The Bailout Bill

[Pedersen]

Damn. This has now become law. The US Government just bought $700,000,000,000 of bad debt. This means that every man, woman, and child in the country now is responsible for an additional $2,333.

This sucks. I can find no good thing to come out of this. If the homes were being foreclosed before this, then the buyer has already shown that they won't make sufficient payments. As a result, the government now has to arbitrarily set these people's interest rates low enough they can make the payments.

What happens when a number of those people either can't or won't make payments? Their homes still get foreclosed. Which the government now gets to sell at firesale prices. Which kills the value of the homes around them, which means that people in those homes get screwed twice: Once because they are now responsible (as a household) for somewhere between $5,000 and $10,000 of debt that they did not incur, and a second time because the value of their home just took a nose dive that they could not do anything about.

The people who run the banks that made the bad loans win. The politicians win, since they get look like they did something. Everybody else? Here, enjoy your 20 grit sandpaper covered coatrack up the ass.

Disgusting.

[Greenday]

The bailout actually makes sense though...from an assbackwards sort of way. So let's see. If you are responsible with your money...you get a lot of debt. But those in debt are getting helped. Awesome.

[MadMike]

Honestly, I don't know what to think here. On one hand, it pisses me off that these rich corporate assholes get to fuck up, and the government comes in and rescues them. If I fuck up, or even if shit happens thru no fault of my own, no one's coming to rescue me.

On the other hand, what if what they're saying is true -- that if we don't bail out these losers, it will hurt everyone? My gut tells me that it sounds like someone's yelling "The sky is falling!", but what if it's true?

I'm torn here. When it wasn't being passed, I got worried. But now that it is getting passed, I'm pissed.

[Boozy]

Unfortunately, the bailout is absolutely necessary, and thankfully it was passed sooner rather than later.

I suppose a few weeks ago,, there were a few other options. A few years ago, there were thousands of other options. But we are where we are, and this is the last resort.

It leaves a bad taste in my mouth, too, and as a Canadian, it's not even my money. It's just too bad things got to this point.

[tropicsgoddess]

I don't like the fact that the bailout bill was passed at all. The US is already in a huge national deficit and debt from the war, plus there's the $85 billion dollar bailout loan to AIG insurance and other big expenditures the Bush Administration have made. I really don't think anything good will come out of the $700 billion dollar bailout except more taxes and grief for tax payers.

[Fashion Lad!]

The people who run the banks that made the bad loans win. The politicians win, since they get look like they did something. Everybody else? Here, enjoy your 20 grit sandpaper covered coatrack up the ass.

Disgusting.

I do not think the politicians win in this at all. For most of the people that voted for the bill, their constituents were very much so opposed to the bill. So, them winning?.. No.

We needed to bailout Wall Street to help Main Street. In this bill, they will be working to get people into reasonable loans so that no more people lose their houses. Also,there will be stricter regulations on these financial institutions. Yes, it will cost us money. But, we're supposed to get it back.

Am I pissed that greedy, irresponsible CEOs got us into this mess? You bet I am.

Do I realize this is for the greater good? I do. Just remember, if our economy collapses, we take the world down with us. Everything is so intertwined that we will hurt other countries if we fail.

[AFPheonix]

I'm hoping at least in the long run we as taxpayers will earn some dividends in the investments we just made to at least pay ourselves back, but I'm not holding my breath.
I don't like that we had to do it, I'm glad that the bill was revisited, and I'm glad that FDIC insurance was bumped up because that absolutely does protect small business owners, but ugh. That's a lot of money. To be fair to Congress, the last time we had a bad go on Wall street they did nothing and we ended up with the Great Crash leading to the Great Depression. So at least they didn't sit on their hands this time around.

[Boozy]

I think US taxpayers will get some back on their investment. I can't imagine there's profit to be had, but I would be absolutely floored if the bill actually ended up costing you guys the full $700 billion.

This is just a bubble that got out of control, because of hundreds of factors like the trade deficit, the move away from a production economy, poor regulation, globalism, and low interest rates following 9/11. The perfect storm. But it's important to recognize that the market has seen bubbles before, it hurts when they burst, and the markets recover. When they do, taxpayers will get something back.

