The Economy, stupid

[Y2HH]

I don't mind the loans as a part of controled program to get rid of costs. They have been negotiating for years to try to do this, and they haven't gotten anywhere meaningful, as they are still on the verge of liquidation. It is going to take a 3rd party to go in there and make the real choices, and fix things. That third party is a bankruptcy court. The automotive business model as we know it is history. Its gone to the same place as the old Steel Mills. Any money thrown at the auto industry without really changing the cost structure is wasted.

 

Hit the proverbial nail on the head.

 

There is no way for our automotive industry to sustain these high costs while being in direct competition with non-union foreign auto on our own soil. It's an unsustainable equation and in the end, we all knew this would happen. It results in higher priced products in order to cover the exorbitant costs, and what that does is drive consumers to the cheaper (but equal quality) competition. And in the end, this is the mess we end up with.

 

Unions can be a good idea, if controlled and implemented properly, but they can also be what ends up destroying the company/industry from the inside out. This is the case of the union nibbling away at the hand that feeds it...and what we have left is a bloody stump.

 

The unions are arrogant and corrupt. What they don't seem to understand, and I think they're finally starting to realize, is that 100% of ZERO is ZERO.

Edited March 31, 2009 by Y2HH

[southsider2k5]

Interesting proposal I had not heard before... I like the idea of consumers actually benefiting from a bailout, instead of just being loans to the automaker.

 

http://www.forbes.com/2009/03/30/auto-sale...l?feed=rss_news

 

Tough Love For Detroit Won't Cut It

Joann Muller, 03.31.09, 12:00 AM EDT

The government needs to stimulate car sales, too.

 

DETROIT--The Obama administration is playing hardball with General Motors and Chrysler, threatening to push them into bankruptcy if they don't come up with more aggressive restructuring plans in a matter of weeks.

 

But that hard-line approach--including the ouster of GM (nyse: GM - news - people ) chief executive G. Richard Wagoner--won't solve a fundamental problem facing Detroit. People just don't feel like buying new cars these days.

Article Controls

 

Until buyers return to dealer showrooms, it doesn't matter how much further GM shrinks, or whether Chrysler strikes a deal with Italy's Fiat SPA (nyse: FIA - news - people ). "No car company is viable at today's sales volume," says Jeremy Anwyl, chief executive of Edmunds.com, an automotive research firm.

 

Obama acknowledged Monday that Detroit's problems are due in large part to weakness in the economy, and he pledged to accelerate efforts to prop up auto sales, like speeding up the purchase of government fleet cars and working to free up consumer credit through previously announced initiatives. The IRS will also begin promoting a new tax break for car purchases: Buy a car before the end of the year, and you can deduct the sales tax.

 

But none of these initiatives will really move the needle to get the industry moving again. The sales tax deduction is estimated to be worth only about $300 to consumers, and the government estimates it'll boost sales by only about 100,000 vehicles, or 1% of current industry volume.

 

"If that's all it took to get consumers off the sidelines to buy automobiles again, carmakers would have had an extra $300 on the hood a long time ago," said Joseph Barker, senior manager for North American sales forecasting at CSM Worldwide, an industry consultant.

 

Anwyl says the industry's predicament has been mischaracterized as a credit crisis. "What we have is a loss of confidence on the part of consumers. People just feel less wealthy. It's a demand crisis, not a credit crisis. If we keep talking about a credit crisis, we'll end up fixing the wrong problem."

Comment On This Story

 

A better strategy, Barker and Anwyl agreed, would be a cash-incentive program to encourage consumers to replace their older, gas-guzzling vehicles with newer, fuel efficient cars.

 

Rep Betty Sutton, D-Ohio, and others have introduced a bill that would pay consumers $3,000 to $5,000 for trading in cars built in the 2001 model year or earlier. Not only would it boost car sales, it would also help get polluting cars off the road and speed the introduction of cleaner cars, something the Obama administration wants.

 

Such "cash for clunkers" or "scrappage" programs have been very effective in countries like Germany, where February car sales rose 20%, compared to big drops elsewhere in Europe.

 

In the U.S., 142 million vehicles, or 57% of the registered cars on the road today, are older than 2001 models, according to CSM's Barker. "We could see as much as 1.5 million to 3 million new-vehicle sales over the next 12 months, depending on how many people take advantage of this," he said. That would provide a huge boost to industry sales, which CSM forecasts at only 9.7 million vehicles this year, and 11 million in 2010. Two years ago, the industry sold a near-record 16.5 million vehicles.

 

The cost of such a program would be at least $4.5 billion and perhaps as much as $15 billion. GM and Chrysler have already received $17.4 billion in taxpayer loans.

