tomjtx
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My solution for the car crises/how to save the big 3
Lamont Sanford
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We should leave the invisible hand of supply and demand alone. It will take care of itself. Do you think that GM, Ford, and Chrysler are the only American automobile manufacturers that have gone out of business in the past? Ford sold as many vehicles as Toyota this year. Toyota made a profit and Ford had a loss. Toyota wages are nearly as equal as Ford's. Who is running a stable business and who is no longer a going concern? In my opinion a free market business is left up to its own devices. This is not a national interest infrastructure situation here. The gap will be filled by other companies with better vehicles. The Nazi government allowed corporations to operate but they were controlled by the government. Volkswagen ended up getting sued for what amounted to slavery during their operations under the Nazi government decades after that fall of the Nazi Party. We should think hard about quasi-government corporations like Fannie Mae and now attempts on Wall Street and the auto industry.

JIMV
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Kill the union and the problem will solve itself.

Monty
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Buy a car, get a free house! Solve both problems.

JIMV
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If the government is smart they will open those 4.5% or lower mortgage rates to existing home owner for refinance...Imagine the billions that would release on the economy...

Lamont Sanford
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We just paid our house off this year 15 years early. People should be more responsible and less materialistic. A 30 year mortgage doesn't mean to spend 30 years to pay it off. But I like your idea on the 4.5%. You're correct.

quadlover
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First off, let me state that I am in the car business. There are a lot of things tied to this argument that the average person on the street needs to realize.
1. Blaming the union is not the answer. They asked for a compensation package over the years and the manufactureres gave it to them. Just like in baseball, who is to blame... the offer of $160 million to pitch or the person who accepts it.
2. There is no question the big 3 as well as most big business are guilty of poor decisions at times. But remember that large suv's, trucks, and performance cars are sold because of the demand for them. Good product is part of the equation for success...market acceptance is just as important.
3. The big 3 have donated millions of dollars over the last 20 years to people in the form of relief, scholarship sponsorship, sports sponsorship, etc. Ask Katrina officials how much the big 3 gave vs. the foreign manufacturers. How many golf tournaments are sponsored by the big 3 resulting in money going to local charities? What about the GM scholarships tied to NCAA games? How many playgrounds have Chrysler and their dealer bodies built in cities at no charge to the public.
4. It is a known fact that the economy's turnaround post 9/11 was heavily influenced by the incentives that the big 3 offered.
5. Chrysler applied and received a loan guarantee in the late 70's/early 80's. They paid it in full in 1/2 the time needed. At the time they were one of only 2 entities to pay back loan guarantees to the U.S. in our history. How much money is shelled out in the name of diplomacy and foreign affaires that is never paid back?
6. The ripple effect of bankruptcy could be staggering. Parts vendors, lenders, car dealers, cities where these businesses are prominent could be crippled.
7. Having the senate create an overseeing committee would be disasterous. Name one department that is overseen by the Senate that is run better than the private sector!
8. It is a matter of public record that foreign manufacturers supply money to their automotive industry. Toyota received billions from Japan to produce Prius. This is just one example.
I could stand on my soap box forever but the bottom line is there is a lot of blame on the unions and the big 3 as to what caused this problem. We need to create a solution now for the sake of the American economy and then look to correct this from happening again.

KBK
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Love em' or hate em:

Here's a copy of what I sent to a friend who is a die hard 'let them die' faniot of major media spew.

"The only problem is that without a bailout package of some sort, you can 'absoufuckingloutly guarantfuckingtee' a total economic disaster that brings in and rings in a real and actual fully blown depression.

Yet, the funds involved in preventing a total economic meltdown in the US are being given in 10 and 20 fold sizes to US banks with no real control of any kind and to the tune of 8.5 TRILLION, and is being reported and spoken of as being a mere 700 billion!! Talk about media bullshit and who owns them! Aye Craumba! When will people wake up and stop trusting mainstream media??? The insanity is that those banks, they mean absolutely FUCK-ALL to the --real-- US economy if they crash. Only a few rich banking folks and similar loose their shirts. The US of A created Wall Street, And Wall street cannot survive without the US. But due to Wall street being parasite, The US economy can survive just fine with a crippled wall street. The parasite attempts to manipulate the economy and the US, but it is still the parasite. Never forget that. Think if of it this way: who purposely tripped you..then as you lay there crying..who offered you a bandage..and for what reason? Now, when pondering --don't forget who tripped you. Think it through, now.

