To bail out or not to bail out...that is the question.

[dude1394]

So the Big 3 automakers bailout has been in the news lately. I was talking to a buddy yesterday and he said that the first 43% of a 25billion bailout would go to retirees...right off the top. Very little if any in investment or anything to keep them competitive...just helping them pay the bills for a little longer.

Their business model seems untenable..their workers make almost 2x other comparable workers and they cannot make money on anything but larger and pricier autos...even though their competition here in the states can.

I'm thinking this is not an investment worth making. I think that union needs a bust-up.

[alexamenos]

Originally Posted by dude1394

I'm thinking this is not an investment worth making. I think that union needs a bust-up.

If the investment were worth making, someone would make it. I would say that because the investment is not worth making, the Federal Government is contemplating forcing people who do not want to make the investment to make it anyway.

[Underdog]

I buy Japanese cars - they last longer than it takes for me to pay the car off...

What was the topic again?

[alexamenos]

I buy used american cars -- best value on the market. the Big 3 have to constantly push new cars to stay in business, and of the Fed Reserve does all it can to help by keeping interest rates super low...this means lots of cars on the market and every body else would rather have a Jap car. Granted, I'm driving a car that looks like it belonged to somebody's grandmother back in the day, but a good bang for the buck.

[DirkFTW]

Originally Posted by Underdog

What was the topic again?

Whether it is wise to replace the civilian workforce with high-precision robots who make fantastic works of modern science but may make slaves of us all the moment they become self-aware.

I vote for 6-foot power cords at least so they can't chase us around.

[Silk Smoov]

Originally Posted by Underdog

I buy Japanese cars - they last longer than it takes for me to pay the car off...

What was the topic again?

LMAO....You got me spitting on my computer laughing...

[DirkFTW]

Originally Posted by alexamenos

somebody's grandmother back in the day, but a good bang for the buck.

That's what she said.

[Silk Smoov]

Originally Posted by DirkFTW

Whether it is wise to replace the civilian workforce with high-precision robots who make fantastic works of modern science but may make slaves of us all the moment they become self-aware.

I vote for 6-foot power cords at least so they can't chase us around.

You guys are silly as hell...You two stop that, my stomach cant take that..

[alexamenos]

Originally Posted by DirkFTW

That's what she said.

nice catch. I love how potentially serious conversation can devolve into matrix talk and 'that's what she said' humor in no-time around this place.

[Arne]

Peter Schiff explains it best: http://www.youtube.com/watch?v=dixxFzohOrY

[92bDad]

Let's see, I have a Chevy, Dodge, Jeep and a Toyota...3 of which are paid for, one of which is getting close.

Never again will I buy a car without paying for it cash.

Why are people worried...if the automakers go down, some new ones will step in...It's all about Change.

Isn't free market all about letting companies who make good decisions survive, letting consumers decide what is actually good or not?

I'm hearing today that the issues with the big three is it's average wage...something like $78 per hour per employee...while companies like Toyota are down around $48 per hour.

Unions are forgetting, that although it's great to increase the income of your members...if you push too hard, you will cause the company to go out of business and essentially cost your members their jobs.

I am all for breaking up the unions!!!

[dalmations202]

If you don't bail them out, along with the layoffs from the oil field industry (gas going back down, less drilling) -- then unemployment and major retirement packages are going to be gone. Government will end up either bailing out the companies, or bailing out the individuals via unemployment packages, etc.

I don't see a win win -- it is either lose, lose or lose, lose, IMO.

[Mavdog]

giving the auto manufacturers any money is like givng money to your alcoholic brother in law.

you know that it won't last very long, and he will be back for more in a short amount of time because he isn't going to change the things that make him such a loser.

just like the brother in law needs to get into rehab, so too do the folks in detroit.

unless they are willing to change what they do and make themselves compeptitive with the rest of the world's auto manufacturers, giving them money only lets them continue doing what isn't working and postpones the date when they will eventually have to face their demise.

[GermanDunk]

Originally Posted by Mavdog

giving the auto manufacturers any money is like givng money to your alcoholic brother in law.

Or like throwing shit through the window ( Kobe Bryant )

btw: German carmaker banks daily ask for states credits.... Did they ever care if their own employees can afford the cars they produce with their hands...

If they can´t compete, they may go to hell.

Go Mavs.