 

"It would be expensive, but we do think it will be effective," said Barker. "This is a bill we can all rally around," because it helps the industry, consumers and the environment.

 

Obama seems to think so, too. He said Monday he would work with Congress to identify parts of the Recovery Act that could be trimmed in order to fund such a plan.

[lostfan]

On another note, did anyone here post Taibbi's response to the NYT op-ed by one of the AIG bonus guys last week? It's priceless. Getting this response is almost worth the price of a couple of those bonuses.

That was great.

[Y2HH]

That was great.

 

That was quite enjoyable, hah.

[southsider2k5]

Its easy to say that the execs don't deserve their paychecks, but now Barney Frank might be saying you don't get yours either...

 

http://www.washingtonexaminer.com/politics...y-42158597.html

 

It was nearly two weeks ago that the House of Representatives, acting in a near-frenzy after the disclosure of bonuses paid to executives of AIG, passed a bill that would impose a 90 percent retroactive tax on those bonuses. Despite the overwhelming 328-93 vote, support for the measure began to collapse almost immediately. Within days, the Obama White House backed away from it, as did the Senate Democratic leadership. The bill stalled, and the populist storm that spawned it seemed to pass.

 

But now, in a little-noticed move, the House Financial Services Committee, led by chairman Barney Frank, has approved a measure that would, in some key ways, go beyond the most draconian features of the original AIG bill. The new legislation, the "Pay for Performance Act of 2009," would impose government controls on the pay of all employees -- not just top executives -- of companies that have received a capital investment from the U.S. government. It would, like the tax measure, be retroactive, changing the terms of compensation agreements already in place. And it would give Treasury Secretary Timothy Geithner extraordinary power to determine the pay of thousands of employees of American companies.

 

The purpose of the legislation is to "prohibit unreasonable and excessive compensation and compensation not based on performance standards," according to the bill's language. That includes regular pay, bonuses -- everything -- paid to employees of companies in whom the government has a capital stake, including those that have received funds through the Troubled Assets Relief Program, or TARP, as well as Fannie Mae and Freddie Mac.

 

The measure is not limited just to those firms that received the largest sums of money, or just to the top 25 or 50 executives of those companies. It applies to all employees of all companies involved, for as long as the government is invested. And it would not only apply going forward, but also retroactively to existing contracts and pay arrangements of institutions that have already received funds.

 

In addition, the bill gives Geithner the authority to decide what pay is "unreasonable" or "excessive." And it directs the Treasury Department to come up with a method to evaluate "the performance of the individual executive or employee to whom the payment relates."

 

The bill passed the Financial Services Committee last week, 38 to 22, on a nearly party-line vote. (All Democrats voted for it, and all Republicans, with the exception of Reps. Ed Royce of California and Walter Jones of North Carolina, voted against it.)

 

The legislation is expected to come before the full House for a vote this week, and, just like the AIG bill, its scope and retroactivity trouble a number of Republicans. "It's just a bad reaction to what has been going on with AIG," Rep. Scott Garrett of New Jersey, a committee member, told me. Garrett is particularly concerned with the new powers that would be given to the Treasury Secretary, who just last week proposed giving the government extensive new regulatory authority. "This is a growing concern, that the powers of the Treasury in this area, along with what Geithner was looking for last week, are mind boggling," Garrett said.

 

Rep. Alan Grayson, the Florida Democrat who wrote the bill, told me its basic message is "you should not get rich off public money, and you should not get rich off of abject failure." Grayson expects the bill to pass the House, and as we talked, he framed the issue in a way to suggest that virtuous lawmakers will vote for it, while corrupt lawmakers will vote against it.

 

"This bill will show which Republicans are so much on the take from the financial services industry that they're willing to actually bless compensation that has no bearing on performance and is excessive and unreasonable," Grayson said. "We'll find out who are the people who understand that the public's money needs to be protected, and who are the people who simply want to suck up to their patrons on Wall Street."

 

After the AIG bonus tax bill was passed, some members of the House privately expressed regret for having supported it and were quietly relieved when the White House and Senate leadership sent it to an unceremonious death. But populist rage did not die with it, and now the House is preparing to do it all again.

 

Byron York, The Examiner’s chief political correspondent, can be contacted at [email protected]. His column appears Tuesday and Friday, and his stories and blog posts can be read daily at ExaminerPolitics.com.

[Y2HH]

Its easy to say that the execs don't deserve their paychecks, but now Barney Frank might be saying you don't get yours either...

 

http://www.washingtonexaminer.com/politics...y-42158597.html

 

Then let it be a lesson to all companies that wish to survive without declaring bankruptcy, and having no product or service that generates profit that requests help from the government/taxpayer. If you don't want to live by these types of rules, then don't piss away success on greed, or otherwise.

