[Ed Dantes]

This quote came from 2004:

"Why the Great Depression lasted so long has always been a great mystery, and because we never really knew the reason, we have always worried whether we would have another 10- to 15-year economic slump," said Ohanian, vice chair of UCLA's Department of Economics. "We found that a relapse isn't likely unless lawmakers gum up a recovery with ill-conceived stimulus policies."

From here:

http://newsroom.ucla.edu/portal/ucla/FD ... elNum=5409

[ATrain]

Democratic officials made clear on Sunday that the cost of Barack Obama’s economic rescue plan would run into hundreds of billions of dollars and hinted he was prepared to hold off introducing new taxes for his first two years as president.

David Axelrod, Mr Obama’s chief political adviser, said passing a massive economic stimulus package would be the president-elect’s top priority when he took office in January, amid deepening fears of a long and severe recession.

http://www.ft.com/cms/s/0/43832dfe-b992 ... fd18c.html

Lets get ready for another Great Depression, folks. You know what really pisses me off? The government has no problem bailing out Citibank and other financial institutions for making bad decisions with $700 Billion and ensuring the CEOs get their bonuses, but when it comes to helping out GM, Ford and Chrysler asking for $25 billion b/c they're suffering b/c of the banks bad decisions, Congress won't do it despite the fact that they employ hundreds of thousands of Americans.

Hopefully the Republicans will realise they've been idiots the past 8 years, drunk with power and revert back to their old ways and the "Contract with America." The Dems are just going to be bigger idiots and now will have unchecked power.

I think I'm going to become an expatriot and move to Australia or New Zeland after May.

[LUconn]

So you'd rather them bail out both if they won't refuse for both? The only good I can possibly see coming from any of this economic doomsday is being able to point to the Union and be able to say, "this is your fault, you've outlived your usefulness, and you're a failure." Did they honestly think they could keep this scam going forever?

[ATrain]

So you'd rather them bail out both if they won't refuse for both? The only good I can possibly see coming from any of this economic doomsday is being able to point to the Union and be able to say, "this is your fault, you've outlived your usefulness, and you're a failure." Did they honestly think they could keep this scam going forever?

I'd rather them bail out neither, but I'd prefer the auto manufacturers over the banks. The banks could've corrected themselves, for example Wells Fargo buying Wachovia and stable, regional banks w/ repsonsible lending practices that could've emerged as new giants had the government just left its hands off the situation.

[olldflame]

Actually, the big 3 have already renegotiated their union contracts, and starting in the next couiple of years, their labor costs will be pretty much in line with those of the Japanese and German automakers with plants here in the US. I agree that it seems strange that congress was so quick with huge amounts for the financial institutions and now are balking at a lot less for the auto makers.

[mrmacphisto]

Maybe it had something to do with the private jets the executives showed up in for the talks? They have to show the government that they're ready to cut costs and manage their money frugally before they get any kind of bailout. The government told them flat-out to sell the jets and come back later on a commercial flight with an detailed financial plan. This isn't just free money -- it's a loan, and there's an application process. So far the auto makers haven't made a good impression.

[ATrain]

Maybe it had something to do with the private jets the executives showed up in for the talks? They have to show the government that they're ready to cut costs and manage their money frugally before they get any kind of bailout. The government told them flat-out to sell the jets and come back later on a commercial flight with an detailed financial plan. This isn't just free money -- it's a loan, and there's an application process. So far the auto makers haven't made a good impression.

I just think its unfair that they get held to a standard higher than bank CEOs, who are still getting several hundred millions in bonuses AND a bailout for their irresponsible actions.

[Ed Dantes]

Maybe it had something to do with the private jets the executives showed up in for the talks? They have to show the government that they're ready to cut costs and manage their money frugally before they get any kind of bailout. The government told them flat-out to sell the jets and come back later on a commercial flight with an detailed financial plan. This isn't just free money -- it's a loan, and there's an application process. So far the auto makers haven't made a good impression.

If you have to go to Washington for the biggest event of your life, one that is so large it has short-and-long-term ramifications for your company -- and your country -- are you going to risk it by subjecting it to the whims of a commercial airliner? Probably, I guess... those flights never get delayed, or canceled, and I'm sure they'll arrive there with their luggage.

(I'm not saying that they were right by taking a private jet. Maybe the heads of the Big 3 should have carpooled from Detroit. And to ensure that they'd get there without any car problems, they could rent a Honda.)

[Hold My Own]

I dont mind them taking a jet...heck you should see how much the heads of Areva take the jet from spot to spot...that's just the heads of the Lynchburg devision...at that level it's expected and really justified by saying the hours saved by taking the jet was used to help the company....etc etc

[ALUmnus]

Yeah, the whole private jet thing is just stupid. Who cares how they got there? It's a reasonable business expense. I heard the Ford CEO drove to DC this time, like he's got nothing better to do. Again, congress has both the problem and the solution backwards. Typical.

[Hold My Own]

This is a common practice...and not just for CEO's...heck if it wasnt my grandfather would be out of business

[ALUmnus]

So Ford is asking for a $9 billion emergency line-of-credit (used only if necessary), will be selling off Volvo, and start focusing more on smaller cars rather than trucks. I don't think congress will buy into the line of credit, they want to own Ford, not just let them borrow money.

