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threlayer
12-10-2008, 10:27 AM
^^^ if this passes, the Japanese and German gov'ts will be justified in providing an equal $15 billion to 'subsidize' production costs of US assembled Toyotas and Hondas ! Imagine the impact on Detroit Three sales / profitability projections if the price of every US assembled Japanese or German car is instantly dropped by $2000 in reaction to this bailout !!!

From the viewpoint of foreign owned carmakers, a US gov't bailout of the Detroit Three constitutes subsidizing domestic industries in favor of foreign owned industries ... which under world trade rules allows them to provide equivalent subsidies !!!

Japan very effectively 'subsidizes' their own auto companies by excluding the importation of foreign autos. (And many other foreign products.) This has been factored already into their desicion to build assembly plants here. US has no fair trade with Japan because it is not bilateral so we should not feel obligated to continue it.

The Japanese assembly plants are at best a poor subsititute for the lost auto production/sales we have suffered due to Japan's policies. Of course by that happening US automakers were forced into producing a much better product at a cheaper price. But now with Korea making very strong inroads into the market, things will continue getting worse for US and for Japan.

Melonie
12-10-2008, 10:50 AM
well it now looks like there are going to be a lot of 'losers' if the Detroit Three Bailout passes, and a very good possibility that republicans will filibuster the bill into the dumper ...


(snip)The House is planning a test vote on Wednesday, and proponents say a deal could be done by week's end..

Congressional Republicans, left out of negotiations on the package, are expressing grave reservations and may seek to block it. Sen. David Vitter, R-La., promised to filibuster the measure, which could delay a final vote for days.

He said the package has an "ass-backwards" approach to curing what ails the U.S. auto industry.

Senate Minority Leader Mitch McConnell said his side hadn't seen the measure yet and wouldn't agree to votes on it on Wednesday.

"Republicans will not allow taxpayers to subsidize failure," McConnell said, although he added that the auto situation would be addressed by the end of the week.

House Republican leader John Boehner offered an alternative plan to the White House-Democratic proposal. It calls for harder benchmarks to make sure the taxpayer is reimbursed by the auto loan plan and deeper concessions from the United Auto Workers.

Kaplan said the administration and Congress have made "very good progress on a conceptual agreement."

"We'll be talking retail to individual senators to win their support," said Kaplan, who said he expected Bush to lobby Republicans to vote for the package.

The White House won a demand that Democrats scrap language that would force the carmakers to drop lawsuits challenging tough emissions limits in California and other states.

That measure "kills the deal," Dan Meyer, Bush's top lobbyist, said Tuesday evening.

Environmentalists are livid that the measure draws the emergency loans from an existing loan program to help carmakers retool their factories to make greener cars."(snip)


Please note the measures very cleverly embedded in this bailout bill ...

- an attempt by Democrats to force the Detroit Three to drop their lawsuits against states like California and New York regarding even stricter state emissions standards being enacted as a condition of being bailed out.

- a diversion of previously approved gov't money specifically slated for funding 'green' auto research to fund the general bailout instead (thus reducing the remaining balance of gov't 'green' auto research money).

- bailout money for public transit (rail and bus) systems who lost private investor money after recently being declared as unlawful tax shelters

- preserves an automaker tax break which allow the 'reclaiming' of past corporate income tax payments (i.e. bailout money from the IRS)

- adds a pay raise for federal judges

- republicans (mostly from states with foreign owned non-unionized US auto assembly plants) have been completely left out of 'negotiations'


from

~

threlayer
12-11-2008, 02:18 PM
Updates: Mitch McConnell doesn't want to proceed and the proponents don't have the 60 votes necessary to go forward with the proposal (bill).
http://www.nytimes.com/2008/12/12/business/12auto.html?ref=automobiles

The White House is trying to convince hold-out Republicans to favor the proposal.
http://www.reuters.com/article/mergersNews/idUSN1138898420081211
http://www.freep.com/article/20081211/BUSINESS01/81211053/1014/BUSINESS01http://www.foxnews.com/politics/2008/12/11/reid-white-house-make-final-pleas-passage-billion-auto-bailout/ (probably an earlier post today)

Melonie
12-11-2008, 03:39 PM
Senator Jim DeMint tells the truth about the proposed auto bailout ...



(snip)"Time and again we’ve heard about the lost jobs and economic impact of failing to bail out the beleaguered American auto manufacturers. But little mention has been made of the consequences of going through with the bailout, and how such an action would be viewed by other Americans.

In an interview following a Dec. 10 press conference where he and four other senators aired their opposition to the proposed bailout deal struck by congressional leaders and the White House (and approved by the U.S. House of Representatives 237-170 that evening), Sen. Jim DeMint, R-S.C., warned that the perception that some industries are being bailed out and some aren’t could lead to violence.