 

If you never ask them for "bailout money', then you never have to worry about this type of government control.

[kapkomet]

How you people can support Obama's administration with this kind of s*** is beyond me.

 

[kapkomet]

Then let it be a lesson to all companies that wish to survive without declaring bankruptcy, and having no product or service that generates profit that requests help from the government/taxpayer. If you don't want to live by these types of rules, then don't piss away success on greed, or otherwise.

 

If you never ask them for "bailout money', then you never have to worry about this type of government control.

There's a lot of people who were forced to take money. And I am so f***ing tired of "greed" being thrown around. Most of us benefited from all of this for a while. It doesn't make it right, but it's the truth.

 

[Y2HH]

How you people can support Obama's administration with this kind of s*** is beyond me.

 

It's not that I support them, it's that I don't support these companies who request government/public help to survive and then whine about having to follow new rules.

 

If you don't want to deal with these rules, run a successful profitable business and you'll never have too.

[Y2HH]

There's a lot of people who were forced to take money. And I am so f***ing tired of "greed" being thrown around. Most of us benefited from all of this for a while. It doesn't make it right, but it's the truth.

 

They took it because of a lot of factors, but the fact is, they put us here, then asked to be bailed.

 

Oopsie.

 

The lesson is simple, don't make these mistakes EVER again.

[kapkomet]

They took it because of a lot of factors, but the fact is, they put us here, then asked to be bailed.

 

Oopsie.

 

The lesson is simple, don't make these mistakes EVER again.

What I'm saying is some of these companies did NOT ask to be bailed and were forced to take money.

 

[Y2HH]

What I'm saying is some of these companies did NOT ask to be bailed and were forced to take money.

 

While I sympathize, if they had never done some of the things they did, such as leveraging themselves 30 to 1, taking huge gambles on margin (money they didn't have), they wouldn't be in this situation.

 

This is a lesson to future companies/businesses or otherwise. While I'm not happy with it, either, I love these draconian rules being put in place because it's sure as hell going to send the message to all future companies to not EVER repeat these mistakes or they may end up taking orders from people like Barney Frank and his ilk.

Edited March 31, 2009 by Y2HH

[southsider2k5]

It's not that I support them, it's that I don't support these companies who request government/public help to survive and then whine about having to follow new rules.

 

If you don't want to deal with these rules, run a successful profitable business and you'll never have too.

 

Its that easy? Where do I sign up!?

[Y2HH]

Its that easy? Where do I sign up!?

 

That's the point. It's not supposed to be easy. So when you do it, successfully, don't throw it away because you like taking stupid risks, etc.

 

Like I said, I sympathize with those who were forced into this, but you know what, f*** them, too...they knew what they were doing and they lost in the end, and they cost a lot of people a lot of money while getting (and staying) very rich. They exposed themselves and their entire industry and the people won't soon forget.

[kapkomet]

While I sympathize, if they had never done some of the things they did, such as leveraging themselves 30 to 1, taking huge gambles on margin (money they didn't have), they wouldn't be in this situation.

 

This is a lesson to future companies/businesses or otherwise. While I'm not happy with it, either, I love these draconian rules being put in place because it's sure as hell going to send the message to all future companies to not EVER repeat these mistakes or they may end up taking orders from people like Barney Frank and his ilk.

Why are you totally missing the point? Is it on purpose? What am I not telling you? If I put a gun to your head, are you going to trust that I emptied the chamber?

 

If the government forces a bank to take money that they DO NOT NEED or HAVE NOT ASKED for... and then the government comes in with all this crap about what they can or cannot do, it's a farce. The government forced some of these companies to take money that did not need it and now they are sitting there saying "you have to play by my rules, even though you didn't really need the money". That is VERY wrong.

 

The other point in your post, I get that, to some extent, but these people are pretty much hell bent on destroying capitalism. I know, I know, it's "Kaperbole ™ " for me to say this, but then again, I'm really starting to wonder because no matter how bad it's ever gotten in any private enterprise institution before, the government hasn't forced its way into board rooms like this before. Obama just crossed THE line. But, it's "ok" to make the "point" about how the government runs things? No, thanks. We already know they suck, but yet, the love keeps on coming about how they are "doing such a great job". Wow.

 

This is class warfare. Hang those f***ing CEOs so the "little people" can get theirs. It's absolutely insane.

[NorthSideSox72]

While I sympathize, if they had never done some of the things they did, such as leveraging themselves 30 to 1, taking huge gambles on margin (money they didn't have), they wouldn't be in this situation.

 

This is a lesson to future companies/businesses or otherwise. While I'm not happy with it, either, I love these draconian rules being put in place because it's sure as hell going to send the message to all future companies to not EVER repeat these mistakes or they may end up taking orders from people like Barney Frank and his ilk.