[Slytovhand]

Just remember, if our economy collapses, we take the world down with us. Everything is so intertwined that we will hurt other countries if we fail.

hahahahahahaahahaha.... sorry FashionLad, but I had to...

No, the only way that 'we take the world down with us' is if someone gets really angry and starts nuking the rest of the planet.

Sure, it might hurt a few places (some countries wont' even notice, tbh), but the world's economy doesn't revolve around 1 nation. I think everyone has realised this for quite a while. Every country goes through repressions and depressions periodically - so we're all used to having to work around them - by going elsewhere.

What is going to hurt the US in a big way, is all those heavy traders that change their base currency away from US dollars to the Euro... cos that's where the US actually makes most of it's money. When people stop trading in dollars, there's a whole stack of foreign currency transaction fees that America won't get. Sure, it's not something that immediately affects mum and dad, but since it means the banks and other brokers lose out, they'll feel that one pretty bad later.

The other countries, such as China as the best example, will have plenty of trading partners to go other countries, and vice versa (which is a large reason why the US government paid out stacks of subsidies and imposed tarriffs. The US has pushed out other traders (such as Australia) from various countries for years... those will dry up and so those countries will turn elsewhere.

Sorry Fashionlad, but the US's massive loss will be other countries gain. One country? Singapore. They now own a few of your banks...

[Greenday]

It is a trend, though, that a good portion of the world hurts when something bad happens to the American economy.

I happened to read an article the other day about how because of the American economy decreasing, less and less illegal immigrants are crossing the border. So I guess the economy getting worse wasn't COMPLETELY bad...

[Slytovhand]

It is a trend, though, that a good portion of the world hurts when something bad happens to the American any 1st world country'seconomy.

Edited for accuracy. :)

[protege]

Am I pissed that greedy, irresponsible CEOs got us into this mess? You bet I am.

Why isn't the government going after those assholes? They fucked up, get got millions (billions?)...even as their companies were failing? How the hell does that work? I mean, if I fuck up at work, cost the company a fair amount, do I even still have my job? Hell no...I'd get tossed out into the street. So why were those assholes allowed to claim bonuses?

However, quite a bit of blame can be placed on the feds for this one. Why?

1. Those companies were allowed to get too big for their own good. Don't we have antitrust laws about this? (And before everyone starts blaming Bush, these firms were already huge before he became President.) Years ago, AT&T was split up for the same reasons...

2. There were no regulations in place to prohibit or reduce sub-prime lending. I can understand that they wanted to move lower-income people into their own homes, but without regulations in place, it was only a matter of time before it failed.

3. There were no regulations in place to make it harder to get credit. I don't know about the rest of you, but it bugs me to see ads with "buy this crap, no credit required" and then hear of the company getting into trouble. Also, I get about a dozen credit applications *per day* in the mail.

I think it's going to get worse before it gets better. The market is going to adjust to the conditions (it's done some of that already) as the bailout plans are implemented, and as weaker players get taken out of the market.

[MadMike]

Years ago, AT&T was split up for the same reasons...


And interestingly enough, they've been slowly coming back together over the years.

I guess when you're a big business, you get to do whatever the fuck you want. :mad:

[Pedersen]

Now, here's what I've been wondering, but not gotten an answer to:

Why?

I've not heard one compelling argument that says that the banks should have been artificially propped up.

I have, however, read one story that made my blood boil. I do not remember the woman's name, but I'm sure someone will provide it for me. 90 years old, and tried to commit suicide when the bank was foreclosing on her home. Normally, I'd feel upset that this would happen to someone of such advanced age.

And then I read about the mortgage itself. It was obtained by her in 2004. A 30 year mortgage was issued to a person who was no younger than 85. This means the debt would not be repaid before the person turned 115. Some banker looked at this person and said "Good credit risk! I gotta give this person some money!"

And this person's story is being used as an example of why the nation has to bail out these banks? I would expect that the nation's lawmakers would at least share whatever the hell it is that they're smoking so that we can think this is a good idea, too. Quite frankly, the banks that are willing to issue loans like that deserve to go under.