“We’re going to have riots. There are already people rioting because they’re losing their jobs when everybody else is being bailed out. The fairness of it becomes more and more evident as we go along. The auto companies may be hurting,” he said, but “there are very few companies that aren’t hurting and they’re going to hurt. We don’t have enough money to bail everyone out.”

DeMint blamed the unions for pushing this issue as far as it has gotten. The senator said the notion that reorganization under bankruptcy would not work was generated by the unions for fear of losing their power.

“The primary driver behind this is the unions, because bankruptcy allows the auto companies to basically restructure all their contracts in a way that a bankruptcy judge says will make them sustainable,” DeMint said. “And if they do that, then essentially the unions lose all their leverage. It’s the unions that have brought them to the brink. So definitely, I think the reason they want a political solution and a car czar is because a car czar can protect the unions through this whole process at the expense of the taxpayer.”

The result of the bailout culture that now exists on Capitol Hill will be incredibly high rates of inflation down the road as the economy picks back up and prices reflect the amount of new money circulating through the economy.

“There is no question this will result in inflation,” DeMint said. “The amount of money we’ve borrowed, the amount of money we’ve printed has put us in a more dangerous situation than we’ve ever been in as a country. We may not see the inflation as long as the economy is slow. But, I’ve talked to some economic experts and once the economy starts picking up with so much money in the money supply and so much debt, we’re likely to see very high interest rates and very high inflation rates.”

DeMint went as far as to say that General Motors (NYSE:GM), one of the big three auto manufacturers lobbying for bailout money, was better off than the nation that’s debating whether to rescue it..

“If you look at where we’re going, we’re not on a sustainable course as a country,” DeMint said. “Frankly, GM is in a better financial situation than we are as a country. The only difference is we can print money. But as other countries around the world lose confidence in the value of a dollar – that’s going to come home very shortly.
(snip)

Melonie
12-11-2008, 03:44 PM
... and one mainstream media outlet ( NBC ) also told the truth (briefly) ...

(snip)"The network broadcast media have generally ignored or downplayed the role of unions in establishing bad business models for the Big Three U.S. automakers. But NBC’s “Today” show bucked the trend Dec. 3 with an honest report about how union contracts’ affect the companies.

“Detroit’s auto workers remain among the highest paid manufacturing workers in the world – paid sometimes even when they don’t work,” NBC’s chief investigative correspondent Lisa Myers said. “That’s right. Under union contracts, thousands of laid-off workers receive 95 percent of their salary for doing nothing, for up to two years.”

University of Michigan professor Mark Parry said this “jobs bank,” as its known, “more than any other practice, you know, highlights and symbolized the inefficiencies of an outdated business model.”

Myers explained that two years ago 15,000 workers from Chrysler, Ford and General Motors were being paid although they were not working. Even now, she added, “GM has agreed to spend as much as $2.2 billion on this over four years.”

Myers’ segment also pointed to executive compensation as a source of financial woes. But compare $2.2 billion over four years for the jobs bank – or $550 million a year – to the often-criticized $6 million salary paid to GM’s CEO, Rick Wagoner."

David Cole, of the pro-bailout Center for Automotive Research, said the jobs bank “turned into an absolute albatross and became an extra weight around the neck of the industry.”

But union commitments go beyond paying employees for not working. Myers pointed to “complex, outdated work rules in thick union contracts.” For instance, she said, “In some plants, experts say, rules can require three different skilled workers just to move a machine.”(snip)

from

FBR
12-11-2008, 04:19 PM
^^ Very true. In numerous cases, I've had my guys in to work on machines. Since we would be working on the electrical and hydraulic components we had to have a maintenance man from each trade standing there doing nothing while we were performing the necessary work. At $70 an hour it seemed like a gigantic waste of money. Seems to me there should be a way to pay folks (especially skilled trades) good money but get rid of this kind of waste.

FBR

threlayer
12-11-2008, 04:32 PM
Yes. Until unions find better ways to make member services in a reasonably efficient manner, we all experience unnecessary costs. This applies also to overbloated salaries/peripheral pmts/perks to corporate executives (especially so when their contributions are untested, mediocre, and exploitative). Seems to me we all need to find more cost-efficient and cost-productive ways to make a living.

Melonie
12-12-2008, 04:23 AM
well it would appear that the current Detroit Three bailout effort is now officially dead ... after the UAW flatly refused to consider pay rate adjustments before their current contracts expire !



(snip)"Thursday's implosion followed yet another set of marathon negotiations at the Capitol - this time involving labor, the auto industry and lawmakers. The group came close to agreement, but it stalled over the UAW's refusal to agree to the wage concessions.

"We were about three words away from a deal," said Sen. Bob Corker of Tennessee, the GOP's point man in the negotiations, referring to any date in 2009 on which the UAW would accept wage cuts.