What Kap is saying, which I know for a fact is true, is that some companies WERE running profitable and normal businesses, and we all but forced to take money.

 

Now, as long as they can return it and be exempt, then I am OK with some of this sort of thing, because it leaves the effect with companies that did indeed screw up. But that exemption needs to be present.

 

[Y2HH]

Why are you totally missing the point? Is it on purpose? What am I not telling you? If I put a gun to your head, are you going to trust that I emptied the chamber?

 

If the government forces a bank to take money that they DO NOT NEED or HAVE NOT ASKED for... and then the government comes in with all this crap about what they can or cannot do, it's a farce. The government forced some of these companies to take money that did not need it and now they are sitting there saying "you have to play by my rules, even though you didn't really need the money". That is VERY wrong.

 

The other point in your post, I get that, to some extent, but these people are pretty much hell bent on destroying capitalism. I know, I know, it's "Kaperbole ™ " for me to say this, but then again, I'm really starting to wonder because no matter how bad it's ever gotten in any private enterprise institution before, the government hasn't forced its way into board rooms like this before. Obama just crossed THE line. But, it's "ok" to make the "point" about how the government runs things? No, thanks. We already know they suck, but yet, the love keeps on coming about how they are "doing such a great job". Wow.

 

If they don't need the money they can pay it back at anytime they feel like it. So, why aren't they? Maybe it's because they do need it, even if they're claiming they don't. See, 2+2 isn't equaling 4 here. You can repay these loans whenever you want...so like I said, repay them if you don't need the money and then you don't have to play by their rules. Something isn't adding up here for these companies that "don't need it"...I can repeat this a million times, because something of a paradox is happening here.

 

And I agree, I don't like the government running things, but really, to sit here and say 'they don't need it', is totally insane.

[Y2HH]

What Kap is saying, which I know for a fact is true, is that some companies WERE running profitable and normal businesses, and we all but forced to take money.

 

Now, as long as they can return it and be exempt, then I am OK with some of this sort of thing, because it leaves the effect with companies that did indeed screw up. But that exemption needs to be present.

 

Well I hope these companies don't have to keep playing by these rules when they repay the loans. But again, I go back to my previous post -- none of this "we don't need the money" crap is adding up. If you don't need it, f***ing repay it. Why aren't they doing that?! It's not adding up is all I'm saying, on both ends somethings f***ed up here...and it's beyond being "forced".

 

The entire thing lacks logic.

Edited March 31, 2009 by Y2HH

[Balta1701]

What I'm saying is some of these companies did NOT ask to be bailed and were forced to take money.

Which was of course one of Secretary Paulson's many, many, many, many, many, many mistakes with the first tranche of that money. But its a mistake that can be rectified.

 

If the banks don't want those restrictions, then they buy the shares the government took in them back. They'll still come out ahead since Paulson under-paid for everything, but that's a good enough start for me.

[lostfan]

How you people can support Obama's administration with this kind of s*** is beyond me.

Barney Frank = Barack Obama? Come on now Kap, molding all Democrats together into a generic archetype and including the bats*** clueless ones like Frank as part of it is just lazy.

[kapkomet]

Barney Frank = Barack Obama? Come on now Kap, molding all Democrats together into a generic archetype and including the bats*** clueless ones like Frank as part of it is just lazy.

Barney Frank isn't doing anything that the Obama Administration doesn't know about... not on a policy level, anyway. The bats*** crazy mouthy crap? I agree. Policy? No way. Obama's leading the charge there.

[NorthSideSox72]

Barney Frank isn't doing anything that the Obama Administration doesn't know about... not on a policy level, anyway. The bats*** crazy mouthy crap? I agree. Policy? No way. Obama's leading the charge there.

I disagree. In fact, I think its been an interesting thing to note that this Congress-President party majority thing was way overblown, because Congress has wanted to do things their way, and Obama has had to follow along or oppose them on some things.

 

[lostfan]

Barney Frank isn't doing anything that the Obama Administration doesn't know about... not on a policy level, anyway. The bats*** crazy mouthy crap? I agree. Policy? No way. Obama's leading the charge there.

I don't think Obama is really in lock step with the House Dems here. He keeps having to back away from them, like last week with taxing the AIG bonuses. I don't even think he and Pelosi like each other that much.

[lostfan]

I disagree. In fact, I think its been an interesting thing to note that this Congress-President party majority thing was way overblown, because Congress has wanted to do things their way, and Obama has had to follow along or oppose them on some things.

I think he has a better rapport with Senate Dems.

[NorthSideSox72]

I think he has a better rapport with Senate Dems.

I'd agree with that.