There's probably an aspect that I'm missing. Please, somebody tell me why the entire country should be paying these buffoons so much more money?

[AFPheonix]

Because while we don't like it, we still need credit to function. When banks don't feel comfortable enough to lend, then companies cannot get money to, say, meet payroll and then you and I are screwed come payday. That's one reason for you.

[Fashion Lad!]

Our financial crisis doesn't have that much of an effect on other countries... well...

Germany said on Sunday it would guarantee all private German bank accounts – currently worth €568bn – in a dramatic move to prevent panic withdrawals as fears over the worldwide financial crisis spread to Europe’s largest economy.

A European summit on the global financial crisis opened Saturday with Britain's leader saying strong banks should be protected and "whatever is necessary" must be done to restore stability.

South Korean Prime Minister Han Seung Soo warned that the new crisis could result in protectionism, citing reports that the turmoil could plunge the world into a recession similar to the Great Depression of the 1930s.

“Without a doubt, the current instability in the financial markets could have a devastating, domino-like impact on the real economy in this globalized world,” he said.


No, this does not seem like it is just America's problem... and it does seem to be very clearly a world-wide problem.

[Rapscallion]

"Strong banks need to be protected" - er, strong banks shouldn't need protecting, surely?

On a more serious note, it's the people who invest in those banks who need protecting. What we also need are laws passed to stop those who gained fat bonuses very recently from getting those awards for failure. The upper management of large companies should be able to see when their company is in decline and be able to try and do something about it. If they fail to turn it around and cost the citizens of a country their savings, the executives should not get any bonuses. It's also possible that they could have inflated their performance targets by acting in ways that hurt the company in other areas, thus promoting a failure. Sod the bonus then.

I don't think just removing bonus payouts from the unworthy would work to deter others, though. I think we need to get all the executives involved in failure in this instance, get them to a press conference in public in front of the white house, and shoot them in the shins. You know, as a warning to the next few generations...

Because while we don't like it, we still need credit to function.

Limited amounts of credit, sure. Large item purchases where the goods can be collected in the case of default, definitely - talking cars and houses here. The rest of it? When credit was easy to get, I saw many adverts extolling the virtue of borrowing to fund a holiday or something else ephemeral.

I'm now one of the Harry Houseowners of the UK. I went to the building society and asked about a mortgage - they were astounded when they found out that I had a deposit. Truly - they were gobsmacked. Most people could squeeze a thousand or two - I had twelve thousand quid and about four thousand for moving costs. How did I do that? I worked my arse off and saved up. I don't have any other loans and my credit card is paid off every month. I'm a rarity, though I saw my parents struggle with credit cards used as cashflow for long enough and there's no way I'm going down that route.

Need credit? Not as much as most people think we need it, though it will take a massive culture shift to change that.

Rapscallion

[AdminAssistant]

Yes, my friends, it seems like Europe is in a similar mess - just not collapsing as quickly and spectacularly as we did.

Honestly, I'm not TOO sympathetic with the 'taxpayers', especially the ones who have been using this free and easy credit to live way, WAY beyond their means and now, all of a sudden, the gravy train's stopped and they cry, "Waah! I'm a victim!" How is your inability to manage your finances my problem? The way I see it, these banks were just enablers in many (not all) cases.

[protege]

The only 'taxpayers' I have sympathy for...are those who were responsible for their cash, but through no fault of their own (losing their job because of the economic slowdown, for example) are in trouble now.

[Slytovhand]

I think there's so much 'panic' out there, that the truth and the facts are going to be distorted.

As for the use of credit... well, we can't get a house loan unless we've got at least 10% deposit! And I've been hearing you need even more.. not to mention stable work history for at least a few years.

Why sell a house on credit to an 85 year old? Cos knowing that she's going to pass on soon, you can collect on the house and sell it to someone else - other than the price dropping, it's all profit.

And lastly, why is the government responsible (other than fining banks for not giving home loans where they shouldn't if they were smart)??? I mean, it's a capitalistic society. So what if a company hires someone with a massive payout agreement - isn't that the right of those boards of executives? Ok - stupid, but still their right. Unless those top dogs are doing something illegal, why does it have anything to do with them? I find it weird that people want less government involvement and more free trade, and then when this stuff happens, they complain that they didn't do anything about it.