Out of all the people who deserve to have their heads on a curbside in this economic debacle ---the banks and their owners are on the top of the list.

So you tell me what the hell is going on in the US??????

The obvious point (for those who pay attention) is that we've got the mass of humanity that doesn't even have the strength of will to take a good look at attempting to understand their own personal relationships, so good luck at getting them to take a look at attempting to get near any of the truth of what is really going on out there. If it disagrees with what has been planted in their heads on how the world really works - then it is even tougher. And that is where things stand today. Both Eisenhower and Roosevelt directly stated (to paraphrase whet they each said) that 'nothing in the world of politics and power happens by chance. It is all planned - to the last detail.'

It is also the responsibility of the Auto unions to take hit on their 'packages', otherwise it's not going to work. At the same time, all those affected should be marching on the Federal Reserve building. Want to kick some ass? Go to where the blame lies.

Monty
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Your friend could have simply said, "I'm an idiot" and saved himself a lot of writing.

Oh, wait. You wrote that to him.

KBK
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Yeah, I'm trying to keep myself calm and not write on the subject. It goes down far too may rabbit holes that the average person does not like and somehow conflates what is written with me specifically and blames me for their dislike of what is real vs what they've been led to believe.

Yet, you can talk such truths with people who move in money and power circles - and they all know it, for the most part.

Monty
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Do tell? I'll do my best to keep up with all the alien concepts. Why not start with
the part where banks are insolvent and the public doesn't make a dash for their cash and
how that wouldn't really impact the average Joe? Then you can equate that with the impact
of the Big 3 going under, along with their suppliers, dealers and other providers. I'll
go ahead and concede the tremendous spike in unemployment, bankruptcies, foreclosures and
increased strains on already dicey municipalities' revenues.

It's what happens after that you can help clarify for me.

Lamont Sanford
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Chicken-Little Argument.

When left alone the invisible hand of supply and demand will take care of itself. The Big 3 American car manufacturers have been sinking for decades. Put the horse down. It is suffering and going to die as it is.

The bottom line is this. Each of these corporations operate like any other business from sole proprietorship to mega corporations. They each have an income statement to show profit and loss and the balance sheet to show the business net worth. The Big 3 are each selling something the public wants and yet the supply and demand end up with a loss for these companies. They have made poor business decisions and made deals with the devil and now it is time to pay up. Stick a fork in them. They're done and they got nobody to blame but themselves. They lost site of the basic fundamentals of running a busiiness. To make a profit comes first and foremost. This was not a priority due to a bureaucratic business model that resulted in a death knell in its coffin at the end of each and every business cycle. Let them file for bankruptcy and stop acting like they need to become a welfare project.

BTW, not only is our house paid for but our old Toyota's are paid for as well and going strong because they are better manufactured vehicles than what the Big 3 can provide. Why should I get saddled with car payments for a new car? Annual maintenance on our vehicles equals that of no more than two months worth of new car payments annually. I'm going to buy the car that is best built and most reliable available to me. Something "the average person on the street" understands and the idiots on the top floor don't get. That's not my problem and shouldn't become my problem so we can keep high school graduates on an assembly line. Any prudent business person would have never made the decision that the Big 3 have made. They are no longer a going concern and that's a fact. Take the pain.

JSBach
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Quote:
Chicken-Little Argument.

When left alone the invisible hand of supply and demand will take care of itself. The Big 3 American car manufacturers have been sinking for decades. Put the horse down. It is suffering and going to die as it is.

Ever since Adam Smith & Ludwig von Mises there's been a fundamental fallacy in the supply and demand equation. For economics to work as rationally and predictably as a supply and demand graph requires our species to behave in a consistently rational manner. We don't.