[wmbwinn]

Originally Posted by dude1394

So the Big 3 automakers bailout has been in the news lately. I was talking to a buddy yesterday and he said that the first 43% of a 25billion bailout would go to retirees...right off the top. Very little if any in investment or anything to keep them competitive...just helping them pay the bills for a little longer.

Their business model seems untenable..their workers make almost 2x other comparable workers and they cannot make money on anything but larger and pricier autos...even though their competition here in the states can.

I'm thinking this is not an investment worth making. I think that union needs a bust-up.

Mitt Romney agrees with you 100%. His Dad used to build cars (American Motors). Anyway, I haven't read past your original thread starter and maybe I am repeating info.

Link:

http://swampland.blogs.time.com/2008...rss-topstories

Buchannon on the other hand thinks we have to bail out the Big 3:

Link:

http://www.humanevents.com/article.php?id=29531

I tend to agree with Romney. Managed bancruptcy with Federal assistance to guarantee a sound start up is necessary. No matter if you love unions and similar structures, they have to die in the auto industry to compete with Toyota, Honda, etc.

[wmbwinn]

Originally Posted by dalmations202

If you don't bail them out, along with the layoffs from the oil field industry (gas going back down, less drilling) -- then unemployment and major retirement packages are going to be gone. Government will end up either bailing out the companies, or bailing out the individuals via unemployment packages, etc.

I don't see a win win -- it is either lose, lose or lose, lose, IMO.

a managed bancruptcy with assistance from Uncle Sam can prevent some of the problems you predicted. But, a bancruptcy has the advantage of killing the union. If Uncle Sam won't finance the start up after bancruptcy due to a union contract that prevents the Big 3 from competing with the international economy, then the union contract will be forcibly scrapped.

It is not in Uncle Sam's interest to see the Big 3 die. See Buchanon's article. But, a managed bancruptcy with assistance from Uncle Sam with a re-structuring to a successful viable model is what is needed.

[Underdog]

Originally Posted by dalmations202

I don't see a win win -- it is either lose, lose or lose, lose, IMO.

+rep <---whatever that means...

[Underdog]

Originally Posted by alexamenos

I love how potentially serious conversation can devolve into matrix talk and 'that's what she said' humor in no-time around this place.

That's because most of us agree on this topic (essentially), no matter what our political leanings are...

[dude1394]

I"m trying to figure out if the big 3 are being honest that millions of jobs will be lost?? They certainly will not close up shop immediately...because no companies do that when they claim bankruptcy.

[dude1394]

Originally Posted by Arne

Peter Schiff explains it best: http://www.youtube.com/watch?v=dixxFzohOrY

What does he say...can't stand wadeing through video...too slow.

[Arne]

Originally Posted by dude1394

What does he say...can't stand wadeing through video...too slow.

Let them fail,
let competent people take over,
let the unions die (okay he never said that, but that's what he meant),
let them have free-market wages and America will have its auto-industry.

A healthy auto-industry, paying normal wages, would be great for America to rebuild its manufacturing base, so that America could start producing stuff again and sending it to foreigners who can really pay for it.

Plus, every over-paid unproductive job saved will only kill other productive jobs, since the government can do nothing more than to redirect capital, usually from the productive to the unproductive. (I can't think of any example that has it vice versa....)

[92bDad]

WOW!!!

I am amazed, we all appear to be in agreement with the general concept of this issue.

I am quite impressed!!! Not that anybody gives a crap what I think...but hey, I am still impressed!!!

[FINtastic]

http://cxa.marketwatch.com/finra/Bon...D=MzcwNDQyQkIw

Financial Markets don't seem too high on GM right now. Yield rate on their bonds is 106%

[dude1394]

A buddy was pointing out that the market cap for GM was....1.7Billion. So the guvment could just buy 'em 20 times over with that bailout amount.

[GermanDunk]

[Underdog]

^LOL!!!

That pic just about sums it up - nice one, GermanDunk!

[MavsX]

Originally Posted by DirkFTW

Whether it is wise to replace the civilian workforce with high-precision robots who make fantastic works of modern science but may make slaves of us all the moment they become self-aware.

I vote for 6-foot power cords at least so they can't chase us around.

my cpu is a neuronet processor, a learning computer.

