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You are here: Home / Politics / Domestic Politics / The Big Three Automakers

The Big Three Automakers

by Michael D.|  November 15, 20089:02 am| 140 Comments

This post is in: Domestic Politics

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Quote:

They are not car companies any longer. They are benefits distributors that happen to also make vehicles on the side.

(via)

For what it’s worth (probably not much) I am not in favor of a bailout for the automobile industry. Having said that, if there is going to be a supermassive infusion of tax money into the industry, I say give it to Toyota, Honda, Nissan and other companies who are much farther along than the American companies at building vehicles people want (seriously GM, a fucking hybrid Tahoe?) Let GM, Ford, and Chrysler die a quick death. Give billions to the more efficient companies to build more plants and hire more American workers.

But my degree is in Adult Education, so what do I know?

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140Comments

  1. 1.

    Jim Downey

    November 15, 2008 at 9:24 am

    Well, my degree is in economics, and I tend to agree with you. Rewarding the problems of the Big Three is at best a poor way to help their workers and the people who supply them with parts/services. Giving the workers a hand to survive a bankruptcy, and turning the money over to the other manufacturers you mention (who have plants here in the US) would be a lot better over the long term.

    Jim D.

  2. 2.

    aimai

    November 15, 2008 at 9:24 am

    I say take the money we are using to bail banks and financiers out of their trouble dealing with their stupid derivitive bets and spend it backstopping the job losses and the retirement benefits of people who paid into the system for years. Then we can let the car companies that can’t compete on product go down while ensuring that millions of families can still feed and clothe and educate themselves thus keeping parts of the economy afloat. Seize the car companies *in order* to pay for benefits not the other way around.

    aimai

  3. 3.

    Wapiti

    November 15, 2008 at 9:39 am

    I agree. With a global economy, the only difference between buying an American car or a foreign car is which CEO gets the big bonus at the end of the year.

    I’d rather reward the competent CEOs – the ones working for the foreign firms.

  4. 4.

    Dennis - SGMM

    November 15, 2008 at 9:44 am

    By all means, do something to aid the workers but the Big Three automakers themselves should not be propped up. They systematically engineered their own downfall. They allowed themselves to become obsolete by resisting every effort to compel them to raise fuel efficiency or reduce the size of their products. Remember the arms race to build the biggest SUV on the face of the earth? Now that was an intelligent use of research and development dollars.
    The Big Three financed groups and candidates who opposed Universal Health Care and now they whine about the cost of benefits. They have become like those unfortunate whales who beach themselves, are pulled back into the ocean with great effort and then beach themselves again.

  5. 5.

    Zifnab

    November 15, 2008 at 9:45 am

    I say break up the whole industry. Let the unions be giant temp agencies. Let the car loan guys – the part of the business GM actually makes money from – be some sort of auto-loan bank. They wanted to privatize the health care and pensions anyway so set that aside as well. And let the actual car manufactoring catch fire and burn down.

    I fail to see why America should continue subsidizing perpetually shitty cars coming out of Detroit. It’s just a giant fucking waste of everyone’s money. Most of all the poor slob who actually runs out and buys a Taurus or Hummer or something.

  6. 6.

    J.

    November 15, 2008 at 9:49 am

    Do the names Pan Am, TWA, and Eastern mean anything to anyone here? They all went under, and we are still flying.

    Btw, bankruptcy does not mean the end of the world (or the auto industry). Heck, United was flying while bankrupt for years. Bankruptcy can be a good thing. Forces companies to reorganize. I guess this is my way of saying I am also not for the auto bailout, though am also not in favor or throwing money at foreign automakers, even ones who make cars here, either. (For the record, I own a Mini Cooper, a fine little car, made under the auspices of BMW, albeit in England, even though I love my country and am proud to be an American.)

  7. 7.

    burnspbesq

    November 15, 2008 at 9:49 am

    There is no way to reorganize the Big Three through bankruptcy.

    If the auto companies go into Chapter 11, one of their advisors is certain to suggest that they reject (or, in non-lawyerly English, "renege on") their collective bargaining agreements. If that happens, the UAW will walk, there will be no revenue at all, the suppliers will die like fish in an algae bloom, and eventually the creditors will say "fuck this" and move to convert the Chapter 11 reorganization proceeding into a Chapter 7 liquidation.

    And then the wingnuts and every corporate lobbyist who hates unions will blame the UAW for the death of the auto industry, and there will be calls for a fundamental re-examination of our labor laws, which will end up with the unions getting it in the shorts.

    None of that seems to me to fall in the category of good outcomes.

  8. 8.

    pto892

    November 15, 2008 at 9:55 am

    Outside of the fact that a bailout of the American car industry would be rewarding failure one should consider that at least one of the companies involved (Ford) actually makes some pretty good cars and arguably is not in need of a bailout. Ford’s basic problem is their CEO who treated the American market as a cash cow for years and simply kept producing the same old crap. How many F-150s and Explorers do we need, anyway? In the meantime Ford of Europe has been making some excellent small cars that simply aren’t being sold here in the States. Ford is already responding as they should have years ago-by bringing in their best stuff. GM is big enough to make it without help, they are simply too big and need to shrink. They can sell rebadged Opels (i.e, Saturns) and captive Korean imports until they retool. As far as I’m concerned Chrysler deserves to die. Suffering through eighty years of a Caravan was enough for me.

  9. 9.

    Chris O.

    November 15, 2008 at 9:56 am

    I am looking for all the anti-bailout people to rebutt this article by Jon Cohn. Until they do, I’m going to have to be in favor. It is very unfortunate that these ill winds are nailing GM & co. just when they’re taking the short term financial hit necessary to become more like their foreign counterparts.

  10. 10.

    Chris O.

    November 15, 2008 at 9:58 am

    @J.: See, this is just what I’m talking about. Knowledgeable people say that GM cannot continue to operate in bankruptcy, yet the blogosphere is still awash in commentary about how bankruptcy isn’t so bad for companies really. I can only hope Congresspeople are better informed.

  11. 11.

    gex

    November 15, 2008 at 10:01 am

    "None of that seems to me to fall in the category of good outcomes."

    I, for one, am fucking sick of this damned if you do, damned if you don’t decision making tree we are presented with. I am sick of being told that companies are too big to fail. It should become abundantly clear that we need to keep companies from becoming this big in the first place.

  12. 12.

    Michael D.

    November 15, 2008 at 10:07 am

    @Chris O.: Which is why I said “But what do I know?”

    Admittedly, very little. Just tossing my opinion out there with the rest of the uninformed commentariat.

  13. 13.

    tofubo

    November 15, 2008 at 10:07 am

    can i buy a ford prius ?? no
    can i buy a chevy jetta diesel ?? no
    can i buy a chrysler civic hybrid ?? no
    can i give a rats ass that the american car company executives thought that the ford excursion, the chevy avalanche, or the dodge durango was a way to sustained profitability ?? no

    rush was on a looney loop the other day saying that ford, gm, and chrysler’s european divisions were doing great

    did you ever see the lineup they sell over there ??

    http://www.ford.co.uk/ie/all_cars/-/-/-/-/-/-
    http://www.gm.com/europe/brands/chevrolet/
    http://www.autoblog.com/2008/02/21/chrysler-unveils-diesel-300c-srt-in-europe-natch/

    small, fuel efficient, and in chrysler’s case, diesel technology in a car, not a truck or suv that i don’t want

    when they start buiding something i would actually buy, i’d sell my 4-cyl honda (built in ohio, btw), it has 250k on it and i do need a new car, but name me ONE american made diesel car (not a truck or suv), you can’t

    /rant

  14. 14.

    ET

    November 15, 2008 at 10:11 am

    I have to say I am torn on this issue.

    A large part of me just want GM to fail because it had become a lazy, bloated company that looked to the short term and seemed to resist any thoughts of a future car that didn’t look like or run like one from the 1970’s. On the other hand they do produce a lot and there are thousands of people and lots of companies all over the country that supply parts to GM that could fail right along with GM. Making the economic problems worse (by how much I don’t know). As there is a limited market for the parts they don’t have the luxury of shifting their business. I hate that they would get punished because GM management over the decades has sucked.

    Maybe I am looking at this too simplistically but I can’t help but feel that we are going to be forced into the position of choosing the least suckiest option and no one is going to be happy with whatever chose is made.

  15. 15.

    Sean Roper

    November 15, 2008 at 10:12 am

    Under normal circumstances, the failure of the American auto industry would be a huge burden on the economy. Under our current circumstances though, it could be catastrophic. I hate rewarding incompetence too, but there’s a time and a place to address these things and it’s not now. Unfortunately, we need to suck it up and keep these dinosaurs afloat until we enter better waters. To think otherwise is a little like rejecting a leaky lifeboat while the ship is going down.

  16. 16.

    Bobzim

    November 15, 2008 at 10:12 am

    I got into a little squabble with Jane Hamsher yesterday, and the UAW is definitely part of Detroit’s problems.

    If the Big Three go tits-up, the very first casualties will be the retirees, so the first ones taken care of should be them.

    As fr as the companies themselves this pretty well sums up my feelings on that.

  17. 17.

    Deborah

    November 15, 2008 at 10:19 am

    I’ve read that Honda has said it will pull the plug on its US manufacturing–thousands of jobs–if the big 3 get a bailout and all the companies manufacturing here with CEOs overseas (Toyota, Hyundai, etc) are made to compete with no bailout. And I can’t say I blame them. A forward-looking economic policy would favor car manufacturers who can build cars people want to buy and manage their companies without government bailouts over their opposites.

    I have not read any pro-bailout stuff that makes me confident we wouldn’t be back here in a year or two–these companies have been a mess for a long time. (AIG is not helping here: "Help, help, the whole economy is doomed unless you give us money!" "Okay, but you’d better turn this thing around." "We have totally learnt our lesson! To the spa! Oh, and we need another 100 billion.") We seem to have conventional wisdom that Ford can make it, GM needs to shrink, and Chrysler sucks too hard–I can live with that. No, I don’t live in Detroit. But I just don’t see a big infusion of cash turning Detroit around–it’ll just pay operating costs on the same habits that got them where they are right now.

    Try to make their failure less painful (e.g. move fast on some sort of national health care, try to do breaking up/selling off in a vaguely smart way, would Toyota etc be interested in expanding here with the skilled labor force?), but there have to be real lessons about facing economic reality. Factory workers can’t make 6-figure salaries and build cars that compete on the world market. That era is done. Maybe it will come again, but in the meantime we need reality-based businesses.

    As for all bad outcomes from letting them fail–what is the good outcome? No one in this thread seems to think that they’ll turn it around and improve the situation–the argument is all based on can’t take the hit on jobs, those poor people, blow to national psyche, etc.

  18. 18.

    tofubo

    November 15, 2008 at 10:20 am

    append to above post

    http://mydrive.roadfly.com/blog/ExJxZ3/

    the big three, conspicuously absent

    do they make anything like that vw golf diesel-electric hybrid that gets 69.9mpg ?? no, but i can buy a 20mpg hybrid escalade for $75,000, hannity says it’s the best car he’s ever driven

  19. 19.

    burnspbesq

    November 15, 2008 at 10:20 am

    @gex:

    But the question for which you have no good answer is "how big is too big?" And you haven’t explained how you plan to hold economic reality at bay. The simple fact is that there are economies of scale in car manufacturing, it’s highly capital intensive, and requires a major, ongoing (and expensive) commitment to R&D.

    The problem with the U.S. car companies is not that they are big. Toyota is big. Volkswagen is big. Honda is big. The meaningful difference between those three companies and the big three U.S. automakers is that three of them are well run (and VW will be even better run once Porsche gets control), and three are not.

  20. 20.

    burnspbesq

    November 15, 2008 at 10:27 am

    @Deborah:

    There is a reason why Toyota is in Kentucky, Nissan is in Tennessee, BMW is in South Carolina, and Hyundai and Mercedes are in Alabama. The laws of those states gave them significant advantages in fighting efforts by the UAW to organize those plants. It also helped that those states were willing to give big tax incentives in order to get the plants, but my personal belief is that the labor law benefits were more important than the financial incentives.