The Senate rejected the bailout 52-35 on a procedural vote - well short of the 60 required - after the talks fell apart. Just 10 Republicans joined 40 Democrats and two independents in backing it. Three Democrats sided with 31 Republicans in opposition. Reid also voted "no" for procedural reasons.

Congress is not scheduled to return for legislative work until early January.

Some Senate Democrats joined Republicans in turning against the House-passed bill - despite increasingly urgent expressions of support from the White House and President-elect Barack Obama for quick action to spare the economy the added pain of a potential automaker collapse.

"In the midst of already deep and troubling economic times, we are about to add to that by walking away," said Sen. Chris Dodd, D-Conn., the Banking Committee chairman who led negotiations on the package.

Alan Reuther, the UAW's legislative director, declined comment to reporters as he left a meeting room during the negotiations. Messages were left with Reuther and UAW spokesman Roger Kerson"(snip)


So it would appear that another effort to pass the Detroit Three Bailout will be postponed until the 'new' congress is seated in January - at which point the inclusion of more democrats in the house and senate could sway the outcome.

hockeybobby
12-12-2008, 08:05 AM
Blame The Unions! Blame the workers! That's right...they made this mess by signing their contracts. How dare they!

This whole mess is looking more and more like it was planned.

threlayer
12-12-2008, 08:18 AM
well it would appear that the current Detroit Three bailout effort is now officially dead ... after the UAW flatly refused to consider pay rate adjustments before their current contracts expire !
The next few months will be interesting to watch. To me, the UAW needs to be 'cut down' to a reasonable 'size', but they are just a symptom of our very possession-oriented. narcissistic society. HB makes a point: is it the Union's aspirations or their members'? Maybe if the union officials get more salary for their members, who won't be disappointed, I presume the officials benefit greatly. I've heard stories where some members of another union thought their reps were making too strong demands for the corporation's success, but I'd bet this is rare. I would go to www.blueoval.com and read a little, but I see the site is "suspended". Hmmm.

threlayer
12-12-2008, 08:43 AM
Closest I've found to that site, which was for for employee comments, is www/bluovalforums.com.
I found this there:

Ford Motor Company Statement on Proposed Congressional Automotive Industry Bill

DEARBORN, Mich., Dec. 8 – As we told Congress, Ford is in a different position. We do not face a near-term liquidity issue, and we will not be seeking a short term bridge loan. But Ford fully supports an effort to address the near-term liquidity issues of GM and Chrysler, as our industry is highly interdependent and a failure of one of our competitors could affect us all.

threlayer
12-12-2008, 08:47 AM
...This whole mess is looking more and more like it was planned.
It may not have been planned, but it was pre-programmed (by a process called STUPID.EXE):

overreaching, risk-taking, illiquidity, financial bailouts, market panic, job loss, consumer fear, recession deepening.

It's happened before.

hockeybobby
12-12-2008, 08:56 AM
Yeah, that's just my distrust of the elites showing. Every time workers and greenies get too uppity....BAM...Big recession. End of problem.

Maybe it's all just coincidence.

Eric Stoner
12-12-2008, 12:02 PM
Here's one stat that says it all.

In 2007 GM sold 9.3 million cars and trucks worldwide and LOST $38 billion. That's billion with a B.

In 2007 Toyota sold 9.3 million cars and trucks and made $17 billion.

threlayer
12-13-2008, 02:31 PM
Also, due to many factors, the American car companies just do not promote buying cars made in this country as quality products and as helping the country's wealth retention. I haven't hear these promo themes since the 80s.

I stopped buying American cars in the 70s due to poor quality/design; it took them quite a while to realize/accommodate that the public was trying to tell them something. I believe their slow turnaround started a big momentum thing toward foreign going that has just gathered up more and more momentum, regardless of their efforts. Of course the mileage thing, union wages, sometimes stupid designs, all have contributed to their present position as well.

threlayer
12-19-2008, 01:08 PM
Well, they got it. Now let's see if they can do more with it than the financial industry has done with their piece of the pie.

Melonie
12-20-2008, 03:58 AM
it will also be curious to see what behind the scenes action the Japanese and German gov'ts now take in regard to their US produced cars in response to the 14 billion dollars that the US government has just 'given' to GM and Chrysler. From the standpoint of 'fair trade', these foreign governments COULD now offer similar support to Toyota, Volkswagen, Honda, BMW etc. without risk of trade sanctions.

In fact, this lays the groundwork for foreign owned US assembled cars to absolutely murder GM, Chrysler and Ford over the course of the next 3 months. All the Japanese and German gov'ts would have to do is to offer billions in the form of auto loan guarantees to the in-house financing arms of foreign owned US assembled auto dealers. Such subsidies would allow the 70% of Americans who can no longer obtain 'affordable' credit for a Detroit Three auto loan to drive away in a new US assembled Honda, Volkswagen, Toyota, BMW etc. with nothing more than a signature just like the good old days!

