Detroit bailout

[theeohiostate]

My sister and brother-in-law have retired from GM and both fear their pensions will be taken. They were led to believe that if GM goes into bankruptcy they would have 1/2 of their pensions cut. Needless to say, they are freaking out and can't afford to have that happen, they both are already working odd jobs now because their pensions aren't enough.

 

If the banks got 700 billion just to hoard and buy up other banks/interests without oversight or any stipulation to relax lending, then it would be criminal not to do the same with the Auto industry for 1/20th that amount with heavy oversight.

 

 

Seems more political and less economical minded for them to argue against it. The UAW lobbys for the Democrats, thus the Republicans are fighting against it. Hmmm, seems a little suspicious

 

 

They let trillions out the door without oversight or accountability now our representatives want to be careful about a minimal 15 Billions. I call BS on this inept propaganda.

Edited December 12, 2008 by theeohiostate

[TheGrunt]

My sister and brother-in-law have retired from GM and both fear their pensions will be taken. They were led to believe that if GM goes into bankruptcy they would have 1/2 of their pensions cut. Needless to say, they are freaking out and can't afford to have that happen, they both are already working odd jobs now because their pensions aren't enough.

 

If the banks got 700 billion just to hoard and buy up other banks/interests without oversight or any stipulation to relax lending, then it would be criminal not to do the same with the Auto industry for 1/20th that amount with heavy oversight.

 

 

Seems more political and less economical minded for them to argue against it. The UAW lobbys for the Democrats, thus the Republicans are fighting against it. Hmmm, seems a little suspicious

 

 

They let trillions out the door without oversight or accountability now our representatives want to be careful about a minimal 15 Billions. I call BS on this inept propaganda.

Even when speaking relatively, that's a lot of taxpayer money. $15 billion.

 

Sidestepping the politics and looking at the situation from a capitalist perspective, a poor business model and a lack of renegotiated contracts are very closely related to the problems with the auto industry. 'The Big 3' have been losing money for decades, and they haven't changed their business model to meet the demands of consumers, but I don't understand why it's the taxpayer's job to bailout a failing company. Also - when or if GM or Ford, or whoever, if they bankrupt it doesn't mean the company will simply vanish. It will allow the business to restructure itself, create a better business model, restructure contracts, and ultimately find a way to better serve a consumer who have lost interest in the products they are selling.

 

Why is it that Toyota or other 'foreign car makers' (who have factories in the United States, creating jobs in the U.S.) are not going bankrupt while 'the big 3' are? There seems to be a fundamental flaw in the business model of certain corporations in the auto industry. That flaw shouldn't be the burden of taxpayers. It is the burden of the company who flawed.

[westvirginia]

Even when speaking relatively, that's a lot of taxpayer money. $15 billion.

 

Sidestepping the politics and looking at the situation from a capitalist perspective, a poor business model and a lack of renegotiated contracts are very closely related to the problems with the auto industry. 'The Big 3' have been losing money for decades, and they haven't changed their business model to meet the demands of consumers, but I don't understand why it's the taxpayer's job to bailout a failing company. Also - when or if GM or Ford, or whoever, if they bankrupt it doesn't mean the company will simply vanish. It will allow the business to restructure itself, create a better business model, restructure contracts, and ultimately find a way to better serve a consumer who have lost interest in the products they are selling.

 

Why is it that Toyota or other 'foreign car makers' (who have factories in the United States, creating jobs in the U.S.) are not going bankrupt while 'the big 3' are? There seems to be a fundamental flaw in the business model of certain corporations in the auto industry. That flaw shouldn't be the burden of taxpayers. It is the burden of the company who flawed.

 

 

:divingboard:

[theeohiostate]

Even when speaking relatively, that's a lot of taxpayer money. $15 billion.

 

Sidestepping the politics and looking at the situation from a capitalist perspective, a poor business model and a lack of renegotiated contracts are very closely related to the problems with the auto industry.

 

 

 

I agree, but please tell me the difference in the Fannie Mae and Freddie Mac business plan and that of GM ? Citigroup ? BOA ?

 

 

This is completely political and you can't sidestep that. The south has no interest is helping out the ironclad northerns.

 

700 Billion for financial institutions that made aggressively poor intentional decisions verse 15 billion for greedy auto workers seems like a wash to me.

 

 

Yes 15 billion is alot of money, but no where near 700 billion of uncontrolled money with no oversight. We will never know where this money was spent.

[AtomicCEO]

My sister and brother-in-law have retired from GM and both fear their pensions will be taken. They were led to believe that if GM goes into bankruptcy they would have 1/2 of their pensions cut. Needless to say, they are freaking out and can't afford to have that happen, they both are already working odd jobs now because their pensions aren't enough.

 

I fully support protection for the workers pensions.

 

But giving the automakers billions to eventually help the pensions of the workers is not a solution to that problem. It's indirect and inefficient and in the end, the pensions are going to be f'd anyway.

