The Auto Bailout

rubycodez

Thu Nov 20 06:40:26 -0800 2008

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with executives horribly overpaid for failure and the UAW worker pulling $73.20 per hour in wages and benefits, its very clear what must happen first before we talk of helping the auto industry.  let other companies buy them up by pieces and parts, and all the people can work for 33% of what they did before, or less.

The Auto Bailout

Bhima

Sun Nov 23 10:41:38 -0800 2008

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I know it's been a while since this story was published but I saw this and thought it important: The average cost of UAW is not $73.20 but around $38.

 

From Autoblog (and elsewhere)

The Auto Bailout

rubycodez

Sun Nov 23 17:25:54 -0800 2008

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wrong, $73.20 is in fact cost per employee.  Sure, includes pensions, as your linked article states.  but they do get a pension.  guess what, they're going to be making $19 an  hour with no pension and no union soon.

The Auto Bailout

squiggleslash

Thu Nov 20 07:10:15 -0800 2008

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$25B is a drop in the ocean compared to the costs to the economy if GM, alone, disappears.

GM's US employee base is around 200,000, all earning an average of around $100,000 a year. That's $20B per year right there. If GM goes under, the direct cost to the economy is $20B per year. That's the amount of money suddenly removed from the economy just by GM itself.

If the economy was healthy, it wouldn't be so much of a problem. It'd be fair to expect most of the 200,000 to be able to find work within a few months of being laid off. But that's not going to happen. The economy is in severe recession. There's no capacity in the economy to mop up this mess.

But the $20B is not the end of it. It's fair to assume that most automotive suppliers will either go under, or have to cut their headcount by a third, in response to GM going under. Local businesses will also see drastic drops in revenues, enough to drive a large number - possibly most - into the hands of the receivers. There are no banks able to prop up these businesses with fair loans until they're able to recover.

Realistically, the cost to the economy of GM going bust alone is probably somewhere around $50B. PER YEAR. And it'll be $50B per year until the economy bounces back. But the economy's chances of bouncing back will be reduced by the increased hit to the economy, so while we might see a recovery in as little as 14 months if GM stays afloat, it may well last for a decade or more if it doesn't

People don't like this. Many are saying "Let GM fail, otherwise we're sending good money after bad." And yeah, that's the worst of it. When we talk about a bail-out, while we can do some things to improve the general health of GM - say, by proposing it as part of a greener, more efficient, revamp - we're still talking about propping up a business that will fail over all in the long term. What might survive is a small rump that gets bought by a current rival or three.

From that point of view, the simplistic answer is "Don't bother." But what that ignores is that there are different costs depending upon when you let GM fail. If you let GM fail today, it's a disaster, and the economy will take a severely long time to recover, and the people let go will suffer immensely. If you spend even $100B over the next two years on propping it up, then by the time you pull the plug, you'll see many of those jobs saved, and those lost anyway will be lost into an economy that should be growing and should be capable of recovering those jobs.

It's going to suck. We're going to give $25B to a set of failing businesses, and over time we'll watch them fail. We can either try to catch the bullet in our teeth, and have the back of our necks blown out, or we can bribe the hitman to hold off for a few months while we save enough cash to buy a bullet proof vest. That's the choice we have to make.

The Auto Bailout

Charles E Hill

Thu Nov 20 07:29:01 -0800 2008

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Will there be those job losses?  Honestly?

I mean, people will still need cars and there are plenty of companies willing to step in and sell them to them.  Toyota, Honda, Nissan, Mazda, Volvo, Saab, Daimler, Hyundai, Daewoo, etc.  Many of them have plants in the U.S. already and many would be interested in snapping up assets of any of the Big Three.

Plants sold would have to be staffed.  Parts would still need to be made and bought. I mean, bankruptcy doesn't mean everything goes up in a puff of smoke!  All the tangible assets, including trained and skilled labor is still there.

Yes, it wouldn't happen overnight.  Chapter 11 is restructuring and you keep on operating during bankruptcy.  They're already paring to the bone, similar to what they would have to do under bankruptcy, just without the legal protection from creditors.