If this were to take place, when the end of march rolls around, the relative sales figures for GM and Chrysler will have fallen to the point where there is no way that 'future financial viability' can be demonstrated. At that point America will then find out if Obama will be true to his word and allow these bailout loans to be called in per original terms, or whether he will blatantly allow the UAW to be subsidized forever.

threlayer
12-20-2008, 05:13 PM
If their situation is anything like ours, they may have to do that anyway. For example Toyota sales are quite a bit down thought not nearly at crisis level. After all it is almost a worldwide financial meltdown.

FBR
12-20-2008, 05:28 PM
^^ I deal with 1st tier suppliers to Toyota and Honda. Pretty much all new projects are on hold for now :-[

FBR

hockeybobby
12-20-2008, 05:41 PM
it will also be curious to see what behind the scenes action the Japanese and German gov'ts now take in regard to their US produced cars in response to the 14 billion dollars that the US government has just 'given' to GM and Chrysler. From the standpoint of 'fair trade', these foreign governments COULD now offer similar support to Toyota, Volkswagen, Honda, BMW etc. without risk of trade sanctions.

In fact, this lays the groundwork for foreign owned US assembled cars to absolutely murder GM, Chrysler and Ford over the course of the next 3 months. All the Japanese and German gov'ts would have to do is to offer billions in the form of auto loan guarantees to the in-house financing arms of foreign owned US assembled auto dealers. Such subsidies would allow the 70% of Americans who can no longer obtain 'affordable' credit for a Detroit Three auto loan to drive away in a new US assembled Honda, Volkswagen, Toyota, BMW etc. with nothing more than a signature just like the good old days!

If this were to take place, when the end of march rolls around, the relative sales figures for GM and Chrysler will have fallen to the point where there is no way that 'future financial viability' can be demonstrated. At that point America will then find out if Obama will be true to his word and allow these bailout loans to be called in per original terms, or whether he will blatantly allow the UAW to be subsidized forever.

You probably don't need to worry about this Mel. Ford does not want one of their big competitors to fail because of the devastation to the overall industry it would cause, and by extension to them. Toyota, Honda, Volkswagen, and BMW would likely be equally concerned.

To no one in particular: Why the derision and scorn directed at the auto workers?

Melonie
12-20-2008, 06:33 PM
You'll have the opportunity to find out for youself soon enough, Bobby !


(snip)"Dec. 20 (Bloomberg) -- General Motors Corp. and Chrysler LLC will get C$4 billion ($3.3 billion) in government loans from Canada and the province of Ontario, a day after the U.S. agreed to aid to keep the two automakers operating.

General Motors’ Canadian unit will receive C$3 billion while Chrysler is set to get C$1 billion, the two governments said today. Borrowers must accept limits on executive compensation and also report “material transactions in excess of C$125 million or more,” the two governments said in a joint statement.

“This is a huge problem that faces the Ontario community and the Canadian economy by extension,” Prime Minister Stephen Harper said at a press conference in downtown Toronto today.

Canada’s aid builds on the $13.4 billion in U.S. emergency loans announced by President George W. Bush. Canadian Industry Minister Tony Clement on Dec. 12 pledged to offer GM, Chrysler and Ford Motor Co.’s Canadian units federal and provincial aid “proportional” to the their contribution to North American production, which is about 20 percent.

“We will not allow catastrophic collapse” of the industry, Harper said. “But the auto companies have to change the way they do their business in a very serious way.”

The aid package is “not a blank check” and Canadian taxpayers expect the money to be used to renew the industry and involve all stakeholders in that process, Harper said.

Ontario’s Contribution

Ontario will contribute C$1.3 billion to the package and the Canadian government C$2.7 billion, Ontario Premier Dalton McGuinty said at the same news conference.

“This is about 400,000 jobs and 400,000 families,” said McGuinty. “There’s a lot at risk.”

The Canadian Auto Workers union lauded the package and pledged to continue working with the companies and governments to ensure the industry’s survival in Canada, Ken Lewenza, president of the union said.

“The announcement today was important for our industry, our workers and for all citizens of Canada,” said Lewenza. “There are 400,000 jobs at stake here.”

He declined to speculate on whether his membership will have to take wage-and-benefit cuts as part of the package. "(snip)

from

Melonie
12-20-2008, 08:24 PM
hmmm ... this took one whole day to arrange ...

(snip)"Volkswagen Wants EU10 Billion in State Guarantees, Spiegel Says
Email | Print | A A A

By Jeremy van Loon

Dec. 20 (Bloomberg) -- Volkswagen AG has applied for 10 billion euros ($14 billion) in credit guarantees from the German government to ensure the carmaker has access to cheap financing, Der Spiegel said, without saying where it got the information.