    And as for the "skilled work force," those companies believed (correctly, it appears) that they could train the locals to make cars to their quality standards, which are (or were) much higher than the Big Three’s.

  21. 21.

    Bobzim

    November 15, 2008 at 10:33 am

    @burnspbesq:

    WV has a Toyota plant and I doubt there is a more organized labor friendly state in the country.

    J-Rock knows Japan very well and sold them on it…along with some pretty sweet tax and infrastructure incentives.

    I’d say that looking for areas that have a depressed economy and hungry workers plays more of a role than "Right-To-Work".

    I also think that the Japanese auto makers understand that not treating their workers like shit is the best way to keep the union out.

  22. 22.

    burnspbesq

    November 15, 2008 at 10:33 am

    OT, and I’m sorry, but I just can’t help myself.

    In men’s college basketball last night,

    Virginia Military 111, Kentucky 103.

    Heh … hehe … BWAHAHAHA.

    Kentucky is the GM of college basketball.

  23. 23.

    nabalzbbfr

    November 15, 2008 at 10:38 am

    Detroit autoworkers deserve absolutely no sympathy. For decades the vampires at the UAW sucked the blood of the Big Three, who foolishly trusted their assurances that they would only take small bites and that the government would provide transfusions as necessary. Now that they have sucked them dry, they deserve whatever is coming to them. Their last straw was to put their money into electing the extreme leftist Obama regime. It will do them no good. God will not be mocked: He has promised the evildoers plague, famine and death and He will keep His Word.

  24. 24.

    Brachiator

    November 15, 2008 at 10:52 am

    @J.:

    Do the names Pan Am, TWA, and Eastern mean anything to anyone here? They all went under, and we are still flying.

    TWA did not manufacture airplanes, so the comparison does not quite work.

    Someone else mentioned Ford Europe’s success with cars people want. But if Ford US collapses, I doubt that Ford Europe could continue.

    Other posters here appear to want to punish the car companies because they make SUVs (whether or not customers want these kinds of cars) or because the car companies opposed universal health care. But this has nothing to do with the economics of the issue.

    Now, the US has bailed out segments of the auto industry before (and also helped the airline industry after 911), and one question that no one seems able to consider is whether a large country such as the US can maintain a sizable and prosperous middle class without a significant domestic manufacturing segment. And what if we threw US taxpayer money at Honda and Toyota (which might not be either legal or politically advisable), only to see these companies move plants out of the US?

    As an aside, I note that GM used to have a manufacturing plant in Van Nuys, CA (they made muscle cars like the Camarro here). Although the plant has been gone for a number of years and the local economy has absorbed the loss of industry and jobs, none of the later companies in the area pay wages even close to what the auto makers made.

    I wonder whether it might be possible to relax trade rules that would allow a foreign automaker to buy US automakers, letting them lay off workers, re-structure pension plans and reduce wages, but guarantee some level of US based manufacturing.

    Bold leaders might also have to consider some version of NAFTA that allows workers to easily travel within the US, Canada and Mexico, depending on where the jobs are. They might also consider nationalizing unemployment benefits. In a worse case scenario in which the US auto industry was allowed to die, it would be irrational to pay unemployment benefits locally and subsidize workers who might sit around in Michigan, pointlessly waiting for jobs to come back which might be gone forever.

    In short, the massive economic problems we face will require new ways of looking at solutions that go beyond the standard options of either throwing money at the problem or letting companies, or entire industries, fail.

  25. 25.

    Incertus

    November 15, 2008 at 10:59 am

    One of the biggest things you could do to help the auto industry is institute a single-payer universal health care system in this country. Much of the Big 3’s legacy costs come from paying for health insurance for workers, both retired and current. Take that load off their backs and they’ll be better able to compete with the Japanese manufacturers in the US.

  26. 26.

    Foxhunter

    November 15, 2008 at 10:59 am

    For decades the vampires at the UAW sucked the blood of the Big Three

    That argument is soooooooo yesterday, but it’s nice to see you have the conviction to stick to the talking points even tho the ‘evildoers’ were swept inoto office.

    If you honestly think that the pending collapse of the auto industry was due to the UAW, then I’ve got a bridge for ya’.

    Example – Ford was making a 40% profit on the Taurus, built in Atlanta. Parts, labor, health, R & D, transportation and dealer costs them around $9,500 per vehicle. Their sales cost? Almost $17,000. Same holds true for the SUVS and trucks. The spread was huge and they rolled in it like pigs. Unfortunately, this orgasmic behavior prevented them from trending 3 to 5 years out, when it normally takes that long just to develop a new car.

    Atlanta was a UAW plant. They made a shitload of money on the Taurus. Unfortunately, it was a stale model that people fell out of favor with in a turn to the Accord. Towards the end of the plants run (and it was one of their premiere plants in terms of production/QC/etc), the Taurus was relegated to fleet sales to rental car companies.

    You do the math.

  27. 27.

    passerby

    November 15, 2008 at 11:03 am

    I am also for a "rip the band-aid off" type of approach to the Big 3 failures and agree we should let them burn to the ground.

    Yes, it’s gonna hurt. Support for the workers should be the aim of any money thrown at this mess.

    And then the wingnuts and every corporate lobbyist who hates unions will blame the UAW for the death of the auto industry, and there will be calls for a fundamental re-examination of our labor laws, which will end up with the unions getting it in the shorts.

    None of that seems to me to fall in the category of good outcomes.

    It’s a clusterfuck for sure.

    Unions have long taken the blame for the woes of the auto industry so, no surprise there. Obama’s pro-worker outlook may cause any restructuring to better serve BOTH the job markets and the auto industry—the name of the game is competition.

  28. 28.

    Foxhunter

    November 15, 2008 at 11:04 am

    @Incertus: You hit the nail on the head. I know it wasn’t politically viable at the time, but it is amazing that during the Clinton era, the auto industry wasn’t lined up for some form of UHC to help them see a longer future. Instead, they (like most people) voted against their own best interests.

  29. 29.

    Just Some Fuckhead

    November 15, 2008 at 11:08 am

    One of the biggest things you could do to help the auto industry

    Actually, the best thing we can do for the Big Three is buy their cars. I’ve never driven an import and whoa, still living an acceptable quality of life, still getting from point A to point B in relative safety and comfort, and also doing my little part to keep American workers in the middle class.

    So while you myopic fuckers are throwing blame around, be sure to cast a glance in the mirror.

  30. 30.

    fenris

    November 15, 2008 at 11:11 am

    Um. So is the bailout designed to help keep jobs, or is it to help preserve companies that aren’t economically viable – unless they recieve subsidies? Considering how GM and Ford run their business, wouldn’t the money be better spent elsewhere? I mean, if you’re really considering using tax- money to help people with jobs… how does that make sense, again?

  31. 31.

    Comrade Darkness

    November 15, 2008 at 11:11 am

    Don’t turn the money over to the other car companies, nothing ruins a functioning system like too much money. Turn the money over to small business funding and training in the affected geographic areas. Small businesses are quick to get started, and are flexible when demand shifts. Plus, no one is technically ever on the dole.

    "GM, a fucking hybrid Tahoe?"

    Okay, so I lived in the shadow of Detroit for decades, I can ‘splain this one. The truck makers are and always have been in a horsepower/torque arms race. Winning this race means winning top dog for that model year, which translates into raw sales. A mild hybrid system (which is one where you mount the electric motor in series with the transmission, as opposed to parallel like say a prius) boosts hp and torque while boosting the gas mileage. Used to be those were a trade off, obviously. Electric motors are mongo torque (prius has 300 lb ft at zero rpm). It’s a win all around (minus the added complexity), and in the process, you can lose the starter motor and set the car up with a high voltage power system that lets you also theoretically ditch the belts, which means you can better arrange things under the hood, which means you can do some interesting styling changes. Basically, they had to pick *some* vehicle to start with, so they picked one where the mechanicals are not already tightly arranged so they can put the design changes through engineering more easily. That’d be my "assume they aren’t whacked" take on it.

    Tahoe is one of the few REAL trucks out there. I’ll troll on this one and say that, WHAT? you don’t want people doing real hard work in this country?

  32. 32.

    Just Some Fuckhead

    November 15, 2008 at 11:14 am

    And ditto for you fuckers that shop at Walmart.

  33. 33.

    Foxhunter

    November 15, 2008 at 11:16 am

    @Comrade Darkness:

    It’s a win all around

    Don’t forget, this move also helped them in the run to CAFE standards compliance. Just like the manufacturer’s embrace of E85…it was a shell game to con CAFE across all lines of vehicles. In Georgia, there are only THREE E85 stations. How is that helping me? It’s not. It’s helping GM meet mileage standards.

  34. 34.

    D. Mason

    November 15, 2008 at 11:18 am

    Refusing to prop these companies up would cut out a huge swath of the middle class and push them into unemployment/welfare lines. It would also depress wages by weakening the stand of unions across the country.

    Up thread someone said they have no sympathy for the auto workers, that’s pretty low but even putting that aside, what about the steel workers, rubber workers, electronics manufacturers, textile workers and other job categories or whole companies that would be devastated by the immediate loss of business from these 3 companies. These are industries that have operated well and done what they should, their only crime is having an auto manufacturer as a big customer.

    I don’t deny that these auto companies have done wrong but how many families have to go hungry and how many kids have to lose their hope of going to college so that these CEO’s will be punished? Is Obama going to pick up the tab on these families? If not there will be a lot of people going from comfort to poverty overnight. I hope America is ready for that reality.

  35. 35.

    Foxhunter

    November 15, 2008 at 11:21 am

    @D. Mason:

    would cut out a huge swath of the middle class and push them into unemployment

    Some estimates put this number at 3 million. We’d be looking at 8.5% unemployment in no time. What a mess.

  36. 36.

    Dennis - SGMM

    November 15, 2008 at 11:22 am

    …and one question that no one seems able to consider is whether a large country such as the US can maintain a sizable and prosperous middle class without a significant domestic manufacturing segment.

    I’d say that horse has already left the barn. Manufacturing employment in the U.S. peaked in 1979 and has been on the decline ever since. I was a machinist in ’79. Fifteen years later the jobs were drying up and the wages offered were down by at least a third. You can blame free trade, increased productivity, overpaid workers, or any number of factors but, the sad fact is that US manufacturing stopped being route to the middle class for most Americans.

  37. 37.

    burnspbesq

    November 15, 2008 at 11:24 am

    @Just Some Fuckhead:

    When a U.S. car company comes up with something as good as my Audi A3, I will be more than happy to buy American. Until then …

  38. 38.

    gex

    November 15, 2008 at 11:26 am

    @burnspbesq: That post was just more about my frustration that no matter how we decide to manage the national economy, the big guys at the top always find a way to screw us. So take my post as just pure, unadulterated rage that is not meant to offer a realistic solution to this issue. I’m pretty sure that the big 3 have managed their way into a situation where there is no good answer. I am fucking sick of a free market system where profits are privatized and losses are socialized.

    Don’t ask me how to fix this. I don’t know how you figure out when a company is too big. But I strikes me as odd to say that we don’t know how to determine when a company is too big to fail prior to a crisis, yet we suddenly know how to determine a company is too big when it is on the brink of failure.

    I read an article the other day about how Ford is going to reopen an F-150 line because gas prices dropped. My head nearly exploded and perhaps that is a factor in my unfocused, not thought out post.

  39. 39.

    ThymeZoneThePlumber

    November 15, 2008 at 11:28 am

    You know, there is a certain responsibility to blogging. If you say completely idiotic and toxic things, it might have a bad effect on people. Did you know that?

    Last time I looked, something like one in six American jobs depended either directly or indirectly on the auto industry.