Besides, the stock market has been massively overpriced for years (decades??). It was always going to happen that someday those stocks would suddenly hit reality. That's the nature of stocks - they are an investment to say that the company will profit... it doesn't truly represent the value of the company. Especially when the value of the company and the profits don't really take into account those multi-million payouts :p

I just read an article by one of our local papers and I loved this bit:

This is a rescue plan devised by people who didn't see the crisis coming in the first place - otherwise they would never have allowed subprime loans to be created. If they didn't understand
the problem with subprimes, then it's possible they don't understand the system they're now trying to rescue.

Even the amount nominated, almost US$150 billion more than the US has spent on the war in Iraq, was not chosen in any scientific way. A US treasury spokeswoman told Forbes magazine: "It's not based on any particular data point. We just wanted to choose a really large number."

[protege]

So what if a company hires someone with a massive payout agreement - isn't that the right of those boards of executives? Ok - stupid, but still their right. Unless those top dogs are doing something illegal, why does it have anything to do with them?

Sure, it is their right. However, if a firm is tanking, why should a CEO still get his bonus...at the expense of his company? If anyone else screws up, do they still get rewarded? Of course not--that's why people are pissed about CEO pay.

[Slytovhand]

Oh - I'm not saying people shouldn't be pissed - I'm just saying that it doesn't have anything to do with laws or governments.


Btw - if a firm is tanking then it should be taking all the aggro and letting the mages do the high DPS, while the Hunter kites, and the rogue CC's! :D

[Boozy]

There's probably an aspect that I'm missing. Please, somebody tell me why the entire country should be paying these buffoons so much more money?

Capitalism is based on the free flow of credit. The credit crunch was basically threatening the entire system. The subprime crisis had cost these banks and firms so much that they no longer had capital to lend. Once credit stops being offered, the economy quite literally stops.

So there was a desperate need for an influx of capital to get money moving again, and to ease the panic. The banks had stopped lending to each other. Financial industries formerly considered completely safe (ie commercial paper) had either shut down completely or were now lending a fraction of what they were before at near usury rates. And the stock market was getting so bad that money market mutual funds, the safest investments out there, were actually losing money.

Basically, the bailout bill saves the US from economic collapse.

[protege]

And the stock market was getting so bad that money market mutual funds, the safest investments out there, were actually losing money.

Since I work for a financial company (a brokerage), we've been following what's going on. We've actually seen our trading operations nearly *stop* whenever news comes out about the crisis. Nobody's really buying things now--many firms are simply reducing their investing, or simply waiting until the dust settles.

[Fashion Lad!]

I think there's so much 'panic' out there, that the truth and the facts are going to be distorted.


There is a lot of panic. Asian Markets, Brazil, Russia and especially European markets have been hit particularily hard.

Now, to say that no one predicted this happening. Well, people have been saying that the housing bubble will pop soon. And the housing bubble is at the center of all of this.

[PREFACE: please note, I understand that this is a complex issue. There is plenty of blame to go around in both parties, across wall street, and main street. But as we examine the primary political players who are involved-the Democrats, more than the Republicans, were on the wrong side of the issue.]

What happened? Why were we never regulating these companies?? Well...
-April 2001 the Bush Administration warned of red flags regarding Fannie And Freddie

-April 2001 the Bush Administration warned of red flags regarding Fannie And Freddie (beginning of video)

-2002 Budget request warned that the size of Fannie and Freddie is a “potential problem"

-2003 the white house warning was upgraded to a systemic risk that could extend beyond the housing market

- Fall 2003 the Bush administration pushed congress hard for an agency that would regulate and supervise Fannie and Freddie

- Then ranking member of the House Financial Services Committee, Barney Frank, pushed back, stating-“we are not in a crisis”.. and…“the federal government should be doing more to get low income families into houses”…and…“too many people had a sky is falling mentality”

-In 2005, Alan Greenspan stated: “Enabling these institutions to increase in size-and they will once the crisis in their judgment passes-we are placing the total financial system of the future at substantial risk”