The guarantees would allow Volkswagen to offer customers cheap purchasing and leasing conditions, the magazine reported. Volkswagen’s move may prompt Daimler AG and Bayerische Motoren Werke AG to also apply for the funds, according to Der Spiegel. "(snip)

hockeybobby
12-20-2008, 08:42 PM
Is this something we should be losing sleep over? ^^^

Melonie
12-20-2008, 10:06 PM
^^^ you tell me ,,,

A 'regular guy' who isn't being paid union wage rate needs to buy a new car. Due to his debt to income ratio, his credit score is say 700 or less even if he is current on all of his loan payments. Because GMAC is up to its ears in bad car loans, even if the guy wants to buy a new Chevy he can't get approved for financing at an 'affordable' interest rate through his local GM dealer and/or he'll be expected to come up with additional down payment money which he simply doesn't have. But his local Volkswagen dealer is ready to write a low interest loan with no money down thanks to the German government's willingness to guarantee his new auto loan. What do you think that this 'regular guy' will do ... save up cash to make the necessary down payment on a Chevy or sign on the line and drive away in a Volkswagen ?

The great unspoken truth here is that North American auto sales are NOT falling because people don't want to buy new cars. They are falling because North American banks and finance companies have taken heavy hits, have tightened their creditworthiness criteria in order to minimize future losses, and as a result have left a significant percentage of would-be new car buyers unable to obtain 'affordable' financing. The decline in 'blue book' values due to repo's and auction sales has added to the problem by reducing the equity value of a typical 3 year old trade-in vehicle to the point where one is fortunate if the outstanding loan balance on the 3 year old vehicle doesn't exceed its resale / trade-in value.

If the German (and Japanese and Korean) governments step up and offer to 'backstop' any number of shaky new car loans while the North American car companies must follow the new creditworthiness / financing criteria set down by their in-house financing arms ( or 3rd party North American lenders ), the issues of price and quality become secondary to the issue of available financing. This could absolutely KILL North American car sales over the next few months. Actually, the US government has been aware of the issue and has already explored the possibility of offering TARP funds to financial institutions that are willing to invest in bonds related to new auto loans ... with little or no interest on the part of American financial institutions other than the in-house financing arms of North American automakers. Unfortunately, the TARP bailout money that was just given to the North American automakers did NOT address their in-house financing arms, meaning that the auto makers would have to go right back to the politicians and make ANOTHER request for gov't funds to 'combat' the German (and Japanese and Korean) government subsidies for in-house financing arms of German (and Japanese and Korean) automakers - something which is NOT going to come across very well from a political standpoint.

Where GMAC in particular is concerned, the fallout from a new gov't bailout request could be horrendous. This is because the $50 billion Madoff investment fraud case is currently all over the news, and one of Madoff's long time 'partners in crime' (i.e. direct mutual investment) is one J. Ezra Merkin ... the chairman of GMAC. And where Chrysler owner Cerberus is concerned, another one of Madoff's long time buddies is one Stephen A. Feinberg ... CEO of Cerberus Capital Management. Thus an attempt to obtain gov't funding to 'backstop' these in-house financing arms of GM and Chrysler could open up a Pandora's Box full of inconvenient questions. It is suspected that the German government is aware of this 'complication', and thus chose the subsidized auto loan route as the best means of 'equalizing' the subsidies just given to the North American carmakers without much possibility of international flak.

Under the terms of the US side of the North American automaker bailout at least, by the end of next March it is absolutely necessary for the North American automakers to demonstrate 'economic viability' - at least to the point where Barack Obama decides to abandon this requirement. 'economic viability' is simply NOT going to happen if sales volumes keep falling. And the German gov'ts decision to 'backstop' new 'easy credit' low interest rate auto loans on Volkswagens (and BMW's and Mercedes) that the North American auto dealers cannot match will certainly cause more than a few new German car sales at the expense of GM and Chrysler.

~

minnow
12-21-2008, 03:06 AM
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

A few things........

1) Who says a "regular guy" has to buy a new car- there's so many coming off leases with a chunk of depreciation gone, yet some warranty left (or even an extended one) make that a viable option. The expansion of business travel has made turnover of rental cars from rental companies more common in last few decades.

2) Not so fast at casting stones at union jobs - If unions are further "cut down to size" as certain posters are so eager to occur, Mr. Regular Guy will be less likely to get the kind of raises required to put him in a good new car buying position, due to employer saying "you're just about making what big corp. folks are making, I can't afford to give you a (x)% raise."

3) RE: #1- German auto brands have a lousy market share, and I have yet to see any meaningful # of VW's in rental car fleets vs number of US & Asian cars- so I don't think that is something to lose sleep over.