[Janett_Reno]

It is hard for the big 3 to compete with Honda and Toyota. They start at 30 to 40% more over head before a vechicle is even produced. They have begged the gov, to cut pension plans, insurance, and restructure from retired employees way back to now. I doubt they can compete with the way the new world runs today from where it use to. They will keep gobbling up free gov money to just keep the lights turned on but for months and even years now they say they are changing and won't ask for more money. They keep on.

The only solution is probably let them go under and take bankrupcy. This way they can get away from union run, restructure all new insurance and health plans, and try to start over knowing they must compete with the Japanese as they have to cut the cost of rolling out a car and can not keep a 40% more over head than the Japanese. It isn't going to be good as i know people now that are not working for the big 3 but mak gaskets, hoses, and other parts and are big companies but there work revolves around orders from the big 3 and more. Some of these companies and they are not small, some have already taken bankrupcy and tried to restructure. They have cut employees big time but within the next 3 weeks i know people that are engineers with college degrees have been told, take a buy out. This is getting paid one years salary, your insurance last 6 months and then you are on your own. So you are sent home and get one years salary.

These are people that have been with the co 10 to 25 years. These car parts co's are trying hard to be sold off now. Co's from Germany, Japan are over here looking at alot of these co's to buy now as they are begging to be bought out. If these employees do not take this deal, when the co is sold or they fold, they get nothing. Unless some of these co's are bought out and a firm from Germany or etc stays in these same towns in the usa and keep alot of these employees on. The problem, is it isn't much orders being called in to keep these employees busy because the big 3 are folding.

In the end, it is a big mess and you are going to see alot of car dealerships fold also in your local towns. It is ungodly how many people to car industry employees in the usa. That fill parts for the car cos.

This is bad to say but i feel the only hope for them is to take bankrupcy and restructure. They can't run a business like they did in the 1920's to 1950's. They must step up to year 2000 and over and compete with a global car market. The co's are still structured for back in the 1950's. The gov has to stop this wild spending spree and throwing good money after bad. This money alone won't save the big 3, they need much more than this money.

[wmbwinn]

I think Newt will run in the next Republican Primary and I don't think Palin or Romney can beat Newt.

Anyway, here is Newt on the Big 3 bailout:

___________________________

There’s a term that’s commonly applied to the economic systems of some Asian and Latin American countries. It’s “crony capitalism.”

Crony capitalism is when government controls significant parts of the economy. Under this kind of bureaucratic micromanagement, politicians -- not the free market -- call the shots. And that means that the decisions that control the economy are of necessity political decisions, not economic ones.

Crony capitalism is bad for government. Economic power in the hands of politicians breeds corruption.

Crony capitalism is bad for democracy. Individuals and businesses outside favored industries have an unequal voice in self-government.

Crony capitalism is bad for business. Politicians wedded to the status quo stifle growth and innovation.

And there’s one more thing about crony capitalism: It’s come to America.

Predatory Politicians Practicing Crony Capitalism Created the Economic Crisis

It’s the nature of crony capitalism to expand -- for government to acquire more and more of the economy.

The agents of this expansion are elected officials. Call them “predatory politicians.”

Crony capitalism practiced by predatory politicians is at the root of the current financial meltdown.

In exchange for campaign cash and support for favored constituents, predatory politicians aided and abetted the government-backed Fannie Mae and Freddie Mac as they created and fed the subprime mortgage market.

Now Predatory Politicians Are About to Make It Worse

And to fix the mess they created, what have predatory politicians turned to? Why, more crony capitalism of course.

First, they designed Wall Street bailouts in which a former chairman of Goldman Sachs got a blank check to disburse hundreds of billions of dollars to his former colleagues on Wall Street.

Then they took over an insurance company at a hugely inflated cost.

Now predatory politicians want taxpayers to fund a bailout of three bloated, stagnant companies that have been losing money for years, one of which is currently hemorrhaging over $1 billion a month.

The Detroit Three: An Investment Only a Predatory Politician Would Propose

To reward the unions that helped produce its electoral victory, the newly empowered Democratic Congress is proposing that American taxpayers pony up $25 billion to bail out the Detroit Three automakers, Ford, GM and Chrysler.

Democrats are using the current financial crisis as their excuse to bailout the autos. But in fact, the Detroit three were unprofitable long before the current crisis hit.

According to one economist, GM and Ford made more money-losing investments in the 1980s than any other U.S. companies. And the Detroit money pit only got deeper in the ensuing two decades. Since 1998, GM has been losing an astonishing $1.5 billion a month.