-As a counter to Greenspan, NY Senator Charles Schumer stated: “I think Fannie and Freddie over the years have done a incredibly good job and are an intrinsic part of making America the best-housed people in the world…if you look over the last 20 or whatever years, they’ve done a very, very, good job"

-IN 2006 SENATOR JOHN MCCAIN CO-SPONSORED LEGISLATION FOR MORE REGULATION, ON THE FLOOR OF THE US SENATE, HE STATED: “FOR YEARS I HAVE BEEN CONCERNED ABOUT THE REGULATORY STRUCTURE THAT GOVERNS FANNIE MAE AND FREDDIE MAC…AND THE SHEER MAGNITUDE OF THESE COMPANIES AND THE ROLE THEY PLAY IN THE HOUSING MARKET….THE GSE’S NEED TO BE REFORMED WITHOUT DELAY"

-McCain’s bill made it out of the Senate banking committee with a party-line vote, all democrats voting against it.

Give credit were credit is due. (http://chicagoagainstobama.wordpress.com/2008/09/25/fannie-mae-and-freddie-mac-republicans-asked-for-more-regulation-democrats-denied-their-was-a-problemsenator-obama-never-said-a-word/)

No one saw it coming??? History has not been kind to you.

Now, because of all this. The United States tax payers own Freddie Mae and Fannie Mac.

Now, this timeline is basically all over the internet. The fact is, people did see this coming. People did try and prevent it. This has been an issue for many years. The war in Iraq has little to nothing to do with this. Now the government also has to step in and re-write loans so people can keep their houses. Now the type of intervention I enjoy, but, it needs to be done.

And the government will get to regulate these companies. And for down payments, people will probably be needing to make a 20% down payment on a home in some situations. The goods is, if you can call it good news, houses will come back down to earth with their prices as bit.

[AFPheonix]

Sure, it is their right. However, if a firm is tanking, why should a CEO still get his bonus...at the expense of his company? If anyone else screws up, do they still get rewarded? Of course not--that's why people are pissed about CEO pay.

I really don't care if the CEO gets his bonus or not. The only way I'd care is if the company benefited from government assistance and the CEO was subsequently fired and then received a massive financial package. At that point, it's my money going in his pocket, and that frankly wouldn't be ok with me.

[protege]

Then there's this--those idiots at AIG just spent $443,000 at a spa resort just *days* after the bailout. Anyone see a problem with that?

[Pedersen]

Why, no, protege, why should I? I'm glad that I and my wife have an additional $4600 in debt (which is more than a vacation costs for us), so that they can have an executive retreat while we try to find ways to save enough so we can go on vacation.

Isn't everybody else glad that the executives at AIG are doing their part to help save the economy from this crisis by spending all this money at a resort hotel?

[Greenday]

Why, no, protege, why should I? I'm glad that I and my wife have an additional $4600 in debt (which is more than a vacation costs for us), so that they can have an executive retreat while we try to find ways to save enough so we can go on vacation.

A what?

Last time I went on a vacation was almost 6 years ago. I don't see one happening for a long time. Paying off my college loans will suck as it is. But I'm glad to see someone gets to go on vacations as a result of my work.

[protege]

Here's a link (http://www.thesmokinggun.com/archive/years/2008/1007083aig1.html) of the expenses they racked up. It must be nice to have that kind of cash to throw around :rolleyes: Seriously though, how the hell can they justify this...especially after their execs were on TV the past few days bitching and moaning about how the company's not doing well, and then get a bailout? WTF?

[BlaqueKatt]

This sucks. I can find no good thing to come out of this.

I can

Mental health parity gets OK'd through bailout (http://www.msnbc.msn.com/id/27011585)

New protections require equal treatment of physical, mental ailments-it was an "add-on" to the bailout bill, this is a very good thing for those of us with loved ones suffering from mental illness who had insurance that only covered 10 psychiatrist visits per year, and did not cover hospitalization for mental illness.

[Slytovhand]

Not commenting on the deservedness of such an add-on, but I am wondering just why it was added to the bailout bill rather than a bill on it's own???

[Boozy]

They wouldn't have been able to get it passed on its own. By attaching it to a bill that had to pass, they guaranteed it becoming law.