    Let them die? Can you even imagine the catastrophic effects and the years of economic pain that would ensue, the mountain of money necessary to clean up that damage and build a new basis for all those jobs?

    Do you have any fucking idea what you are suggesting?

    Get a clue man, and get some information before you shoot your mouth off and post stupid, irresponsible shit like this. The country is at a precipice and you are making an ignorant shrug and looking away while it rolls over the edge. Who the fuck needs that kind of "opinion?"

    The country has committed large scale criminal neglect of its social safety nets and healthcare access, and let its core industries compete with countries who had the sense to step up to their responsibilities, creating a huge imbalance. Coincidentally, a finanicial trainwreck now creates a proximate threat to the near and mid term future of these core industries …. and you can’t think of anything better to do than say "fuck it" and walk away and propose a grotesque and expensive cleanup of the disaster you are proposing to create.

    Fuck you, Michael. Seriously. Fuck you and the horse you rode in on. With any luck the people who run the country will have a little more sense and a little more character than to do what you suggest.

    But my degree is in Adult Education, so what do I know?

    Based on your collected work here, I would say, absolutely nothing. Nothing at all.

  40. 40.

    Fulcanelli

    November 15, 2008 at 11:29 am

    As someone who worked in car dealerships for almost 20 years with GM, VW, Jaguar (pre-and post Ford), Land Rover (pre and post BMW) and finally Honda, I can say with confidence the Japanese run the best company and build the best cars. And I’ve worked with ’em all and watched up close how they run their organizations.

    From what I’ve seen and heard from the inside about the South Koreans… Hyundai makes a good car, but the dealerships aren’t geared to especially profitable internally for the owners, especially on the parts and service end and Kia and Daiwoo (remember them?) were worse, product and dealership-wise.

    @Deborah:

    I’ve read that Honda has said it will pull the plug on its US manufacturing—thousands of jobs—if the big 3 get a bailout…

    If this is true Ohio is going to rival Michigan in become a manufacturing wasteland. Honda has tens, maybe hundreds of thousands of workers in it’s Ohio plants. From it’s engine and transmission plants, to the assembly line facilities, this is gonna fucking sink big chunks of that state.

    Other states that will feel the pain big time if Honda bolts are Alabama, with the Pilot and Odyssey assembly plant they built around 2002 and Oklahoma, where they rebuild transmissions.

    Honda trivia: A few years back when Honda was looking to build a new North American assembly plant, Michigan was on the short list, but lost out to Ontario, Canada because of Canada’s national health coverage and the lower labor costs. Fucking Socialist Japanese…

    When Honda’s Alabama plant opened, naturally some bugs will be needed to be worked out, but the quality of the Pilots and Odysseys was so poor (and this I can attest to, personally) and production line was so fucked that they had to revamp the training system for the line workers to include more pictures and diagrams, because the locals weren’t, let’s say, as quick on the uptake and learning as fast as they needed to… You northern liberal elitists can read into that what you will.

    When I worked with GM, it was the most bloated, wasteful inefficient system you could imagine. A freakin’ joke. And from what I heard from others working with Ford and especially Chrysler (can’t build a decent transmission even with a gun to their heads) it’s no surprise at all the big 3 are well and truly fucked.

    (FWIW, Jaguar and Land Rover were a nightmare where quality and parts availablity were concerned. (A $6000 warranty claim on an $78,000 Range Rover before the owner even drove it off the lot!) so the Brits were no better.)

  41. 41.

    Dennis - SGMM

    November 15, 2008 at 11:32 am

    I’ve got it! The gov can use part of the bailout money to pay the Big Three to build cars. They can use the rest of it to pay us to buy them. Win-win.
    *Disclaimer: I own two American cars. They’re okay.

  42. 42.

    gex

    November 15, 2008 at 11:33 am

    @Foxhunter: Ah, here you get to the crux of the problem. The incentives for the decision-makers, like CEOs, are to maximize their compensation. They believe that UHC will bite into that through taxes. Plus, they have an ideological aversion to socialism (in the health care context, obviously not in the bail out context). That doesn’t mesh with the incentives for the company to reduce their health care expenditures. We have very, very poor methods of holding the people running these things responsible for their actions.

  43. 43.

    Ivan Ivanovich Renko

    November 15, 2008 at 11:38 am

    Hey, I don’t know how to tell you guys this, but those big, heavy, gas-sucking vehicles (the Tahoes, the Navigators, the thrice-cursed Hummers) ARE WHAT THE AMERICAN PUBLIC WANTED TO BUY.

    Americans have had cheap fuel for years and years and years (certainly compared to Europe); and don’t look now, but we like big-ass cars because they’re more comfortable for our big, fat ASSES.

    That fuckhead is absolutely right; the big 3 built big-ass cars because THAT’S WHAT WE WANTED TO FUCKING BUY.

    I’m sick to fucking death of hearing people blame the manufacturers for building these gas-sucking behemoths– they were building what the marketplace (oh, holy marketplace) wanted.

    Until gas prices shot up to over 4bucks a gallon.

    How many of you commenters are in any way in the auto business? How many of you have the first fucking CLUE of what goes on inside said business?

    I’m in auto assembly plants regularly; my employer builds manufacturing equipment that’s used by all three of the Bigs. Oh, and we’re used by several of the transplants and a number of the smaller suppliers that support others of those southern transplants (I’m looking at you, Mr. Mexican-Hat/Stylized Bull driver).

    As such I know these people. They’re not the lazy, mindless caricatures some would have them be: they bust their asses trying to do good work in an environment where people WHO WON’T EVEN TRY THEIR PRODUCT decry it as "inferior" to the vehicles from the Japanese and Korean manufacturers.

    Ahem. Anyway, I’ve watched these men and women bust their asses to drive more/better quality into their vehicles day after day after day, and I’ve driven them too. I’ll put a Ford Fusion up against a Toyota Camry any day of the week with regard to build quality.

    I’ve watched GM and Ford close plants here in the Lower 48 and increase production in Canada and Mexico at least partly due to health-care costs– when the hell are we gonna do something about that?

    All that aside– obviously I have my own prejudices on this subject; but if We The People are gonna dump money into the economy, consider this: at least we in the auto industry (it’s a LOT more than just the Big Three; my company is but a small player in an enormous network of suppliers to them) BUILD SHIT. We aren’t hedge funds; we aren’t "investment vehicles", WE BUILD THINGS.

    In that sense we are indeed the center of American manufacturing knowledge and capability. What happens when that goes away?

  44. 44.

    JR

    November 15, 2008 at 11:39 am

    Foxhunter writes:

    "If you honestly think that the pending collapse of the auto industry was due to the UAW, then I’ve got a bridge for ya’."

    The phrase "honestly think" cannot be applied to a CONservative. But it was nice of you to make the gesture.

  45. 45.

    Michael D.

    November 15, 2008 at 11:40 am

    Ahmmm, I wasn’t saying let the auto industry die. I was saying to let the big three die. If you believe for one minute that a bailout will save them, well, your fine to think the way you do.

    Americans are still going to buy cars at the same rate they buy them today – regardless of whether or not it’s GM, Ford or Chrysler selling them.

    What I DID say was, if we’re going to spend many billions of taxpayer dollars on the auto industry, spend it on companies that are PROFITABLE, and are not run so dismally as GM, Ford, and Chrysler. Spend it on companies like Toyota and Honda with the condition that they build more plants here, hire American workers, and buy from American suppliers, etc. Yes, the industry and the country will soffer for awhile. Eventually though, the gaps in the supply chain will fill in again, and Americans will be working for companies that are well-managed.

    Giving money to the Big Three is like giving money to a crack addict who says he’s going to use it “to buy a meal.”

  46. 46.

    D. Mason

    November 15, 2008 at 11:40 am

    God-damn you to hell Michael D… You made me agree with TZ.

  47. 47.

    kuvasz

    November 15, 2008 at 11:41 am

    john cole, you are a complete fool to promote giving US tax payer dollars to

    1 foreign companies

    2. with non-union shops

    3. located in "right-to-fire" work states.

    Doing so will wreck the UAW, the Steelworkers Union, and likely the Teamsters. Frankly, it would help destroy the efforts to organize industrial workers in this country and drive millions into the lower class.

    The problems are not caused by the rank and file men and women in the production line but by the arrogance and incompetence of management, who btw take the most from the profit pie. You are punishing the people who actually give the most, instead of punishing the true culprits who give the least.

    Before casting a stone at these working people, go get a job on the line in a "right to fire" state before you open up your ignorant mouth again because you don’t know shit about the lives of the men and women in these industries and factories.

    Your entire response is why I hate so much many of you soft-handed, college educated kids who think sitting at a desk for a few hours at a time laboring over a spread sheet constitutes "hard work."

    Put on a hard hat, stuff your ears with plastic plugs and step into an automotive, steel, or textile mill where one mistake can cost you an arm, leg or life, then come on back and preach about turning your back on unionized industries and companies, but be sure to work in both types of plants, union and non-union to see the difference in them. You will never open your pie hole again and speak such nosense.

    here is a motto for you to live by:

    "There are many truths of which the full meaning cannot be realized until personal experience has brought it home."

    John Stuart Mill

  48. 48.

    Brachiator

    November 15, 2008 at 11:44 am

    @Dennis – SGMM:

    You can blame free trade, increased productivity, overpaid workers, or any number of factors but, the sad fact is that US manufacturing stopped being route to the middle class for most Americans.

    Excellent points. The problem is that no one has yet blazed a trail to a new route into the middle class.

  49. 49.

    Just Some Fuckhead

    November 15, 2008 at 11:44 am

    Giving money to the Big Three is like giving money to a crack addict who says he’s going to use it “to buy a meal.”

    Michael, you are dumber than a pile of rocks. Seriously. We can fuck up our own country without yer help.

  50. 50.

    Dennis - SGMM

    November 15, 2008 at 11:45 am

    @Ivan Ivanovich Renko:
    I’ve read in a couple of places that the Big Three were on the cusp of producing the kinds of cars that people now want but that the move was largely short-circuited by the collapse of the economy, credit crunch, etc. Is it true?

  51. 51.

    kay

    November 15, 2008 at 11:50 am

    I live in the rustbelt, and I’m admittedly biased.

    Here’s the thing: the people here who make cars and parts didn’t do anything wrong. They made concessions, on wages and benefits. They didn’t design the cars, and they didn’t decide to put anyone who showed up at a dealership in a 60 month loan.

    I would add one thing. In my humble opinion, this is going to get bad.

    I would resist the urge to trump up resentment between taxpayers and certain segments of the economy, and certain segments of the country, because I think a lot of people are going to lining up at the bail-out window, before this shakes out.

    Not all of them union members, and not all of them in the rustbelt.

    Give it some time. I have the feeling we’re in for some shared sacrifice, whether we like it or not.

  52. 52.

    Comrade Darkness

    November 15, 2008 at 11:50 am

    So while you myopic fuckers are throwing blame around, be sure to cast a glance in the mirror.

    I’m a capitalist. My job as a consumer is to buy the best product that fits my needs at the best price. That’s my role and the system only works well if I play my role properly. The manufacturer’s role is to make the best products at the best price. If they cannot do that, they need to make room for a player who can.

    Now, there are externalities beyond price. And as an informed, worldly consumer, I’m willing to take those into account when making a buying decision. For example Fair Trade goods where dirt poor third world workers aren’t exploited and their kids get to go to school. I’m willing to pay a premium for that (as long as it is not too high, nor too much of a quality hit).

    You consider the externality of employing Americans to be paramount to other considerations. I used to as well, bought my first Ford out of college and drove it into the ground 12 years later. Went to buy another one and found that not only had the cars not improved (in 12 freakin’ years!), they had actually declined. So, faced with a choice of having the externality "cost" me too much, I opted to consider the externality of burning too much fossil fuel, and I bought a prius instead.