Quote:
The bottom line is this. .................................. They are no longer a going concern and that's a fact. Take the pain.

I totally agree with all you say here Lamont and find it utterly astonishing that capitalism is now on the dole.

tomjtx
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Even if you don't like my bailout ideas will you guys still make me dictator ?
I promise all of you senate seats.

Monty
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By allowing the toxic mortgage backed securities to become leveraged at 30-1 ratios and
those derivatives to be listed as assets and packaged and sold on the open market with bogus
aaa ratings, the disease was allowed to spread to every corner of the globe and infect every
financial instrument and balance sheet at financial institutions everywhere, we quite literally
created a scenario where everybody became "too big to fail."

An important part of any capitalist economy is to have in place a structure where the weak can
fail and the strong can prosper, ingenuity rewarded and stagnation punished, risk properly priced
and relative security attached with modest returns. None of these prerequisites have been existing
for the last 15-20 years.

The TARP was implemented because the banks were (are) technically insolvent. They lack the required
capital to function as lending institutions. Without the Feds injection of capital, they start falling like dominoes. Paulson acted when faced with the sudden evaporation of deposits in money
market accounts as the public began to rapidly withdraw their money from banks, forcing the
banks to stop loaning money in order to preserve capital and technical solvency. Had Paulson not
taken action when he did, the quiet run on the banks was going to be a stampede.

One of the first actions the Fed took was to guaranty money market accounts, which up til then
was never afforded the FDIC umbrella, effectively putting the brakes on the run on banks. The
Fed also extended this protection to non traditional banking institutions to preserve the investment
banks like Fidelity, Janus, TRowe Price and the like to put a stop on the flight from these
institutions.

The notion that allowing every bank and financial institution in this country and across the globe
to simultaneously collapse would be limited to just the Wall Street crowd and have anything other
than disastrous consequences to every person in this country and across the world is naivety
on stilts. And we aren't out of the woods yet...

If the argument is that an economy based on a fiat currency that isn't backed by something tangible like gold is a poor model and rife with recurring bubbles and busts, then I'm with ya. However,
that isn't what we have and wishing for something that doesn't exist doesn't get us out of the
jam that we currently find ourselves in.

The car makers are infinitely less important than the banks and pales in comparison to the
magnitude of addressing the banking crisis. A pre-packaged bankruptcy where consumers are
guaranteed warranty service would seem to be the best solution if an outright liquidation
is to be avoided. Ironically, letting the auto companies fail will almost certainly cost
the taxpayers more than using tax dollars to prop them up. Again, the lesson being that no
company should be allowed to become too big to fail.

I doubt anyone is a bigger capitalist pig than I am, but the banks simply can't be allowed
to fail under our current economic structure. The auto companies failing will only magnify
the intensity of recession and its duration, along with destroying the ability of several
states to function, placing further burdens on the taxpayers to bail them out.

These are all symptoms of a broken political and economic system. It's a failure of government
and decades of poor oversight and management, along with unwise legislation.

JSBach
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Quote:

Quote:
Chicken-Little Argument.

When left alone the invisible hand of supply and demand will take care of itself. The Big 3 American car manufacturers have been sinking for decades. Put the horse down. It is suffering and going to die as it is.

Ever since Adam Smith & Ludwig von Mises there's been a fundamental fallacy in the supply and demand equation. For economics to work as rationally and predictably as a supply and demand graph it requires that our species behaves in a consistently rational manner. We don't.

Quote:
The bottom line is this. .................................. They are no longer a going concern and that's a fact. Take the pain.

I totally agree with all you say here Lamont and find it utterly astonishing that so called capitalism is now on the dole.

Buddha
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I have the perfect solution:

Give Chrysler to Toyota, GM to Honda, and Ford to Nissan.

Problem solved!

This whole fiscal crisis has been such an unreality trip.

Capital mismanagement worthy of capital punishment, the weak excuse of "millions upon millions" of predatory borrowers, mortgage insurance that was passed around like a spliff made of Latinum...

