Bailout Nation 2: General Motors

[barracuda]

What a complete disgrace. I have to give credit to Bush and Obama. And the House. The Senate... YOU IDIOTS! I hope you're happy. All this talk about the UAW was complete crap. Why? There was a NYT article that actually explained the $73/hour salary. If you ran the domestics, like the foreign car companies, you'd save a whopping $800/car. No unionized labor, nothing. Never mind that those domestic vehicles are already being sold at $2500 below the imports! And that $73/hr... includes all kinds of non base labor costs (benefits, etc.).

Brace for another stock market crash in the morning.

Also, it's funny how the senate Republicans continue to defy the President while the Democrats compromise with him. Yet, the senate Republicans have no alternative plan of their own.

I've also changed my mind on Chrysler. It seems like Cerberus should use their own wealthy coffers to fund Chrysler. We should really only need to bailout GM.

[barracuda]

Well, maybe all those suburbanites in their SUVs and pickups are feeling a bit guilty for driving such oversized and wasteful vehicles, and to make up for it, they have instructed their Republican Senators to strike down any aid to the manufacturers of their favorite vehicles.

Only thing that makes sense.

That would be true if not for the fact that nearly all the foreign brands also sell huge SUVs and pickups.

Toyota alone sells the Toyota Land Cruiser, Toyota Highlander, Toyota FJ Cruiser, Toyota 4Runner, Toyota Sequoia, Toyota Tacoma, Toyota Tundra, Lexus GX, and the Lexus LX.

[BryanS]

Brace for another stock market crash in the morning.

Also, it's funny how the senate Republicans continue to defy the President while the Democrats compromise with him. Yet, the senate Republicans have no alternative plan of their own.

I've also changed my mind on Chrysler. It seems like Cerberus should use their own wealthy coffers to fund Chrysler. We should really only need to bailout GM.

Aren't they a hedge fund? How many hedge funds are actually doing well this year? As far as we know, its Chrysler that is propping up Cerberus!

Brace for another stock market crash in the morning.

Also, it's funny how the senate Republicans continue to defy the President while the Democrats compromise with him. Yet, the senate Republicans have no alternative plan of their own.

I've also changed my mind on Chrysler. It seems like Cerberus should use their own wealthy coffers to fund Chrysler. We should really only need to bailout GM.

Brace for another 1000 point rally.

Based on all the (bad) news coming out recently, seems like a lot of the short-bus riders are all about BUY, BUY, BUY! Idiots.

[barracuda]

Aren't they a hedge fund? How many hedge funds are actually doing well this year? As far as we know, its Chrysler that is propping up Cerberus!

Brace for another 1000 point rally.

Based on all the (bad) news coming out recently, seems like a lot of the short-bus riders are all about BUY, BUY, BUY! Idiots.

You would think so, but I read this earlier today...

Chrysler's Hidden Coffers

http://www.forbes.com/2008/12/09/chrysler-...10gerstein.html

[RedScare]

That would be true if not for the fact that nearly all the foreign brands also sell huge SUVs and pickups.

Toyota alone sells the Toyota Land Cruiser, Toyota Highlander, Toyota FJ Cruiser, Toyota 4Runner, Toyota Sequoia, Toyota Tacoma, Toyota Tundra, Lexus GX, and the Lexus LX.

You're getting a little fast and loose with your definitions of "huge SUVs and pickups". The Highlander, FJ Cruiser and Tacoma all weigh less than a Volvo wagon. I wouldn't call them "huge".

Now, the Tundra, Sequoia and Land Cruiser definately qualify, weighing roughly 40% more than the others, and equal to a Suburban.

[Subdude]

The problem with GM was never just the UAW, nor was it about gas mileage. The underlying issue is that they have the infrastructure of a company with 60% of the market when their actual market share was closer to 20%. Yes they have higher wages, but there are too many factories, too many brands, too many dealers etc. and as a result their embedded cost structure is too high to be competitive. Toyota sells as about as many vehicles, yet Toyota makes money at it while GM cannot. I suppose shrinking a business is as risky as growing it.

I could see only bailing out one manufacturer, but it would have to be Ford which has a decent chance of surviving and was rumored to be considering pulling out of the proposed bailout. Chrysler is dead meat anyway and it appears GM will be out shortly as well.

Why does everthing have to be some godamned big? You can engineer safety for small and light. You can also engineer space for small and light.

One of life's little mysteries. I would also prefer something light and agile, but many people seem to prefer land barges.

