Auto Execs Fly Corporate Jets to D.C., Tin Cups in Hand

[KSigkid]

Originally Posted by AGDee

This post makes it sound like it will have no effect on anywhere but Detroit and that it is only affecting blue collar workers on the assembly line. I would think that the people who work in the 100,000 dealerships around the country feel differently.

Here is a list of all the auto plants by state:
http://www.cnbc.com/id/27808154
They are hardly limited to Michigan.

That doesn't include suppliers, many of whom are not in Michigan. I guess we'll see how bad it could get if Bush doesn't assist. If he does, some will never believe how bad it would have been.

It seems more like he was responding to the concerns of how this was going to hit the blue collar workers, since that is where most of the concern has been directed in this thread. I may be wrong, but no one (or almost no one) in this thread has been questioning how upper level management (and even middle-level management) is going to recover from losing their jobs.

Again, I don't think anyone, even the people who are anti-bailout, are sitting around thinking that this is a good thing, or that it will have no (or minimal) effect. It seems like it's more of a balancing of the relative merits of the bailout versus the problems of it.

[preciousjeni]

Originally Posted by AGDee

Ironically, during a big chunk of the bad crashing in early October, we were unable to move any funds because they were in the process of changing which of our funds were available and had a "freeze" period.

It's not coincidental. They do things like this to keep money from flowing out.

[AGDee]

Originally Posted by preciousjeni

It's not coincidental. They do things like this to keep money from flowing out.

The one in October was coincidental. It had been planned since April or May so nobody knew that far in advance that the market would be tanking in the fall. The one this morning? I'm not so sure.

[KSig RC]

Originally Posted by AGDee

This post makes it sound like it will have no effect on anywhere but Detroit and that it is only affecting blue collar workers on the assembly line. I would think that the people who work in the 100,000 dealerships around the country feel differently.

Here is a list of all the auto plants by state:
http://www.cnbc.com/id/27808154
They are hardly limited to Michigan.

That doesn't include suppliers, many of whom are not in Michigan. I guess we'll see how bad it could get if Bush doesn't assist. If he does, some will never believe how bad it would have been.

I was using "Detroit" as representative of the auto industry as a whole - my apologies for being unclear.

Let me reiterate my point here:

If the three automakers fail and dissolve, millions of jobs will be lost. This is a big deal, this sucks for people in dozens of related fields, this is not something that will simply be "absorbed" by the rest of us.

The solution to that is NOT necessarily forcing every other person to subsidize the auto industry to protect those jobs. This MAY be a proper solution, but will it actually result in changes that protect those jobs over the long term? Would it be better to revamp the way America handles semi-skilled jobs, of which hundreds of thousands would spring up to fit the now-flooded (and wage-depressed, I'll admit) market?

Granted, we'll (at least partially) pay for this as a collective either way, through Welfare benefits, food stamps, even crime - what have you. However, and this is a hard pill for anyone close to the situation to swallow, I understand, but . . . it may be best to allow the companies to fail, rather than prop them up with little tangible evidence that there will be substantive changes to the way business is done.

We've propped up airlines in the past - guess what? The airlines are still, for the most part, poorly run.

Also, it is completely disingenuous to claim that millions of blue-collar workers are "suffering" due to the ineptitude of their CEOs. They may be suffering due to inept management in general, but even if each CEO had paid himself one billion dollars it wouldn't account for the losses of each. There was no contingency plan in place - or, rather, there was one, but it involved government bailouts instead of corporate strategy. They were caught with their pants down.

[KSig RC]

Additionally, let's consider for a moment the message this sends going forward: if you are large enough that the fallout from your industry's collapse will have to be subsidized by the American taxpayer, there is no incentive to reduce risk or include controls to prevent massive collapse, each of which would ultimately eat into profits (providing further disincentive).

Do you really get one 'free' collapse before you're forced to insert controls to prevent MysticCat and epchick from having to pay your bills, sloughing through massive future debt because risk/reward ratios didn't need to care about the risk?

[Kevin]

Also, let's not pretend that all of these jobs will be lost. That's just unsupportable. Will some jobs be lost? Absolutely. Will some of GM's many brands go away? I'm sure they will. Will there still be Chevrolet and Ford pickups? As our should-have-been VP would say, you betcha.

The present worst-case scenario is that some of the auto companies might be forced into Chapter 11 reorganization. In that, all contracts will be again open to negotiation, and the companies will essentially be able to take the painful steps necessary in order to become solvent again.

Americans will still be buying around the same number of cars, so dealerships will find a way to make it.

Sometimes, due to a number of reasons, businesses do fail, and they should be allowed to do that. Our system of government and economy will not be viable if our major industries, if poorly managed, can always look to the government to bail them out in the event of failure (assuming they're big enough).