Maybe an American can explain it better. All I know is that law-making in the US is really complicated.

[lordlundar]

It's quite simple. Bills have to be passed or rejected as they are written. It can't be determined what parts of a bill can pass and which can't. To do so would cause the government to run slower than it currently is (if that's even possible). The only way that a bill can be modified is if it fails a reading, at which point it can be modified and resubmitted.

The bailout bill failed it's first shot, so a lot of bills that individually would only get a handful of votes were tacked on. These extra bills were picked to get a yes vote out of key members, saying that the only way to get what you want passed, is by voting in favor of the bailout bill. There were enough tacked on to get a near unanimous vote in favor to make it look like the bailout bill was an overwhelming success, when in actuality, it was politicians voting in favor of their pet projects.

[Slytovhand]

Ah... bribery - what a wonderful concept :p

[BlaqueKatt]

They wouldn't have been able to get it passed on its own. By attaching it to a bill that had to pass, they guaranteed it becoming law.


pretty much-it failed several times on it's own due to the insurance companies lobbyists. Sadly there is a movie that explains the lobbying process and adding on things to stronger bills to get them to pass-it's called "legally blonde 2", actualy not a horrible movie, and you do learn about the lawmaking process.

[daleduke17]

Ah... bribery - what a wonderful concept :p

Yeah, legalized bribery. The bailout was a stupid fucking idea in the first place, so, let's put stuff in there that would make Congress look like a bunch of heartless bastards if they don't vote yes so it will pass.

And it is nice to see Obama, McCain and Biden show up for once and actually vote (not just choose "present"). Too bad they all three voted for basically welfare. If you can't make your payments, you lose whatever you didn't/couldn't pay for. I'm pretty sure there was something in the paperwork signed about that (generic "you"s).

[Greenday]

So now that the bailout's gone on for a bit, banks are still receiving money, what do you guy's think about the bailout now? Totally worth it, eh? :rolleyes:

Oh, but wait! The bailing out of morons isn't over yet. Now the American car companies want a piece of the the check too. They aren't making as much money lately so they feel they deserve something for nothing. Hm, maybe, if you didn't keep trying to push those hunk of junk SUVs and other pieces of crap, this wouldn't have happened. While foreign companies were making cars with great gas mileage, the American companies continued to make their SUVs that burn money in your wallet like there's no tomorrow. Dumbasses.

Here's a bailout that's actually worth supporting: http://www.facebook.com/inbox/readmessage.php?t=1011756014278&mbox_pos=0#/group.php?gid=31344557829

If you can't view it, it's a petition to Congress for a student loan bailout. Giving money to people who ACTUALLY need it. People who will ACTUALLY be thankful for the money. Then, instead of spending all of our money repaying our loans, which isn't doing much for the economy, we could be spending our first 5-10 years out of college buying stuff like new homes, vehicles, food, etc., instead of just paying back loans, not helping the economy, and being deep in debt.

[AFPheonix]

If you want to point fingers at the companies for making SUVs, you'd sure better point your finger at the populace that made it profitable to continue making those vehicles.
Perhaps point fingers at oil companies and the government for making fuel cheap enough to make it possible for people to operate those vehicles.

While the companies are guilty of mismanagement, they are not guilty of at least grasping basic economics. I will make the argument that they should have made smaller vehicles to compete globally as well, but that's a grump for another day.
Hell, even since gas prices dropped in the last month or two, demand for smaller cars and hybrids has dropped correspondingly. We as a purchasing public are just as culpable.

[Greenday]

I know the general population is partly to blame for buying gas guzzling vehicles, but for the car companies to continue to make SUVs while so few people were bothering to buy them, the companies are to blame for selling products no one wanted and for losing out on so much money.

I don't blame the oil companies. They knew how so many people had to buy so much gas and since their was a high demand for gas, they could charge more. They earned their money quite well.

[AFPheonix]

That's the thing though. People ARE still buying them. Now that gas is down to $1.70 people are purchasing that vehicle type again, not Prius or other small cars.

The only time there was a dip was when gas got spendy.

[Boozy]

GM decided to start making SUV's for the general public because they already had the facilities and expertise to make them due to their military division. The problem was that there was no demand for these behemoths, especially among women.

