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Auto company bail-outs - Idle Chit-Chat - The Lounge - Civil War Interactive Discussion Board
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 Posted: Fri Dec 19th, 2008 11:26 pm
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pamc153PA
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I happened to be home today and watched the president's press conference announcing the $17 billion bail-out loans for Chrysler and GM, though I'll admit I was only half-watching because, as a former public speaking teacher, everytime I watch Bush give a speech, regardless of topic, it just makes me wince. (Sorry--I digress.)Anyway, I liked the fact that there are stringent strings attached to the loans, but I wonder if any, like the March 31, 2009 deadline to show they can be profitable, will be enforced. That's not a comment on the new adminstration, who will be the ones to judge this, but a comment on government in general. Will the companies be held accountable, and if so how? I keep hearing our government officials say, "Well, we can't let them fail, it would be a terrible drag on our already compromised economy," but this IS capitalism, is it not? If not the banks, or the car companies, then whom SHOULD we let fail?

My grandfather used to have a saying that I think applies here: If you make it your policy to shoot horsethieves, you only have to shoot a couple before they get the general idea.

Just a bit of a rant. . .

Pam



 Posted: Fri Dec 19th, 2008 11:37 pm
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Doc C
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Pam

I'm afraid it's come down to damned if you do, damned if you don't. Look at the the bail out for the big banks recently - on the evening news tonite it showed the end of year bonuses these bozos are going to get even in the midst of the govt. bailout. To keep on topic, we have to do something for the auto industry to preserve the thousands of jobs, however they have to make significant changes - competitive products, more realistic union contracts (jes - 75 bucks an hour, I make good money but not close to those union guys).

Doc C

Last edited on Fri Dec 19th, 2008 11:38 pm by Doc C



 Posted: Fri Dec 19th, 2008 11:59 pm
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pamc153PA
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Doc,

I saw that too about the banks. One of the "experts" said something like companies like Goldman Sachs needs to keep the best people in order to be profitable, which means giving big bonuses. I understand the logic, but I don't agree with it in this economy. . .which is probably why I'm not an employee at Goldman Sachs! (Not that they've asked!:))

The town I live in used to be a factory town, mostly clothing, and way back, cigars and caskets. The last large factory employer left about 10 years ago. Our country is becoming less and less reliant on factory jobs, although in auto country where the auto industry is the largest employer, it may not seem that way. If I worked a factory job of any kind, I think I'd be more than a little worried, union or not. If the job's not there, no union can save you.

FYI--I did hear on the news that the $75 an hour minus benefits, overtime and pensions is more like $45.  .  . still not bad, though.

Pam



 Posted: Sat Dec 20th, 2008 12:16 am
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Doc C
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Pam

I still have a twin brother down in north Louisiana who says that they will be closing 1 local paper mill completely and another one for a couple of months. Don't think we've seen the worst of it yet unfortunately. The only thing we can be thankful for is, oil is < $40 a barrel. However, because of this they're laying off a lot of oil patch people. Listening to Johnny Winter Blues to get me through all of this.

Doc C



 Posted: Sat Dec 20th, 2008 12:49 am
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javal1
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Good to see some well thought-out comments about this subject. You both sound torn on the subject of the bail-outs, and actually I salute you for that. One of the problems we have as a nation is we always want to fight things on ideological grounds. Unfortunately. ideology isn't always aligned with reality.

In my gut- just pure instinct - I'm opposed to bailouts. But how realistic is that? I would have liked to see Fannie Mae and Freddy Mac go under. Problem being they would take half the US mortgages with them. Instinctively, I would say let the car companies go under, after all it was their stupidity and greed that put them where they are. I could even justify in my mind the auto workers losing their jobs, since it's also their greed that got them where they are.

But when you start to think of the myriad of secondary industries they would take with them: sand pit workers who supply the sand for the auto glass, glazers who make the windshields, metal workers who fabricate, computer chip makers, plastics workers, retail auto supply store workers, and on and on. I really do think the economy could collapse. Do we want that for the sake of ideology?

Just two small points. The $75,000 per worker thrown around is deceiving. Truth is that (and this is an amazing stat if you think about it), it costs the Big Three $35,000 per year per active employee to pay the legacy costs of those already retired. That figure is added in to come up with the "they earn $75,000 a year" line. Sad to say, but someone down the line's going to have to tell the retirees "sorry, we tried, but your benefits are going to have to be cut or eliminated".

