Interesting, more for how serious he comes across than for anything really profound that he says.

 

"Forget Chrysler, that's a two-bit little... has-been."

Ow.

But... I'm thinking he's right.

However, of the three, GM is the more likely to die.

And... he's right as well... where does it end?

I dunno about his Financial Armageddon Meteor Strike scenario, but... really, where does the bailout money *really* need to go?

The people who would *BUY THE CARS*. And make sure they only buy from one of the big three.

****, I'm brilliant. I need to go to Washington and sell this idea.

I'd buy a nice little single cab long bed truck. A red one. I always wanted a red truck. But a nice blue isn't out of the question.

But I ain't gonna do that if I don't get monies. Screw printing GM, Ford, and Chrysler a check, print ME one. I'll go spend it on them, sure. That puts more Americans to work, makes them buy the cars being made here, and wouldn't you know it, that'll also save the companies. Win. Duh.

 

Just a couple of problems with that theory:

• How are you gonna make people spend the money on buying a car right now when they're worried about losing their homes and/or their jobs;

• Even if they did, how are you going to MAKE them buy a domestic product?

Assuming Washington were to ever MAKE citizens adhere to a consumer choice, I would expect them to begin banning imports, too.

 

You do it by giving it in the form of a tax credit to people who purchase an American-made car.

I agree with him on Chrysler. They are a PRIVATELY held company. They were bought by a private equity firm less than 2 years ago, and they knew the company was in trouble when they bought it, and because they are private they don't have to disclose any of their financials. Ford and GM are both publicly held, and their failure has the potential to hurt a lot more people.

 

It's like this:

Person A goes to Ford, buys an F150.
Person B sold that F150. Their Manager, Person C, also has a stake, as well as person D, the finance manager, and person E, the finance director. Further, Person F, the GM has a piece. There's also person G, the Make Ready person who final preps the truck for delivery, as well as person H, the MR Manager. Person I, the porter, runs the car back to MR, and then back up to the delivery area where Person B goes about hanging the temp tags that Person C (in the state of Texas, under our system, others may vary) have to print out and bag. Person A drives home in the truck.

Not to mention person J, the truck driver who brought the truck, person K, the person who recieved the truck at the depot, person L, the train driver who delivered the truck to the depot, and person M, who put the truck on the rail car.

Persons N,O,P,Q,R,S,T who built the truck, perhaps more.

Person U, the dealership owner, gets a monetary adjustment.

Oh yeah, and there's these folks:
Person V, Person W, Person X, Person Y. In order, the phone company person, the computer supplier person, the copier guy, and the mainframe server guy. All of whom are dealt with by me, Person Z, the IT guy who makes sure all that crap works in the dealership so they can do the tags, title, license, deal, stocking, etc. etc. ad nauseum, including surfing at WalMart.com.

And all of us are paid because one person bought a truck. Isn't that just *GRAND?* And I get to go buy something. And whom I buy from gets to go buy something. And so on. That's the way of things... if things were 'normal'.

That's just 26 people. There's SO many more that I didn't even mention on the building the truck side... suppliers of parts, suppliers of THOSE people materials to make the parts... on and on.

But if you just gave GM, Ford, Chrysler money... none of that happens in the first place, and you're doing, in effect, what we're upset at the unions for: Job Banks for the Big 3. Place holding them "in case" they're needed. You don't need them because NOBODY'S BUYING. There's no incentive to buy American. And given the circumstances, it's even less likely. But they'll buy it if it's *free* for them to. Heck, I'm ready for my truck, like I said. I could *so* use a truck. There's another person, btw: The insurance agent. But I can't buy one. Maybe one day. But not just now.

You send that bailout money to me in the form of a $25K voucher? I'm gettin' a truck. And yep, I'll get a Ford, GM, Chrysler, whatever fits the bill. And yep, I won't mind it, because it'll be FREE to me. Well, of course, as free as government vouchers are. We're gonna all be payin' for it somewhere. Problem is, the other way we don't get much of anything, and given the circumstances, I firmly believe that money is just going to be lost, forever missing, and be retired as bad debt long after GM and Chrysler die. Ford may too, it depends on if they can get their act together. But my way, I get a vehicle, and they still get to operate, and they survive.

And *that*, Hollywood, is why those two problems are overcome by my plan. You can only get the money by buying the company that needs help. Might as well do it that way than any other way, and *everyone* gets affected.

As in... I can go buy other stuff since that truck was bought, and I got to keep my job and make a little more money.

The other way, the bailout? Doomed. Period. It's lost money. It's a lost cause. At least my way, people are doing something with the money that makes sense, and should trickle on down like it ought to. This bailout way, the companies are just bobbing along in the ocean far from any shipping lanes, awaiting the final shark attack.