[Subdude]

Chevy has a modern-day Geo Metro in the Aveo; like all Geo's it's a badge-engineered Asian import. IIRC the Metro was a three-cylinder Suzuki Swift. The sad truth is that the Metro got its spectacular fuel economy from being very light and having a tiny engine. Modern crash standards, air bags, etc. mean that the featherweight microcars of the 80's are gone for good, and with them the opportunity to get by with a small gasoline engine. The torque of diesels is what makes them the engine of choice in the non-hybrid fuel-economy sweepstakes of today.

I think blaming the poor mileage of modern cars on crash standards and air bags is a bit of a canard. Most American cars are unique to America - the rest of the world drives smaller cars with better overall mileage, the safety standards for European cars are at least as strict as those in America. Modern American cars get poorer mileage than those in the past because to a large extent modern Americans buy larger and more powerful cars.

[BryanS]

I could see only bailing out one manufacturer, but it would have to be Ford which has a decent chance of surviving and was rumored to be considering pulling out of the proposed bailout. Chrysler is dead meat anyway and it appears GM will be out shortly as well.

I see, in January (perhaps after Jan 20th), a $50+ billion bailout of all three auto companies. None of them going under. Eventually, our Congress will do the right thing. Right now, there is too much of an anti-UAW (Republican) influence in the Senate. That will be gone, shortly, thank god.

[barracuda]

I could see only bailing out one manufacturer, but it would have to be Ford which has a decent chance of surviving and was rumored to be considering pulling out of the proposed bailout. Chrysler is dead meat anyway and it appears GM will be out shortly as well.

I see your point, but Ford is the only one of the three not asking for a bailout.

One of life's little mysteries. I would also prefer something light and agile, but many people seem to prefer land barges.

One thing the next administration could do is propose a tax to stabilize the price of gas to at least $4. This would be very unpopular based on the current price, so I don't expect it to happen. However, it would help justify the production of more fuel efficient vehicles since it would eliminate the rapid fluctuations in domestic fuel prices.

[TheNiche]

Why is nobody in the Republican Party pressing for the abject outlawing of labor cartels!? They have leverage, dammit! Use it!

[RedScare]

Why is nobody in the Republican Party pressing for the abject outlawing of labor cartels!? They have leverage, dammit! Use it!

Amendment 1 - Freedom of Religion, Press, Expression. Ratified 12/15/1791.

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances

[Jeebus]

Why is nobody in the Republican Party pressing for the abject outlawing of labor cartels!? They have leverage, dammit! Use it!

Because they know to just wait and the companies that the labor unions are trying to milk too much will most likely die.

One thing the next administration could do is propose a tax to stabilize the price of gas to at least $4. This would be very unpopular based on the current price, so I don't expect it to happen. However, it would help justify the production of more fuel efficient vehicles since it would eliminate the rapid fluctuations in domestic fuel prices.

Speaking of Milk, maybe we should tax the price of milk to ten dollars a gallon. That way dairy farms will be forced to find a way to genetically make cows that produce less bovine gas - another element to global warming.

That, or they will just go out of business, and we'll stop drinking milk.

I see, in January (perhaps after Jan 20th), a $50+ billion bailout of all three auto companies. None of them going under. Eventually, our Congress will do the right thing. Right now, there is too much of an anti-UAW (Republican) influence in the Senate. That will be gone, shortly, thank god.

It's that anti-UAW influence that will hopefully allow these auto companies to file bankruptcy, re-structure, and re-open union free like the Japanese plants that ARE successful.

[crunchtastic]

It does seem like this is just of game of waiting to cry uncle. Honestly, I don't particularly believe their claims about how much money they need, and when they need it. Am I expected to believe that unless the president waves his magic wand, on December 31, the last man out turns out the lights? I say wait 'em out. They'll change their tune and embrace a restructuring, because they won't have any more options, and can set about fixing the systemic problems in their business model.

Speaking of restructuring, a couple of weeks ago there was quite a bit of news about a pre-arranged bankruptcy package being developed for them by Obama's people. Suddenly, no more talk of that.

[TJones]

I know where the Big 3 might be able to get a $50billion loan from a Ponzi scheme.

[jm1fd]

And I think you're ignoring my point by comparing domestic cars to imports with lousy mileage.

Ooooh. Okay. So, for starters, what imported minivan gets better mileage than the Chrysler vans from the same time period?

[jm1fd]

I think blaming the poor mileage of modern cars on crash standards and air bags is a bit of a canard.

