Expanded Bailout

[Bindare_Dundat]

WASHINGTON-- Democratic leaders in Congress asked the White House today to provide more aid to the auto industry.

House Speaker Nancy Pelosi, D-Calif., and Senate Majority Leader Harry Reid, D-Nev., said in a letter to Treasury Secretary Henry Paulson that the administration should consider expanding the $700 billion bailout to include car companies.

"A healthy automobile manufacturing sector is essential to the restoration of financial market stability, the overall health of our economy, and the livelihood of the automobile sector's work force," they wrote. "The economic downturn and the crisis in our financial markets further imperiled our domestic automobile industry and its workforce."

Reid and Pelosi met separately on Thursday with the leaders of the automobile industry and its top union representative to discuss the financial challenges confronting the industry.

"We left the meetings convinced that our nation's automobile industry — the heart of our manufacturing sector — and the jobs of tens of thousands of American workers are at risk," Pelosi and Reid said in their letter.

The request comes as auto companies are bleeding cash and jobs. General Motors Corp. and Ford Motor Co. reported Friday that they spent down their cash reserves by a combined $14.6 billion the past three months. Ford said it would slash more than 2,000 white collar jobs.

President-elect Obama said Friday his transition team would explore policy options to help the auto industry. Obama's economic transition team includes two allies of the U.S. auto industry — Michigan Gov. Jennifer Granholm and former Rep. David Bonior, D-Mich.

Automakers already want an additional $50 billion in loans from Congress to help them survive tough economic conditions and pay for health care obligations for retirees. The companies are seeking the loans as part of an economic aid plan that is now more likely to come together early next year rather than in a postelection session of Congress this month. The $50 billion would be in addition to the $25 billion in loans that Congress passed in September to help retool auto plants to build more fuel-efficient vehicles.

[Bindare_Dundat]

So now were going to prop up businesses that didn't know how to run themselves properly. The most important "wisdom" of market process theory is to get out of the way of the process of adjustment.  The poor decisions in one period must be penalized, the malinvestments made by businesses must be cleaned out, and the opportunities for previously unrecognized profit opportunities must be allowed to be exploited.  Bailouts, regulations, taxes, redistribution, and inflation only hinder the ability of the market to self-correct.

[Slapper]

Free market at its best.

[Cap]

Maybe Ford, Chevy, Dodge, etc should make a more competitive product.  Bailing out lenders, who we need for credit, is important.  Bailing out companies who make shitty products and don't want to improve to compete with the Japanese, is stupid. 

[Hedgehog]

I think there needs to be a fundamental change in the US car industry.
I remember not too long ago arguing with people on this very board that Jap cars 'were too small' and that SUV's were the only real cars.

Question is if the US car industry is capable of fundamentally changing focus from building 'cool' pickup trucks with enormous engines to efficient hybrid cars?
I seriously doubt it.
Another interesting thing is that in Norway, the oil has always been nationalized. They don't have cheap gas.
But their national economy has been running a gigantic surplus for a long time, making Norwegian living standard probably the highest in the world.
All the while Exxon is making huge profits in USA.
 While the general public is fcuked.
I wonder what Ron Paul thinks about the success of Norway and how he would 'fix' the greed of companies like Exxon.

[Hereford]

The only reason the government is going to bail out the Big 3 is to keep the unions propped up.

They are 10 years+ behind the rest of the civilized world in auto design & quality.

[240 is Back]

One thing here... GM has 600 Billion in pensions due to their employees.

FOX news pointed out, in a very somber way, that any 25B or $50B bailout will just go to paying off their fat pensions to employees, not fixing operations.  GM can use the money any way they see fit, and they put employees first.

[El_Pajero]

im hungry

me too

[Cap]

I think there needs to be a fundamental change in the US car industry.
I remember not too long ago arguing with people on this very board that Jap cars 'were too small' and that SUV's were the only real cars.

Question is if the US car industry is capable of fundamentally changing focus from building 'cool' pickup trucks with enormous engines to efficient hybrid cars?
I seriously doubt it.
Another interesting thing is that in Norway, the oil has always been nationalized. They don't have cheap gas.
But their national economy has been running a gigantic surplus for a long time, making Norwegian living standard probably the highest in the world.
All the while Exxon is making huge profits in USA.
 While the general public is fcuked.
I wonder what Ron Paul thinks about the success of Norway and how he would 'fix' the greed of companies like Exxon.

In Mexico it is nationalized and they have cheaper gas than in So Cal or in the US for that matter.

The US keeps building big ass trucks and SUVs to pull boats and caravan their families but the 4Runner can carry a family just as well as a Suburban, but these parents want a separate row for each kid and cannot live if their car cannot pull a 4 ton boat as opposed to a 2 ton boat (I don't know boat weights  ).  For some reason people are obsessed by big cars (small penises?) and the US automakers make them, poorly, and now they are paying the price.  I bought my foreign truck for just as much as a Chevy or Ford, it drives better, gets better mileage, and I'll get a better trade in WHENEVER I want to.  Why wouldn't people buy better, cheaper foreign cars.

[Bindare_Dundat]

Maybe Ford, Chevy, Dodge, etc should make a more competitive product.  Bailing out lenders, who we need for credit, is important.  Bailing out companies who make shitty products and don't want to improve to compete with the Japanese, is stupid. 

Those finanacial institutions arent lending any money. They are hording money to build up their reserves again and they are  encouraged to do that by the same government that is telling them to lend that money out, so go figure. 

Whenever we spend money to prop up a failing company, we are taking away all kinds of resources for successful companies to thrive.

[Cap]

Those finanacial institutions arent lending any money. They are hording money to build up their reserves again and they are  encouraged to do that by the same government that is telling them to lend that money out, so go figure. 

Whenever we spend money to prop up a failing company, we are taking away all kinds of resources for successful companies.

Lenders have publicly stated that there is money to lend but people aren't coming in.

With regards to whom to lend money, the government made a better choice with lending companies than they will with car companies.  Lending companies were half the problem, idiots were the other.  With regards to the car companies, they continually put out shit cars for years and never bothered to compete with the Japanese who make better cars.  The people that bitched and moaned about the lending companies helped put them in that situation in the first place.

[Bindare_Dundat]

Lenders have publicly stated that there is money to lend but people aren't coming in.

White House to banks: Start lending now

WASHINGTON – An impatient White House prodded banks and other financial companies Tuesday to quit hoarding billions of dollars flowing into their vaults from Washington and start making more loans. Wall Street soared nearly 900 points on bargain-hunting and hopes of a hefty interest rate cut by the Federal Reserve.

Hoping to thaw the credit freeze that has chilled the economy, the Bush administration sent banks an unmistakable message to put aside fears and open up loan windows for cash-starved businesses and consumers who have pulled back on spending.

http://news.yahoo.com/s/ap/20081028/ap_on_bi_ge/financial_meltdown



I predict the government will take temporary control of these banks and force them to start lending again.

[Hugo Chavez]

maybe we should just have some freaking fair trade policies put in place.  I guarantee American Auto companies wouldn't need bailed out.  But who would come unglued at that idea?  yea, we would have an epic meltdown by neoliberalists. 

[Hereford]

maybe we should just have some freaking fair trade policies put in place.  I guarantee American Auto companies wouldn't need bailed out.  But who would come unglued at that idea?  yea, we would have an epic meltdown by neoliberalists. 

Whats a neoliberalist?