That’s an investment only a predatory politician would propose.

Bringing Fannie and Freddie Style Accountability to the Auto Industry

One of the things that makes crony capitalism so profitable for politicians is that Washington exempts itself from the economic and financial rules it imposes on private industry.

For example, in 2003, federal regulators discovered that Fannie Mae and Freddie Mac had engaged in Enron-style accounting fraud. But while executives at private companies who engaged in similar fraud went to prison -- and Congress responded by imposing the draconian and business-killing Sarbanes-Oxley bill on private businesses -- Fannie and Freddie executives barely received a slap on the wrist.

One of the reasons was House Financial Services Committee Chairman Barney Frank (D-Mass.). Frank fought tenaciously against the regulation that would have held Fannie and Freddie executives accountable and might have averted the financial crisis.

Now Chairman Frank wants to bring his particular style of crony capitalism to the auto industry.

Any Detroit Bailout Government Board Should Be Subject To Sarbanes-Oxley

On “Face the Nation” this Sunday, Chairman Frank announced that not only would he push for a taxpayer bailout of the Detroit Three during the special session of Congress this week, but he would also create a government oversight board for the three companies -- in effect, a board of directors made up of predatory politicians.

I believe that it would be a mistake for the taxpayers to be forced to bail out Detroit. Companies at which union workers make $71 an hour in wages and benefits -- compared to just $47 an hour at Toyota’s U.S. plants -- are not going to be saved by a $25 billion government check.

But if Democrats do find the votes to bring crony capitalism to Detroit, Americans should at the very least insist that any government board of directors created for the auto industry be subject to the criminal penalties and lengthy prison sentences in Sarbanes-Oxley.

What’s fair for the rest of us is fair for predatory politicians.

A Chance For President-Elect Obama to Deliver Real Change

The solution to our economic problems, be they in Detroit or on Wall Street, isn’t more crony capitalism; it’s economic growth.

While politicians in Washington are constantly calling on taxpayers to put up more and more money to bail out flagging businesses, there are practical things that wouldn't cost the taxpayers a penny that we could do to make America a better place to create jobs.

One of these things is to repeal Sarbanes-Oxley. As my wife Callista and I outline in more detail in this video, Sarbanes-Oxley has had the unintended consequences of stifling innovation, killing new business start-ups and driving listings overseas.

President-elect Obama won an historic victory two weeks ago on the promise of delivering change to the American people. Bailing out the Detroit auto dinosaurs is not change. It is crony capitalism in service of a failed status quo.

President-elect Obama should stand up to congressional Democrats and say “no” -- “no” to saddling future generations of Americans with the bill for today’s crony capitalism.

That would be change we could believe in.
http://www.humanevents.com/article.php?id=29544&s=rcmp

[wmbwinn]

Who killed the U.S. auto industry?

To hear the media tell it, arrogant corporate chiefs failed to foresee the demand for small, fuel-efficient cars and made gas-guzzling road-hog SUVs no one wanted, while the clever, far-sighted Japanese, Germans and Koreans prepared and built for the future.

I dissent. What killed Detroit was Washington, the government of the United States, politicians, journalists and muckrakers who have long harbored a deep animus against the manufacturing class that ran the smokestack industries that won World War II

As far back as the 1950s, an intellectual elite that produces mostly methane had its knives out for the auto industry of which Ike's treasury secretary, ex-GM chief Charles Wilson, had boasted, "What's good for America is good for General Motors, and vice versa."

"Engine Charlie" was relentlessly mocked, even in Al Capp's L'il Abner cartoon strip, where a bloviating "General Bullmoose" had as his motto, "What's good for Bullmoose is good for America!"

How did Big Government do in the U.S. auto industry?

Washington imposed a minimum wage higher than the average wage in war-devastated Germany and Japan. The Feds ordered that U.S. plants be made the healthiest and safest worksites in the world, creating OSHA to see to it. It enacted civil rights laws to ensure the labor force reflected our diversity. Environmental laws came next, to ensure U.S. factories became the most pollution-free on earth.

It then clamped fuel efficiency standards on the entire U.S. car fleet.

Next, Washington imposed a corporate tax rate of 35 percent, raking off another 15 percent of autoworkers' wages in Social Security payroll taxes

State governments imposed income and sales taxes, and local governments property taxes to subsidize services and schools.

