$700 Billion Bailout

[southsider2k5]

Hey would you look at that, I sort of almost changed somebody's mind. Without even trying.

 

I am always willing to listen. If you don't listen, you don't learn new things. I would have never known about the change in the pension plans status.

[lostfan]

If you don't listen, you don't learn new things.

word

[Cknolls]

Fed creating a new bubble in MBS mkt? These have been the ONLY thing to own, and now the gov't is buying like no tomorrow. If someone(China) hits their bid, look out below. Next bubble????

[Balta1701]

CNBC had a stat that percentage wise the job loss report was the 41st worst ever, still significant since it's in the top 50 ever, but infotainment won't report that and point to the raw numbers

But, alternatively, there are some numbers that are actually comparable over the years, regardless of whether or not they're altered for population growth. For example:

 

The length of the workweek slipped to 33.5 hours, the shortest since records began in 1964, a Labor Department official said.

 

You can also compare the current numbers to the number of jobs generated during the expansion after the last bottom in unemployment:

Both the number of unemployed persons (10.3 million) and the unemployment rate (6.7 percent) continued to increase in November. Since the start of the recession in December 2007, as recently announced by the National Bureau of Economic Research, the number of unemployed persons increased by 2.7 million, and the unemployment rate rose by 1.7 percentage points. (See table A-1.).

 

... (Therefore) we've lost 37.5% of all jobs created during the last expansion.

[mr_genius]

Watched Barney Franks opening remarks today with the Big 3 leaders. I was 3/4 listening to it since I was jamming a Benadryl down my dog's throat and I have a very limited econ background, but I think he basically said the finance committee is going to go forward and work with the big 3 on a bailout because it wouldn't be fair to hold the U.S. hostage to punish those who made the mistake. He cited the new job report (which initially anyways, didn't send the DOW soaring downward, hovering around

-80 at the opening bell) and said the effect of the Big 3 not paying their debt at this time would harm the U.S. too much.

 

Now, hopefully one of you econ guys heard it or can read it and translate it, that's an econ layman's interp of it

 

I can translate mr.Barney's position on this; the unions gave the Democrats $850 million in bribes and he is paying them back with $40 billion in bailout money.

 

and basically everyone is bailout crazy now-a-days. there is a long line forming for handouts and every industry is going to want a some tax payer money.

Edited December 5, 2008 by mr_genius

[Balta1701]

It seems a deal has been reached of sorts on how to get at least a partial bridge loan program through the White House.

Jolted by news of the worst job losses in more than 30 years, congressional Democrats were near an agreement with the White House yesterday on a plan to speed at least $15 billion to the faltering Detroit automakers in hopes of averting the collapse of an industry that supports millions of U.S. jobs.

 

In talks with White House Chief of Staff Joshua B. Bolten, House Speaker Nancy Pelosi (D-Calif.) dropped her long-standing opposition to tapping a loan program created by Congress to fund the development of fuel-efficient cars. Pelosi agreed instead to use the money to provide immediate cash to General Motors and Chrysler. Without government help, GM executives have said their company may not survive the month.

 

Pelosi is insisting, however, that money pulled from the loan program be "replenished in a matter of weeks so as not to delay that crucial initiative," she said in a statement. The White House has yet to agree to those terms, senior congressional aides said, but Democrats believe President Bush would be unlikely to veto a bill over those provisions.

Of course he wouldn't veto over that. He'd just add a signing statement and refuse to do it.

 

Man I'm going to miss this guy. We need $700 billion for the banks? No problem. We need $34 billion for the auto industry? Well that's crap. Where can we take the money from where it will do the most possible harm to the future of the country? How about we take it away from programs to build more fuel efficient cars, so that we stay years behind everyone else on their development? brilliant!

[Cknolls]

It seems a deal has been reached of sorts on how to get at least a partial bridge loan program through the White House.

Of course he wouldn't veto over that. He'd just add a signing statement and refuse to do it.

 

Man I'm going to miss this guy. We need $700 billion for the banks? No problem. We need $34 billion for the auto industry? Well that's crap. Where can we take the money from where it will do the most possible harm to the future of the country? How about we take it away from programs to build more fuel efficient cars, so that we stay years behind everyone else on their development? brilliant!

 

 

If they say $34 billion, its probably closer to 150 billion. And without huge cost re-structuring, this too will not be enough. I say let Gettlefinger run the company. He wants a seat on the board, hell give him the whole enchilada.

 

[Balta1701]

And this morning, we have GM Vice Chairman Bob Lutz going on Fox News and telling everyone how the small car market is not a place GM wants to go because Americans still want their SUV's and large pickup trucks.

LUTZ: Let me just get one thing straight here: There’s a lot of talk about well, General Motors doesn’t make the right kind of cars or General Motors built trucks too long. At $1.50 per gallon, the American public wants sport utilities and large pickup trucks.