    Blaming consumers for the failure of a business is useless. Consumers behave "rationally" more or less. Simply cater to them and they will come. How hard is that? Detroit tried to demonize the foreign car makers instead of learning from them. Their management, at all levels, swallows good ideas. Read the story of the 2005 Mustang, for an amazingly frustrating example of this. They need a cleanout and a serious culture change to be viable again. That never happens without some pain. Read about Carlos Goshen at Nissan for the other side of the story. Nissan went from the dumps/written off by everyone to car of the year with the Altima in one design cycle.

    If the gov is going to bail them out, they better also deliver the impetus for a real internal shift of management style/quality/mentality or it’s not going to help.

    And I’ll happily buy their cars when they make the car I want to buy. Simple as that.

  53. 53.

    Dennis - SGMM

    November 15, 2008 at 11:53 am

    @Brachiator:
    Aw shit. You just made me take one of my favorite hobby-horses out of the barn. I clearly remember Bush I making a campaign speech about how we shouldn’t worry about the decline of industry because we were all going to get groovy high-tech jobs. Clinton assured us that we’d keep the really desirable jobs here. Bush II just stuck his fingers in his ears, closed his eyes and repeated "I can’t hear you! I can’t hear you!" Meanwhile, jobs that paid enough to put a family into the middle class weren’t created at the necessary rate and wages stagnated. So many Americans simply borrowed their way into the Middle Class. And now the bills have come in.
    I believe that devoting our best brains brains and tons of money to developing new ways to blow shit up didn’t help.

  54. 54.

    Ivan Ivanovich Renko

    November 15, 2008 at 11:58 am

    Michael, you’re wrong as two left shoes on this one.

    To repeat: Hummers, Navigators, Tahoes, and Suburbans exist because that’s what Americans wanted to buy.

    F-150s and Rams and Silverados exist because SOME people really need ’em to work with (go to a construction site sometime; or better, be Joe the Plumber/Carpenter/Mason and try to haul your materials and your tools in a Honda Accord sometime); they sold them to more of us because of two things: Americans got boats ‘n’ shit to drag around; and Americans got big, fat asses.

    I’m telling you, the room inside the cab of an F-150 is something to behold, and I say this as the posessor of a mighty big ass myself.

    In America, the small car has long been thought of as a "starter" car, the province of college students and poor people– it’s a cheap car. To keep it cheap, small vehicles here generally still have crank-handle windows, no power nothin’, no navigation systems, no killer satellite radio systems, nada.

    European vehicles, thanks to their petrol prices, have long been smaller and far more fuel-efficient. So you could get something like the Ford Focus (Euro version, soon coming to a dealership near you) with all the bells and whistles because Europeans were willing to pay for them.

    So the only real driver for the Big Three to build more efficient vehicles for sale here was CAFE standards. It didn’t matter so much if they were purchased, it certainly didn’t matter if that were all that profitable (and don’t get me started on the American penchant for focusing on next quarter’s results and be-damn-all to the next five years) so long as they let the manufacturer meet that standard.

    IT was easy for the Japanese and European marques to build more efficient vehicles, because that was required for their home markets. When fuel prices exploded here, they were well situated to take advantage. Add to that the (IMHO entirely mistaken) belief that their quality was better across the board and you see the Bigs taking it in the junk.

  55. 55.

    Incertus

    November 15, 2008 at 12:01 pm

    @Ivan Ivanovich Renko: Funny–Japanes automakers sold fuckloads of small, fuel-efficient non-SUVs at the same time the Big 3 weren’t. The Big 3 ceded that part of the marketplace, in other words. And if you don’t think that the advertising strategies and marketing arms of the Big 3 aren’t at least partially responsible for the consumer demand you’re screaming about, well, then I don’t know how you manage to breathe without someone reminding you every couple of minutes.

  56. 56.

    Comrade Darkness

    November 15, 2008 at 12:05 pm

    That fuckhead is absolutely right; the big 3 built big-ass cars because THAT’S WHAT WE WANTED TO FUCKING BUY. I’m sick to fucking death of hearing people blame the manufacturers for building these gas-sucking behemoths—they were building what the marketplace (oh, holy marketplace) wanted.Until gas prices shot up to over 4bucks a gallon.

    You’ve given me a really nice setup here, so I’m going to jump on it in the style you used… THIS IS WHAT REGULATION IS FOR. Regulation forces an industry to take into account externalities to their products. Burning too much fossil fuel, whether because of environmental or political problems, is something the collective has an interest in. There are some things a free market simply cannot do. One of them is unilaterally hurt their short term sales. That’s why weak government regulation in the end has hurt the industry. Please, let’s learn from this and not let it happen again.

    Ahem. Anyway, I’ve watched these men and women bust their asses to drive more/better quality into their vehicles day after day after day, and I’ve driven them too. I’ll put a Ford Fusion up against a Toyota Camry any day of the week with regard to build quality.

    It sucks that the workers, as usual, are the pawns in all this. They are also the political leverage, which makes them a target too, on top of it.

    And in support of my earlier point, the Fusion was designed in an fiscal environment that helped get management off the engineer’s backs.

  57. 57.

    Jim

    November 15, 2008 at 12:05 pm

    Trillions of dollars in bailouts are being given to prop up the banks and the investment bankers, whose utter fucking greed and venality make any mistakes by the automakers look like missing a perfect score on the SAT by one point, and people are piously raising hell about the automakers getting 25-50 billion to keep millions of people employed? WTF, is complete stupidity the rule now? Anyone who thinks Chapter 11 will work for the automakers is an utter and complete fool whose ignorance makes Palin look like Einstein. I don’t even like American cars but I know our economy can not handle a catastrophe like the shutdown of GM, Ford and Chrysler right now. There are only so many apples and pencils to sell on street corners.

  58. 58.

    J.

    November 15, 2008 at 12:10 pm

    @Chris O:
    I accept that (and admit I am not knowledgeable on this score), though am curious to know who you consider to be knowledgeable on this topic, who has spoken out?

    @Brachiator:
    Good point about the analogy not quite working, though I think you understood my bigger point. Thank you.

    I’m just sick of all these bailouts. Enough already, though NO ONE likes the idea of hard-working Americans losing jobs and homes.

  59. 59.

    Duros Hussein 62

    November 15, 2008 at 12:11 pm

    Did anybody else see Ashton Kutcher on Real Time last night?

    He had a really good idea (I know, right?).

    Get the oil companies to bail out the automakers.

    Isn’t that what co-dependence is all about?

  60. 60.

    burnspbesq

    November 15, 2008 at 12:12 pm

    @gex:

    Trust me, I completely understand and sympathize with your frustration and anger. You just happened to hit one of my hot buttons. No big deal.

  61. 61.

    kay

    November 15, 2008 at 12:15 pm

    @Jim:

    I don’t get that either.

  62. 62.

    Dennis - SGMM

    November 15, 2008 at 12:16 pm

    @Jim:
    Good point. And I doubt that we’d see the auto workers giving themselves huge bonuses or throwing parties at luxury resorts.

  63. 63.

    Just Some Fuckhead

    November 15, 2008 at 12:20 pm

    I ain’t begrudging you fuckers a free market. I’m just pointing out that yer no less part of the problem than everyone else yer blaming. You already wrote off the Big Three long before this. Do you really have anything more profound to say about the subject than that? No, you don’t.

  64. 64.

    Brick Oven Bill

    November 15, 2008 at 12:22 pm

    The job, in practice, of a CEO is to maximize return to the shareholder. The job, in theory, of a politician is to pass laws that benefit his constituents. The job, in practice, of a politician is to accrue power. In modern times, this usually includes helping the CEO to do his job.

    Wages in Honduras and Guatemala are $3/day. The workers are motivated by the basic requirements of life. $3/day buys the family rice and beans and, sometimes, chicken. There is no health care. They wind motors and manufacture all kinds of things down there.

    So long are there is this life force ready and willing to compete with the American labor pool that expects to make $7/hr, or $25/hr, the middle class is destined to end.

    Option #1 is to cut off the rest of the world, knowing that this will cause images of widespread starvation on TV. Option #2 is to watch the America middle class slowly but surely vanish. It is the CEOs job to choose Option #2 as it increases the rate of return to his shareholders. The politicians are supporting the CEOs, whether they know it or not. America is currently run by a small handful of people, in my judgment.

    Personally, I support heavy tariffs on most imports. America has all the resources necessary to be self-sufficient.

  65. 65.

    Ivan Ivanovich Renko

    November 15, 2008 at 12:23 pm

    I’ve read in a couple of places that the Big Three were on the cusp of producing the kinds of cars that people now want but that the move was largely short-circuited by the collapse of the economy, credit crunch, etc. Is it [email protected]Dennis – SGMM:

    To a large extent, I think that’s true; but the truth is I think they’ve been making the kinds of cars people want for some time now– but they’ve been up against the perceptions built up in the ’80s and ’90s that said the Japanese cars were simply that much better than anything you could get out of a Detroit manufacturer.

    Like I said, that just simply, demonstrably ain’t true no more; but the perception remains.

    I keep looking at Ford’s new vehicles (oh, and by the way– the Mazda 6 is built Flat Rock Michigan in the same plant as the Ford Mustang), and the General’s new vehicles (check out the new Malibu) and I like ’em a lot.

    However– on the small-car front– I know the General has had to put off introduction of their next-generation small car, the Chevy Cruze, because of the cash and credit crunch; Ford are planning to move the EuroFocus here; they’re also planning on bringing the Euro Fiesta over (though it will be built outside the Lower 48), but those plans too are questionable given current cash flow problems.

    BTW– I keep harping on Ford, but their current CEO, Alan Mulally, came from the Boeing Comercial Airplane Company; he’s demonstrated a longer-term outlook and some very sound fiscal management policies (he’s been holding onto cash like a miser; so that should credit disappear they can continue to run their business). They have a fine portfolio of well-received vehicles in Ford of Europe; and they have solid plans to bring more of them here (though this gas price roller-coaster may affect those plans as well). I honestly think Ford will ultimately do well.

  66. 66.

    Ivan Ivanovich Renko

    November 15, 2008 at 12:25 pm

    @Incertus: Not as many small cars as the Bigs sold big ass cars.

    This isn’t a perfect analogy– like I said, in their home markets they built efficient cars with nice creature features; but for the bigs the profits were in the big cars. The profit just wasn’t there in the little cars.

  67. 67.

    kay

    November 15, 2008 at 12:25 pm

    @Dennis – SGMM:

    It’s not just autoworkers. The locals buy the stock. Those not directly employed in the auto industry. The older ones. They buy the stock (and the cars) because they have a real and tangible appreciation for the benefits it brings to their local economy.

    It’s an out-dated idea, and maybe they should have been more savvy, as investors, and diversified, but they weren’t, and now they’re old, and they’re watching it all go to hell, and that’s hard.

    They thought they were investing in something they knew.

  68. 68.

    scarshapedstar

    November 15, 2008 at 12:27 pm

    Eh, I’d say they make jumbo-sized space heaters with wheels.

  69. 69.

    Ivan Ivanovich Renko

    November 15, 2008 at 12:29 pm

    @Incertus:

    The Big 3 ceded that part of the marketplace, in other words. And if you don’t think that the advertising strategies and marketing arms of the Big 3 aren’t at least partially responsible for the consumer demand you’re screaming about, well, then I don’t know how you manage to breathe without someone reminding you every couple of minutes.

    Bugger if I can argue that point– the bigs DID cede that portion of the market; the price-points and the profits weren’t there for ’em.

    I’m gonna blame that, though, on the unfortunate American/MBA tendency to focus solely on next quarters bottom line, and bedamn to what happens next year or five years from now.

  70. 70.

    PeakVT

    November 15, 2008 at 12:33 pm

    The auto industry situation is quite complex and there are a number of issues nobody has touched on. The details can be found here (with the addendum that my direct/indirect employment figures are higher than reality).

  71. 71.