[Clubfoothead]

What's the problem with helping the automakers? Not from a philospohical standpoint but from fiscal and logistic standpoint?

[dmarc117]

the bailout is dead for now. markets down overseas and spu's down 50.

[dmarc117]

Equity futures move to pre-mkt highs on headline that the White House is considering using the TARP for Automaker aid

[Kid Cid]

I fully support protection for the workers pensions.

 

But giving the automakers billions to eventually help the pensions of the workers is not a solution to that problem. It's indirect and inefficient and in the end, the pensions are going to be f'd anyway.

 

Why doesn't the gov't freeze the assets supporting the pensions today, take them over and let the big 3 try and survive on their own? I don't necessarily like the gov't stepping in to that degree, but I don't like to see people get f'ed out of their retierment either. I 100% don't advocate the gov't saving the companies though. I think the Grunt put it quite nicely earlier in this thread.

[gsmayes]

This time it really will be the war of northern aggression. These southern a$$holes have been anti-union forever, and that's all this is, union busting. You know why Ford is in good shape? Because they were able to borrow money 2-years ago from real live actual banks to fund their restructuring. Too bad for GM that they weren't in as rough a shape. The bottom line is that the south doesn't care what happens to the midwest. Well, it's on, the next time some huge ass hurricane comes and f*cks thier sh*t up, f*ck em. And don't think I'm some random kook, everyone in my office is sick to their stomach after being sold down the river by Kentucky, Tennessee and Alabama; and we aren't even connected with the auto industry, we're civil engineers. The south just dropped a bomb on the midwest; my new motto is don't buy southern.

Edited December 12, 2008 by gsmayes

[TimC]

gsmayes will not be one of the 144,000 spared when the South goes medieval on yer ass.

[dmarc117]

the onions need to go away.

[millerx]

This time it really will be the war of northern aggression. These southern a$$holes have been anti-union forever, and that's all this is, union busting. You know why Ford is in good shape? Because they were able to borrow money 2-years ago from real live actual banks to fund their restructuring. Too bad for GM that they weren't in as rough a shape. The bottom line is that the south doesn't care what happens to the midwest. Well, it's on, the next time some huge ass hurricane comes and f*cks thier sh*t up, f*ck em. And don't think I'm some random kook, everyone in my office is sick to their stomach after being sold down the river by Kentucky, Tennessee and Alabama; and we aren't even connected with the auto industry, we're civil engineers. The south just dropped a bomb on the midwest; my new motto is don't buy southern.

random kook

[Perchoutofwater]

This time it really will be the war of northern aggression. These southern a$$holes have been anti-union forever, and that's all this is, union busting. You know why Ford is in good shape? Because they were able to borrow money 2-years ago from real live actual banks to fund their restructuring. Too bad for GM that they weren't in as rough a shape. The bottom line is that the south doesn't care what happens to the midwest. Well, it's on, the next time some huge ass hurricane comes and f*cks thier sh*t up, f*ck em. And don't think I'm some random kook, everyone in my office is sick to their stomach after being sold down the river by Kentucky, Tennessee and Alabama; and we aren't even connected with the auto industry, we're civil engineers. The south just dropped a bomb on the midwest; my new motto is don't buy southern.

 

I'm a southerner and I have a problem with federal disaster relief. I think if people want to live in areas subject to natural disasters then they should pay for that privilage, and that we shouldn't. Having said that, comparing the fall of the big 3 to a natural disaster is just crazy. The big 3 are in trouble for one reason and one reason only. Greed, the greed of the CEOs and the greed of the unions. You don't see Toyato and Honda crying for money, yet they are built her by Americans. Of course they don't have the noose around thier necks that UAW put around the big 3.

[millerx]

This time it really will be the war of northern aggression. These southern a$$holes have been anti-union forever, and that's all this is, union busting. You know why Ford is in good shape? Because they were able to borrow money 2-years ago from real live actual banks to fund their restructuring. Too bad for GM that they weren't in as rough a shape. The bottom line is that the south doesn't care what happens to the midwest. Well, it's on, the next time some huge ass hurricane comes and f*cks thier sh*t up, f*ck em. And don't think I'm some random kook, everyone in my office is sick to their stomach after being sold down the river by Kentucky, Tennessee and Alabama; and we aren't even connected with the auto industry, we're civil engineers. The south just dropped a bomb on the midwest; my new motto is don't buy southern.

The problem is that you guys did this to yourselves. A hurricane is not something we have control of... I'm pretty sure we would be there for you if there was a disaster beyond your own control!! kinda like 9/11.... I know we were with you and for you then. Wait, why am I even arguing this... I must really be bored.

Edited December 12, 2008 by millerx

[Pope Flick]

My sister and brother-in-law have retired from GM and both fear their pensions will be taken. They were led to believe that if GM goes into bankruptcy they would have 1/2 of their pensions cut. Needless to say, they are freaking out and can't afford to have that happen, they both are already working odd jobs now because their pensions aren't enough.