The United Auto Workers struck repeatedly to win the highest wages and most generous benefits on earth -- vacations, holidays, work breaks, health care, pensions -- for workers and their families, and retirees.

Now there is nothing wrong with making U.S. plants the cleanest and safest on earth or having U.S. autoworkers the highest-paid wage earners.

That is the dream, what we all wanted for America.

And under the 14th Amendment, GM, Ford and Chrysler had to obey the same U.S. laws and pay at the same tax rates. Outside the United States, however, there was and is no equality of standards or taxes.

Thus when America was thrust into the Global Economy, GM and Ford had to compete with cars made overseas in factories in postwar Japan and Germany, then Korea, where health and safety standards were much lower, wages were a fraction of those paid U.S. workers, and taxes were and are often forgiven on exports to the United States.

All three nations built "export-driven" economies.

The Beetle and early Japanese imports were made in factories where wages were far beneath U.S. wages and working conditions would have gotten U.S. auto executives sent to prison.

The competition was manifestly unfair, like forcing Secretariat to carry 100 pounds in his saddlebags in the Derby.

Japan, China and South Korea do not believe in free trade as we understand it. To us, they are our "trading partners." To them, the relationship is not like that of Evans & Novak or Fred Astaire and Ginger Rogers. It is not even like the Redskins and Cowboys. For the Cowboys only want to defeat the Redskins. They do not want to put their franchise out of business and end the competition -- as the Japanese did to our TV industry by dumping Sonys here until they killed it.

While we think the Global Economy is about what is best for the consumer, they think about what is best for the nation.

Like Alexander Hamilton, they understand that manufacturing is the key to national power. And they manipulate currencies, grant tax rebates to their exporters and thieve our technology to win. Last year, as trade expert Bill Hawkins writes, South Korea exported 700,000 cars to us, while importing 5,000 cars from us.

That's Asia's idea of free trade.

How has this Global Economy profited or prospered America?

In the 1950s, we made all our own toys, clothes, shoes, bikes, furniture, motorcycles, cars, cameras, telephones, TVs, etc. You name it. We made it.

Are we better off now that these things are made by foreigners? Are we better off now that we have ceased to be self-sufficient? Are we better off now that the real wages of our workers and median income of our families no longer grow as they once did? Are we better off now that manufacturing, for the first time in U.S. history, employs fewer workers than government?

We no longer build commercial ships. We have but one airplane company, and it outsources. China produces our computers. And if GM goes Chapter 11, America will soon be out of the auto business.

Our politicians and pundits may not understand what is going on. Historians will have no problem explaining the decline and fall of the Americans.

-Buchanon

http://www.humanevents.com/article.php?id=29586

--------------------------------

It is my understanding that the reason that we allow Japan, South Korea, China, and Europe to import to us in dramatic unbalanced fashion is based on the issue of national security. That what builds up our allies and allows them to thrive is what is good for us in the world.

I suspect that the above is true.

However, we probably went too far with it. We may well have to become more protective/restrictive in the international economy in order to save our own economy. But, I don't know if we will do that. I think that Obama wants to do that. I don't know if Congress will go along with it.

Naturally, a protectionist/restrictionist international economic policy will bury the international economy who has relied on us since the second World War.

[Arne]

Originally Posted by wmbwinn

Who killed the U.S. auto industry?

To hear the media tell it, arrogant corporate chiefs failed to foresee the demand for small, fuel-efficient cars and made gas-guzzling road-hog SUVs no one wanted, while the clever, far-sighted Japanese, Germans and Koreans prepared and built for the future.

I dissent. What killed Detroit was Washington, the government of the United States, politicians, journalists and muckrakers who have long harbored a deep animus against the manufacturing class that ran the smokestack industries that won World War II

As far back as the 1950s, an intellectual elite that produces mostly methane had its knives out for the auto industry of which Ike's treasury secretary, ex-GM chief Charles Wilson, had boasted, "What's good for America is good for General Motors, and vice versa."

"Engine Charlie" was relentlessly mocked, even in Al Capp's L'il Abner cartoon strip, where a bloviating "General Bullmoose" had as his motto, "What's good for Bullmoose is good for America!"

How did Big Government do in the U.S. auto industry?

Washington imposed a minimum wage higher than the average wage in war-devastated Germany and Japan. The Feds ordered that U.S. plants be made the healthiest and safest worksites in the world, creating OSHA to see to it. It enacted civil rights laws to ensure the labor force reflected our diversity. Environmental laws came next, to ensure U.S. factories became the most pollution-free on earth.

