Economists are debating whether it would be better for the government to bail out General Motors or for GM to declare bankruptcy. But Time magazine noted that taxpayers will pay either way. The bailout money, obviously, would come out of taxpayers’ pockets. But if GM goes bust, the government will face lost tax revenues and higher unemployment costs and would have to take over GM’s huge pension obligations. A GM bankruptcy could pull down Ford and Chrysler, too. “The decision that Washington has to make,” Time said, “is whether we pay for GM’s survival or for its funeral.”
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80 Comments
How about transfer the $70 billion the banks received in the bailout, and used for bonuses, and give it to GM and Ford. Then it doesn’t cost us anything more and doesn’t reward incompetent crooks at the bank.
How about just buying inventory? The gvmt needs 100,000s of vehicles. State and federal governments in many cases are running worn out crap, especially state agencies. At least that way, we get something for our money, and savings would be produced for years to come. That is, if mopar products are avoided.
If the automakers can’t survive if their sales are restored, they can’t survive. At $20,000 per, a billion buys 50,000 vehicles.
Not only that, such a plan would rock the economy in every town in the U.S. Buy them from the dealers. Talk about economic stimulus.
And you’d still have your money, though in the form of depreciating vehicles.
Then there’s step two: convert the vehicles to run on natural gas or propane at $1,000 per pop. Energy crisis begins to be solved. And for free, in returned savings on gasoline. The N.G. infrasructure to make the switch would be provided by private investment, who would now have a built in market which gradually could be expanded to serve the public at large.
Auto industry saved, energy crisis solved, billions pumped into local economies.
Remember too, that natural gas is the fuel for fuel cells and the sorce of hydrogen for many envisioned hydrogen car designs.
Did I mentions saving the whole flipping economy?
The cars could be sold to school districts, hospitals, whatever serves the public good.
Oh, to pay me my reward for saving the whole goddamned mess, please contact me at anassel@hasink.com
Of course, that would leave the nation with about 2.5 million junkers. Hmmm, could my plan have a flaw after all?
rough being a genious. (I)
Pull the plug.
Whatever happened to that famed free market culture of personal responsibility.
This has republican fingerprints all over it.
Privatize the profits. Socialize the costs.
No wonder they see a socialist under every tea cup. They set the GOLD standard for government handouts to private businesses.
I thought the free market rewarded those who were successful and punished those who were stupid?
In american, that’s not the case. The reason the repukes are so worried about obama giving away free “siht” to PEOPLE?
They want it all for their business masters….
I agree with Nobel Economist Friedman that any bailout of Garbage Motors be accompanied by a takeover and re-structuring. Perhaps someone should ask why GM (and the other ‘Detroit’ companies) failed to respond to changing consumer demand. Last time I bought a new car (7-8 years ago) GM didn’t have anything to offer me. Ford at least mad the ‘long list’ with the Escort; however even that did not make the cut to the short list. I did, however, end up buying an American car – from a company that is not on the bailout list.
apparently you guys don’t think it would work, eh!
I think congress has amply proven that they are completely incapable of oversight of any bailout.
That alone should turn off the welfare spigot for business.
Corporate welfare. Yet ANOTHER repuke policy that failed!
Nobel prize winners…
Like having a bunch of Swedes nominate you for an award actually means something…
Kinda like military ribbons?
#
ksfarmgrrl
Posted November 14, 2008 at 8:49 am | Permalink
Kinda like military ribbons?
———–
I agree, most medals awarded are pure fluff for ‘atta boys’ and ‘you didn’t screw up this year.’
However, considering the environment under which the medals are awarded, they stand out a little more because they are harder to achieve than your typical merit recognition in the ‘civie’ world.
Best path for GM:
Let them declare bankruptcy. Re-organize and trim the fat from the white collar ranks. Officers need to take a pay hit, for several years. No more multi-million dollar bonuses.
2nd and most important, drop the union. The UAW puts between 1,000 to 3,000 in costs per car. It is a trivial manual labor job. You don’t need platinum health insurance and $40 per hour to do it. The union will come back, in time. If they had a clue they would wait until the company is solvent again. When the union comes back, play hardball with the unions. If they strike, they strike. There are plenty of unemployed in Michigan (2nd highest in the nation) that would love the opportunity to work.
Look at the rest of the country. Look down south. Honda and Toyota are EXPANDING. They don’t have the bloated white collar staff and they DON’T HAVE THE UNION. Get a clue.