    Downpuppy

    November 15, 2008 at 12:33 pm

    A lot of problems are due to totally assbackward regulatory effects in the US. Safety turned into a vehicle weight arms race, with ever larger vehicles going out to have an edge in collisions making the overall road more dangerous for everyone. The 6000 rule, where monsters get unlimited depreciation. Road maintenance paid for, railroads left to rot.

    All of which suggest things that should have been done differently. Too late now. GM is utterly, totally cooked. Chapter 11 would devolve into a union roasting, then failure anyhow.

    Time to take ’em over & relaunch the salvageable parts. And hope we don’t end up repeating British Leyland.

    And for god sake, can’t something be done about that line of Malkin beaverteeth leaping horribly out of the left column?

  72. 72.

    jeffro

    November 15, 2008 at 12:34 pm

    Well, it seems like it was a co-dependent relationship. Americans wanted to by SUVs and automakers wanted to sell them because they were easy to make (built on pre-existing platforms without too much additional engineering) and could be sold with the fattest margins. There’s some combination of dumb and lazy on both sides.

    I’ve never had any interest in buying an SUV, so I’ve never compared the quality of them, foreign v. domestic. I have driven a Cobalt and a Civic side by side and the Honda is just miles better. And when the time came for me to buy my Honda Fit, there simpy wasn’t a domestic equivalent. The quality of the Aveo doesn’t compare and it’s a Korean import anyway. Show me a small American hatchback, period, let alone one that gets 40 mpg and has crazy folding Swiss Army origami seats that let me haul a washing machine home from the Home Depot, and I’ll buy it.

    I don’t really have a solution here other than Americans waking up and realizing that they need smarter cars, demanding that domestic mfgrs make them, and then somehow having the money in this economy to buy them. It will take a lot of change for that to happen.

  73. 73.

    JGabriel

    November 15, 2008 at 12:35 pm

    Totally OT, but, oh my fucking god…

    Joe the Plumber has a subscription web site:

    You may upgrade to a Freedom Membership at any time for an annual membership fee of just $19.95, which includes:

    1) Total Access to "Joe The Forum" where you may chat directly with Joe
    2) Subscription to the "Joe The Blog" monthly newsletter
    3) Free Shipping on all "Joe The Plumber" merchandise

    It’s just like porn, but with photos of Joe the Plumber in a dry t-shirt instead of Victoria Zdrok in a wet one. And you get to talk incompetently about politics instead of oral sex.

    .

  74. 74.

    Brachiator

    November 15, 2008 at 12:41 pm

    @Comrade Darkness:

    I’m a capitalist. My job as a consumer is to buy the best product that fits my needs at the best price.

    If you don’t have a job, you are not going to be buying much of anything. If you don’t have a job that pays worth a damn, you are not going to be buying much of anything for very long.

    So many Americans simply borrowed their way into the Middle Class. And now the bills have come in.

    Very true. I am just amazed (though I should not be) that so many discussions about the economy focus on consumer credit, consumer spending, financial markets, etc., but try do downplay or omit altogether discussions about the stagnation of wages over the past several years. The problem is even worse than some will admit if you adjust for the high wages and bonuses paid to executives in various industries.

    By the way, the other shoe yet to drop is the size of the decline in retirement income (a kind of wage) due to the financial crisis. In addition, some retired folks who might have been able to sell their homes as a last gasp measure if they needed to supplement their retirement income are now in a world of hurt.

    As an aside, people who see Universal Health Care as somehow related to any solution to the present economic crisis need to put down that crack pipe.

    By the way, I strongly recommend the recent PBS American Experience program, The Crash of 1929, which may still be scheduled on stations in your area. Program notes, and a transcript, are available at the PBS web site.

    It is amazing to see how cyclical stupidity can be (from the program):

    One of the most wondrous inventions of the age was consumer credit. Before 1920, the average worker couldn’t borrow money. By 1929, "buy now, pay later" had become a way of life….

    Here was a whole new way to make a fortune. Unlike the Carnegies and the Rockefellers of previous decades, who built steel mills and dug oil wells, men like Michael Meehan, Jesse Livermore and Charles Mitchell had amassed their fortunes buying and selling stocks, pieces of paper. The public was fascinated. Bankers, brokers and speculators had become celebrities and they lived like royalty.

    Dreams of easy money, followed by running to the government to save us from the folly of speculators. The more things change the more they remain the same.

  75. 75.

    in canaduh

    November 15, 2008 at 12:41 pm

    Hung over and i have to see Malkin’s mug… what s wrong with left wing or no wing advertisement?

  76. 76.

    Comrade Darkness

    November 15, 2008 at 12:41 pm

    I’m just pointing out that yer no less part of the problem than everyone else yer blaming.

    I’m "part of the problem" because I don’t consider buying a car to be an act of charity? I’m fine with that summary, but I just want to make sure I’ve got it straight.

    As a capitalist, I have to point out that the money I save on gas gets turned back around into my buying other American made things. Wine, for example. Things Americans can do better. In the long run, that’s an economical win, but it requires adjustment to be fully appreciated. Such is life.

    I’ll say, though. I’d rather the 700 billion be spent reworking the "domestic" auto industry than going to the banks. (That’s in quotes because that is a muddled notion) If we must spend the money on something. Let’s put it somewhere that actually makes something other than ponzi schemes.

  77. 77.

    Incertus

    November 15, 2008 at 12:45 pm

    @Ivan Ivanovich Renko: Yeah, favoring the immediate gain over long-term stability is a problem, and not only in the auto industry. It’s infected our entire system, which is a big reason we’re in the shit we’re in right now.

  78. 78.

    AhabTRuler

    November 15, 2008 at 12:49 pm

    Yeah, favoring the immediate gain over long-term stability is a problem, and not only in the auto industry. It’s infected our entire system, which is a big reason we’re in the shit we’re in right now.

    This point should be emphasized.

  79. 79.

    Deborah

    November 15, 2008 at 12:50 pm

    Here’s the thing: the people here who make cars and parts didn’t do anything wrong.
    Same was true for most of the lowlevel people at Enron, Lehman Brothers, and any number of other badly managed companies. Do we bail out every single company that might fail on account of the low-level workers being really nice people who did their jobs, and whose unemployment would be tragic? Or do we draw that too big to fail line, which will encourage every future company to get as big as possible so that their risk will be socialized, driving out small firms who are small enough to fail, and thus can’t take those big risks?

    As to buying American vs foreign: for one thing, these days you might be buying a Toyota or Honda built here vs an "American" car built in Mexico, so it’s not so easy to draw lines. But my main point is the same one that was made about attracting a young generation of voters to the Democratic party: they’ll stay. If the Republicans improve in a few years then some will switch, but to really see a big shift the Dems need to screw up while the Reps know what they’re doing. (Note I’m not saying the Dems are incapable of screwing things up–I’m amazed they’ve waited til after the election this time.) There’s a whole generation who looked at reliability–the big thing for me was that my car never leave me stranded–and went with Toyotas. I’ve read that American cars are getting more reliable (and have a LOT of cupholders), but so long as my familiar Toyotas continue to be utterly dependable, I doubt I’ll be changing brands.

  80. 80.

    Dennis - SGMM

    November 15, 2008 at 12:50 pm

    @Incertus:
    Not just long term stability but also long-term planning. Many American businesses seem to find it impossible to plan beyond the next quarter. The Japanese and Chinese who are now dominant in some sectors plan a generation ahead without expecting a return for that amount of time.

  81. 81.

    Hyperion

    November 15, 2008 at 12:56 pm

    spend it backstopping the job losses and the retirement benefits of people who paid into the system for years

    i think that a large part of GM’s problem is the defined benefit retirement program. employees don’t "pay into" that system. they promised health care to these folks, too. bad idea IMO. what were their accountants thinking!

  82. 82.

    Ivan Ivanovich Renko

    November 15, 2008 at 12:59 pm

    @Dennis – SGMM:

    Hear hear. It’s one of the reasons we keep getting played by China and Iran, among others– those ol’ boys play the long game; we’re focused on next quarter. Or next election.

  83. 83.

    Deborah

    November 15, 2008 at 1:00 pm

    It’s an out-dated idea, and maybe they should have been more savvy, as investors, and diversified, but they weren’t, and now they’re old, and they’re watching it all go to hell, and that’s hard.
    They thought they were investing in something they knew.

    Um…That’s exactly what happened with all the Enron people who didn’t diversify and saw their savings go up in smoke because it turned out owning Enron wasn’t worth anything.

    I’d like to believe that a bailout could be done in a smart way, and they just need this little boost. I’d be in favor then. But I look at AIG and don’t see that, and I look at the big 3s management and ability to plan for the future (fine to build SUVs when demand is high if you actually have a good working plan for the future, which will include higher gas prices DUH) and I don’t have a lot of faith that they won’t be asking again in a year. And long-term, should we be driving Toyota and Honda out by handing money to Chrysler? I just don’t see much long-term thinking here, and a lot of "it will be very sad when they fail, so maybe we can put it off a couple of years, because it will be sad."

  84. 84.

    Comrade Darkness

    November 15, 2008 at 1:04 pm

    I did a quick computation of how much a problem I am. At 3$ per gallon, over the life of my prius, my car choice keeps 5700$ more money inside the U.S. economy in fuel savings.

  85. 85.

    kilo

    November 15, 2008 at 1:05 pm

    @Just Some Fuckhead:

    Actually, the best thing we can do for the Big Three is buy their cars.

    Actually, the best thing you can do for the Big Three is NOT buy their cars. Unless, of course, they are making the best vehicle in the category.

    Because if you don’t give your business to the best manufacturer, the market can’t signal the other manufacturers that they need to get their collective shit together. And then they wind up doing clueless things like MOAR ESS-EWE-VEEESS !!!

    Depriving them of your business is the right and patriotic thing to do for the Big Three.

  86. 86.

    El Cid

    November 15, 2008 at 1:06 pm

    We encouraged our car companies to be idiots. It wasn’t the unions or the pension funds that made management make stupid decisions all around. That was the awesome "conservative" and business influence over laws and regulations.

    Toyota and Honda weren’t whining and lobbying for years about how Congress and the President had to keep from raising fuel economy standards. Of course, gas was cheap for a while, so let’s all be idiots and act like it’ll be cheap forever. After all Jimmy Carter was wrong about everything and Ronald Reagan would have had a Hummer. Chuck Norris. The End.

    It wasn’t Hyundai that was celebrating when SUV’s kept being taxed as work & farm vehicles over passenger cars, leading to a nation-wide surge in truck-based passenger vehicles.

    It wasn’t Land Rover who begged for a tax exemption for up to $100,000 toward the cost of a small business buying a vehicle which had to have a GVWR over 6500 lbs. Thanks for my American tax dollars no longer being used for useful purposes, but gifting all the dumb-ass exercise and other service-industry shops here in metro Atlanta for going out and buying promotional Hummers and Range Rovers and Land Rovers etc. to wrap with their a**hole promotions.

    We helped them to the edge of their graves, while other nations kept on with their evil, socialist requirements for greater fuel economy standards, lighter weights, more passenger-vehicle based work vehicles than vice versa.

  87. 87.

    AhabTRuler

    November 15, 2008 at 1:08 pm

    I feel like the inability to look forward really hampers us as a nation. Look at our inability to rebuild and maintain infrastructure. Look at the general failure to invest in public trans., high-speed rail, roads, bridges, etc.

    I live in the DC Metro area, and the various regional gov’ts. inability to fund and develop the Metro system drives me nuts. Unless, you are a morning or evening commuter, the system is frustrating to use.

    Compared to NY, London, or Paris, the system is a joke. But it is very clean!

  88. 88.

    Joel

    November 15, 2008 at 1:19 pm

    Someone who has a better appreciation for history might help me here, but would General Motors be the largest company (relative to their peak market capitalization) in US history to declare bankruptcy?

    Right now, GM’s market cap. is smaller than Avon.

  89. 89.

