but the near-time solution is smaller more efficient cars and trucks and continue to develop hydrogen fuel cells and algae based fuels.
OK, rant off.
atriot:
Because the banks run the show. Ask yourself how it is that two un-elected individuals have so much power (Bernake and Paulson). You should add Denninger to your reading list:
We're screwed
We're screwed
WNYDiscoIIErik said:
That is one part of the problem
The days of a company being able to survive and offer a comfortable life long job with retirement benefits are now gone due to global competition.
Little to no turnover in your employee base creates a business that is overly staffed, lethargic, overpaid, less productive with a sense of entitlement. Companies need to balance retaining the top performers, recruiting new talent and pushing out the mediocre / overpaid employees.
This allows them to be innovative, cost effective and succeed in the market and while this may not make the employees comfortable it will give the company a better chance at long term success.
At the end of the day what is an employee really entitled to?
Health care?
A yearly raise?
Retirement benefits?
Or a safe work environment and pay for the work they performed?
Don’t get me wrong, I do feel sorry for the majority of the employees that have been going along thinking that everything is great while their leaders failed to make the tough decisions to ensure their future.
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WNYDiscoIIErik said:
Yes I read it. I've read more on this than just the posts on here btw and even wrote to my district congressman. I am sure your father has skills that are transferrable to others industries and I am sure the benefits/compensation received at GM is very good too... the other side of the equation is to consider if the benefits/compensation is too good in relation to the work/responsibilities...in other words overpaid. I'm not saying he is or is not - this isn't meant to be an insult, but I'm sure you can agree that one must consider that as an option for not seeking work elsewhere (among other reasons).
From my Congressman... I'm sure it is a template letter they use... but nonetheless:
"Thank you for contacting me to express your opinion relating to a possible financial bailout of America?s automobile industry. As a former businessman and current elected representative of the hardworking taxpayers of my district I remain very cautious about using public funds to rescue any failing private sector enterprise. Most of the proposals mentioned to date including direct financial grants and subsidized loans would not have my support or vote.
While I understand that the current financial market and credit crisis have seriously harmed both business and financial prospects for our automakers, they have an even more significant operational problem. Until these American manufacturers develop competitive products, reform management practices and bring labor costs under control, no amount of federal underwriting will resolve their current and future challenges.
As the former Chairman of the U.S. House of Representatives Aviation Subcommittee during America?s aviation industries most difficult times I devised a rescue plan that might serve as a model. We provided no direct loans. Only loan guarantees for which recipients paid a fee. We also required strict review of viable business plans by an independent panel.
We placed the government and taxpayer in a primary position if any loan failed. While only two loans were rescheduled and a number denied, all loans were repaid. Furthermore, taxpayers received $345 million in fees and revenue from the loan guarantee program.
I know Congress can find creative and responsible means to get both America?s auto workers and many of our other ailing businesses back on track. Please know I will do everything possible and in a responsible manner to get our economy in a positive direction as soon as possible."
Rockefeller hated competition. Why? Because it made running a business unpredictable. Competition required agility, flexibility and the need to sometimes make hard decisions. So what was Rockefeller's strategy? Buy out or destroy the competition to achieve stability and predictability. Ensure his business was a monopoly.
So what does this have to do with GM, Ford and Chrysler? Well decades ago they were basically monopolies. Their market and business was . . . . predictable. There were also another monolopy. Labor. Labor was also run like a monopoly and also desired predictability. They achieved predictability by requiring membership. Organized meant strong arm tactics to achieve . . . . predictability.
Monopolies exert economic force. The manufacturers were able to accomodate labors monopoly because they were also a monopoly. The UAW did play a role in the finances of the manufacturers. Control the scarcity of labor and you dictate compensation, from hourly wages to healthcare and working rules. The symbiotic relationship existed for decades and allowed both corporate and labor profits. To say labor monopoly doesn't participate in financial decisions is false.
Enter competition and one leg of the symbiotic relationship is removed. Labor and the cost of this monopoly was exposed. The 'cost' of this monopoly is not competitive.
This is feeling more and more like the current approach to housing, attempt to prop up an entity while ignoring the fundamentals. Housing prices cannot be propped up. Real estate prices will return to traditional multiples. Auto manufacturing cannot be propped up. Labor cost must become competitive and manufacturing infrastructure cost must be brought back in line. Bailing out either real estate or manufactureres will only delay the process.