If the government does loan them more money, then GM needs to state how they will use that money and what it will accomplish. They need monthly and quarterly goals announced. If they miss a goal, the have to give some of the money back. What kind of BS is this to just write them a check and say “Good luck!”
Long and short, trim the white collar fat and de-unionize. Honda and Toyota are kicking a$$ with that model.
Honda and Toyota are “kicking ass” because they build cars people want to buy.
American automakers?
Not so much…
I thought it was ALL about the free MARKET!
Americans are so used to dictating TO the market, they have no idea how to let information in FROM the market.
But hey, it’s always easier to blame the unions…
Sol, is your hotmail address still a good one?
The auto companies bankruptcies will ricochet throughout the economy besides effects mentioned above, other suppliers and manufacturers will either go under or lay off severely, as one in ten manuf. jobs are supported by the auto industry, which will mean more unemp., more pension plans being taken over, and when we go through the other side not only will our electronics and food come in as imports but all of our cars as well.
Guess we’ll still have that magical “Service Economy”, oh, I forgot, it’s tanking too.
But hey, it’s always easier to blame the unions…
If the shoe fits. I live around these people. I know what they do for a living. I know how much they get paid. It is pretty simple math.
If you could see past the poor victim unions, you would see what my first step was ->Cut back the white collar fat. Get rid of those that are not steering the company in the right direction. Cut back on officer pay and bonuses.
Nope, head straight for the poor victim unions that keep idiots in $40 per hour jobs for installing 6 bolts. And give em platinum insurance to go along with it. Yeah there is no way that is a factor in the demise. How naïve of me.
Linda,
Yes ma’am
Toyota just announced a day or two ago a stop on their prius plant down south. Their sales just like the American’s has fallen off of the financial cliff. Their governments will help them out if they get to where they need it, you can bet on that.
If GM declares bankruptcy, then yes, there will be pain. It will affect other industries as well. The current model doesn’t work and needs to be adjusted. GM (and Ford) need to make those adjustments, on their own. To continue with this model and just throw money at it (our money mind you) is ignorant at best.
FutureWatch: Toyota Confirms Prius Brand Expansion, “Zoned” Dealerships
According to Lentz, dealerships are already being constructed with a multi-zone theme, including space earmarked for the Prius, Scion, and the Toyota’s trucks.
http://www.nextautos.com/toyota-confirms-prius-brand-expansion
The govt. could tie money to concessions by both the union and mgmt. insofar as compensation and benefits and in energy efficency requirements.
The govt. could tie money to
Why do you want to throw more money at them? I mean, hey, my state stands to take the deepest hit and I am saying “Bring it the F on brother!”
Why would you want to throw even more money at them?
Sol, on the insurance thing for Auto Workers you do know that the Japanese Auto companies dont have to pay that. In fact niehter do the German, Swede, Or Korean auotmakers.
“The auto companies bankruptcies will ricochet throughout the economy besides effects mentioned above”
It’s called an economic adjustment. It happens when an economy is no longer sustainable.
Bail it out, and you will be rewarding failure. And they will STAY on the public tit forever, since it isnt a workable model.
Pain? Hell yeah. Bushco and their bleating followers should have thought about that when they disregarded every economic prinicple and went on their binge.
Hangovers are a biotch. But the first step to recovery is admitting you have a problem…
THOMAS FRIEDMAN: DON’T GIVE DETROIT ANY BLANK CHECKS
http://www.kansas.com/205/story/596091.html
They can all pound salt. They build an inferior product. Price of oil was skyrocketing and they continued to produce SUV’s?
This is not my problem. Screw them.
However you are talking about tens of thousands out of work.
Tax payers are going to pay one way or the other.
beber
Posted November 14, 2008 at 6:26 am | Permalink
Not only that, such a plan would rock the economy in every town in the U.S. Buy them from the dealers. Talk about economic stimulus.
beber
Posted November 14, 2008 at 6:27 am | Permalink
And you’d still have your money, though in the form of depreciating vehicles.
I thought you were a free-market advocate.
I would be inclined to say no bailout money for the carmakers but if we bailed out the Wall Street fat cats, then why are the carmakers any different?
But as with the Wall Street bailout, will the money actually be used as it was intended or will the carmakers do as some of these banks and insurance giants on Wall Street are doing with their free money -keeping it and giving it to their top CEO’s or their lavish spending on days at the resort spas, such as AIG?