Melonie
12-21-2008, 05:42 AM
1 - yes obviously the same principle of German gov't subsidized easy credit would apply to new leases and to the purchase of 2-3 year old lease return Volkswagens and Audis. As to the 'used vehicle' market, which must obtain financing via 3rd party lenders rather than the financial wings of an auto manufacturer ... high creditwortiness requirements, down payment equity requirements, etc. will take the greatest toll on this segment. It doesn't help if a 3 year old car that originally stickered for $20k+ is now selling for $10k if you don't have $2,500 in cash for the down payment and don't have a 720 credit score to get a loan approved.

2 - new car affordability comes from both ends of the spectrum ... the income of the buyer, but also the production cost of the new car. And without after-tax profits, its doubtful that pay raises are going to be an issue at the vast majority of employers regardless of the union auto worker pay rates in effect.

3 - this point actually revolves around 'domestic content' to some degree ... which VW has lacked. However, despite current economic conditions VW is going ahead with a huge new US auto assembly plant in an effort to bridge these 'domestic content' issues ... which stem from rental cars to taxi fleets to police cars.

threlayer
12-21-2008, 10:46 AM
..."The guarantees would allow Volkswagen to offer customers cheap purchasing and leasing conditions, the magazine reported. Volkswagen’s move may prompt Daimler AG and Bayerische Motoren Werke AG to also apply for the funds, according to Der Spiegel. "(snip)

That was supposed to be a result of bailing out the financial industry. Too bad it was just a Christmas present to them instead!


...2) Not so fast at casting stones at union jobs - If unions are further "cut down to size" as certain posters are so eager to occur, Mr. Regular Guy will be less likely to get the kind of raises required to put him in a good new car buying position, due to employer saying "you're just about making what big corp. folks are making, I can't afford to give you a (x)% raise."...

I think it only the Detroit Three union workers which, with the limit on what price cars could be sold for, were greatly reducing their profits to where this recession and finance crunch depleted their cash reserves. The Detroit Three used to fairly easily cave in to their demand because of fears of striking; now a strike would actually help the mfgrs' cash positions. Not that such is likely now.

Melonie
12-21-2008, 10:59 AM
^^^ in point of fact, the bailout of the US financial institutions ... and particularly the bailout of GM and Chrysler ... has primarily benefitted uber-rich bond investors, union workers, and politicians . It's more than a bit ironic that the only public bailout money that may DIRECTLY benefit US auto buyers / leasers in the form of more affordable cars is actually coming from GERMAN taxpayers !

NWoD
12-21-2008, 11:29 AM
Japan very effectively 'subsidizes' their own auto companies by excluding the importation of foreign autos. (And many other foreign products.) This has been factored already into their desicion to build assembly plants here. US has no fair trade with Japan because it is not bilateral so we should not feel obligated to continue it.

The Japanese assembly plants are at best a poor subsititute for the lost auto production/sales we have suffered due to Japan's policies. Of course by that happening US automakers were forced into producing a much better product at a cheaper price. But now with Korea making very strong inroads into the market, things will continue getting worse for US and for Japan.

From the news stories I read, even the Japanese automakers don't want US auto makers to collapse as they rely heavily on the same supplier network that would be devastated if this were to occur...

threlayer
12-21-2008, 10:54 PM
^^ And that's why they have pulled together.

eagle2
12-21-2008, 11:13 PM
^^^ in point of fact, the bailout of the US financial institutions ... and particularly the bailout of GM and Chrysler ... has primarily benefitted uber-rich bond investors, union workers, and politicians . It's more than a bit ironic that the only public bailout money that may DIRECTLY benefit US auto buyers / leasers in the form of more affordable cars is actually coming from GERMAN taxpayers !

Preventing American automobile manufacturers from going out of business will prevent a significant decline in the supply of vehicles and provide consumers with a wider selection.

The intent of the bailout of the financial industry is to make credit available for things such as automobile purchases.

Melonie
12-21-2008, 11:29 PM
Preventing American automobile manufacturers from going out of business will prevent a significant decline in the supply of vehicles and provide consumers with a wider selection.

according to whom ? The flip side argument, of course, is that allowing GM and Chrysler to go bankrupt will remove a supply of vehicles that the American public in general already doesn't seem to want to buy ( variation - will remove a supply of vehicles i.e. SUV's which the American government doesn't want Americans to buy) ... and will allow other investors to 'resurrect' those segments of GM and Chrysler that would be profitable on their own ( thinking Chevy Volt, Jeep, Dodge trucks). Another flip side argument you are ignoring is the distinct possibility that the US divisions of Toyota, Honda, Volkswagen, BMW et al could begin offering other US assembled vehicles that are currently not imported.



The intent of the bailout of the financial industry is to make credit available for things such as automobile purchases

again, according to whom ? The flip side argument of course is that, just like 'subprime' real estate, people who can't actually afford to own (i.e. pay for) new cars should not be given the credit to buy new cars. Unless you are advocating the introduction of a new 'entitlement' program which would, like HUD / Fannie / Freddie, use American taxpayer money to selectively subsidize new car loans for would-be low income / minority car buyers !