It then clamped fuel efficiency standards on the entire U.S. car fleet.

Next, Washington imposed a corporate tax rate of 35 percent, raking off another 15 percent of autoworkers' wages in Social Security payroll taxes

State governments imposed income and sales taxes, and local governments property taxes to subsidize services and schools.

The United Auto Workers struck repeatedly to win the highest wages and most generous benefits on earth -- vacations, holidays, work breaks, health care, pensions -- for workers and their families, and retirees.

Now there is nothing wrong with making U.S. plants the cleanest and safest on earth or having U.S. autoworkers the highest-paid wage earners.

That is the dream, what we all wanted for America.

And under the 14th Amendment, GM, Ford and Chrysler had to obey the same U.S. laws and pay at the same tax rates. Outside the United States, however, there was and is no equality of standards or taxes.

Thus when America was thrust into the Global Economy, GM and Ford had to compete with cars made overseas in factories in postwar Japan and Germany, then Korea, where health and safety standards were much lower, wages were a fraction of those paid U.S. workers, and taxes were and are often forgiven on exports to the United States.

All three nations built "export-driven" economies.

The Beetle and early Japanese imports were made in factories where wages were far beneath U.S. wages and working conditions would have gotten U.S. auto executives sent to prison.

The competition was manifestly unfair, like forcing Secretariat to carry 100 pounds in his saddlebags in the Derby.

Japan, China and South Korea do not believe in free trade as we understand it. To us, they are our "trading partners." To them, the relationship is not like that of Evans & Novak or Fred Astaire and Ginger Rogers. It is not even like the Redskins and Cowboys. For the Cowboys only want to defeat the Redskins. They do not want to put their franchise out of business and end the competition -- as the Japanese did to our TV industry by dumping Sonys here until they killed it.

While we think the Global Economy is about what is best for the consumer, they think about what is best for the nation.

Like Alexander Hamilton, they understand that manufacturing is the key to national power. And they manipulate currencies, grant tax rebates to their exporters and thieve our technology to win. Last year, as trade expert Bill Hawkins writes, South Korea exported 700,000 cars to us, while importing 5,000 cars from us.

That's Asia's idea of free trade.

How has this Global Economy profited or prospered America?

In the 1950s, we made all our own toys, clothes, shoes, bikes, furniture, motorcycles, cars, cameras, telephones, TVs, etc. You name it. We made it.

Are we better off now that these things are made by foreigners? Are we better off now that we have ceased to be self-sufficient? Are we better off now that the real wages of our workers and median income of our families no longer grow as they once did? Are we better off now that manufacturing, for the first time in U.S. history, employs fewer workers than government?

We no longer build commercial ships. We have but one airplane company, and it outsources. China produces our computers. And if GM goes Chapter 11, America will soon be out of the auto business.

Our politicians and pundits may not understand what is going on. Historians will have no problem explaining the decline and fall of the Americans.

-Buchanon

http://www.humanevents.com/article.php?id=29586

--------------------------------

It is my understanding that the reason that we allow Japan, South Korea, China, and Europe to import to us in dramatic unbalanced fashion is based on the issue of national security. That what builds up our allies and allows them to thrive is what is good for us in the world.

I suspect that the above is true.

However, we probably went too far with it. We may well have to become more protective/restrictive in the international economy in order to save our own economy. But, I don't know if we will do that. I think that Obama wants to do that. I don't know if Congress will go along with it.

Naturally, a protectionist/restrictionist international economic policy will bury the international economy who has relied on us since the second World War.

Buchanons love for Hamilton is disgusting. Protectionism is crony capitalism. Buchanon should think about this for a minute: Why can Germany produce high quality cars for world markets without messing with their currencies or subsidizing them? Germany is the most successful export nation in the world without messing in any way with it's currency.

[FINtastic]

However, we probably went too far with it. We may well have to become more protective/restrictive in the international economy in order to save our own economy. But, I don't know if we will do that. I think that Obama wants to do that. I don't know if Congress will go along with it.

Yeah, it worked just swell when we did that with the Smoot-Hawley tariff in 1930.