Any corporation/institution requesting a bail-out of any form should have ALL the assets of the top 25% of their executives liquidated and pumped into the company/institution requesting the bail-out. Any excess needed from public funding can be paid back with those same executives being housed in a 400 sq.ft tarpaper shack working for minimum wage. There are many in this forum who swear that’s enough and people working for those conditions work better. It’s fairly obvious they’re unskilled labor, consequently their resume was fraudulent.
I bet with that criteria no one will be asking for a bail-out.
“I thought you were a free-market advocate.”
They only love the “free” part when they are free to rape and pillage and have the government give them a socialist bailout.
The productivity and sustainability part? No so much. They can afford to be Alfred E. Newman when they know the government will give them corporate welfare.
for the last 3 years in this forum the lib (boo-hiss) have been saying the con robber baron mentality was going to drive us into a depression and y’all said they were crazy.
“The result was an industry that became brain-dead.
Nothing typified this more than statements like those of Bob Lutz, GM’s vice chairman. He has been quoted as saying that hybrids like the Toyota Prius “make no economic sense.” And in February, D Magazine of Dallas quoted him as saying that global warming “is a total crock of (expletive).”
These are the guys taxpayers are being asked to bail out.”
If you think GM and Ford suck at building cars, just wait until the government builds them.
They will be as worthless as an 80’s Hyundai.
KFG, I sent ya a post on
http://blogs.kansas.com/weblog/2008/11/pro-con-on-californias-gay-marriage-ban/#comment-468796
8^p~~~
“Tax payers are going to pay one way or the other.”
I’d much rather pay unemployment benefits to real people rather than give another corporate welfare handout to artificial persons in the form of businesses.
The american voters bought this economy. Twice. Now they have to live with it.
Isnt newtie’s and georgie’s glorious republican revolution grand?
I was pointing out something to my wife the other day.
Remember when Ford and GM bult cars in the 40’s, 50’s, and 60’s?
They were made of steel, chromed out, iron. A lot of strong materials.
Heck, the dashes were made of metal.
Now they build plastic cars that are crap. They funny thing about all of this is that they cost much more than the real steel of the past.
Thanks Federal Reserve Bank. Your inflationary ways are surpassed by none.
We shipped our steel industry to Japan. Plastic is lighter and shipping costs are cheaper.
ksfarmgrrl
Posted November 14, 2008 at 10:45 am | Permalink
“Tax payers are going to pay one way or the other.”
I’d much rather pay unemployment benefits to real people rather than give another corporate welfare handout to artificial persons in the form of businesses.
The american voters bought this economy. Twice. Now they have to live with it.
Isnt newtie’s and georgie’s glorious republican revolution grand?
________________________________________________
As long as you keep looking at this as a partisan issue, you will never gain any real knowledge.
There is no difference between the two parties in power. Both want big government. Both want the Federal Reserve. Both want an interventionist Foreign Policy.
Until you realize that, you are at the mercy of Washington DC.
Remember Carroll Quigley and his influence on Bill Clinton. It’s all right there in front of your eyes. Open them and gain a new perspective.
Freedom is the only way to get out of this crisis.
“As long as you keep looking at this as a partisan issue, you will never gain any real knowledge.”
And as long as YOU are in denial of the republican congress fiasco and the horrors of bushco, you’ll never see the REAL source of the problem.
I’m no fan of the democrats, which you would know if you werent a sock puppet. But then again…
This one belongs to the republicans. They should have their noses rubbed in the crap and then have their asses kicked out the door.
And their little dogs too…
Back in the 40s, 50s, and 60s, everyone was getting squat for wages, the upper echelon wasn’t making several score more annually than regular workers. Everyone could afford the products produced.
Now-a-days if a company can’t get labor for nothing, they ship their wealth to other countries where they can hire people a a dollar a day. Unfortunately they don’t realize that not only will the non-people making the dollar a day be unable to afford to buy their products, neither will the people they’d just put out of a job to hire the dollar a day kid in the foreign country. That’s why the economy is crappy.
“Freedom is the only way to get out of this crisis.”
Yeah. We see what comes from the “freedom” of massive deregulation and letting big business self police.
The bush economy.
nitwit
If drinking too much koolaide is killing you, why would drinking even MORE koolaide fix you?
nitwit
I don’t feel this is actually a Republican fiasco; I do feel those who created this mess tend to vote Republican, though.