If you take the time to do a little research, you'll find that a significant portion of new car purchases over the last 5 years were NOT funded with incomes, but were instead funded with 'liquidation' of other assets - specifically things like home equity withdrawls or exhaustion of savings. Thus the 'tin foil hat' crowd would again say that America does not have a liquidity problem, it has a solvency problem.

And while the GM and Chrysler bailout addresses the potential future solvency problems of union auto workers, it does nothing to help the solvency problem of any other US workers i.e. the 'affordability' of a new car based on current US worker pay rates that are being increasingly arbitraged versus lower cost Asian workers. This is a 'problem' which does not HAVE a solution other than facing the facts that America's standard of living must endure a permanent decline to realign the ability of unskilled and semi-skilled American workers to afford a house / car / whatever with the 'global' value of their labor. Arguably, the GM and Chrysler bailout is an attempt to selectively subsidize one specific segment of American workers at the expense of all other American workers.

~

threlayer
12-22-2008, 10:17 AM
^^ The price escalation of autos, foreign and domestic, has outstripped payrolls for several years. And yet Americans are, until recently, interested in upgrading their vehicles, so that's not surprising. Not surprising is why--wages, benefits and the depletion of dollar value. Because we control the markey ultimately, according to theory, we should habe been able to control it. Don't we? Maybe not.

Question is why do we let them do that to us? Is it really marketing that makes 'us' want to buy more of what is promoted to us. Do we really believe that we "deserve it" no matter how realistic and impractical "IT" is? Are we that gullible?

When we become that accepting and gullible, how much can those qualities be extended before we will buy most anything that strokes our inflated egos or fills our empty shelves? Examples: Do we really need off-road capabilities and/or 1500 lbs extra weight at the cost of 10-15 mpg over other choices? Will we sell out our neighbor's jobs so that we can buy a $10 made-in-USA baking pan for a made-in-China $6 one? Maybe we don't even have to think about it any more because the whole process seems so automated. Do we really need to have that much stuff, considering what that much consumption does to us? Apparently so.

Melonie
12-22-2008, 02:27 PM
When we become that accepting and gullible, how much can those qualities be extended before we will buy most anything that strokes our inflated egos or fills our empty shelves?

well, this speaks directly to the 'moral hazard' which has been created by federal and state governments. Why NOT buy as large of a house as you can find a lender to write a mortgage for if A. the gov't is going to bail you out when you fall behind in your payments, B. if the gov't is going to allow you to keep any 'forgiven' loan balance as a tax free 'gift', C. if the gov't is going to prevent your eviction even if you are 6 months behind in your mortgage payments for the SECOND time after receiving a taxpayer funded bailout on your first default. Same applies to state bankruptcy laws that prevent auto loan lenders from repossessing a vehicle needed to drive from home to work. Same applies to anti-discrimination laws which actually provides bankruptcy filers with a BETTER chance of being approved for future credit 3 years after filing for bankruptcy.

~

threlayer
12-22-2008, 03:39 PM
Well, it appears to be what 'we' want. But it doesn't just apply to big ticket items. Funny thing is that laws are passed to help us out with our excess spending for 'stuff.' But nothing in a long time has helped us with our health expenses when they become overly expensive and life-threatening. For example health and pharmacy insurance just gets more expensive and contains less coverage. Funny priorities.

Melonie
12-22-2008, 09:35 PM
^^^ well, arguably, the gov't is responsible in large part for those high (and rising) medical costs ... by passing laws forcing health care providers to provide services to those who cannot pay, while charging those who CAN pay double the actual cost to make up for it ... by passing laws forcing health insurance providers to cover all sorts of 'esoteric' maladies with very high costs that must then be recouped via higher premiums being charged to everyone covered ... by allowing very high awards for medical malpractice, resulting in malpractice insurance costs being passed on as a 10-15% price premium embedded in all health care services costs etc.

In some similar myopic sense, the GM and Chrysler bailout decision by the gov't is also likely to result in HIGHER PRICES for future new cars, from both domestic and foreign owned automakers.

eagle2
12-23-2008, 12:45 AM
according to whom ? The flip side argument, of course, is that allowing GM and Chrysler to go bankrupt will remove a supply of vehicles that the American public in general already doesn't seem to want to buy ( variation - will remove a supply of vehicles i.e. SUV's which the American government doesn't want Americans to buy) ... and will allow other investors to 'resurrect' those segments of GM and Chrysler that would be profitable on their own ( thinking Chevy Volt, Jeep, Dodge trucks). Another flip side argument you are ignoring is the distinct possibility that the US divisions of Toyota, Honda, Volkswagen, BMW et al could begin offering other US assembled vehicles that are currently not imported.