Second point: boy do we have a bunch of idiots in Congress (both parties). We have Dingell (D) from Michigan who has catered to the stupidity of the Auto industry at every chance, right up to today. And we have Shelby (R) and other Southern Senators demanding they go into bankruptcy because they think they're protecting the foreign carmakers in their states. Wonder if they ever stopped to think about all the non-union workers in their states involved in the secondary industries I mentioned will go under. Idiots.

Damn, now my fingers are tired. Good thread.



 Posted: Sat Dec 20th, 2008 12:54 am
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Doc C
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Doc J

Another North vs South debakel. I'm glad I live in a border state.

Doc C



 Posted: Sat Dec 20th, 2008 01:58 am
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pamc153PA
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Joe,

I AM torn, for one simple reason: the people who would get hurt by letting these banks and companies go under are NOT the people who should pay the price, literally and figuratively.

I'd like to sound all cut-and-dried and say, "They screwed up, let them fail," but the double-sidedness of this makes that impossible for me. I would even say that knowing that a worsening economy would affect me, too. I do feel that way, but as you so rightly pointed out, there are so many related businesses that would get caught in the domino effect of bankruptcy, and the little people would get crushed. Easy for me to say, "Well, sorry folks, but you should've known the company you worked for was in trouble, and found another job," but I am 2000 miles, and a world away, from Detroit. Not for me to say, no matter how much I begrudge handing my tax dollars over to guys who fly corporate jets to Washington to ask for a hand out.

The sadder thing about a bail-out is that I'm not sure in the long run it'll change anything. Past experience has shown the people who should learn a lesson from this won't--from the auto company bosses to the politicians.

And by the way, where is Ole and his two (or three or four) cents' worth??

Pam

 

Last edited on Sat Dec 20th, 2008 01:59 am by pamc153PA



 Posted: Sat Dec 20th, 2008 04:51 pm
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ashbel
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Joe is right about the wage issue.  The figure of $75 to $85 per hour is loaded with retiree costs.  I really don't know the true wage rate (net of benefits) of the top tier wage earners.  I suspect it is more in the $30 range.  But new hires go in the second tier and make $16 to $18 per hour.  Hardly an amount that will make someone rich.

What is being missed in this dialogue is what will happen to the retiree pensions if the automakers go bankrupt.  The thinking is that is this will allow the auto companies the opportunity to restructure contracts with employees and auto dealers to make them more competitive.  But there is a huge cost for us taxpayers.  All the pensions are guaranteed by the Pension Guarantee Act.  In other words the government picks up the cost!  These pensions may be less but they do not go away!



 Posted: Sun Dec 21st, 2008 12:05 am
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ole
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Pam:

Ole assumed the fetal position under his make-shift desk. He'll likely come out sometime next fall.

 



 Posted: Sun Dec 21st, 2008 01:03 pm
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gettysburgerrn
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Silly stuff this bailout...propping up inefficient, ineffective businesses....that sounds like...hmm socialism..I wonder if I can qualify for a government bailout...I had a bad wekend in Atlantic City...

ken



 Posted: Sun Dec 21st, 2008 02:16 pm
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Doc C
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Ashbel

Pensions may be backed by the govt. but pensions have been replaced by 401K's which save companys millions. These aren't guaranteed like pensions. I feel for those individuals whose 401K portfolios have dwindled to next to nothing and who now or in the near future depend on those funds. DO WE BAIL THEM OUT ALSO? How are people who work in the auto industry different from other American workers? Whose next? Hard questions with no easy answers. Glad I'm just a lowly physician.

Doc C



 Posted: Sun Dec 21st, 2008 10:20 pm
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ashbel
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Doc
401K's and pensions covered by the Pension Guarantee Trust are two different things.  Pension's are "insured" much like the FDIC insures bank deposits.  Companies that offer pensions pay a percentage of their deposits each year to insure the continuation of their programs - even if they go bankrupt.  This program was started in the 1970's and was in pretty good shape until a few years ago.  Now it is several billion dollars in the red.  Any deficits in the Trust are guaranteed by the government.

All government bailouts represent a "slippery slope."  Where do you stop?  I, for one, favor those that keep the most jobs.



 Posted: Mon Dec 22nd, 2008 01:08 am
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Doc C
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Ashbel

Exactly, the majority of corp. retirement plans today to my limited knowledge are 401K's therefore not backed by the fed. Like mine, they've taken a significant hit lately, thank godness I'm not planning to tap into it for many years.

Doc C



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