[Arne]

The great Dr. from Texas:

Dr. Paul's latest Texas Straight Talk:

The Bailout Surge

This week the bailout of the Big Three automakers was under heavy consideration in Congress’s lame duck session. I have always opposed government bailouts of private organizations. Back in 1979 Congress had hearings about bailing out Chrysler and I was on record pointing out that these types of policies are foolish and very damaging to the long term economic health of our country. They still are.

There was also renewed pressure this week to bailout homeowners and send another round of stimulus checks to “Main Street” to balance out all the handouts to big business. It seems that eventually the entire economy is going to be blanketed over with Federal Reserve notes. Most in Washington are completely oblivious as to why this model of money creation and spending is so dangerous.

We must remember that governments do not produce anything. Their only resources come from producers in the economy through such means as inflation and taxation. The government has an obligation to be good stewards of these resources. In bailing out failing companies, they are confiscating money from productive members of the economy and giving it to failing ones. By sustaining companies with obsolete or unsustainable business models, the government prevents their resources from being liquidated and made available to other companies that can put them to better, more productive use. An essential element of a healthy free market, is that both success and failure must be permitted to happen when they are earned. But instead with a bailout, the rewards are reversed – the proceeds from successful entities are given to failing ones. How this is supposed to be good for our economy is beyond me.

With each bailout we hear rhetoric that this is the mother of all bailouts. This will fix the problem once and for all, and that this is absolutely necessary to avert disaster. This sense of panic squeezes astonishing amounts of dollars out of reluctant but hopeful legislators, who hate the position they are being put in, but are relieved that it will be the last time. It is never the last time, and again and again we are faced with the same scenarios and the same fears. We are already in the bailout business for such a staggering amount that admitting it was wrong in the first place would be too embarrassing. So the commitment to this course of action is only irrationally escalated, in the hopes that somehow, someway eventually it will work and those in power won’t have to admit they were wrong.

It won’t work. It can’t work. We need to cut our losses and get back on course. There is too much at stake for too many people to continue down this road. The bailouts thus far to AIG, Bear Stearns, Fannie and Freddie, and TARP funds amount to around $1.5 trillion. Considering our GDP is $14 trillion, and our Federal budget is already $3 trillion, this additional amount will significantly eat into our future lifestyles. That amounts to an extra $5,000 that every person in the country needs to somehow produce just to keep up. It is obvious to most Americans that we need to reject corporate cronyism, and allow the natural regulations and incentives of the free market to pick the winners and losers in our economy, not the whims of bureaucrats and politicians.

http://www.house.gov/htbin/blog_inc?...ngdetail.shtml

[92bDad]

Arne,

Thanks...I would have to agree with what the article you posted states.

Nice article, thanks for posting.

[Arne]

But wait, the Fed to the rescue!?

Fed Must Speed Aid to Auto Credit Units, Schumer Says (Update2)

By Angela Greiling Keane

Nov. 24 (Bloomberg) -- The Federal Reserve should speed access to the $700 billion bank-bailout fund for automakers’ finance units to help General Motors Corp., Ford Motor Co. and Chrysler LLC boost sales, Senator Charles Schumer said.

Schumer, a New York Democrat and member of the Senate Banking Committee, asked the Fed in a letter today to begin lending to the credit arms while Congress considers whether to approve a rescue plan for the automakers themselves.

“It is critical that the federal government use the tools at its disposal to deliver immediate assistance,” Schumer said in the letter to Fed Chairman Ben S. Bernanke, Treasury Secretary Henry Paulson and Neel Kashkari, the assistant treasury secretary in charge of the bailout program.

The letter renewed the push for U.S. help by automakers’ allies while Congress is in recess this week. The United Auto Workers union urged members today to press lawmakers for aid, while supplier Dura Automotive Systems Inc. sought to form a caravan of fuel-efficient autos to drive to Washington.

A Treasury spokeswoman, Brookly McLaughlin, didn’t immediately respond to a request for comment on Schumer’s request.

Auto Lenders

Costlier borrowing and tighter credit rules are contributing to the 15 percent slump in U.S. industrywide auto sales through October. GMAC LLC, the lender partly owned by GM, has restricted consumer and dealer financing as it reels from five straight quarterly losses and frozen debt markets.

Ford Motor Credit’s costs to obtain funds for loans have increased, while Chrysler Chief Executive Officer Robert Nardelli has said limited access to credit through Chrysler Financial is the biggest threat to the company and the industry.

U.S. lawmakers postponed until December a vote on whether to give the automakers $25 billion in new federal loans. Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi gave the companies a Dec. 2 deadline to present restructuring plans.