    Fulcanelli

    November 15, 2008 at 1:22 pm

    Mr Moderator… My comment back at #40 is still in moderation limbo? Have I offended the moderator god(s) in some way? Is a burnt offering neccessary? First born sacrifice?

  90. 90.

    Mike G

    November 15, 2008 at 1:23 pm

    Bugger if I can argue that point—the bigs DID cede that portion of the market; the price-points and the profits weren’t there for ‘em.

    So perhaps it’s not as simple as "the big 3 built big-ass cars because THAT’S WHAT WE WANTED TO FUCKING BUY"?

    Toyota, Honda et al built SUVs during the craze, they just weren’t so Detroit-stupid and shortsighted as to neglect their small/compact car lines because they weren’t quite as profitable that quarter. When the SUV craze died (No-one could have anticipated gas prices would ever go up!! Er, except for all the Japanese and Koreans and everyone else who can remember the 1970s or read a history book) the importers had a viable range of product to carry them. Ford had the long-neglected Taurus, once the best-selling car in the country, now relegated only to rental fleets while the Camry and Accord ran away with its segment.

    I don’t know how you can cure the shallow, short-term-profits MBA-mentality of the Detroit (and US in general) management culture, but it is absolutely ruinous to run an industrial manufacturing business with long product cycles on such a basis. Managers who think long-term are pushed out in favor of hucksters who produce dazzling short-term financial results, and there is an addiction to hyping the ‘next big thing’ because that’s how you get promoted, even if incrementally improving existing products is a much more important task.

  91. 91.

    Mr. Mises

    November 15, 2008 at 1:25 pm

    While ‘short term profit’ Detroit was killing the electric car, a few silicon valley electro-gearheads had more of a long term focus:

    http://www.teslamotors.com/

  92. 92.

    Dennis - SGMM

    November 15, 2008 at 1:29 pm

    Someone who has a better appreciation for history might help me here, but would General Motors be the largest company (relative to their peak market capitalization) in US history to declare bankruptcy?

    Not sure. Here’s a page of the Largest Overall BK’s from 1980 to present.

  93. 93.

    Ivan Ivanovich Renko

    November 15, 2008 at 1:35 pm

    @Mike G:

    Is anything that fucking simple?

    Jesus, Mary and Joseph.

    Did I not mention that in their own home markets (Nippon, the European Union) they sold a lot more small cars because the cost of fuel was already much higher than what we had to deal with?

    I can agree that the short-sighted chase of short-term profits hinders us as a nation, but blaming a corporation for chasing profits is like blaming a dog for chasing a car.

    It’s what they fucking do.

    Someone mentioned that evil term, regulation. Without rational, dare I say wise regulation ANY "corporation", as a *profit centered entity*, will do likewise.

    It’s what they fucking do.

    In the meantime the Bigs have moved aggressively toward improving their smaller car lines; but to give them the same level of creature comfort that you can get in a Eurocar of the same size, they’ve either gotta cut their profits (already at the bone, on small vehicles if they exist at all) or raise prices (which Americans have demonstrated that they don’t want to pay).

    Cut your margins or raise your prices– or concentrate on bigger vehicles that seem to sell pretty well and on which you can make much bigger margins.

    That isn’t the Bigs sole bailiwick– it’s American business in a nutshell: "What’s next quarter’s bottom line gonna be like?"

  94. 94.

    kay

    November 15, 2008 at 2:05 pm

    @Deborah:

    I don’t think Lehman Brothers or Enron are an apt comparison. I don’t even think you can compare Lehman Brothers to Enron, really.

    The facts are, auto manufacturers were adapting. They got hit with a triple whammy.

    Under a new, two-tier UAW contract signed in 2007, the average base wage rate for existing workers at each of the Detroit Three is about $28 per hour, and new workers will be hired at base wage rates of $14 to $16.23 per hour.

    "So much of the costs faced by GM and Ford are costs to workers who are no longer working anymore," Chaison said. "Essentially, Honda is paying workers who make cars, and GM, Ford and Chrysler are paying workers that made cars."

  95. 95.

    Incertus

    November 15, 2008 at 2:15 pm

    OT, but Alan Keyes has joined the Obama birth certificate brigade. This ought to make an already stupid group of people implode into a black hole of inanity from which no one will escape.

  96. 96.

    Joshua Norton

    November 15, 2008 at 2:16 pm

    I’m a capitalist.

    No. You’re not. Rockefeller is a Capitalist. DuPont is a Capitalist. The old time robber barons were capitalists. A capitalist lives off the profits of their CAPITAL. They have enough money and investments (i.e. "capital") to generate enough return to live on (usually very well). If you work for your pay, you are NOT a capitalist.

    People seem to think that capitalism just means making a profit. You might believe in the idea of capitalism in the hopes that one day you will be a capitalist, but until your bank account is supporting you – and not the other way around, you aren’t one.

    It’s a very exclusive club to belong to, but not a political ideology.

  97. 97.

    Comrade Darkness

    November 15, 2008 at 2:18 pm

    @Joshua Norton, so give me the term for the ideology that says that the best company’s products should win. You somehow failed to say what that was.

  98. 98.

    Dennis - SGMM

    November 15, 2008 at 2:22 pm

    @Incertus:
    That is epically, spectacularly unashmedly stupid.
    This part:

    …until documentary proof is produced and verified showing that Senator Obama is a natural born citizen of the United States, and does not hold citizenship of Indonesia, Kenya or Great Britain.

    Is the crown jewel.

  99. 99.

    Joshua Norton

    November 15, 2008 at 2:25 pm

    best company’s products should win.

    That would be the infamous "free market". Which isn’t really "free" in this country, since it’s constantly being manipulated by people who think it should be free only for them.

  100. 100.

    Comrade Darkness

    November 15, 2008 at 2:46 pm

    @Joshua Norton, I think that’s a cop-out answer, but I’m not a believer in a free market. I’m a believer in using, what I call (for lack of another term) capitalist mechanisms to account for externalities, such as pollution, and social damage (for example regulating real estate development by requiring public transit be taken into account), among others. That’s not Free Market, at all. Try again.

  101. 101.

    gil mann

    November 15, 2008 at 2:50 pm

    But my degree is in Adult Education, so what do I know?

    That, believe it or not, there’s li-yee-ife after high school?

  102. 102.

    harlana pepper

    November 15, 2008 at 2:57 pm

    It’s a very exclusive club to belong to, but not a political ideology.

    Fixed.

    It’s a very exclusive club to belong to, but not a political ideology,
    except for the very dumb.

  103. 103.

    kay

    November 15, 2008 at 2:58 pm

    @Deborah:

    And, then Deborah, I’d ask you to consider this. Every one of those 3 million Big Three-related jobs come with health care benefits.

    Each of those workers insures a family, including, usually, a spouse.

    That spouse is then free to pursue self-employment, and maybe even employ a couple of people.

    Show me a free-wheeling bootstrap small business here and most of the time I can show you the spouse with the health benefits behind that small business. The Big Three ( and employers like them) are backing a lot of risk-taking, and that’s good.

    There’s that.

  104. 104.

    Comrade Darkness

    November 15, 2008 at 3:03 pm

    Fixed.
    It’s a very exclusive club to belong to, but not a political ideology,
    except for the very dumb.

    So, changing the price of a good changes its market potential, no? If I were in charge, wars for oil would be charged against oil products in the form of a tax. This, fairly to me, makes oil less desirable in the market relative to other forms of energy for which we do not have to initiate wars of aggression to get cheap access. It forces the market price to take into account the true cost of the goods. Changing the price of a good to take into account externalities requires taxation policy. That requires politics.

    Give me a term for that mentality, no one has been able to, funny enough. They just toss insults.

  105. 105.

    J.

    November 15, 2008 at 3:48 pm

    @Duros Hussein 62: Great idea.

  106. 106.

    Deborah

    November 15, 2008 at 3:55 pm

    @Kay:
    On the triple whammy, there’s no excuse for not being prepared for higher gas prices. No one at all was predicting super low gas prices over the next decades. An economic slowdown–they happen. If you’re a huge industry that’s been in business for decades, you’re supposed to be prepared for such. The credit markets freezing up I’ll give you. On the first 2, why aren’t Honda and Toyota pleading for handouts before they go bust, if higher gas prices and an economic downturn were impossible to foresee? Toyota’s even been pushing their 0% financing throughout, so I assume they have enough capitalization to keep making loans.

    All of these companies had divisions within which people made good decisions and did their jobs; if someone could convince me that a bailout was aimed at promoting those groups and shutting out all the poorly run and unneeded ones, I’d be more receptive. Instead, I see AIG and a couple of decades of cars no one wanted to buy. For that matter, in the badly run or unneeded divisions I am sure there are many wonderful people who just did their jobs to the best of their ability. I don’t wish them any ill, but carrying them along because it would be so sad to fire them is not long-term thinking.

    On heathcare, I’ve been in favor of single payer for years. No one talked about it as doable in this election, so I looked for someone who would move things forward and get kids covered. Maybe this will be the kick in the pants to jump toward government funding health care. But if the health care needs are too great to dump into society as a whole, so we must carry the businesses along, where do we draw our small-enough-to-fail line? How many small firms, or middle-sized firms, get to lay people off? Do we carry all of them in the interests of fairness? If so, we should probably do it by a national program, e.g. single payer health care. Subsidizing certain industries on the grounds that they’re large–again, there is no long-term strategy there.

    If we’re to bail out Detroit, I want to be convinced that it’s along the lines of running a Ch 11 restructuring without the debt issue, where plants will close and poor managers be weeded out and divisions sold to companies interested in running them well. The fact that people–really nice people, even–will be out of work if we don’t give them the difference in operating expenses for the next year doesn’t convince me they won’t be asking for round 2 at the end of that year.

    To someone’s point about Detroit paying a lot of people who don’t make cars–I agree it’s a problem, and one they stumbled into when not being run very well. I don’t know the solution, though–does the US gov guaranteeing underfunded pension plans encourage any responsibility from companies? Underfund, you have more cash on hand, and the government bails you out. Fund fully, you have less cash, and no government bailout. The incentives are wrong. As with too-big-to-fail, it rewards the wrong behavior and makes it harder for well-run firms to compete–it’s some sort of anti-Darwinism.

  107. 107.

    Church Lady

    November 15, 2008 at 4:02 pm

    When I went looking for a new vehicle in 2003, I compared the Chevy Surburban to the GMC Yukon XL. I needed something big to transport two kids and two big dogs. The cars were practically identical, except for the price tag – there was about a $4K difference. I asked the Chevy salesman why the Suburban was so much less than the Yukon. He told me that it was because the Suburban was produced on a line in Mexico and the Yukon was made in the U.S. Price won out and I bought the Suburban. My seventeen year old son drives it now. Yes, it’s a tank, and yes, it’s expensive to fill up. But man, it is safe. Last weekend he got rear ended while at a stop light. A small dent and a few paint chips on the bumper was the extent of the damage. The other car, which was a Honda Civic, wound up with a very crumpled front end and had to be towed.

    We also own a 2004 Chevy Trailblazer and a 2007 GMC Yukon XL. The Suburban and the Trailblazer (I have no idea where it was made) have been really dependable cars for the most part, requiring not much more than basic maintenance. The Yukon, not so much. It’s been in the shop four times in less than two years for a variety of electrical system problems. My husband is fed up and ready to trade it in and go back to driving a Lexus.

  108. 108.

    kidkawartha

    November 15, 2008 at 4:20 pm

    Slightly off the main topic, my brother is a grade-school teacher who teaches in a community just east of Toronto that is heavily populated with GM workers (whose truck plant is scheduled to go the way of the dodo in a year or two). He’s heard a great deal of water-cooler chatter about two things-
    1. Honda and Toyota won’t build plants near the Big Three’s, because they don’t want to have to deal with the ex-employees of the Big Three- they tend to be the worst employees available.
    2. GM lines and plants here in Ontario are reputed to be rife with corruption and outright theft.

