Eric Stoner
11-11-2008, 01:55 PM
Yep. I was wary of the bail-out anyway and seeing how some companies (AIG I'm looking at you!) are blowing the money on shit like spa retreats and such, I'm even more wary. This seems like a damned if you don't damned if you do situation and the American people have been thoroughly fucked by it.
While terrible looking, the junkets at AIG are really the LEAST of it. The REAL problem is the neverending nature of the AIG bailout. The original $85 billion is gone and they need at least $35 billion more with no guarantee that it will be enough.
Melonie
11-12-2008, 10:59 AM
and now a whole host of non-real estate related financial companies plus totally 'non-financial' companies are lining up for similar handouts from the US taxpayer ...
Eric Stoner
11-12-2008, 12:28 PM
and now a whole host of non-real estate related financial companies plus totally 'non-financial' companies are lining up for similar handouts from the US taxpayer ...
http://biz.yahoo.com/ap/081112/american_express_ahead_of_the_bell.html?.v=1
http://www.cnbc.com/id/27662540/
It's out of control. As I and many others predicted. Now the "community banks" are crying : "Where's ours ?"
I hope we do not, but if we do bail out the automakers I hope we do it along the lines suggested by Tom Friedman in today's New York Times: Kick out management and the Bd. of Directors with the stockholders getting NOTHING.
Appoint a receiver to run each company tearing up union contracts etc. as necessary.
Yesterday, I did some research on WHY the automakers are failing. here are just the highlights.
1. Labor costs- Average hourly wage of a Big 3 UAW worker - $72. Of an American Toyota worker- $40. Of a typical American industrial worker $31.
2. Health care costs.
3. The Michigan Congressional Delegation led by Dingell and Levin stopping every effort to impose higher gas mileage standards. They put in amendments where the worst gas guzzlers didn't count as a "fleet average" is used.
4. Terrible management. GM's only profitable models are its biggest SUV's and trucks. The same is true to a lesser extent at Ford and Chrysler.
Melonie
11-12-2008, 04:08 PM
You seem to have a lot of agreement on the Auto Industry Bailout being 'payback' to overpaid UAW members who supported Barack Obama and virtually every Democrat policitican in the last election
(snip)" FALLS CHURCH, Va., Nov 12, 2008 /PRNewswire-USNewswire via COMTEX/ -- Peter Flaherty, President of the National Legal and Policy Center (NLPC), today criticized proposals to bailout GM, Chrysler and Ford, arguing that the plans are actually intended to bailout the United Auto Workers (UAW). Flaherty said:
The $700-million Wall Street bailout was not meant to be a prize for special interest groups that were on the winning side of the election. It is a mistake to use TARP to reward high-tax, non-right to work states like Michigan. It was argued that failure of financial firms posed systemic risk; no such risk exists with the automakers.
The automaker bailout is actually a UAW bailout. The union will not allow companies to deploy capital in ways that the market would dictate such as closing plants and layoffs. That's why UAW opposed the GM/Chrysler merger and a government role in it.
UAW wants to instead enrich health and retirement plans they control, like the $35 billion GM VEBA (Voluntary Employee Beneficial Association). GM is scheduled to make a $7 billion payment in 2010. These entities will survive the collapse of the companies. Union boss control of all this money will not protect worker benefits, but will only guarantee another generation of union corruption and political power.
Obama has a dilemma. If he provides a short-term fix now on the UAW's terms, these companies are doomed. Later, he will face requests for even more taxpayer money. A so-called bridge loan would be more like a bridge to nowhere loan.
The automakers' biggest problem is union contracts. The price of equity shares go down when overvalued, but contracts stay the same. To subsidize these contracts is unfair to other automakers operating in the United States. Yes, they are foreign companies but they have assembly plants here.
It was foreign companies that brought hybrids to market. Nancy Pelosi and Harry Reid cannot design cars any better than they can run Congress. The loan program for retooling is nothing more than industrial policy, a discredited remnant of the 20th century.
If the purpose is to save jobs, then automakers are nothing more than jobs programs. There are more efficient ways to create jobs, like cutting taxes. END STATEMENT "(snip)