The American public does want to buy vehicles from American companies. GM sells more cars in the US than anyone else. The problem isn't that the American public don't want to buy cars from American companies. The problem is they can't because of the economy. Sales for ALL manufacturers have dropped significantly. Sales for Toyota and Honda have dropped by a third. If the American companies make it through this downturn, they will most likely become profitable again when the economy recovers.

I doubt the Chevy Volt will be profitable anytime soon, if ever. It costs more than twice as much to build as an equivalent car with only an internal combustion engine.





again, according to whom ? The flip side argument of course is that, just like 'subprime' real estate, people who can't actually afford to own (i.e. pay for) new cars should not be given the credit to buy new cars. Unless you are advocating the introduction of a new 'entitlement' program which would, like HUD / Fannie / Freddie, use American taxpayer money to selectively subsidize new car loans for would-be low income / minority car buyers !

If you take the time to do a little research, you'll find that a significant portion of new car purchases over the last 5 years were NOT funded with incomes, but were instead funded with 'liquidation' of other assets - specifically things like home equity withdrawls or exhaustion of savings. Thus the 'tin foil hat' crowd would again say that America does not have a liquidity problem, it has a solvency problem.


Do you have any references for that? I would bet that most people finance their cars through banks or dealers. Many people lease cars.

The current problem is that even people with good credit are having trouble getting loans for automobiles because of the financial crisis.




And while the GM and Chrysler bailout addresses the potential future solvency problems of union auto workers, it does nothing to help the solvency problem of any other US workers i.e. the 'affordability' of a new car based on current US worker pay rates that are being increasingly arbitraged versus lower cost Asian workers. This is a 'problem' which does not HAVE a solution other than facing the facts that America's standard of living must endure a permanent decline to realign the ability of unskilled and semi-skilled American workers to afford a house / car / whatever with the 'global' value of their labor. Arguably, the GM and Chrysler bailout is an attempt to selectively subsidize one specific segment of American workers at the expense of all other American workers.

~

No, you're greatly exaggerating the situation for most Americans. Most American families can afford new automobiles. They’re not that expensive. A Chevy Cobalt or Toyota Corolla can be bought for less than $15,000. Not as many American may be able to afford to purchase big trucks and SUV’s as before, but that would be a good thing.

Melonie
12-23-2008, 05:03 AM
I doubt the Chevy Volt will be profitable anytime soon, if ever. It costs more than twice as much to build as an equivalent car with only an internal combustion engine.

Don't worry. As 'part owners', Obama and washington democrats will undoubtedly pass a new federal tax credit for electric vehicles ... allowing ALL taxpayers to pick up a large percentage of the Chevy Volt's purchase price.



I would bet that most people finance their cars through banks or dealers. Many people lease cars.

The current problem is that even people with good credit are having trouble getting loans for automobiles because of the financial crisis.

This previously made point still seems to be unmade. The financial crisis only removed the ability of BAD CREDIT RISK borrowers to obtain new car loans at affordable interest rates. Translation, a significant portion of would-be new car buyers are actually BAD CREDIT RISKS given their overall levels of after-tax income versus their overall levels of pre-existing debt / equity. Translation, a significant portion of new car buyers over the past several years were only able to 'afford' a new car via the approval of risky cash out home mortgage re-fi's, risky home equity loans, via 100% financing of the new car with zero equity etc. With some prudent creditworthiness / lending standards being reintroduced by most lenders, today those new car buyers CAN'T AFFORD a new car pure and simple.



A Chevy Cobalt or Toyota Corolla can be bought for less than $15,000.

Ah yes but from a lender's standpoint, how many people who actually have $3000 in cash available for a down payment plus actually have the actual ability to afford an additional $12,000 in new debt want to buy a Cobalt or Corolla ? True that this option may be 'forced' on some new car buyers eventually !

threlayer
12-23-2008, 08:33 AM
...As 'part owners', Obama and washington democrats will undoubtedly pass a new federal tax credit for electric vehicles.... You have to understand the factors of product development cycles before you judge incentive programs too harshly. This is an issue of 'economy of scale' increasing sales in any way will help:

distribute the development costs among a larger number of buyers,
reduce the per unit cost of items they have to buy instead of build,
make the Volt a more acceptable, less risky big ticket item,
help establish a better infrastructure network,
lead to more improvements from competition, etc.,
allow pollution controls to be better managed at central sites rather on distributed on all vehicles.
This is just another investment program initiated with government assistance with nation-wide, longer-term benefits. Others have been:

the Internet, without which we wouldn't even be here and which has led to a huge number of new technologies that stand on their own,
the space program with its huge technology spin-offs like the digital age,
the national highway system which has led to many economic trade benefits,
nuclear power which is a big though unpopular answer to many national problems,
passenger airlines.
Yes, there are bad examples too.