A review of GMs restructuring plan:
GM’s Magical Thinking
Jim Manzi
NRO
So what does this have to do with GM, Ford and Chrysler? Well decades ago they were basically monopolies. Their market and business was . . . . predictable. There were also another monolopy. Labor. Labor was also run like a monopoly and also desired predictability. They achieved predictability by requiring membership. Organized meant strong arm tactics to achieve . . . . predictability.
Monopolies exert economic force. The manufacturers were able to accomodate labors monopoly because they were also a monopoly. The UAW did play a role in the finances of the manufacturers. Control the scarcity of labor and you dictate compensation, from hourly wages to healthcare and working rules. The symbiotic relationship existed for decades and allowed both corporate and labor profits. To say labor monopoly doesn't participate in financial decisions is false.
Enter competition and one leg of the symbiotic relationship is removed. Labor and the cost of this monopoly was exposed. The 'cost' of this monopoly is not competitive.
This is feeling more and more like the current approach to housing, attempt to prop up an entity while ignoring the fundamentals. Housing prices cannot be propped up. Real estate prices will return to traditional multiples. Auto manufacturing cannot be propped up. Labor cost must become competitive and manufacturing infrastructure cost must be brought back in line. Bailing out either real estate or manufactureres will only delay the process.
A review of GMs restructuring plan:
GM’s Magical Thinking
Jim Manzi
NRO
. . . The point of this document was supposed to be the presentation of the plan to achieve these operational improvements. But there’s no there there. I guess somebody who’s never read a real business plan might mistake this document for one, but it’s a joke. It’s basically a list of assertions of amazing improvements, entirely discontinuous with actual performance to date, that they will achieve. What's missing is any real indication of how they will go about accomplishing this.
Here are four huge examples: . . .
. . .
. . . Now, the most obvious response to all of this is to say that I’m the fish at this table, because this is not a real business plan, but simply a political document. It exists to provide political cover to members of Congress. But if that’s the case, it’s an unintentionally beautiful illustration of why industrial policy fails. . . .
Here are four huge examples: . . .
. . .
. . . Now, the most obvious response to all of this is to say that I’m the fish at this table, because this is not a real business plan, but simply a political document. It exists to provide political cover to members of Congress. But if that’s the case, it’s an unintentionally beautiful illustration of why industrial policy fails. . . .
$25B two weeks ago.
$34B for this week
Reality?
Senate Told It May Take $75 to $125 Billion To Keep Big Three From Bankruptcy
Human Events ^ | 05 DEC 08 | Dan Calabrese
Probably much higher as the bailout delay's the inevitable
$34B for this week
Reality?
Senate Told It May Take $75 to $125 Billion To Keep Big Three From Bankruptcy
Human Events ^ | 05 DEC 08 | Dan Calabrese
Probably much higher as the bailout delay's the inevitable
WNYDiscoIIErik said:
Curious, isn't it? I mean Washington couldn't slow down long enough to make up some guidelines for the $700 billion it dumped on Wall Street, but now there's endless debate over 1/20th that amount - with significant strings attached - for the auto industry.
Guidelines for bailout...
At least $400K per month must be spent on lavish retreats for "sales" executives. When facing public scrutiny, continue retreats undercover.
At least $400K per month must be spent on lavish retreats for "sales" executives. When facing public scrutiny, continue retreats undercover.
Someone sent me this post to me a couple of days ago and I thought some of this makes sense. I grew up in Michigan and I understand that the BIG 3 made mistakes but to put so many people out of jobs that work their balls off everyday for many many years don't make sense to me. If the BIG Three goes down Michigan and alot of other states will be in a real bad place. Michigan already has the number one highest unemplyment rate. Many of these blue collar workers don't have college education a lot of my friends from back home graduated high school and went straight to working for ford, GM, and Chrysler. Many of my family members worked and still work for the BIG 3 so maybe I have favortism toward Michigan and the BIG 3.
Anyways read the below post that was sent to me and make your own decision.
If I had the floor at the auto rescue talks...