Bail Out I.

Next, the same idiots who couldn't figure out that payments on an ARM would change over time then ran out and got home equity loans, and we'll bail that out...Bail Out II.

After that comes the 'student loan crisis' where people who couldn't work and go to school will get cashed out by everyone who did.

Bail Out III.

Then will come the credit card crisis, where all those same imbeciles who got ARM's and home equity lines ran out and ran up every creadit card they could get their hands on will say, "Unforseen debt burden! Halp us! Halp us!"

I can only pray that Bail Out IV will be for guys whose wives are pissed that they bought new amps without getting permission.

And all this bailing out in order to save the pain of true market directed consequences.

I know, it would be a really bad thing, but I'm pissed.

All dozen of us working guys in this country without ARMS, second mortgages, credit card debt, and paid up student loans are pissed!

Dammit!

bifcake
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Quote:

Even if you don't like my bailout ideas will you guys still make me dictator ?
I promise all of you senate seats.

You got my vote, Governor.

Lamont Sanford
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What Buddha said...

quadlover
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I agree in a true free market system the strong survive and the weak die. The car industry, however, is not a level field.
1. The terms and conditions that the U.S. allows foreign vehicles to com in is much more liberal than the terms and conditions for us to export cars to Europe & Asia. Level the field and see what happens to the price/supply/demand.
2. I am in full agreement that until the last few years the foreign vehicles had a decided advantage over our domestic vehicles. That has changed dramatically. Are American vehicles better than imports today? In most cases it is a tie except that the typical import vehicle owned maintains their vehicle better than the average domestic vehicle owner. I have many customers who put 40-60,000 miles a year on their vehicle with no problems. We have customers with over 500,000 miles of city & highway miles that run great. You do not see many foreign taxi cabs because the cab companies realized a long time ago that if you add the cost of purchase to the cost of ownership over long term, domestic vehicles make sense.
3. Look up in public records how much money states and cities have given foreign companies in the past few years to entice them to build their plants here. Tax abatements, tif areas, enterprise zones, etc. have been in the millions. Just over the weekend the New York baseball teams were in the news discussing the cost overruns of their new stadiums that will cost well over 1 Billion. Who gave them financial assistance? Local government and bonds. So if makes good business sense to bail out insurance and financial companies, give tax breaks to entice import car companines to build their products in the U.S., and for cities to compete to get major league teams to play in their city, why does it not make sense to make a loan guarantee to the Big 3? Ask NYC-LA-Chicago how much money their auto shows bring in to their cities each year?
I'll close this with fuel for thought. If a foreign manufacturer came to California-Texas-NY-Illinois-Ohio and said we want to build a number of plants employing 100,000 people with real jobs, what will you do for us as a group, what would the billion dollar offer be? so invest in the known entity!

Lamont Sanford
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I hear your pain, dude. But the Japanese have been working their asses from the janitor to the CEO. Remember Quality Circle Management. Why should the government step in and makes things easier in the market just so a money-hole can catch up. That isn't fair to the manufacturers that are making profits. You don't see Saturn or Humvee crying like the Big 3. The Big 3 can file bankruptcy like the rest of American companies that have failed. That should be their only option. It time to pay up. Now, I don't know if the labor unions are a drain on the Big 3 but I can bet my bottom dollar that have served their time, got fair labor laws on the books, and it is time for them to fade away into the sunset with a pat on the back. They just don't know when to stop. As a concerted whole the labor unions are a drain on society. They have stayed longer than they needed to. Joint ventures are not designed to be permanent. They are temporary and blackmailing companies was not part of the package. Today's labor unions are propaganda machines. They have caused more damage to the fabric of our economy than all the outlaw motorcycle clubs combined. I would rather buy a Hell's Angel lunch than any member of a labor union. Believe or not, we as government employees have a labor union. WTF are we doing with a labor union? We're state employees for crying-out-loud. One example of their bullshit. They raised the dues $.25 per pay period to pay for the Kerry Campaign when he ran for president. We are still paying for that campaign. Where does this shit stop?