Really? Modern cars can disobey the laws of physics? Uhmmm...NO! Fact of the matter is that all the safety features add weight. Increased weight means decreased MPG.

[barracuda]

It does seem like this is just of game of waiting to cry uncle. Honestly, I don't particularly believe their claims about how much money they need, and when they need it. Am I expected to believe that unless the president waves his magic wand, on December 31, the last man out turns out the lights? I say wait 'em out. They'll change their tune and embrace a restructuring, because they won't have any more options, and can set about fixing the systemic problems in their business model.

The automakers haven't been paying some of their suppliers for months, so I don't think their bluffing. Those are the people I feel sorry for...workers in the small supply shops whose jobs are at risk because they are essentially having to loan money to the automakers who can't pay their bills.

http://www.nytimes.com/2008/12/12/business...wanted=1&hp

[barracuda]

Speaking of Milk, maybe we should tax the price of milk to ten dollars a gallon. That way dairy farms will be forced to find a way to genetically make cows that produce less bovine gas - another element to global warming.

That, or they will just go out of business, and we'll stop drinking milk.

I didn't say it'd actually work in this country . But the point is that basing your strategy on building fuel efficient cars isn't easy with sub-$2 gasoline. Congress and others have been complaining that the domestic automakers don't focus enough on fuel efficiency and new technology, but demand drops with fuel prices. Gas prices will inevitably go back up, but many consumers are evidently short sighted. If we want to seriously spur market demand for fuel efficient cars, the price of gas has to be at least $3 to $4.

http://www.greendaily.com/2008/12/03/car-c...-off-in-demand/

[marmer]

I think blaming the poor mileage of modern cars on crash standards and air bags is a bit of a canard. Most American cars are unique to America - the rest of the world drives smaller cars with better overall mileage, the safety standards for European cars are at least as strict as those in America. Modern American cars get poorer mileage than those in the past because to a large extent modern Americans buy larger and more powerful cars.

Modern cars do not get poor mileage. Modern engines are the most fuel-efficient internal combustion engines the world has ever seen. I was specifically replying to crunch's post about the Geo Metro. Small engines and light weight are all good things, but we probably won't see anything that light again. It's not only crash standards, it's antilock brakes, air bags, vehicle stability control, power windows, and all the other things that today's cars have. Yes, you can argue that we don't need all those things, and that cheap, tinny, econoboxes are all we really need. Provided that you are capable of considering your car as nothing more than a transportation appliance. I can't do that.

[TheNiche]

Amendment 1 - Freedom of Religion, Press, Expression. Ratified 12/15/1791.

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances

Assembly is fine. Conspiring to raise prices by way of a cooperative monopoly is not fine. Businesses that do this are subject to fines amounting to three times the amount that they were able to raise prices. I think that the same should apply to all forms of cartel, regardless of who is initiating them.

[TheNiche]

Because they know to just wait and the companies that the labor unions are trying to milk too much will most likely die.

It's that anti-UAW influence that will hopefully allow these auto companies to file bankruptcy, re-structure, and re-open union free like the Japanese plants that ARE successful.

Yep, but that won't keep unions at other firms and at other industries from suppressing American competitiveness. Unionists are like parasites. They'll feed on their host until the host grows weak and is no longer able to compete for the scarce resources in its environment that it needs to survive. Marginalized, the host lives out a miserable existence and dies young.

The infestation must be erradicated.

[TJones]

Yep, but that won't keep unions at other firms and at other industries from suppressing American competitiveness. Unionists are like parasites. They'll feed on their host until the host grows weak and is no longer able to compete for the scarce resources in its environment that it needs to survive. Marginalized, the host lives out a miserable existence and dies young.

The infestation must be erradicated.

"We are UAW, resistance is futile."

[N Judah]

Unions are just a voting block that, with popular support, managed to turn industrial policy in their favor. Don't give them too much credit. They are definitely not a cartel, and there are many places in this country and others where anyone can start their own car company free of UAW interference.

[BryanS]

It's that anti-UAW influence that will hopefully allow these auto companies to file bankruptcy, re-structure, and re-open union free like the Japanese plants that ARE successful.

Organized labor has given us 40-hour work weeks, and Sundays off. The UAW, and Unions, built middle class America. God Bless the Unions.

Gettlefinger for President.