[RubberMallet]

Yeah, the whole private jet thing is just stupid. Who cares how they got there? It's a reasonable business expense. I heard the Ford CEO drove to DC this time, like he's got nothing better to do. Again, congress has both the problem and the solution backwards. Typical.

yeah i thought it was funny. however most companies have fleets of jets that generally sit in a hangar somewhere and are very little flight time on them. they didn't give a very good answer for their use and were made to look like morons.

a "do you want us to get this fixed as soon as possible or do you want me to have to strip down to my skivvies by TSA while the possibility of your plant getting shut down looms over your head" kind of answer would of shut everyone up...

[Ed Dantes]

Here's the problem with all this...

Any deal with the government is like a Faustian bargain. Sure, you may get money to finance what you need to do, but you're metaphorically crawling into bed with the government. That means they are in the position to dictate to the automakers what they can and can't do.

It's not like it's going to be a "we'll give you $20 billion to get situated, and pay us back". It's more like "we're going to give you $20 billion, and in return, you're going to do things our way"... which is a scary proposition when you consider 'my way' is going to be eerily similar to 'Nancy Pelosi's Way'.

Take a look at public schools. They are mostly funded from the state and local level, but since they receive federal funds, the feds can dictate curriculum.

So what'll happen? The government, which has rarely been good at solving things, will not lessen restrictions and regulations that have (partially) contributed to the Big 3's downfall (thank you, ridiculous CAFE standards!) The government won't fix the disparity between UAW workers and their non-union counterparts.

The solution to all this is a heck of a lot simpler than we're making it out to be.

#1. Fire all the executives of the Big Three and the United Auto Workers. If $20 billion is going to be doled out, someone's head needs to roll.
#2. Declare bankruptcy so you can re-negotiate union contracts.
#3. Use bailout money to reach buyout settlement with retired employees & fired employees who are still earning a paycheck.
#4. Current employees' pensions are voided, and instead a 'just compensation' will be awarded to them in the form of a Roth IRA. They can continue contributing to that Roth IRA at normal levels, and also the car companies will provide them the option to invest in a 401(k). Future contributions to the 401(k) will be matched by the companies, up to a point. These 401(k)'s will be held by the employee, just like in every other sector of the economy, and can be held on to in the event of the employee's departure from the company.
#5. Companies no longer pay for health care. Employees will be expected to purchase their own health care. To offset these costs, the companies will allocate a certain amount of money available to an employee so he / she can purchase health care, and the government will provide a hefty tax credit to those employees who do.
#6. Auto companies axe several production lines. Toyota has a fleet of cars, with great variety, with only three brands (toyota, scion, and lexus). Honda, two. Why should GM have eight (Pontiac, GMC, Hummer, Cadillac, Saturn, Saab, Chevy, Buick, etc...) Consolidate some brands, sell off others (example: sell Hummer to Caterpillar). Multiple brands means you have to waste millions in production costs and advertising for awfully similar vehicles.
#7. Government ends "Two-Fleet" rule for CAFE standards. Foreign imports and domestic cars shouldn't be held to the same standards.
#8. Mandate that cars be able to run on 'flex-fuels'
#9. Restructure factories and assembly plants to be more automated and flexible. It can be done. It has been done, it Brazil for example: http://info.detnews.com/video/index.cfm?id=1189
#10. Any and all bailout money will be paid back. With interest.

[ALUmnus]

#5. What's wrong with offering healthcare if it's reasonable? Most if not all companies offer this benefit, it attracts better workers.

#8. Why mandate this? It's not cost-effective at the moment. Why not let the market make the demands?

Honestly, the biggest step they need to take is to bust the union, but I don't think that's a possibility.

[Ed Dantes]

#5. What's wrong with offering healthcare if it's reasonable? Most if not all companies offer this benefit, it attracts better workers.

#8. Why mandate this? It's not cost-effective at the moment. Why not let the market make the demands?

Honestly, the biggest step they need to take is to bust the union, but I don't think that's a possibility.

The problem with offering health care is it adds to the cost of the employee. That cost is rather prohibitive; it amounts to something like an extra $1,500 to the price of a car. To put it another way, if you had two equal vehicles, one from the USA and one from Japan, the one from the USA would cost an extra $1,500 to cover for tha US' auto workers' health care costs. By putting the option out of Detroit's and into private hands, you eliminate this cost.

As for flex fuels, I think ethanol is a complete disaster. However, I think cars need to have the option to take different fuel blends instead of just one kind (or two, if you go with diesel). The reason it's not cost-effective is because there are a dearth of energy alternatives out there.

For example, you could fill up a car with natural gas for like 60 cents a gallon. But no one wants to buy a car like that because there are practically no natural gas stations around, and while you can install one in your home, that cost is rather expensive (like $4,000). I mean, in the Hampton Roads area, where there is over a million people, there are a whopping total of two natural gas stations to service the region. Two. By mandating cars that have the ability to drive off of a variety of fuel sources and not just one, you create a market for them.

[ALUmnus]

Most companies build the cost of healthcare into an employees earnings. If you dropped the healthcare, the employee would expect to make more. The key word there was "reasonable". The UAW healthcare is ridiculous, but getting rid of the benefit altogether would probably not be a good thing for the health of the company.