Remember, Chrysler used to be Dodge, Chrysler, Plymouth, Jeep, Eagle, AMC.  They're now Chrysler (cars), Dodge (trucks), Jeep (jeeps), with some overlap on minivans.  (Hmmm...Dodge sells too many cars.  They probably need to focus on trucks and kill off some of those cars.)

The Auto Bailout

squiggleslash

Thu Nov 20 08:04:29 -0800 2008

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Yes. There will be these job losses.

Like I said above, and like everyone ignores, there is NO CAPACITY in the economy at this time to employ these people. That's the problem. GM is going under not just because of healthcare costs or pensions or any other excuses people are making: it's going under because there's been a drastic drop in sales. All automakers of any serious size are reporting drops in revenues of around a third. That includes progressive, forward looking, companies like Toyota.

No, no car company has the capacity to absorb GM.

This is why we can't let GM fail NOW. We can let it fail later. But not NOW.

The Auto Bailout

Charles E Hill

Thu Nov 20 08:12:19 -0800 2008

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How much later?  What if the economic downturn has a long, multi-year recovery?  Can we keep propping up GM and Chrysler the entire time?

There is speculation that the gov't has been fudging the numbers spent on the wars and instead of the reported $600 billion it is more like $3 trillion.  All of these: war, bailouts and others, are borrowed money and we'll have to pay it back sooner or later.  How long can we keep re-arranging the deck chairs and claiming the Titanic can sink later, but not now?

The Auto Bailout

squiggleslash

Thu Nov 20 08:28:45 -0800 2008

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If the economic downturn takes a decade, then we're screwed anyway.

The choice is we can make the economy downturn virtually impossible to reverse in the short or medium term by letting GM go bust, or we can do what we can to prop it up until there's enough slack in the economy. I think that's a pretty easy choice to make.

I'm surprised how many seem desperate to do the "trying to catch a bullet with your teeth" thing though.

Another choice

zogger

Thu Nov 20 07:45:52 -0800 2008

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The big three and the UAW could have an emergency meeting and everyone concerned make a binary decision-hang onto jobs by taking a drastic wage cut, top to bottom,CEOs on down, then drop the car and truck sale prices down significantly, the stuff that is out there right now gathering cobwebs, I mean a lot, a whole bunch, then move on to more efficiency gains..or not. They don't need a bailout to do that. The retirees with their pension plans and so on should be doing emergency planning and triage *anyway*, there was absolutely no way in heck they could afford those packages indefinitely. They are going to have to deal with regardless of what happens. There's no free lunch, the entire planet needs the lesson hammered in until it sticks that 1) a "stock portfolio" is not a guarantee you will ever see a penny of what you spent to accumulate it, no matter how many high falutin "managers" or brokers or wallstreet shills or government one step removed wallstreet shills try to push that notion, and that 2) people, those retirees included, need to realise debt is not money, credit is not money, and printed up crap or poof created digital entries called money are not wealth, they are pseudo wealth, electronic promises of future wealth, promises in the most part based on hot air and accounting tricks and some rather evolved and sophisticated flim flammery. Wealth is based on the production and accumulation of tangibles, everything else is wealth servicing, wealth rearrangement, wealth management, wealth governing, wealth marketing, wealth analyzing, wealth punditry, wealth advertising, wealth entertaining, and etc.

In other words, get the nasty part over with as soon as possible. No wallstreet bankers bailout -late for that, we've all been conned again, they needed jail for buncoism, not bailouts-and no industrial bailout for dinosaurs. I've been against this whole charade from the beginning. It is an economic conjob, designed to accumulate even more power and more reaql wealth in some global elites hands, they are pushing their version of some glorious new world order with them as the massah overlords. It's transparently nuts it is so obvious and crooked. The economy has been hosed on purpose anyway, from the their threats of economic terrorism, they are no different from those somali hijackers, except by scale, they hijacked huge swaths of the real economy and real political power and are holding it for ransdom or else they will "crash it". That's clearly extortion, the world's largest ever organized crime protection racket. "Nice economy ya got there, shame if it burned down...".