    I think that the collapse of the Big Three will be a nightmare for the American economy, but it might be an unavoidable and potentially, long-term benefit for the overall economy. America has to stop allowing so many of it’s economic eggs to sit in one basket- imagine if there were 15-20 smaller US automakers and how healthy that would be- possible if would help re-invent the UAW as well.

    One last thought- I know GM is paying a crapload of $ in bennies to existing and retired workers, and I often wonder why the UAW doesn’t have a pension plan built on the Ontario Teacher’s Pension Plan, where the teachers have first and final say on all it’s goings-on. It is one of the most powerful and healthy pension funds in the world, primarily, I think, because the employers don’t control it and can’t raid or diminish it.

    Hang on, my American friends- as the Chinese say, danger can also mean opportunity- if you are careful, maybe there is a whole new renaissance of American work-life around the corner, providing you can do a progressive shock doctrine on the present situation.

  109. 109.

    CIRCVS MAXIMVS MMVIII

    November 15, 2008 at 4:51 pm

    Meanwhile, jobs that paid enough to put a family into the middle class weren’t created at the necessary rate and wages stagnated. So many Americans simply borrowed their way into the Middle Class. And now the bills have come in.

    I didn’t take advantage of this credit party, I just sat on the sidelines watching it, and now I’m going to be screwed too.

  110. 110.

    Doug H. (Comrade Fausto no more)

    November 15, 2008 at 4:54 pm

    @Comrade Darkness:

    I did a quick computation of how much a problem I am. At 3$ per gallon, over the life of my prius, my car choice keeps 5700$ more money inside the U.S. economy in fuel savings.

    You might want to start saving that $700 for if/when the Big 3 do go under.

    Just sayin’.

  111. 111.

    Cain

    November 15, 2008 at 4:57 pm

    You consider the externality of employing Americans to be paramount to other considerations. I used to as well, bought my first Ford out of college and drove it into the ground 12 years later. Went to buy another one and found that not only had the cars not improved (in 12 freakin’ years!), they had actually declined. So, faced with a choice of having the externality "cost" me too much, I opted to consider the externality of burning too much fossil fuel, and I bought a prius instead.

    My brother works for Johnson Controls, and the big three outsources interior design of cars to them. You’ve never seen such a bunch of cheapskates. My brother designs car interiors for them. They’ll ask them to make a good design with good materials and then balk and tell them to make it all cheap. In contrast, my brother says that Japanese and German guys don’t mind paying for good design and good materials. (they don’t contract Johnson Controls for this, I believe they do it all in-house) They are a very frustrating bunch of people to deal with.

    That might explain why after 12 years, there has been no change in design interiors. I personally, hate the interiors of American cars. I’m buying what I want. If I save on gas, I can buy other american products. Hell, I’ll buy stuff that’s made in the damn state I live in. I recently got furniture made in Oregon (Grant’s Pass), entertainment furniture through Costco. Quality stuff, and I was willing to pay a little extra for that.

    Here’s another thought, someone reported that they were making 40% profit on SUVs. What exactly happened to all that profit? Did they invest it in their own R&D or did they just give themselves higher salaries? If some MBA is to blame for all this, that fire the lot of them and then we’ll talk bailout or some way to help workers get through the hard times until car manufacturers unstuck their head from their collective asses.

    cain

  112. 112.

    Doug H. (Comrade Fausto no more)

    November 15, 2008 at 5:01 pm

    @kidkawartha:

    Hang on, my American friends- as the Chinese say, danger can also mean opportunity- if you are careful, maybe there is a whole new renaissance of American work-life around the corner, providing you can do a progressive shock doctrine on the present situation.

    Its been some time now since the steel industry abandoned Cleveland for cheaper and less unionized climates. You know what’s the biggest industry left in the area?

    The Cleveland Clinic.

    That’s right. We’ve gone from one of the biggest industrial cities in the world to basically being the support system for Kuwaiti shiekh heart transplants. And that’s it. Where there used to be a steel plant, there’s now a fucking shopping center – because nobody was going to build another plant there.

    So if you don’t mind me, I’ll be sitting here having a hearty gut laugh at those crying ‘opportunity’. If I’m not jabbing my Brad Delong voodoo doll in the posterior.

  113. 113.

    Cain

    November 15, 2008 at 5:29 pm

    @Mr. Mises:

    http://www.teslamotors.com/

    I think they’re going bankrupt and may not be able to survive. THey might need a bailout too. :-)

    check this link

    cain

  114. 114.

    pattonbt

    November 15, 2008 at 6:01 pm

    @gex:

    This is the big problem for me as well ‘too big to fail’. So if we find ourselves in a position where something is too big to fail, then we should break it up, end of story.

    Maybe this is something that can not be an immediate term focus while the hemorrhaging is ongoing, but it should be a significant part of the short, medium and long term reviews of laws and regulations that will be necessary as we get through this downturn.

    ‘Too big to fail’ should never again be an excuse.

  115. 115.

    AnneLaurie

    November 15, 2008 at 6:47 pm

    Show me a free-wheeling bootstrap small business here and most of the time I can show you the spouse with the health benefits behind that small business. The Big Three ( and employers like them) are backing a lot of risk-taking, and that’s good.

    Word. Lots of the libertarian-approved "new paradigm" small businesses are only viable because the Glorious Risk Taker’s spouse’s employer is taking the hit for the 10,000 various "pre-existing conditions" our insurance companies won’t cover. That’s why UNIVERSAL HEALTH COVERAGE really really really needs to be a starting point for the whole creative-destruction cycle we’re looking at right now. And, surprise!, the fact that only government-approved marriage entitles couples to this particular scam is one reason Teh Gheys want access to government-approved marriages…

    Incidentally, this thread serves as proof positive that John Cole hired Michael D. to serve as a pinata. M.D.’s always good for another half-witted unthought-through idea to spark the commentors on an otherwise dull afternoon. How’s it feel to be a professional troll, Michael?

  116. 116.

    Reed

    November 15, 2008 at 7:08 pm

    Lots of thoughts that echo my own, or at least seem to. Without quoting and repeating ad nauseam, here is a small list of questions I ask myself whenever I run across well-thought but perhaps limited dialog:

    1. Are those of us whose first reaction is anger to the possibility of auto industry bailout more or less misdirecting that anger? The financial industry is getting the bailout. Do they deserve it more than the working class industries whose management has screwed up following the supply-side gurus? Why give the financial folks the bailout and let the auto industry die? If we follow that thread, let’s let the entire enconomy tank across the board, try to survive and pick up the pieces.

    2. Last time I checked — and it’s been a few years back — unions only accounted for about 12% of the American working population. Does that mean we should punish the unions by throwing their constituency out of work, which will act as a negative ripple effect on the industries that don’t utilize unions?

    I’m just wondering. I see an awful lot of downside if we take a rigid negative position on further bailouts on industries who can’t finance further loans to keep theiry industries afloat.

    Shouldn’t we (the angry people; our new government leadership) really hold Paulson/Bush/supply side CEO feet to the fire regarding compensation, completely overhaul the accounting mechanism the financial industry has used to deceive the public over the years.

    Just wondering. Seems like we’re burning our economic bridges on the wrong end.

  117. 117.

    pattonbt

    November 15, 2008 at 7:08 pm

    To me the bailouts ongoing (auto and banks) are just like the little Dutch boy sticking his finger in the dyke plugging the little holes while the dyke crumbles around him. Its temporary but doesnt deal with long term macro economic problems the US faces.

    The US needs to accept that we can no longer demand or expect the world to finance our substantially higher unrealistic quality of life. That may have been possible from the 40’s through the late 70’s but its been pretty obvious, long term, that since the 80’s we’ve just been putting off the inevitable.

    Free markets and free capital have levelled the playing field which is what has brought the US back from the top to the rest of the pack. Hoisted by our own petard if you will. The ideas we championed brought us down because we couldnt imagine the rest of world would never not accept our debt or be able to compete with us. We never believed the rules would ever apply to us.

    So we’ve debted ourselves in a fantasy land of thinking that we should not be restricted from our wants (not just needs) in any way. We build McMansions, we dont tax fuel, food and wages at reasonable levels, we dont invest in infrastructure, we extend our personal and communal supply lines over ridiculously long lines and use inefficient transportation methods to move people and goods. We dont accept any limitation on our desires.

    We have been told that ‘no’ is absolutely not acceptable and a sign of weakness.

    So while I know that letting these institutions fail is awful and will have massive short and medium term impacts, its time for the US to pay its bills and get on with getting used to the fact that the rest of the world will no longer support our carefree lifestyle. I am sure there are ways of doing this incrementally so that we dont have one massive shock to the system, but we need fundamental change.

    Maybe there is no way to the fabled ‘middle class’ of yore anymore where one man can work in a manufacturing job and fund a family of four with two cars, a big house, college tuition to a private school, etc., etc., etc. Or maybe we just need to accept that the middle class means something different now. Smaller homes, smaller cars, less consumerism, moderately lower average wages, working families, etc. That is the simple reality we face going forward.

    Yeah, I know all this is against the grain of the US’s belief in their own divine exceptionalism, but the more we continue to bury our heads in the sand the longer and harder the eventual fall will be, and the US will fall.

    But the good news is, its not like the US is going to fall into a Congo like state. The Roman emprie fell two thousand years ago and Italy today is still a first world country. So the US will still be near the top, just moderated a bit, which is a good thing.

  118. 118.

    Tattoosydney

    November 15, 2008 at 7:40 pm

    @pattonbt:

    The Roman empire fell two thousand years ago and Italy today is still a first world country.

    Um…. from what I recall there were 400 years of war, famine, disease epidemics and a total collapse of education outside scattered religious institutions following on from the collapse of the Roman Empire. Not called the "Dark Ages" for nothing.

  119. 119.

    Bob In Pacifica

    November 15, 2008 at 7:47 pm

    A number of Republican politicians wouldn’t mind the automakers going down because they are highly unionized and highly paid. They’d just as soon have us all poor, ignorant and barefoot.

    Having a unionized industry is good for the economy long-term.

    The problem is the collection of numbnuts who run the companies. I want the companies to survive, but there should be strings attached. Ropes. Steel cables.

    Guarantees for pensions. Acceptance of the money means an end to bonuses for execs and strict limits for exec salaries. Higher CAFE standards, hybrids and electrics.

    Perhaps medical benefits can be transferred over to the feds as a transition for what’s (hopefully) coming.

  120. 120.

    pattonbt

    November 15, 2008 at 8:03 pm

    @Tattoosydney:

    Good point. But the world is exponentially different and more advanced now than it was then so I feel pretty safe in saying we do not have any ‘dark age’ effect to worry about.

    I dont mean to imply that there will not be severe and unpleasant effects (or downplay them), there will be. But we will ride them out in relative comfort compared to historic equivalents.

  121. 121.

    Mr. Mises

    November 15, 2008 at 8:21 pm

    @cain:

    100K+ a pop is an awful lot for a little car. But still, a humongous gap in performance between what the Big Three offer (like Chevy Volt) and what a few silicon valley electro-gearheads with limited experience have come up with.

  122. 122.

    Tattoosydney

    November 15, 2008 at 8:26 pm

    @pattonbt:

    I hope you are right…

  123. 123.

    e_majorana

    November 15, 2008 at 8:38 pm

    Not really an expert here, but I wonder how much the Japanese, Germans and Koreans believe in the kind of laissez faire, neo-liberalism that’s an article of faith in the United States.

    For years, the response to the suggestion that the government needed an industrial policy was that we didn’t want the feds picking winners and losers. Now here we are, faced with the distinct possibility that a major manufacturing component of the economy might collapse, with unforseen consequences.

    During WW II, it took bombs to destroy the industrial base of Germany and Japan. It seems the same thing is about to happen in Detroit without a shot being fired.

    Incidentally, I suspect that one reason foreign car makers avoided the northeast is because the workforce is less docile and hence less averse to unionism than elsewhere.

  124. 124.