“Now-a-days if a company can’t get labor for nothing, they ship their wealth to other countries where they can hire people a a dollar a day. Unfortunately they don’t realize that not only will the non-people making the dollar a day be unable to afford to buy their products, neither will the people they’d just put out of a job to hire the dollar a day kid in the foreign country. That’s why the economy is crappy.”
That’s the same thing libs have been saying for years. And the voters bought the cons.
Pay for it. It’s a biotch when your actions come back to haunt you. Too bad it hurts the folks also who were smart enough to see this coming.
American voters deserve everything they get.
“I do feel those who created this mess tend to vote Republican, though.”
That’s what I mean too. And the voters who enabled them.
Twice.
Jesus wept, anyone with a freshman econ course under their belt could have seen this coming.
Republicans are like the Santa Claus weekend daddies. They want to hand out the gifts, but the democrats have to clean up the mess and deliver the pain.
Damn KFG, you are cranky AGAIN today.
Why do you feel the need to name-call in about every post? Insecurities?
Austrian – done correctly composites are superior to rust-prone iron and steel. The other automakers know that and do it successfully. My rust-free 7+ year old American made Civic shows that.
ksfarmgrrl
Posted November 14, 2008 at 10:57 am | Permalink
“As long as you keep looking at this as a partisan issue, you will never gain any real knowledge.”
And as long as YOU are in denial of the republican congress fiasco and the horrors of bushco, you’ll never see the REAL source of the problem.
I’m no fan of the democrats, which you would know if you werent a sock puppet. But then again…
This one belongs to the republicans. They should have their noses rubbed in the crap and then have their asses kicked out the door.
And their little dogs too…
________________________________________________
You obviously have not read Carroll Quigley.
Here, I’ll help you out:
This is from his book Tragedy and Hope.
“The argument that the two parties should represent opposed ideals and policies, one, perhaps, of the Right and the other of the Left, is a foolish idea acceptable only to the doctrinaire and academic thinkers. Instead, the two parties should be almost identical, so that the American people can “throw the rascals out” at any election without leading to any profound or extreme shifts in policy.” [Pg. 1247-1248.]
You feel exactly as he told you to. Get mad at one party and throw them all out. This way there will be no dramatic shift in policy. Hook, Line, and Sinker.
Knowledge is fun isn’t it. Good to see a “Sock Puppet” can still teach if cornered. Let me know if you need anymore facts to fill your mind with.
My brother-in-law has a rust free ‘49 Ford PU. What are the chances your Civic will still be around in 60 years.
The problem with the free market at least when it comes to the banking industry and mortgage lending is this:
http://en.wikipedia.org/wiki/Community_Reinvestment_Act
You can’t regulate yourself too well when you are forcing them to make loans to unqualified buyers.
ksfarmgrrl
Posted November 14, 2008 at 10:59 am | Permalink
“Freedom is the only way to get out of this crisis.”
Yeah. We see what comes from the “freedom” of massive deregulation and letting big business self police.
The bush economy.
nitwit
If drinking too much koolaide is killing you, why would drinking even MORE koolaide fix you?
nitwit
_________________________________________________
Oh, you think that this is a free-market?
We have a Federal Reserve Bank and a centrally planned economy.
Come back and this “nitwit” will fill your mind so full, you’ll need to take a smoke break.
Seriously, once you get done calling me names, let me know if you want to learn. I have a bookshelf full of books that will clear your mind right up.
AE, that works fine as long as that ‘almost identical’ fits what you believe. I guess if I don’t have your views, I’m just out of luck, whether 90% of the country agrees with me or not. If the minority is in office, and throwing them out for more of the same (isn’t that what we just avoided earlier this month?), what have we gained?
This current crop of Republicans are more liberal than the Democrats of the 60’s.
Wrap your mind around that one.
Conservatives have been on the backburner for a long time.
ghotiphaze
Posted November 14, 2008 at 11:12 am | Permalink
AE, that works fine as long as that ‘almost identical’ fits what you believe. I guess if I don’t have your views, I’m just out of luck, whether 90% of the country agrees with me or not. If the minority is in office, and throwing them out for more of the same (isn’t that what we just avoided earlier this month?), what have we gained?
__________________________________________________
If you have the same foreign policy and monetary policy, everything else is inconsequential.
If it agrees with yours!