Give them a grant, not a loan

President4242

Thu Nov 20 08:37:28 -0800 2008

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With a *requirment* that *ALL* the money be spent to retool the car and light truck lines such that 25% of the fleet produced each year is pure electric, 25% plug-in hybrid, 25% flex fuel diesel, and 25% flex fuel gasohol.

Under NO other circumstances should they get the money.

what are your plans

tert

Thu Nov 20 08:42:21 -0800 2008

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Are you planning to buy a new car between now and (say) Dec.'09? No? Do you know anyone who is planning to do that? Go ahead, ask around. I'll wait.

That didn't take long. That's why I'm opposed to any bailout. I could spend all day talking about other factors, like the cars on the docks at Long Beach, CA, just off the ship and nowhere to go. Bottom line: the US economy just changed and the auto industry missed it. That's life. Get over it.

what are your plans

President4242

Thu Nov 20 11:04:56 -0800 2008

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Are you planning to buy a new car between now and (say) Dec.'09?

Depends on if I can get a new car with the *right* technology mix.

Do you know anyone who is planning to do that?

I know quite a few people who would be willing, even in this environment, to go into debt IF we're talking about a car that would provide basic job-related transportation in the eventuality that the United States becomes too poor to buy imported oil.  

That didn't take long. That's why I'm opposed to any bailout. I could spend all day talking about other factors, like the cars on the docks at Long Beach, CA, just off the ship and nowhere to go. Bottom line: the US economy just changed and the auto industry missed it. That's life. Get over it.

And very few, if any, of those cars offer the technology mixes I put in the first post.  Yes, the US economy has changed.  NO, gaz-guzzling hummers and even mere 45 MPG Priuses aren't going to sell in this economy.

An 80MPG peoplehauler SUV just might, though.  So would conversion kits to get there.

Thus I'm for a bailout that leads to a quantum leap in technology.  I'm NOT willing to waste a bailout, as you say, on anything else, because the traditional car models just won't sell in an environment where *everybody* is looking to find a low-cost method to continue life.

what are your plans

The Baron

Fri Nov 21 06:29:08 -0800 2008

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Actually, I am planning on buying a new car next February. My biggest problem is that nothing on the market is at all appealing to me. My job and lifestyle requires that I have something that can handle at least some off-road (jumping curbs, construction sites, etc.). I want as high gas mileage as I can get, and no, 16 mpg in a full size truck doesn't cut it anymore (I put 30k miles per year on my vehicle, spent $7k on gas alone last 12 months). And, I can't afford anything over about $15k, and really $10k would be more realistic.

Those constraints put me completely out of the new car market, and leave me picking through the used car market with a fine tooth comb. Automakers could sell cars at $30k to a lot of people back when everyone could use their house as a free source of income. Now that we all have to depend on our actual salaries, minus the payments on the accumulated debt, the folks who can even consider the monthly payment on a $30k car are few and far between.

Give them a grant, not a loan

squiggleslash

Thu Nov 20 08:47:45 -0800 2008

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Ok, so you're saying give them $25B in loans, but add massively to their short term expenses?

This will save the industry how, exactly?

Not that I disagree we shouldn't do what we can to force GM to reform, but there's an argument that GM's dead anyway. The focus should probably be on the healthy part of the industry (Ford seems confident, surprisingly enough), and keeping GM on life support - with whatever can be done to ensure the assets stay valuable - until we can afford to lose it.

Give them a grant, not a loan

President4242

Thu Nov 20 11:11:29 -0800 2008

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Ok, so you're saying give them $25B in loans, but add massively to their short term expenses?

No, I'm saying give them a $25B GRANT to completely change the entire focus of the industry.  Ford included in that, even though they don't think they "need" it, it's time for the Sturgeon to come off of the back lot of that stupid Hollywood movie from the 1980s and into the showroom.

This will save the industry how, exactly?

I don't see the problem as being where other people see the problem.  I see the primary problem being a lack of innovation leaving the entire industry behind at a time when both economics and environmental concerns *require* that transportation in general become more efficient.

I'm willing to give them a grant (not a loan, an outright grant) to specifically make basic transportation for the average American become more efficient- and I believe that despite the current economic woes, or perhaps because of them, America is ready for that change.  