    AhabTRuler

    November 15, 2008 at 8:39 pm

    BTW:

    Johnson Controls

    is my favorite company name.

  125. 125.

    Delia

    November 15, 2008 at 9:05 pm

    Um…. from what I recall there were 400 years of war, famine, disease epidemics and a total collapse of education outside scattered religious institutions following on from the collapse of the Roman Empire. Not called the "Dark Ages" for nothing.

    Oh, much longer than that. But OTOH, when change they could believe in did come, Italy was the first to recover.

    That being said, it may not be politically tenable for Obama not to offer some sort of bailout. There’s no reason for him to follow gooper precedent and just hand over bags of cash to the Big Three. With proper adult supervision it might be possible to structure some aid that encourages them to produce products that are worth buying. Unlike the Chevette my then-husband bought me many years ago that fried a fuel pump at 25,000 miles and dropped its front axle in the driveway at 40,000. That’s when we switched entirely to Japanese and never looked back.

  126. 126.

    TheHatOnMyCat

    November 15, 2008 at 10:33 pm

    In case anyone here might wonder, this is what a blog article about the auto industry crisis looks like when it is written by somebody who knows what the fuck they are talking about. Something you will not find here, when somebody like Michael, who has no fucking clue what he is talking about, is given the key to the front page.

    Michael, the Sarah Palin of Balloon Juice. Appeal to the lowest common denominator in any problem set, reduce everything to slogans and emotional release.

    There are cogent arguments to be made for any position in the auto crisis situation, but (a) cogent argument doesn’t make a bad solution into a good one, and (b) you won’t find that kind of argument under this byline. You will need to look elsewhere.

  127. 127.

    Brian J

    November 15, 2008 at 11:20 pm

    This is a situation where knowledge of the legal system as it relates to bankruptcy so so forth is really necessary. That said, if what I am about to say seems strange, forgive me, because I am really not sure about some thing in that area.

    If the biggest problem is really the legacy costs, then wouldn’t the simplest solution be for the government to assume them and then let the companies move on from there? If they go under, won’t we be assuming them anyway?

    If it’s something greater, perhaps the best solution is to do something similar to what the Treasury did for JP Morgan when it acquired Bear Stearns. That seems to be what Michael D. is suggesting above.

  128. 128.

    Phoenix Woman

    November 15, 2008 at 11:57 pm

    @burnspbesq:

    There is no way to reorganize the Big Three through bankruptcy.

    If the auto companies go into Chapter 11, one of their advisors is certain to suggest that they reject (or, in non-lawyerly English, "renege on") their collective bargaining agreements. If that happens, the UAW will walk, there will be no revenue at all, the suppliers will die like fish in an algae bloom, and eventually the creditors will say "fuck this" and move to convert the Chapter 11 reorganization proceeding into a Chapter 7 liquidation.

    And then the wingnuts and every corporate lobbyist who hates unions will blame the UAW for the death of the auto industry, and there will be calls for a fundamental re-examination of our labor laws, which will end up with the unions getting it in the shorts.

    None of that seems to me to fall in the category of good outcomes.

    Exactly.

    I have a friend who thinks GM’s top management should for the most part be drawn and quartered. However, the people behind the Chevy Volt — which leapfrogs past the proprietary hybrid technology used by Toyota to provide a car that can do most if not all of its running via electricity (it has a backup gas tank for when the battery runs low) — need to be allowed to get their car to market. That will be the game changer here.

    Oh, and who’s going to keep our steel mills open if the Big Three are gone? Demand for wind turbines can’t, not on its own.

  129. 129.

    Mako

    November 16, 2008 at 1:49 am

    I did a quick computation of how much a problem I am. At 3$ per gallon, over the life of my prius, my car choice keeps 5700$ more money inside the U.S. economy in fuel savings.

    heh, I did a quick calculation of how much of a problem I am. Still driving a 1970 beater. No new metal or plastic waste created since 1970!
    Okay, just kidding, I live in Tokyo and don’t even own a car, Which makes me better than you. Naynee naynnee.

  130. 130.

    Dennis - SGMM

    November 16, 2008 at 3:07 am

    @CIRCVS MAXIMVS MMVIII:
    Same here. Our "new" car is nine years old, etc. We get to go along for the ride anyway – and we get to help to pay for it.

  131. 131.

    Paulie Chestnuts

    November 16, 2008 at 8:06 am

    @pattonbt:

    To me the bailouts ongoing (auto and banks) are just like the little Dutch boy sticking his finger in the dyke plugging the little holes while the dyke crumbles around him.

    That kid must have some good technique… ;)

    FWIW I would rather pull our troops out of Iraq, end the drug war, or let some red states lose some of their disproportionately earned tax dollars (that they claim they don’t need anyway) before I would oppose an auto company bailout.

    And yes, as a Michigander I’m a little partisan in this matter, as our state is so dependent on the Big Three. I kind of got a dose of reality when a childhood friend of mine who is a hard-working engineer for Lear got laid off. If this happens en masse this state will be far more screwed than it is already (which is bad enough).

    And there ought to be many, many strings attached.

  132. 132.

    Tim H.

    November 16, 2008 at 10:22 am

    Holy Cthulhu. We’ve just given banks an order of magnitude more money which they’re apparently going to use solely for dividends and bonuses but we’re going to draw the line at bailing out car companies.

    Maybe we can make the auto CEOs promise to run multi-million dollar retreats for their dealers so they can qualify.

  133. 133.

    slightly_peeved

    November 16, 2008 at 4:50 pm

    I have a friend who thinks GM’s top management should for the most part be drawn and quartered. However, the people behind the Chevy Volt—which leapfrogs past the proprietary hybrid technology used by Toyota to provide a car that can do most if not all of its running via electricity (it has a backup gas tank for when the battery runs low)—need to be allowed to get their car to market. That will be the game changer here.

    The view of the rest of the world (go search for some Top Gear episodes featuring US cars to get more) is that US cars can’t handle and look cheap, both inside and out.

    I’ve read plenty of local motor magazines, and I’ve watched a lot of Top Gear (the funniest motor show ever made), and every review of a US car criticizes the interior build quality. Since Ford owns so many other car companies, this complaint has spread; Since Jaguar and Aston Martin were taken over by Ford, the quality of the interior fittings has gone down.

    Even if this is nothing more than a cultural bias against the style of US cars, convincing the world otherwise would be a sisyphean task for the big three. US car companies can’t put US cars up against the local competition at the same price and expect to be successful. They have to either undercut the European competition (as GM’s subsidiary Holden did with the Vauxhall VXR8/Pontiac G8/Holden Commodore) or do something unique. The Volt could do this, provided they beat other companies to the punch and keep the price competitive.

  134. 134.

    Original Lee

    November 17, 2008 at 1:35 am

    I agree with El Cid.

    However, as someone who has many family members working in the auto industry, I can say that top management and legacy benefits are not the only problems with the Big Three. First, there is the problem of letting the automakers open car loan banks, which let them charge pretty unrealistic prices for their vehicles while persuading gullible and ignorant people to sign ridiculous car loan contracts. That’s part of what started the slide.

    Second, the corporate culture of the Big Three is also very different than at the transplants, and I’m not sure that there are very many people who could take over as CEO and force the kind of transformation needed to make those companies healthy and competitive. The Big Three (with perhaps, the exception of the Saturn division of GM) are not very friendly to grassroots ideas, and unless you have some kind of clout at headquarters, fighting the status quo doesn’t get you very far. Remember the Pinto? A whole bunch of people on the line knew what was wrong with that car, but Dearborn needed engineers at headquarters to figure it out, and even then it was such a political hot potato that the relative newbies were the ones that got to break the news.

    Third, the foreign carmakers have a much flatter compensation structure than the Big Three, and they don’t seem to have as many layers of management as the Big Three do. Plus, everybody knows roughly how much each level is supposed to make, and the differences in compensation for each level are not that big – the plant manager might make double what the typical line worker does. I think that kind of accountability makes it easier to demand quality and attention to detail.

    WRT unions: as a union member myself (AFL/CIO), I think unions serve a useful and important role in protecting the workers. BUT I also think that there was a period of time where prosperity led to sloppy thinking on the part of the United Autoworkers as well as the Big Three automakers, and now everybody except for the people who largely caused the problem has to pay.

  135. 135.

    crack

    November 17, 2008 at 10:10 am

    I have to say Micheal, this is a terrible post. You espouse some uninformed belief and then couch it with ‘what do I know’. How can that help anything?

    Read Cohn, Krugman, Salmon, and DeLong. This whole thread is more venom than enlightenment.

    If someone can become better informed watching cable news than reading the thread, then the thread is not just worthless but harmful.

  136. 136.

    mike leo

    November 18, 2008 at 3:18 pm

    They dont bail-out the lady with 2 kids who works at the dinner up the street,so why allow the disenfranchised suffer and relieve the wealthy’s problems? Are we also going too seize the assets of the CEO’S and their home’s and bently’s and roll’s royce? and pull their kids out of harverd and yale?
    hell no.. that aint right…. do you agree?

  137. 137.

    MadeNTheUSA

    November 22, 2008 at 2:14 pm

    The Big 3 happens to be my life line which makes me a supporter of a bailout. I’m sure a lot of people enjoy driving their foreign cars at cheaper prices and better gas mileage which allows them to stretch their dollar further. The automobile is an American Icon we invented the automobile. But if you feel prouder driving a foreign car more power to you but then who’s next to be on the chopping block? I know if all those foreign car plants here in the states which all are hiring right now knew they could hire a Big 3 auto worker who lost his job and is qualified he/she will be waiting a long time for an interview. Why? Honda, Nissan, ect. will not hire them because they are qualified they do not want to have some one who was linked to UAW working for them and telling the rest of the workers how nice it was to have health insurance. The auto industry took a hit not because of poor management but because the price of oil flew through the roof and people cut back on spending and wasteful gas consumption which caused the retail industry to slow down which caused the manufacturing industry to slow down and that hit internationally and the auto industry was not the cause of grocery prices rising it was shipping costs from high oil prices. Poor management comes from Wall Street and they got their bailout and why is that? So the rich do not end up poor because they have all their money tied up in Wall Street and decided that they don’t want to give loans to all consumers? Who can buy a new care made by an American company or foreign company with cash? Thats why the auto industry colapsed they need loans like all businesses to continue to buy supplies to make a product. It all boils down to who wants to help one another. I am glad to see the government stepping in and helping its the American way. When we finally get out of Iraq how about dropping that cash on bailouts for the good old USA instead of wasting it on a country who is not greatful to have a government like ours there lending a hand. And no one is bailing me out of Wall Streets poor management decisions of my 401k.

  138. 138.

    LenHockin

    November 24, 2008 at 7:21 pm

    What the fuck are the (sheople) led to believe. I say to the bail out of the supposed big three of America, who have abandoned the USA taxpayers on a wholesale level, GO FUCK YOURSELFS!!!!!!! When you can make multi billions of $$$$ out of the USA , I don’t see why the so called , uneducated, moron,VOTING taxpayers should foot their propaganda requests!!!!!!! WAKE UP & STAND TALL AMERICA regardless of our new ELECTED LEADERS!!!!!!!!!!!!!

  139. 139.

    LenHockin

    November 24, 2008 at 7:21 pm

    What the fuck are the (sheople) led to believe. I say to the bail out of the supposed big three of America, who have abandoned the USA taxpayers on a wholesale level, GO FUCK YOURSELFS!!!!!!! When you can make multi billions of $$$$ out of the USA , I don’t see why the so called , uneducated, moron,VOTING taxpayers should foot their propaganda requests!!!!!!! WAKE UP & STAND TALL AMERICA regardless of our new ELECTED LEADERS!!!!!!!!!!!!!

  140. 140.

    mark

    January 9, 2009 at 5:11 pm

    when are the 3 gonna get it. alot of buyers out there can’t afford another morgatge or rent as a car payment. make something affordable and usefull.

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