 

BRIAN KILMEADE: They did.

 

LUTZ: No, they do now. … Look at automotive news and see that the Honda Civic in may sold 57,000 units, in November it was down to 7,000. Same numbers for the Toyota Corolla. The small cars are not selling at $1.50 a gallon.

 

GRETCHEN CARLSON: And why this issue’s so complicated is that people want to buy trucks and SUVs potentially but they can’t get the credit.

 

LUTZ: That’s exactly right.

[NorthSideSox72]

And this morning, we have GM Vice Chairman Bob Lutz going on Fox News and telling everyone how the small car market is not a place GM wants to go because Americans still want their SUV's and large pickup trucks.

 

This is why any bailout of the auto industry (which I'd rather see not happen at all) would NEED to require these imbeciles to step down. Does he really think that gas will stay at $1.50? And has it not occurred to him that as the economy stengthens, and people buy more cars, that gas prices will also rise, and they will want more FUEL EFFICIENT cars?

 

Idiot.

 

[Balta1701]

This is why any bailout of the auto industry (which I'd rather see not happen at all) would NEED to require these imbeciles to step down. Does he really think that gas will stay at $1.50? And has it not occurred to him that as the economy stengthens, and people buy more cars, that gas prices will also rise, and they will want more FUEL EFFICIENT cars?

 

Idiot.

I still can't figure out how a company run by such absolute blockheads could produce a car as worthy of keeping alive as the Chevy Volt.

[lostfan]

lol, that is awesome.

 

If I can't get credit for an SUV, at the discounted rate mind you, why is it automatic that I would get credit for a smaller car?

[southsider2k5]

This is why any bailout of the auto industry (which I'd rather see not happen at all) would NEED to require these imbeciles to step down. Does he really think that gas will stay at $1.50? And has it not occurred to him that as the economy stengthens, and people buy more cars, that gas prices will also rise, and they will want more FUEL EFFICIENT cars?

 

Idiot.

 

They don't care about fuel effecient, they care about profits. The US automakers made something like 10k off of each of the large SUVs and 5k off of the small ones. They lost money on the small cars. They could give a s*** less about fuel economy. THat doesn't make money.

[Balta1701]

They don't care about fuel effecient, they care about profits. The US automakers made something like 10k off of each of the large SUVs and 5k off of the small ones. They lost money on the small cars. They could give a s*** less about fuel economy. THat doesn't make money.

Which is of course why the Japanese companies are bailing out their automakers right now to keep their heads above water during this downturn.

 

Oh...wait...

[southsider2k5]

Which is of course why the Japanese companies are bailing out their automakers right now to keep their heads above water during this downturn.

 

Oh...wait...

 

Which is exactly where that extra $2000 a person that is costs to pay a US autoworker would come in handy, wouldn't it. But then again we don't seem to have a problem when a Japanese company undercuts our works, just American ones.

[Balta1701]

Which is exactly where that extra $2000 a person that is costs to pay a US autoworker would come in handy, wouldn't it.

I agree. So you're now willing to support my government run healthcare plan. I accept your apology.

[StrangeSox]

I agree. So you're now willing to support my government run healthcare plan. I accept your apology.

Or how about they just get paid the same that all of the US-based Toyota/ Honda/ Mercedes/ BMW/ Subaru employees get paid, which is still pretty damn good for assembly line workers?

[Balta1701]

Or how about they just get paid the same that all of the US-based Toyota/ Honda/ Mercedes/ BMW/ Subaru employees get paid, which is still pretty damn good for assembly line workers?

Here's the issue with that...almost all of those other factories have started within the past 20 years or less. If I were to compare the number of retirees they have per vehicle produced that they have to cover, they are naturally going to be dramatically lower than the number for a factory that has been operating for 50+ years, because very few of the people originally hired will have worked to retirement age. And given that health care expenditures also rise dramatically as people begin to retire, there is every reason to expect that those same plants will in the future have to assume substantially more costs as their workers approach retirement and have their health care costs go up and begin to actually draw on their retirement plans.

 

Basically, your argument there is that we can just have the companies go out of business every 30-40 years or so when their health care costs get too high, and no one will mind having a large new number of uninsured elderly folks out there, because Medicare will take care of that.

[knightni]

They should have taken the 700 billion, placed an order for 700 billion worth of hybrids and electric cars. Offer them gratis to the American public if they turn in their gas guzzlers. Put the money to purchase the cars in each bank, have the banks finance the builds, and then keep the interest.

 

1. Banks make money.

2. American people get something for their money.

3. Extra steel from recycled cars for buildings.

4. Automakers make money like crazy.

5. A better environment and a push towards alternate energy sources.

 

That's 17.5 million hybrids and electric cars.