With members of Congress back in their home states and districts, UAW members should lobby for a direct assistance package, the union said today in an e-mail message.

“They need to hear from all of us,” the union said. “It’s crucial to save American jobs, prevent bankruptcy by American auto firms, and create a long-term plan for the viability of our auto industry.”

Fuel-Efficiency Gains

Dura, based in Rochester Hills, Michigan, is leading a plan to have suppliers, dealers and UAW members drive fuel-efficient autos made by U.S. automakers to Washington to show progress in building better vehicles, CEO Timothy Leuliette said.

“We need to move this discussion away from the three CEOs” of the automakers, Leuliette said in an interview today. “We’re talking about America’s jobs.”

Leuliette said he formed a committee to organize the Detroit-to-Washington caravan. Closely held Dura makes parking brakes and seat recliners and emerged from bankruptcy in June.

Senator Bob Corker, a Tennessee Republican, repeated his call for the automakers to take “the painful steps necessary to ensure their viability, which probably include Chapter 11 bankruptcy, reorganization and consolidation.”

Such a restructuring should precede any federal aid to the industry, according to a statement from Corker, who like Schumer serves on the Banking Committee.

To contact the reporter on this story: Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

http://www.bloomberg.com/apps/news?p...ONU&refer=home

[92bDad]

What would happen if all these Bailouts were actually put on some federal ballot for the people of this nation to vote on?

Who would get more support...Gay Marriage or Bailout?

[alexamenos]

Originally Posted by 92bDad

What would happen if all these Bailouts were actually put on some federal ballot for the people of this nation to vote on?

The bailouts would lose by a huge margin, without question. The notion that the Federal Government is a government of, by and for the Peeps is a laughably naive notion. It's why I usually don't bother to vote, such as I didn't vote this year - voting is a waste of time, nothing more than an act of subservience where one pretends to have have an impact upon pre-ordained outcomes.

[wmbwinn]

"The three big domestic automakers are now saying they are working jointly on a new hybrid car. It runs on a combination of state and federal bailout money." --Jay Leno

[alexamenos]

Originally Posted by alexamenos

The bailouts would lose by a huge margin, without question. The notion that the Federal Government is a government of, by and for the Peeps is a laughably naive notion. It's why I usually don't bother to vote, such as I didn't vote this year - voting is a waste of time, nothing more than an act of subservience where one pretends to have have an impact upon pre-ordained outcomes.

along this^^^ line...

Operating mostly under the radar screen, Congress, the Treasury Department and the Internal Revenue Service have been rolling back various provisions of the tax code to help out industries and investors caught up in the turmoil.
...
the Treasury Department declared that the cash infusions for banks won't be considered "federal financial assistance." Normally, that type of funding would count as taxable income for the recipients, and could trigger other unfavorable tax consequences for banks receiving assistance that take part in mergers.
...
The most controversial move so far is an obscure IRS ruling that gives banks the unfettered ability to use the "tax losses" of banks they acquired.

Typically, companies are permitted to carry over tax benefits from years when they lose money to help offset taxes when they return to profitability. However, for decades, Congress has restricted the amount of those losses that can be used in a given year, to prevent companies from buying and selling other firms solely to benefit from the tax strategy.

In a one-sentence ruling issued on Sept. 30, the Treasury Department effectively lifted that restriction if the company being bought is a bank and the losses are attributable to a portfolio of loans.

Sen. Charles Grassley, the ranking Republican on the Senate Finance Committee, has complained about the sudden loosening of the rules. "Congress should have been informed and consulted before Treasury took such an extraordinary action that likely will add billions of dollars to the deficit," he said.

Informed and consulted? Congress is absolutely, legally responsible for adding and subtracting (the latter in theory) dollars from he deficit. It's much, much too weak to say that they should be "informed and consulted", instead they should "vote and enact."

That last line is a stunning acknowledgement of the extent to which a duly elected representative congress has abdicated its power. We aren't governed by a representative government subject to the rule of law, but at least in times not-too-distant past that facade has been carefully maintained. But now it's like the powers that be are saying, "we've got too much on our hands to worry about what you peons think." Interesting times.

[Underdog]

^The American people are getting mugged and raped in a bi-partisan effort to make the rich richer (again...)

"Hope" and "Change" are just words - grab your ankles, bitches!