We'll be fine. Maybe Detroit won't, but that's the risk a city takes when it puts all of its eggs in one poorly positioned basket.

[KSigkid]

Originally Posted by KSig RC

Additionally, let's consider for a moment the message this sends going forward: if you are large enough that the fallout from your industry's collapse will have to be subsidized by the American taxpayer, there is no incentive to reduce risk or include controls to prevent massive collapse, each of which would ultimately eat into profits (providing further disincentive).

Do you really get one 'free' collapse before you're forced to insert controls to prevent MysticCat and epchick from having to pay your bills, sloughing through massive future debt because risk/reward ratios didn't need to care about the risk?

This is one of my larger fears about all of this. It seems a lot of the trouble has come about through poor risk analysis, in terms of investments, mortgages, etc. Continuing a trend of bailouts across all industries would seem to shift the whole risk-benefit analysis.

Plus, I question the government's ability to step in and exercise management, even through a purportedly-savvy "car czar."

[Munchkin03]

Originally Posted by Kevin

We'll be fine. Maybe Detroit won't, but that's the risk a city takes when it puts all of its eggs in one poorly positioned basket.

This is my biggest concern here. It's like what any financial planner says: DIVERSIFY. Even if you only have two big industries you're dependent on, you can usually weather a storm better than a one-horse town.

You know, maybe people should just move, if the situation in Michigan is that dire. I know it's hard to leave your family and comforts, blah blah blah, but if anyone remembers this thing called the Great Migration, a ton of people left the South to go to cities just like Detroit because of all of the jobs that were available.

[Munchkin03]

Originally Posted by KSig RC

I was using "Detroit" as representative of the auto industry as a whole - my apologies for being unclear.

It was pretty clear to me. Isn't it synecdoche or metonymy or one of those crazy 8th grade grammar words that describes how Detroit=the auto industry, much like how Hollywood=the entertainment industry?

[KSigkid]

Originally Posted by Munchkin03

This is my biggest concern here. It's like what any financial planner says: DIVERSIFY. Even if you only have two big industries you're dependent on, you can usually weather a storm better than a one-horse town.

You know, maybe people should just move, if the situation in Michigan is that dire. I know it's hard to leave your family and comforts, blah blah blah, but if anyone remembers this thing called the Great Migration, a ton of people left the South to go to cities just like Detroit because of all of the jobs that were available.

My hometown (Bristol, CT) has gone through something like that. Most of the local economy was in manufacturing, and when the companies started leaving for cheaper land (and cheaper labor), the city started a downturn. The only thing that really has saved it is that ESPN was started in town and is based there. Without the tax and revenues generated by ESPN, I shudder to think what my hometown would have become.

[AGDee]

Originally Posted by Munchkin03

This is my biggest concern here. It's like what any financial planner says: DIVERSIFY. Even if you only have two big industries you're dependent on, you can usually weather a storm better than a one-horse town.

You know, maybe people should just move, if the situation in Michigan is that dire. I know it's hard to leave your family and comforts, blah blah blah, but if anyone remembers this thing called the Great Migration, a ton of people left the South to go to cities just like Detroit because of all of the jobs that were available.

It is difficult to move when you have nothing but your house and you can't sell that. It's not about family or comforts. Do you think anybody lives in Michigan for the comfort? Have you ever been here during January? LOL

[Kevin]

Ah yes... if you hold on to your Michigan house, its value might increase.

[AGDee]

I hope the damage to the economy is not as widespread as some analysts claim but I hope even more so that we don't have to find out. The news channels here are reporting that a deal has been made with the White House but details will not be announced tonight.

[KappaKittyCat]

Originally Posted by KSig RC

Additionally, let's consider for a moment the message this sends going forward: if you are large enough that the fallout from your industry's collapse will have to be subsidized by the American taxpayer, there is no incentive to reduce risk or include controls to prevent massive collapse, each of which would ultimately eat into profits (providing further disincentive).

Do you really get one 'free' collapse before you're forced to insert controls to prevent MysticCat and epchick from having to pay your bills, sloughing through massive future debt because risk/reward ratios didn't need to care about the risk?

I can't believe this, but I might actually be agreeing with KSig RC here.

[preciousjeni]

Originally Posted by AGDee

I hope the damage to the economy is not as widespread as some analysts claim but I hope even more so that we don't have to find out. The news channels here are reporting that a deal has been made with the White House but details will not be announced tonight.

I'm totally out of the loop here. What can the White House do if the Senate voted it down?

ETA: Ok, I see that they're talking about using the financial industry money for this purpose. That scares me a little.