His speech this morning was very revealing at how the GOP minority, in the Senate, operate. Look at where the foreign "transplants" build their cars - right in the backyard of these GOP blowhards. They seek nothing more than the destruction of the UAW... well... because maybe the UAW doesn't vote Republican. And perhaps they are afraid that the UAW will make inroads into Southern states, which would only offer workers in the South a better way life; security of their standard of living.

[TheNiche]

Unions are just a voting block that, with popular support, managed to turn industrial policy in their favor. Don't give them too much credit. They are definitely not a cartel, and there are many places in this country and others where anyone can start their own car company free of UAW interference.

If you don't recognize labor unions as cartels, then you don't know what a cartel is. That's all there is to it.

Organized labor has given us 40-hour work weeks, and Sundays off. The UAW, and Unions, built middle class America. God Bless the Unions.

Gettlefinger for President.

His speech this morning was very revealing at how the GOP minority, in the Senate, operate. Look at where the foreign "transplants" build their cars - right in the backyard of these GOP blowhards. They seek nothing more than the destruction of the UAW... well... because maybe the UAW doesn't vote Republican. And perhaps they are afraid that the UAW will make inroads into Southern states, which would only offer workers in the South a better way life; security of their standard of living.

So take Texas' economy, make it more like Michigan's, and then call it an improvement.

Yeah, NO!

[N Judah]

If you don't recognize labor unions as cartels, then you don't know what a cartel is. That's all there is to it.

Hrm, interesting angle! Anyway, today's NYTimes has a great article about paraffin cartels.

[Jeebus]

Organized labor has given us 40-hour work weeks, and Sundays off. The UAW, and Unions, built middle class America. God Bless the Unions.

Maybe they did, but that was years ago. That doesn't give them carte blanche to dictate what every company should have to do ABOVE and BEYOND the minimum in todays failing market. That should be up to the employer to offer those incentives so that employees will be happy with they job, and thus more productive.

This article eludes to that, and take note that its a company thats built here:

..the foreign "transplants" build their cars right in the backyard of these GOP blowhards.

Seems all the poor people in the south are happy enough with their "transplant" employer that they won't even go down to the new Union recruitment center and sign up. They probably see the benefit in saving the monthly union dues, media attention, and contract heartache that they avoid now.

the UAW will make inroads into Southern states, which would only offer workers in the South a better way life; security of their standard of living.

Really? Nation wide polls show that the American public would rather see the UAW fail. How much better could they make the lives of the "transplant" employees in the south?

[N Judah]

Seems all the poor people in the south are happy enough with their "transplant" employer that they won't even go down to the new Union recruitment center and sign up. They probably see the benefit in saving the monthly union dues, media attention, and contract heartache that they avoid now.

They're desperate and have low standards. Once they get going, they'll want to renegotiate their own worth. The article even implies that were Toyota's wages not "close enough" to union wages they might find it worth their while to unionize.

Really? Nation wide polls show that the American public would rather see the UAW fail. How much better could they make the lives of the "transplant" employees in the south?

The threat of unionization has already made the lives of "transplant" employees better in the South. If the unions are destroyed then that leverage is gone.

[TheNiche]

The threat of unionization has already made the lives of "transplant" employees better in the South. If the unions are destroyed then that leverage is gone.

Good riddance. There'll be cheaper cars.

[marmer]

One thing that really surprised me when I first moved to Texas was the preponderance of large pickups and SUVs on the roads. This is especially true in the suburbs and rural areas (like, say, Brazoria county). Nowhere in the country have I witnessed a greater proportion of the driving public using these huge vehicles to barrel their way down to their super mega Walmart to fill their oversized 3000+ square feet homes with imported chinese products.

Now, I have nothing against people with legitimate needs for large vehicles, but it seems that the vast majority drive them just because they can. And I think a lot of them do it partly out of fear for their safety. Some people don't feel safe driving a small economy car when there are tank-like SUVs driving super aggressively down the freeway.

'Cuda, you are not wrong, but maybe I can add a little perspective, having grown up in and lived in Brazoria County for most of my life. When I was a kid, there were no SUV's. There were a handful of small all-wheel-drive utility vehicles like the Bronco, the Scout, and the original Blazer. They were more or less competitors to Jeep, and were somewhat uncommon. But almost every family had a pickup truck in addition to a car. The pickup was "Dad's work truck" and was driven to work in a chemical plant, or to pull a trailer, or to buy building materials or lawn equipment. The car was "Mom's car" and was used to take kids to school or to get groceries. One big reason that my mom changed to a Blazer in the late 70's was that our streets would flood in heavy rains and she wanted a higher-riding car.