BY MITCH ALBOM
FREE PRESS COLUMNIST
OK. It's a fantasy. But if I had five minutes in front of Congress last week, here's what I would've said:
Good morning. First of all, before you ask, I flew commercial. Northwest Airlines. Had a bag of peanuts for breakfast. Of course, that's Northwest, which just merged with Delta, a merger you, our government, approved -- and one which, inevitably, will lead to big bonuses for their executives and higher costs for us. You seem to be OK with that kind of business.
Which makes me wonder why you're so against our kind of business? The kind we do in Detroit. The kind that gets your fingernails dirty. The kind where people use hammers and drills, not keystrokes. The kind where you get paid for making something, not moving money around a board and skimming a percentage.
You've already given hundreds of billions to banking and finance companies -- and hardly demanded anything. Yet you balk at the very idea of giving $25 billion to the Detroit Three. Heck, you shoveled that exact amount to Citigroup -- $25 billion -- just weeks ago, and that place is about to crumble anyhow.
Does the word "hypocrisy" ring a bell?
Protecting the home turf?
Sen. Shelby. Yes. You. From Alabama. You've been awfully vocal. You called the Detroit Three's leaders "failures." You said loans to them would be "wasted money." You said they should go bankrupt and "let the market work."
Why weren't you equally vocal when your state handed out hundreds of millions in tax breaks to Mercedes-Benz, Hyundai, Honda and others to open plants there? Why not "let the market work"? Or is it better for Alabama if the Detroit Three fold so that the foreign companies -- in your state -- can produce more?
Way to think of the nation first, senator.
And you, Sen. Kyl of Arizona. You told reporters: "There's no reason to throw money at a problem that's not going to get solved."
That's funny, coming from such an avid supporter of the Iraq war. You've been gung ho on that for years. So how could you just sit there when, according to the New York Times, an Iraqi former chief investigator told Congress that $13 billion in U.S. reconstruction funds "had been lost to fraud, embezzlement, theft and waste" by the Iraqi government?
That's 13 billion, senator. More than half of what the auto industry is asking for. Thirteen billion? Gone? Wasted?
Where was your "throwing money at a problem that's not going to get solved" speech then?
Watching over the bankers?
And the rest of you lawmakers. The ones who insist the auto companies show you a plan before you help them. You've already handed over $150 billion of our tax money to AIG. How come you never demanded a plan from it? How come when AIG blew through its first $85 billion, you quickly gave it more? The car companies may be losing money, but they can explain it: They're paying workers too much and selling cars for too little.
AIG lost hundred of billions in credit default swaps -- which no one can explain and which make nothing, produce nothing, employ no one and are essentially bets on failure.
And you don't demand a paragraph from it?
Look. Nobody is saying the auto business is healthy. Its unions need to adjust more. Its models and dealerships need to shrink. Its top executives have to downsize their own importance.
But this is a business that has been around for more than a century. And some of its problems are because of that, because people get used to certain wages, manufacturers get used to certain business models. It's easy to point to foreign carmakers with tax breaks, no union costs and a cleaner slate -- not to mention help from their home countries -- and say "be more like them."
But if you let us die, you let our national spine collapse. America can't be a country of lawyers and financial analysts. We have to manufacture. We need that infrastructure. We need those jobs. We need that security. Have you forgotten who built equipment during the world wars?
Besides, let's be honest. When it comes to blowing budgets, being grossly inefficient and wallowing in debt, who's better than Congress?
So who are you to lecture anyone on how to run a business?
Ask fair questions. Demand accountability. But knock it off with the holier than thou crap, OK? You got us into this mess with greed, a bad Fed policy and too little regulation. Don't kick our tires to make yourselves look better.
Contact MITCH ALBOM at 313-223-4581 or malbom@freepress.com. Catch "The Mitch Albom Show" 5-7 p.m. weekdays on WJR-AM (760).
Anyways read the below post that was sent to me and make your own decision.
If I had the floor at the auto rescue talks...
BY MITCH ALBOM
FREE PRESS COLUMNIST
OK. It's a fantasy. But if I had five minutes in front of Congress last week, here's what I would've said:
Good morning. First of all, before you ask, I flew commercial. Northwest Airlines. Had a bag of peanuts for breakfast. Of course, that's Northwest, which just merged with Delta, a merger you, our government, approved -- and one which, inevitably, will lead to big bonuses for their executives and higher costs for us. You seem to be OK with that kind of business.