Why do I feel all your ‘books of knowledge’ lean the same way?
ghotiphaze
Posted November 14, 2008 at 11:24 am | Permalink
Why do I feel all your ‘books of knowledge’ lean the same way?
_________________________________________________
I read non-fiction. No way to lean.
I do have a couple of fiction books though.
Atlas Shrugged is a good story.
AE thinks AS is a true story?
heheheheh. AHHAHAHAHAHAHAHAHHA.
Teach? Hell, you’d have to learn first!
I read Keynes, Mises, and Friedman. I am well rounded in economic theory. I can tell you that Keynes theories are the worst.
As far as philosophy goes, Aristotle, Bastiat, and Paine are my favorites.
I am reading, “The Mainspring of Human Progress” right now. I am really enjoying this one.
I like to read opposing viewpoints so that I can pick and choose which ones I agree with and disagree with.
The best way to learn is to read all sides and pick what makes sense to you. Am I really being short-sided, or is it the person calling me names and rejecting my ideas?
ksfarmgrrl
Posted November 14, 2008 at 11:32 am | Permalink
AE thinks AS is a true story?
heheheheh. AHHAHAHAHAHAHAHAHHA.
Teach? Hell, you’d have to learn first!
_________________________________________________
Fiction means not real. Atlas Shrugged is fiction, just like I stated in my post. Like I said, when you get done insulting my intelligence, let me know if you want some of mine.
“I thought you were a free-market advocate.” — Maybe your memory isn’t so good after all, if that’s you. Mine’s shot.
THIRD OPTION:
We bail out GM, they continue on with the very same practices which led them to where they are now and we still have to pay for their funeral.
Which is what is very likely to happen if we do bail them out.
And austrian economist; what you fail to mention about the steel of yore is that you had to overhaul them every 50,000 miles, and they were in the shop once a week. That’s what started the decline in the u.s.a. business.
You can drive most u.s. made cars a quarter million miles now with no problem. Those cars were worn out at 100,000 unless they had fanatic maintenance.
I wasn’t calling them better cars, just cheaper cars made with better materials.
I ain’t arguing economist; but it’s like shopping at walmart. You may get a cheap shirt, but generally it lasts through about two washings.
Who is the Speaker of the House? Which political party controls the Senate? Who introduced this idea to bailout the automakers?
“Bush: Conserve fuel, don’t expect GM bailout”
“Should the government bail out private enterprise? The answer is no, it shouldn’t,” Bush said.
http://www.reuters.com/article/domesticNews/idUSN1529157320080715?feedType=RSS&feedName=domesticNews
The only reason congress is pushing to get this approved and signed into action during a lame duck session is to later have the option to absolve themselves from the error.
This is only a preview of things to come. This liberal, democratic led administration will soon have the USA on the fast track to economic depression. Then, who’s going to bail us out?
More on the potential impact at cnn.com
http://money.cnn.com/2008/11/14/autos/auto_failure_ripple_effect/index.htm?postversion=2008111412
Catch-22. Disaster either way thanks to the greedy incompetant execs. I agree with Friedman – give the help but clean house.
Yes, those who’ve proven themselves incompetent at the top should be replaced and deprived of golden parachutes (give them a parachute with holes in them), there’s no shortage of talent.
Jesus WEPT OM, that link was to an article from July.
Shrub has changed his position HOW MANY times since then?
I believe it was bush and paulson who first suggested ANY of these bailouts.
One last raid on the public treasury before they leave for Paraguay…
The heads of the Honda and Toyota North American Operations said to-day that they have no plans to ask for help from anyone. They are hurting of course but will handle the problems internally pointing out sales are up in some area of North America.
Oh, here ya go repukes.
BUSH wants the carmaker bailout.
Mr. Captialism and free markets is presiding over the biggest socialist moves in our history.
http://news.yahoo.com/s/ap/20081114/ap_on_go_co/auto_bailout
They must’ve read my earlier post. “… rescue for Detroit’s Big Three if it contained strict conditions for the beleaguered companies, including management and salary changes, concessions from their powerful unions, and a commitment to making more fuel-efficient vehicles.”
Nov. 14 (Bloomberg) — New York Representative Charles Rangel said he’s revamping his tax overhaul proposal to reduce corporate tax rates to 28 percent, down from the current rate of 35 percent.
Ha, ha….when things get hot the DimLibs start acting like conservatives, ha ha.