You'd think it would be the height of hubris to assume that you can make whatever product you want and consumers will buy it because you tell them to buy it. But we North Americans can be real suckers for marketing and advertising, so we were all quite shortly convinced that we all wanted - no, needed - an SUV. You still hear soccer moms calling them a necessity, saying they don't know how they'd get by without one. That would be news to my mother, who raised four kids just fine with a little Ford hatchback.

SUV craze temporarily saved the dying American auto industry. When the SUV bubble burst, they were back to where they were before; making over-priced cars with over-priced labour facing increasing competition from foreign competitors.

North American auto manufacturing needs to die, just as the American textile industry needed to die, and the steel industry needed to die. Their time has passed. There are other countries that can do these things cheaper and better, and we need to let them. We have a comparatively well-educated work force and a strong technological infrastructure. There are other things our economy should be focused on.

With that said, I don't know if NOW is the best time to allow the entire auto industry to sink. It would be a major blow in strong economic times; it could be disastrous now. We have a chance to prevent this recession from turning into a depression, and we need to do that. It's expensive, and certainly we'd all like to spend our money on other things, but unfortunately we are where we are.

[Greenday]

Not all American car companies can die. Who will make the Mustangs and the Corvettes and the Chargers and the Challengers and the Camaros and the...

You get the idea. No one else will make muscle cars like these. American muscle RULES.

[protege]

The problems of the "Big 3" have been a *long* time coming. GM especially created their own problems. For years, they've had too many similar vehicles chasing the same dollars. Rather than have each division stick to what they know, they tried to "badge engineer" different vehicles under all of the brands. Cadillac Cimarron, anyone? That aside, not only did they segment the market, but they blurred the lines between their divisions.

British Leyland (MG's parent company until 1980) did the same thing. Using their 1100/1300 series as an example, they sold that design under 6 different names--Austin, Morris, Riley, MG, Vanden Plas, and Wolseley. Nothing was really different with all of those cars--they used the same engines, basic body shells, and other parts. Most of the "differences" were relatively minor--different grilles, dashboards, etc. was about it. Like GM, BL "had" to continue those other makes because of owner loyalty. By the 1970s, BL was broke, and managed to discontinue most of them--only Morris, MG, Triumph, and Austin lasted past 1980...and out of those, only MG is still around...albeit under Chinese ownership.

In fact, one of the auto boards I belong to, is referring to GM as "BL part 2." Nearly all the same things are there--changing market place, massive losses of jobs, imported cars gaining more ground, etc.

Anyway, I do not support a bailout for GM, Ford, or Chrysler. At least not without some conditions. First, get rid of management. Those fools got the companies into this mess. Second, consolidate divisions--is it really necessary to have GMC *and* Chevy building trucks? Third--they're going to have to consolidate and modernize factories if they're going to stay competitive.

Let's not forget this--it's a simple fact that you can't have high wages and low prices. You can have one or the other, but not both. That's why some companies started offshoring or outsourcing jobs...and why manufacturing in the US will never be what it once was.

[AFPheonix]

I would say that GM and Ford are worth saving, Chrysler, however, has been circling the drain for years. I don't think I support keeping them alive.
I do disagree with saying that American manufacturing needs to die. There's a reason why companies like Toyota build plants for them here. We have good workers, and manufacturing actual products like cars impact huge swaths of the economy, including all the people who sell the cars, the people who work at ports to send the cars overseas, truckers who move the cars across the country, and people who make the parts to send to the car plants, just to name a few.
What Ford and GM need to do is to be more competitive globally as well. The need to grow into other markets and that involves coming up with models that can sell in places with narrower roads and higher fuel prices. GM especially kills me because they have been on the cutting edge of really cool stuff in the past like EV-1, and then they shelve it in favor of big-ass trucks.
It's too bad.

[AdminAssistant]

I'm not sure, but I believe the majority of Toyota plants are in 'right-to-work' states, i.e. no unions. The Big 3 could've got a bigger slice of the bailout pie if the auto worker's union would've negotiated a little. (Sorry, when I hear anyone makes $28/hour I have a very hard time finding sympathy).