If the big three aren't willing to play ball with that change, well, it's going to happen anyway- we'll lose GM but in 50 years Tesla will have taken over their factories and replaced them.

Give them a grant, not a loan

squiggleslash

Thu Nov 20 11:17:44 -0800 2008

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Ok, so it's a $25B grant, but it still doesn't do much except add massively to their short term expenses. So instead of giving them enough funding to tide them over, you're giving them money and guaranteeing they'll go bust at a time we really can't afford for them to do so.

It looks to me like a proposal that's the worst of all worlds. Early bankrupcy and the economy out $25B. What's the upside of this?

Give them a grant, not a loan

President4242

Thu Nov 20 12:39:55 -0800 2008

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Ok, so it's a $25B grant, but it still doesn't do much except add massively to their short term expenses.

And allows them to retool to the new realities of the market.

So instead of giving them enough funding to tide them over, you're giving them money and guaranteeing they'll go bust at a time we really can't afford for them to do so.

If they change to fit the market- then they won't go bust.

It looks to me like a proposal that's the worst of all worlds. Early bankrupcy and the economy out $25B. What's the upside of this?

Creating a transportation system that fits the new, negative growth economy.

Give them a grant, not a loan

squiggleslash

Fri Nov 21 11:36:26 -0800 2008

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And allows them to retool to the new realities of the market.

After they've gone bust.

If they change to fit the market- then they won't go bust.

They will, if they've already gone bust.

Creating a transportation system that fits the new, negative growth economy.

And how is a bankrupt company going to create this wonderful new transportation system?

Give them a grant, not a loan

Charles E Hill

Thu Nov 20 09:03:25 -0800 2008

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GM already make 8 different hybrid models, more than anyone else.

All-electric and hybrid sales accounted for less than 3% of all new car sales in the United States in 2007.  PEOPLE DON'T WANT THE COMPROMISES THEY REQUIRE.

Rather than the government force GM to make a specific lineup, how about mandating the gov't itself purchase only flex-fuel or hybrid vehicles for their fleets?  They buy and lease a LOT of cars.

Tax incentives to auto rental companies for buying (and renting out) flex-fuel and hybrid cars would be a step forward.  Ditto for large fleet purchases from corporations.

Give them a grant, not a loan

President4242

Thu Nov 20 11:12:52 -0800 2008

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That would work too.....funny, last time I went to a GM dealership (just this last summer) and asked to be shown Hybrids, they did everything they could to discourage me from even looking at one.

Editing this- I did a few google searches, and it turns out we're both kind of correct.  They've got 8 models in the pipeline, but the first Volt or Bolt (the first two) you'll see in a dealership will be 2010 at the earliest.

I have to think that $25 billion, wisely invested in retooling, could change that, but it appears the execs themselves disagree with me and will be spending it on current bills, if they get it at all.

The Auto Bailout

The Angry Mick

Thu Nov 20 08:45:43 -0800 2008

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One thing I would suggest, though, should a bailout is approved, is that it be conditional on a company's entire executive management team being dismissed outright, and legally prohibited from ever acquiring another job paying more than minimum wage.

Since they can't seem to understand accountability, force it on them.

Once this is done, something could be created that prominently lists the names of each next to the word "FAILURE"; a "Who's Who of Monumental Stupidity", if you will. Billboards should be hung, and full page ads taken out in every newspaper (at the dismissed's expense) detailing every aspect of their uselessness to humanity.

They should become the social pariahs they deserve to be, and the only words I ever want to hear coming out of their mouths again are "Do you want fries with that?", or "Paper or plastic?".

The Auto Bailout

Charles E Hill

Thu Nov 20 09:12:51 -0800 2008

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Except that latter part is not only illegal, it is immoral -- more immoral than the executives' various failures.

The day the government starts mandating specific wages is the day I move back to my property in the mountains and start polishing my guns.

The Auto Bailout

The Angry Mick

Thu Nov 20 10:17:03 -0800 2008

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It can be made legal - economic damage of this scale should be illegal - we need just pass a law and enforce it. 