Which makes me wonder why you're so against our kind of business? The kind we do in Detroit. The kind that gets your fingernails dirty. The kind where people use hammers and drills, not keystrokes. The kind where you get paid for making something, not moving money around a board and skimming a percentage.
You've already given hundreds of billions to banking and finance companies -- and hardly demanded anything. Yet you balk at the very idea of giving $25 billion to the Detroit Three. Heck, you shoveled that exact amount to Citigroup -- $25 billion -- just weeks ago, and that place is about to crumble anyhow.
Does the word "hypocrisy" ring a bell?
Protecting the home turf?
Sen. Shelby. Yes. You. From Alabama. You've been awfully vocal. You called the Detroit Three's leaders "failures." You said loans to them would be "wasted money." You said they should go bankrupt and "let the market work."
Why weren't you equally vocal when your state handed out hundreds of millions in tax breaks to Mercedes-Benz, Hyundai, Honda and others to open plants there? Why not "let the market work"? Or is it better for Alabama if the Detroit Three fold so that the foreign companies -- in your state -- can produce more?
Way to think of the nation first, senator.
And you, Sen. Kyl of Arizona. You told reporters: "There's no reason to throw money at a problem that's not going to get solved."
That's funny, coming from such an avid supporter of the Iraq war. You've been gung ho on that for years. So how could you just sit there when, according to the New York Times, an Iraqi former chief investigator told Congress that $13 billion in U.S. reconstruction funds "had been lost to fraud, embezzlement, theft and waste" by the Iraqi government?
That's 13 billion, senator. More than half of what the auto industry is asking for. Thirteen billion? Gone? Wasted?
Where was your "throwing money at a problem that's not going to get solved" speech then?
Watching over the bankers?
And the rest of you lawmakers. The ones who insist the auto companies show you a plan before you help them. You've already handed over $150 billion of our tax money to AIG. How come you never demanded a plan from it? How come when AIG blew through its first $85 billion, you quickly gave it more? The car companies may be losing money, but they can explain it: They're paying workers too much and selling cars for too little.
AIG lost hundred of billions in credit default swaps -- which no one can explain and which make nothing, produce nothing, employ no one and are essentially bets on failure.
And you don't demand a paragraph from it?
Look. Nobody is saying the auto business is healthy. Its unions need to adjust more. Its models and dealerships need to shrink. Its top executives have to downsize their own importance.
But this is a business that has been around for more than a century. And some of its problems are because of that, because people get used to certain wages, manufacturers get used to certain business models. It's easy to point to foreign carmakers with tax breaks, no union costs and a cleaner slate -- not to mention help from their home countries -- and say "be more like them."
But if you let us die, you let our national spine collapse. America can't be a country of lawyers and financial analysts. We have to manufacture. We need that infrastructure. We need those jobs. We need that security. Have you forgotten who built equipment during the world wars?
Besides, let's be honest. When it comes to blowing budgets, being grossly inefficient and wallowing in debt, who's better than Congress?
So who are you to lecture anyone on how to run a business?
Ask fair questions. Demand accountability. But knock it off with the holier than thou crap, OK? You got us into this mess with greed, a bad Fed policy and too little regulation. Don't kick our tires to make yourselves look better.
Contact MITCH ALBOM at 313-223-4581 or malbom@freepress.com. Catch "The Mitch Albom Show" 5-7 p.m. weekdays on WJR-AM (760).
Fair points... but it misses a couple very important parts...
1) There are a lot of other choices for automobiles than the Big 3... airline industry (as a whole) is not a fair comparison
2) Financials... again, foolish comparison... they effect 1000+x as many people... in fact, the U.S. Financial market pretty much impact the world... so yes, maybe they need to spend more time providing oversight to the money tossed at Citi, AIG, etc... but keep them liquid is of much greater importance/urgency...
1) There are a lot of other choices for automobiles than the Big 3... airline industry (as a whole) is not a fair comparison
2) Financials... again, foolish comparison... they effect 1000+x as many people... in fact, the U.S. Financial market pretty much impact the world... so yes, maybe they need to spend more time providing oversight to the money tossed at Citi, AIG, etc... but keep them liquid is of much greater importance/urgency...
Where in NY is gas $0.91??? Because I paid $2.75 today. Still better than the $5.50 I saw in July.