I still believe also that one of these three is gonna die. It's inevitable. I am in a mental toss up regarding if it's GM or Chrysler. Ford's gonna make it regardless. They're in a better position to do it.

Edit: You know... more I think about it, though... there's still a whole bevy of rules that would have to be followed, enacted, traced... that'd be another job or two, but the point is that even though I think it's a good idea, the exploitation possibilities are humongous. So it'll never work right, and it'll be worse. This post would grow beyond huge if I kept on going with my rules and whatnot to prevent cheaters. So... I now officially extract myself from this topic. I apologize for the inconvenience.

 

Ahhh, yeah...good luck getting THAT past WTO regulations without incurring sanctions and/or tariff penalties from other countries. In the current world trade climate, three words: ain't gonna happen. America can't even get China to float its currency for crissake because the US government is SO in love with free trade!

 

It's Chrysler. They will not survive and may, in fact, be dead already.

Ford and General Motors will receive a bailout and will survive. It is inconceivable that they will not receive assistance. Your "trickle up" theory is interesting, but impractical. Particularly for a company like GM who also manufacturer critical components for industries other than automobiles - like the aircraft sector, for example. Like military, for another.

The more I hear Congress chastise these companies and say that "the votes aren't there for a bailout," the more I'm convinced that that is complete BS; that elected representatives are putting on a dog & pony show for their constituents to make them feel better about the bailout.

As to turnaround: It will be be easier for Ford because they began to put their house in order two years ago...are further along in their global reintegration plan...and are running a tauter ship. GM has work to do, but they do have some terrific technology and products either out there now, or on their way. GM's biggest problem is that they are too big (like a slow moving dinosaur) - they must shed brands and consolidate their product lineup.

 

Still what amazes me is how fast the morons in congress in conjunction with secretary Paulson dropped their pants and crapped the money for the banking/mortgage debacle before even taking a good look at what needed to be done, and yet they beat the heck out of the auto companies asking for a fraction of what they gave the banks...boggling. houtex, your post breaking down the number of folks who will be affected hit it right on the head.

 

Very true, Hollywood, but add to that the arrogance inside GM and best exhibited by "The Rick" (Wagoner) and it is not hard to see how they got where they are. I have been with a GM delaer for the last two years after spending the first 22 years with Ford dealerships and believe me the difference in which the two companies handle things is remarkable. The prevailing attitude is "We are GM and what we do is right" no matter what is actually going on in the world. I have never seen a company that "wears blinders" like GM. Oh and I think Wagoner should be shown the door.

 

Hollywood has a great point: GM doesn't just make cars, for example.

However, I somehow think it's not the rest of whatever they make that's dragging them down, per se, but just the Automotive part. The other things currently still have buyers. The consumer market is the issue.

Lockheed went through a similar issue. Nobody was buying the L1011 Tristar planes because of three things: McDonnell Douglas had a similar concept and so the market was split, Rolls Royce about killed themselves trying to develop the ONE engine that would power the Tristar, so that was why the orders were going to McD, and by the goofy engineering task of one single engine supplier, both companies **** near went bankrupt. As a matter of fact, Rolls did, and had the British government bail them out.

One other fact is that no Tristar was built that could have center overhead storage... this lack was another decision factor in favor of the DC10. It did, however, have advanced avionics and a cabin that was "airy" and one could easily get to the center aisle from only one seat away...

Still, by the time Rolls got the engines figured out, it was too late, McD had the market. They kept improving the Tristar, and Rolls kept improving the engines, but the writing was on the wall, and Lockheed was shown the door in regards to the commercial airliner business.

What's all that about? Both businesses had other interests *besides* the L1011... but that was the one thing that **** near killed them both. This is the case here. The consumer automotive market is going to kill them, regardless of whatever else they got going on. And this is why you *need* the consumers to **buy something**, not give the makers money to stay afloat. Instead of plugging the hole, you're bailing water, which is coming in faster than you can bail.

Why do you think it's called a bailout anyway?

Oh, and by the way... screw the rest of the world if we go down, you can count on that. If you were worried about free and fair trade... everyone should make $7.50 per hour, and all cars would be... well, pick one. Wouldn't be a Mustang, it'd probably be a Volkswagen.

This isn't about fair trade, equal rights to other countries. This is about a country's existence. It's an economical war, friends, and in war, there is no 'fair', there's only win or lose. You pick up the pieces later. We need to fix ourselves first. So yeah, we *can* say "You will buy Amercian cars with this money, or you don't get the money." Kinda like socialized medicine... you can have it for free, or you can *elect* to go outside the system and pay if you desire.

Which is what this would be. Economic socialized medicine. Hopefully a short term version.

Anyway. I gotta go.