Besides, since when did wages become a moral right?  If we already send people to jail for stealing an 89 cent Snickers bar, brand them with the permanent label of "felon", aren't we already condemning them to a life of low wages and communal distrust?  What's the difference, between my suggestion and our current reality beside the absence of a codified statute?  Haven't we already abandoned the idea of a wage-based moral highground?

These people failed at what they did, and did so in such a collosal and devastating manner that will impact the lives of millions for years to come.  What about those people's wages? 

At the very least we have a moral right to make sure fools such as these never get in a position to do the same kind of damage again.

The Auto Bailout

Charles E Hill

Thu Nov 20 11:20:57 -0800 2008

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Besides, since when did wages become a moral right?

The ability to exchange your labor freely for payment has ALWAYS been a moral right as far as I'm concerned.  Marx and Engels be damned.  ALWAYS.  The day it isn't is the day I leave and become a criminal.

We don't brand people felons for stealing an $0.89 candy bar.  That is misdemeanor theft.  Some very stupid States (California, for example) enacted inflexible "3 strikes" laws that can elevate petty theft to felony level if it is a repeat offense.  I am unsure of the leeway given in cases like this, but they are prime example of why "mandatory sentencing" laws are poor ideas.

If you think some form of negligence statute has been violated, then talk to your DA about filing charges against these people.  If you're a stockholder, file a civil suit.  Feel free to sue them into the poor house.

Then explain to me how you plan on running a company that size where it would be impossible for this sort of thing to happen.  You CAN'T guarantee it.  There are frequently things beyond the control of the board. The best you can do is the old communist lie of letting the government run it then burying incompetance with a printing press, either printing money or printing propaganda.

But the auto industry wouldn't be in this position if the economy in general was sound.  It would be a downturn, but they could weather it like they have in the past.

The financial industry wouldn't be in this position if they weren't greedy bums, and Congress didn't balk at every attempt to rein in mortgage fraud.  Nor encourage it in the first place.  [Nancy Pelosi, Maxine Waters and Barney Frank, I'm talking about YOU.]

The Auto Bailout

The Angry Mick

Thu Nov 20 12:39:56 -0800 2008

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Then explain to me how you plan on running a company that size where it would be impossible for this sort of thing to happen.  You CAN'T guarantee it.

You CAN guarantee it, provided you don't let willful ignorance and blatant greed dictate corporate philosophy. 

It's quite simple.  First and foremost, never allow the company to get so large that it becomes unmanageable.  If the CEO cannot explain or identify every unit under his control and the jobs they perform in some detail, he is failing at his job.  Couple this with never allowing the company to be run by outsiders with no previous experience in the field (I'm looking at you Bob Nardelli).  Promote from within where experience and understanding already lives, instead of from the golf course or the gentlemen's club.  You're existing underlings will know way more about the everyday realities of your corporate business that any imported hotshot ever will.

Second, listen to the markets, instead of your egos.  GM used to have the philosophy of, "We'll build it, you buy it, and we'll sell you the parts when it breaks down".  Only a fool would think this kind of customer disrespect could last for very long in an era of increased customer prosperity and materialism.  Customers asked why should they hold on to a buggy, blocky, GM with an alternator designed to die, when you can buy a shiny, sleek new Accord with lower mileage and better reliably for less?  Instead of recognizing the sea change in customer perspective, GM simply floundered and tried to hold on to a now well dead belief.  The same thing happened with GM and SUV's.  Demand has dropped, yet GM still continues to build SUV plants [P.S. They're not in the U.S. by the way].

Finally, stick to your core focus.  WTF is a car company doing handling home mortgages?  GM is in trouble here because they caught the same virus of greed that Wall Street caught.  Their previous failures at market perception returned once again to aggravate the damage being done - there was a near perverse belief that may, just maybe, GM would be right this time around.  That's the kind of mentality that needs to go, and go quickly.