[Boozy]

Sorry, when I hear anyone makes $28/hour I have a very hard time finding sympathy.

The problem is not that some people make $28 per hour. The question is whether or not their labour is worth that price. I'm sure there are a few engineers working at car plants that might make $28/hour and still be underpaid. But if there are high school graduates working a basic assembly line making that much, then yes, there has been some wage inflation going on and it needs to be corrected.

[protege]

But if there are high school graduates working a basic assembly line making that much, then yes, there has been some wage inflation going on and it needs to be corrected.

There's plenty of that going on. It's not just manufacturing jobs either. When Pittsburgh still had 2 daily newspapers, the union (Teamster) delivery drivers were making about $70,000 a year. Did I have any sympathy for those fools when they went on strike (for *more* wages and the home-delivery jobs) in 1992? Keep in mind that they made more than my parents...both of whom had college degrees, and the only requirement for driving a truck then, was a CDL license and a high-school diploma.

[smileyeagle1021]

I'm with Admin Assistant, Boozy and Protege... I think the UAW is learning the same thing Teamsters learned to the transit strike in Reno... thankfully that lesson was powerful enough to teach transit workers across the country. When the drivers went on strike in Reno they were making $13 an hour to start with regular increases up to $18 an hour (guaranteed increases btw) and full benefits. I know this because when they started there was some sympathy for their cause... the first letter to the editer changed that though... it was an employee in the payroll department (not unionized) who wrote about how with his college degree they were paying him only $15 an hour with no benefits. Overnight the bus drivers went from the victims to the villains (and rightfully so... the job sucks, but you are more than fairly compensated for it). We're seeing the exact same thing with UAW, the are fastly becoming the villains that are responsible for the Big 3s fall... in this case that isn't entirely fair, the main problem is management but the UAW is playing a huge part in it.

[protege]

Smiley, part of the problem...is that the unions get upset when they don't get their way. Take the coal miners' strikes of the 1980s. Granted, mining *is* a dangerous job, but it's more mechanized now than it used to be. At the time, some of the mines were being modernized in an attempt to stay competitive. That meant that some jobs were going to be cut. The union wasn't having any part of that, and went on strike.

I know all of this, because there was a mine portal just up the road from my grandparents' farm. For months, it was all over the papers--the company was saying they couldn't afford what the union wanted; the union was stamping their feet and whining like a child over it.

Some of the things weren't pretty--they'd block the roads, try to intimidate neighbors (all of whom had *nothing* to do with it!), and just be overall pests. That went on for awhile, until things returned to normal. The company somehow not only modernized the mine, but kept most of the jobs by transferring them or offering early retirement.

For awhile, all was well, until the next strike about 1997. This time, they struck over wages. This time, the company said "fuck you," and closed the mine. By then, the reserves were dwindling, and it didn't make sense to keep it open. Even now, there are still talks of reopening that, and several others. Don't think it'll happen though, since the UMW is such an entitlement whore...

[ExiledV20]

The other countries, such as China as the best example, will have plenty of trading partners to go other countries, and vice versa (which is a large reason why the US government paid out stacks of subsidies and imposed tarriffs.

Except this has turned out to be untrue. *sigh* The poor Chinese. Their factories are currently standing idle and all the stock sitting on the docks as there is no one purchasing it.

Those companies were allowed to get too big for their own good. Don't we have antitrust laws about this?

How are the companies too big? There's a lot of competition out there between them, which is what antitrust is all about. No competition is a monopoly, not being too big.

There were no regulations in place to prohibit or reduce sub-prime lending.
*snip*
There were no regulations in place to make it harder to get credit. I don't know about the rest of you, but it bugs me to see ads with "buy this crap, no credit required" and then hear of the company getting into trouble. Also, I get about a dozen credit applications *per day* in the mail.

Sure there was!
It was the Glass-Steagal Act, which was enacted in the 1930s to prevent EXACTLY this sort of problem after the 1929 economic collapse. It was repealed in 1999 under the Republican Congress, signed by President Clinton. It was considered not to be 'necessary' any more, as the banks and mortgage firms could be trusted to 'police themselves'.

Whoops.