 

The biggest problem with Big 3 is high production costs. GM, Ford and Chrysler were even bigger in the past and that never slowed them down. But when you're paying a $70/hour for each worker ... you gotta be in trouble.
And then people wonder why factories are moving to other countries ...

 

Lotta merit in want houtex wrote. Bob Brinker has made several comments on helping homeowners in trouble as the priority of the TARP bailout - rather than "shoring up balance sheets". How does that "facilitate lending"? It doesn't! You have to take the relief to the payer - by renegotiating the terms so they are manageable, and/or increasing the payer's cash flow - and then the payer can stay in his home and foreclosures will shrink and banks will get their relief too.

Case in point - I have stellar credit and had 3 - 3.99% fixed credit cards thru JPMChase - dating way back to Bank One and First USA before Chase bought them years ago. I have gone through years of scary economic times but I sweated to make sure all my payments were made on time so that I would preserve my credit history for any future loans I may want. Now that CEO Jamie Dimon has got his billions from the taxpayer to play the accounting game of "shoring up balance sheets" (code for putting the money in the vault), he sent notices out that finance charges were going to double (almost) and min pmts were going to double. Even though I am a perfect payer, they renege on their promised terms. Good job Hank Paulson! That cash flow hit would push me over the banko edge and then Chase would get zero. (If other banks follow suit and increase my payments and/or close my access to credit lines, they'll wind up with nothing due to their forcing a banko - which only makes their problems worse. duh) My only option to preserve my current terms is to close the accounts - which I did immediately. So how did giving money to the banks "facilitate lending" or help open up consumer purchases??? **** government and **** Jamie Dimon/Chase. Jamie Dimon should keep in mind that his mentor, Sandy Weill, has been humiliated off the board and off his ego perch, while CitiGroup continues to unravel miserably. I hope history is just as hard on Dimon & JPMChase for his reneging on his promise while stealing from the taxpayer. They're both a couple of sharks.

If you want to fix the problem, you've got to make the consumer and homeowner "feel" healthy (consumer confidence is crucial to avoiding or ending recessions) while actually doing something to "improve" their health financially. Then all those worker bees in all industry will get their piece of the pie. And the best way to help the American consumer is to increase real wages. The Fed has been so panicked for years about inflation - and wage inflation has been their biggest concern - that they have kept the lid on any real increase in the wages of Americans. Add to this the free traders. I don't have a problem with free trade, but let's bring up the standard of living of poorer countries, rather than bringing Americans wages down to their level. The result of flat - negatvie real wage growth? A tapped out consumer that can't make their mortgage payments or buy cars, etc. And then - at the worst time - lenders close the loan window.

As it stands, after breaking up the monopolies way back in the early 20th century for more competition/cheaper services, and the 1933 Glass-Steagall Act keeping banks, ins cos, & brokerages separate, then at the end of the 20th century all the monopolies were allowed again - from oil to finance to other industries. And then the fateful 1999 when Glass-Steagall was removed. So a few short years after that, in what history will record as 'one fell swoop', Paulson has wiped out the Brokerage Industry, the Ins Industry is on its knees, and the Banks just took over the financial industry. They won, game over. So much for competition to bring better, cheaper services. More than taking over the financial service industry, I think they just took over government. Most would say the reverse but an old farmer once told me in the early 80's, "If you owe the bank 10k, they own you. If you owe the bank 100k, you own them." The banks just borrowed an outrageous amount (that they are sitting on rather than lending) from the government/taxpayer. And we'll do just about anything to keep the hope alive that a) we are getting our money's worth, and b) we might get paid back. Including 'lending' them even more...

Nothing that has been done is working because they gave the money to the foxes (banks) guarding the henhouses (consumers). And this thing is so deep, its not going to just pop back to business as usual. This is going to take a long time...

 

Well, remember, it's the media that coined the term "bailout." The money for the Big 2-point-whatever is a bridge loan - they WILL have to pay it back.

 

VERY well said. Unfortunately, historically it's been easier to do the latter than the former. And you can thank corporate greed for that one. They've been the only true beneficiary of so-called free trade.

 

Well, I'm all for that too... but there are certain people in charge of those countries... like, oh, Fidel...er... brother to Fidel Castro, what keep the people oppressed. Same thing with Saddam. Same thing in many countries. Basically, the powerful can't be having people who want too much... it makes them harder to control and stay in power. Those in need and having nowhere else to turn... are easily herded as sheeple.

I mean... could you imagine a China with a democratically elected government that allowed people to do what they want (within reason) versus doing what is best for the country? The horror... We'd have products from China that cost 200% more than they do now... the world would implode.

I agree the 70 per hour is stupid. To build a car? Wow... I'm so in the wrong business... except now, I may get to keep my job, whereas they may lose theirs... permanently. All three of these companies need Lee Iacocas badly now.

Oh, wait, I forgot, I was supposed to stay out. My bad.