Don't get me wrong here.  I'm mad as hell at companies like GM, but I know it's not easy to do what they do, and I know it's not entirely their fault.  Greed is not good, as we are learning to our deepest chagrin, but how can we help it when every role model we have tells us otherwise?  Advertising tells us we will be less than perfect unless we own certain products.  We shop not for self sufficiency, but for cultural acceptance; an acceptance that can never arrive as it is constructed intentionally to be a moving target. And then there's our political leaders, who do nothing but demonstrate an appaling lack of accountability and fiscal reason.  How can you expect the people to exercise financial restraint and responsibility when everything they see hear and experience is demonstrating otherwise?.  

We are in trouble because we've allowed ourselves to be conditioned to expect an ideal based on shadowy promises made by the very people inventing, selling, and profiting on the ideal.  Maybe it's high time a few collosal failures are necessary to demonstrate the reality of Darwinian history: Nobody wins forever.  My only hope is that we emerge from this mess a better, more self aware people, and that we don;t simply repeat the whole mess over yet again.

The Auto Bailout

Charles E Hill

Thu Nov 20 12:59:02 -0800 2008

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I'll agree with your first three paragraphs.   You're right, and those are many of the reasons they're in trouble.  I also agree with your last, as they should fail and people feel the pain.  There is no other way everyone is going to learn, and the public needs to realize they have some responsibility for this mess.

Stockholders -- individuals and institutional -- who didn't ask any questions when GM was continually riding the SUV wave.  "What is your 10 year outlook?" is a start.  What justifies your outrageous compensations?

All the ancillary businesses who have all their eggs in the GM/Chrysler basket.  Diversify, diversify, diversify.

Workers and union bosses who blindly believed the good times would go on forever.  Bethlehem Steel anyone?  This is NOT a new condition and no, this time it is NOT different.

Greed CAN be good, when it is for the right thing.  Money for actually producing things is good and leads to being able to produce more.  Money for money and just shuffling around paper is bad.  Never sitting on your rear end content, but being driven to improve your products and produce different products of good quality is a good thing.

I wonder how many of the big executives actually built a company from the ground up, or made money making products and not shuffling paper.  How many earned it, as opposed to just stole it.

The Auto Bailout

d47xeiwP

Thu Nov 20 11:36:44 -0800 2008

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It can be made legal - economic damage of this scale should be illegal - we need just pass a law and enforce it.

While true, it would require an amendment to the US Constitution.  The executives have contracts that guarantee payouts in the event they are terminated.  They're called golden parachutes.  If a US government (Fed, state, local) were to pass a law rescinding the contract, that would be a governmental taking.  The executives would sue for just compensation and, in all likelihood, win.  The only way to prevent the executives from winning in court would be to change the law regarding governmental takings, which is based on the US Constitution. 

If you think getting Democrats and Republicans to agree on the bailout is hard, look up what it takes to amend the US Constitution.

The Auto Bailout

pyro9

Thu Nov 20 10:31:55 -0800 2008

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The government has two programs for that already. They call them probation and parole. Both sometimes come with strings attached including being barred from a particular occupation. If that occupation happens to be the only one you have professional credentials in, you get to dig ditches and such for a living.

The Auto Bailout

Charles E Hill

Thu Nov 20 10:54:27 -0800 2008

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Or educate yourself and switch careers.  Probation with restrictions is fine, but explicitly saying "minimum wage" is fighting words.

The Auto Bailout

President4242

Thu Nov 20 11:17:01 -0800 2008

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Once again, why?  I don't understand why you think this isn't "a punishment that fits the crime"?

In fact, given the way that many of them got rich (by screwing over labor and hiring illegally for low skilled jobs) I wouldn't be against specifically attaching their wages to pay restitution such that they can never earn more than $1/day for the rest of their lives.

The Auto Bailout

Charles E Hill

Thu Nov 20 11:29:21 -0800 2008

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Your definition of "screwing over labor" and mine are radically different.  Auto worker contracts aren't exactly "screwing anyone over".  They were some of the best labor wages and benefits in the world.  How is that getting screwed over?

Where were the auto companies illegally hiring for low skilled jobs?  And did the UAW know about this?

The Auto Bailout

President4242

Thu Nov 20 12:41:51 -0800 2008

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Your definition of "screwing over labor" and mine are radically different.  Auto worker contracts aren't exactly "screwing anyone over".  They were some of the best labor wages and benefits in the world.  How is that getting screwed over?