[StrangeSox]

Here's the issue with that...almost all of those other factories have started within the past 20 years or less. If I were to compare the number of retirees they have per vehicle produced that they have to cover, they are naturally going to be dramatically lower than the number for a factory that has been operating for 50+ years, because very few of the people originally hired will have worked to retirement age. And given that health care expenditures also rise dramatically as people begin to retire, there is every reason to expect that those same plants will in the future have to assume substantially more costs as their workers approach retirement and have their health care costs go up and begin to actually draw on their retirement plans.

 

Basically, your argument there is that we can just have the companies go out of business every 30-40 years or so when their health care costs get too high, and no one will mind having a large new number of uninsured elderly folks out there, because Medicare will take care of that.

The issue with that is even in the future, as retiree costs rise, they still won't be nearly as ridiculous as the UAW costs are because they never signed the ridiculous UAW contracts. Their contracts are universally cheaper, for those working and for the retirees.

 

Your argument is that somehow centralized health care would be cheaper for US consumers in the end (because that is who ultimately pays for the higher UAW costs through increased product prices), which it almost certainly would not be.

Edited December 10, 2008 by StrangeSox

[southsider2k5]

Here's the issue with that...almost all of those other factories have started within the past 20 years or less. If I were to compare the number of retirees they have per vehicle produced that they have to cover, they are naturally going to be dramatically lower than the number for a factory that has been operating for 50+ years, because very few of the people originally hired will have worked to retirement age. And given that health care expenditures also rise dramatically as people begin to retire, there is every reason to expect that those same plants will in the future have to assume substantially more costs as their workers approach retirement and have their health care costs go up and begin to actually draw on their retirement plans.

 

Basically, your argument there is that we can just have the companies go out of business every 30-40 years or so when their health care costs get too high, and no one will mind having a large new number of uninsured elderly folks out there, because Medicare will take care of that.

 

The assumption that their legacy costs will even be close is faulty. The people working for the Japanese auto plants in the US don't get NEARLY the benefits, hence their $25 per hour wage advantage over the US workers.

[southsider2k5]

I agree. So you're now willing to support my government run healthcare plan. I accept your apology.

 

We already have a government run pension plan that sucks, why not a government run health care plan that falls woefully short... Oh wait, we have that too.

 

Nope. The government still falls short of the private sector in both of those areas, dispite the shortfalls in those areas.

[NorthSideSox72]

They don't care about fuel effecient, they care about profits. The US automakers made something like 10k off of each of the large SUVs and 5k off of the small ones. They lost money on the small cars. They could give a s*** less about fuel economy. THat doesn't make money.

Profit is precisely my point - they are still stuck in the idea that their profit model from the late 90's is going to continue to work. It won't. They won't make the extra profit on SUV's because they won't be able to sell nearly as many. I have no illusions about these idiots "caring" about much of anything other than profit. And that is fine and dandy. But if they don't look past the current quarter, they will be dead in the water.

 

These labor contracts are definitely not the only thing handicapping the American car companies. Their complete unwillingness to prepare for the future is also killing them.

 

[StrangeSox]

Profit is precisely my point - they are still stuck in the idea that their profit model from the late 90's is going to continue to work. It won't. They won't make the extra profit on SUV's because they won't be able to sell nearly as many. I have no illusions about these idiots "caring" about much of anything other than profit. And that is fine and dandy. But if they don't look past the current quarter, they will be dead in the water.

 

These labor contracts are definitely not the only thing handicapping the American car companies. Their complete unwillingness to prepare for the future is also killing them.

 

The other side of that argument is that they essentially had to sell the big vehicle cash cows because small cars just weren't profitable enough, given their labor costs vs. their competitors'. It still comes back to bad management decisions in signing these contracts in the first place, though.

[NorthSideSox72]

The other side of that argument is that they essentially had to sell the big vehicle cash cows because small cars just weren't profitable enough, given their labor costs vs. their competitors'. It still comes back to bad management decisions in signing these contracts in the first place, though.

Sure, the labor contracts are problem #1. But the contracts are not the only big problem they have.

 

[southsider2k5]

The other side of that argument is that they essentially had to sell the big vehicle cash cows because small cars just weren't profitable enough, given their labor costs vs. their competitors'. It still comes back to bad management decisions in signing these contracts in the first place, though.

 

Stop on that thought for just a second. Go back to say 10 years ago, when steel was a record low prices, and gas prices were still cheap. The auto companies were making money hand over first at the time. I can not believe for one nano-second that if the management of ANY of the big three companies had gone to the UAW and said "we want you to take huge concessions, so that we can quit making our hugely profitable product lines, and instead replace them with much smaller, less in demand, and less profitable product lines.", that the autoworkers would not have shutdown the entire company with strike and refused to sign the deal. Its easy to say that management signed the contract, but common sense tells you that they had NO WAY to force labor to sign any contract that involved the sorts of givebacks that we are talking about here. Its a pie in the sky theory that holds no water.