Lamont Sanford
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Quote:
Ever since Adam Smith & Ludwig von Mises there's been a fundamental fallacy in the supply and demand equation. For economics to work as rationally and predictably as a supply and demand graph requires our species to behave in a consistently rational manner. We don't.

The premise of Adam's invisible hand as a metaphor is viable. Where there is demand there will be supply in a free market. If one organization fails in supplying that demand another more successful organization will take its place. It has nothing do to with consistent human behavior. Sometimes it takes longer for the invisible hand to rectify a problem but in the end it is better than stop-gap measures that only cure the symptoms and not the disease. The invisible hand is not a band-aide. Americans don't buy into it because it isn't a quick fix. The quick fix is a disaster waiting to happen once the government gets involved with heavy-handed policy making. The biggest problem with American capitalism is that a politician only needs a fundemantal understanding for micro and macro economics 101. Unfortunately that isn't enough and with a President only have to serve a maximum of 8 years isn't enough to stabalize economic variables. Decisions made by a president to stabalize the economy during his tenure may have a terrible effect on future administrations. Clinton made same great economic decisions during his terms but by the end of his last term the next president had inherited a recession. The only true economic president in the history of the United States is FDR and that is only because he was able to serve 16 years where he was able to start from scratch and work his way up. But that was a very conservative Democratic Party in those days compared to today. I don't know what the Democratic Party is going to do with America's Greatest Generation finally dies off. These old people are so demented and in such denial that it is a shock to them any time someone explains the Democratic Party's platform of today, my 87 year old mother included. Neither the Democrats nor the Republicans can fix today's economic crisis. Only the invisible hand can do that. The weak organizations have to die. The strong organizations have to fill the gaps in the line. All business organizations have a limited life-span. Eventually, they get weak and die off. What is the point of putting such organizations on fruitless life support when the incoming administration leans toward pulling the plug on such things as human beings when there is no chance for a productive life.

quadlover
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i was not going to comment any more but lamont has forced me to. saturn and hummer are part of gm so they are deep in the middle of this mess. saturn has yet to turn a profit since its inception. the most often mentioned divisions of gm that may terminate are saturn, pontiac, maybe buick and possibly either gmc or chevy truck (keeping 1 not both) hummer announced a major cut back late summer/early fall with a possible closing of their main facility in mishawaka indiana. the import divisions of gm and ford are currently for sale (jaguar was already sold to a company in india) as most of these aquisitions have been a cash drain for multiple reasons not tied to labor costs/unions.

as to union organizations if your union supports a candidate (it does not matter the party) and you are against it what steps were taken by the majority to stop the funding? i am a member of a group that frequently gave political contributions to "friendly" candidates. there was enough of an uproar of the members about who was being supported and how much it cost that these were eliminated as line item costs of the association and individuals were asked to submit finances to back their candidate of choice. labor unions in theory should protect the common working person, but the reality of the last decades is it seems to protect those that abuse and misuse the system not the majority of good, hard working people. our society in general is moving more and more to a socialist type of government that helps those who want a handout rather than those that need one. after all no one is ever wrong or at fault...it is always the other guy or else my attorney will protect me from being convicted.

today's people need to realize that society does not owe anyone anything more than the effort you choose to exercise yourself.

Lamont Sanford
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Thanks for the correction on Saturn and Humvee. You're correct. The unions have gone above and beyond the scope they were originally intended to perform. I'm finding them very obsolete. Today, their efforts are backfiring on them. They have created an entitlement workforce. They [unions] were at their peak when very important rights were passed to protect hard working people. In this age of information The People can just as easily get representation quickly without the bureaucracy of a labor union. In other words, the workforce can do the same job of lobbying on their own based on what unions have done in the past when they were productive for the working class. Our union has done everything from forcing members to pay for contributions to x or y political candidate campaign for a period of infinity to creating performance evaluations that make it impossible for an employee to fail based on performance. Totally counterproductive and costly drain on any organization to accomplish goals. I wish you the best of luck in the days, weeks, and months ahead.

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