There's an old saying:  Profit is what you can steal from the consumers and the workers.

Where were the auto companies illegally hiring for low skilled jobs?  And did the UAW know about this?

Chances are that the UAW contracts don't cover janitorial services in retail outlets.  

The Auto Bailout

Charles E Hill

Thu Nov 20 12:47:48 -0800 2008

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That is the best you can do?  Janitorial services in retail outlets?  And the executives got rich off the savings made there?

Thank you for playing.

The Auto Bailout

pyro9

Thu Nov 20 11:49:37 -0800 2008

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Or educate yourself and switch careers.  Probation with restrictions is fine, but explicitly saying "minimum wage" is fighting words.

 

More than a bit difficult for 'hackers' who are barred from using a computer AT ALL. There aren't many decent paying jobs out there that don't somehow involve using a computer. For that matter most education programs require it.

The Auto Bailout

Charles E Hill

Thu Nov 20 11:59:23 -0800 2008

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You'd be amazed at what you can learn from books and your local library.  And jobs like pumber, auto mechanic, construction worker and other skilled labor can make decent money with the ability to avoid computers if necessary.

The Auto Bailout

lexic0n

Thu Nov 20 10:55:41 -0800 2008

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"The day the government starts mandating specific wages..."

Does the federally mandated minimum wage law count?

The Auto Bailout

Charles E Hill

Thu Nov 20 11:24:34 -0800 2008

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No.  And I specifically changed my original comment from "maximum" to "specific".  Both apply.  Minimum wages aren't punative, but maximum and specific ones would be.

The Auto Bailout

President4242

Thu Nov 20 11:14:21 -0800 2008

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Except that latter part is not only illegal, it is immoral -- more immoral than the executives' various failures.

WHY?

Under what possible convoluted logic can you possibly defend failure?

The Auto Bailout

squiggleslash

Thu Nov 20 11:25:50 -0800 2008

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He didn't. He said that punishing executives in this way is worse than the executive's failures, not that the executives were right to fail.

Personally I'm rather disappointed by the fact that most people seem to be obsessed with the blame game and punishing people than they are in the consequences of the things they propose.

Focus on the real issue here: If GM doesn't get a loan, it'll go bust today, when we can't afford it to do so. We can afford for it to go bust in three years, assuming the economy is back on track then, both because there'll be expanding businesses willing to employ those made redundant, and because other automakers will in an position to take over chunks of GM and prevent anyone from losing their jobs. But as things stand right now, we don't have the capacity in the economy to engage in the little vendettas most people posting about the subject have.

The focus needs to be on keeping GM on life support, restructuring it as much as possible, and if possible getting it to produce products the world needs. Bills of attainer against GM's executives are illegal, and telling them they have the choice between sending GM into bankruptcy or being treated like unreformed criminals for the rest of their lives is neither fair nor likely to end up with any result other than half a million jobs in total (200k from GM itself, 2-400k from the businesses that rely upon GM) in the US alone being lost.

The Auto Bailout

Thomas Lord

Thu Nov 20 15:26:22 -0800 2008

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They have no product. They have no effective culture for developing product. They are basically a top-heavy (execs, R&D, and retirees) holding company for various productive assets.

Nationalize them, tool them up for the coming "energy independence, mean keansian stimulus" agenda, and sell of the reformed thing.

-t

The Auto Bailout

Stowe

Fri Nov 21 07:34:52 -0800 2008

manage

An option I have not heard proposed is providing a mechanism (probably requiring bankruptcy first) that would encourage the conversion of these failing companies to employee owned corporations.  You could buy all the stock in these companies for less than the likely cost of some of the proposed bailouts.  The employees would then make the decisions about where and how much to cut benefits in order for the corporation to survive. These reborn giants would have a better chance of avoiding the fatal bankruptcy stigma that pundits have used to argue against going the route of bankruptcy.  The government should offer grants for energy efficiency conversion to all US car companies - both the fledgling Tesla/Aptera etc, and the reborn giants.