 

If the banks got 700 billion just to hoard and buy up other banks/interests without oversight or any stipulation to relax lending, then it would be criminal not to do the same with the Auto industry for 1/20th that amount with heavy oversight.

 

 

Seems more political and less economical minded for them to argue against it. The UAW lobbys for the Democrats, thus the Republicans are fighting against it. Hmmm, seems a little suspicious

 

 

They let trillions out the door without oversight or accountability now our representatives want to be careful about a minimal 15 Billions. I call BS on this inept propaganda.

 

I'd like to see someone take this on with balls: those pensions HAVE to ge guaranteed, no doubt about that.

 

Then we should simply buy out the health plans of the unions and pull them off the companies' books. Use that as a basis for overhauling our health care ystem and slide the coverage into the private market simultaneously. Then, we should move EVERYONE off of corporate health plans and into the private sector.

 

Sorry, UAW - no more zero deductibles. Welcome to mainstream america. Wages? They'll need to be rolled back to current market conditions. Capitalism ahs demonstrated that you have priced yourself to high in the market. If you cannot accept that, well then so be it.

 

 

Also, some are questioning why the banks and not the auto industry? It's pretty simple: realistically, the banks are more or less a utility, like water and power. Should we ever allow those to be shut down? Private industry is simply that, private industry. Do you know how many more bailouts from the private sector we'll be asked for?

Edited December 12, 2008 by Pope Flick

[AtomicCEO]

Why doesn't the gov't freeze the assets supporting the pensions today, take them over and let the big 3 try and survive on their own? I don't necessarily like the gov't stepping in to that degree, but I don't like to see people get f'ed out of their retierment either. I 100% don't advocate the gov't saving the companies though. I think the Grunt put it quite nicely earlier in this thread.

 

I don't see why pensions are liquid funds to begin with. It seem like if employees have deferred some compensation into a special account, that money should not be able to be depleted by the company holding it. It should be in a lockbox so the employees is guaranteed to get it back some day. I can't imagine allowing my money to be put in a pension fund if the company could just lose it all when times get tough.

 

the onions need to go away.

 

I like the onions. It's the pickles I can't stand.

[Perchoutofwater]

I don't see why pensions are liquid funds to begin with. It seem like if employees have deferred some compensation into a special account, that money should not be able to be depleted by the company holding it. It should be in a lockbox so the employees is guaranteed to get it back some day. I can't imagine allowing my money to be put in a pension fund if the company could just lose it all when times get tough.

 

 

 

I like the onions. It's the pickles I can't stand.

 

You mean like social security?

[chiefjay]

My sister and brother-in-law have retired from GM and both fear their pensions will be taken. They were led to believe that if GM goes into bankruptcy they would have 1/2 of their pensions cut. Needless to say, they are freaking out and can't afford to have that happen, they both are already working odd jobs now because their pensions aren't enough.

 

If the banks got 700 billion just to hoard and buy up other banks/interests without oversight or any stipulation to relax lending, then it would be criminal not to do the same with the Auto industry for 1/20th that amount with heavy oversight.

 

 

Seems more political and less economical minded for them to argue against it. The UAW lobbys for the Democrats, thus the Republicans are fighting against it. Hmmm, seems a little suspicious

 

 

They let trillions out the door without oversight or accountability now our representatives want to be careful about a minimal 15 Billions. I call BS on this inept propaganda.

 

TOSU, how old is your sis as you seem to be a fairly young guy?

 

I'm really torn on all of this. I grew up in the Auto Industry as my dad was a tinsmith for GM for many years and a hard core union man. I've heard all the stories about GM and quite frankly I still get the UAW talk, Repulicans are bad, etc... from my old man. I am for the most part a Republican. I do understand where a few of these Senators are coming from as I have believed for many years that the UAW needed to right size themselves in order for the Big 3 to survive in the long run. The country is changing, the UAW needs to adapt as do the big wigs. Those salaries and bonuses are crazy. Generally speaking we have lived too big for too long and now it's all coming to a head.

 

We do need these loans but if the UAW and the C-Suite and their direct reports don't right size their salaries then that 15M will just be a band aid that will come off in a few years.

 

I am grateful for the salary my old man had earned over the years and the Pension he gets today which may be cut as TOSU described and that does concern me as he is handicapped today. I guess he'll have to adapt with the help of me and my siblings if that does happen.

 

Interesting times we are living in.

[Outshined]

Retirement Benefits Alone Cost $31 an Hour

 

The argument that retiree pension and health benefits inflate the hourly labor costs of the Detroit automakers cannot withstand basic scrutiny. For instance, General Motors UAW retirement plan paid $4.9 billion to 291,000 retirees and surviving spouses in 2006. That works out to $31.04 an hour when apportioned among active workers. That figure accounts for virtually all GM's benefit costs--before accounting for health care costs, disability benefits, supplemental unemployment benefits, or any of the other benefits GM provides. GM pays too much in retirement benefits to have labor costs of only $70 an hour if that figure included benefits to current retirees.

 

Link

 

 

They need to somehow switch over to a 401k or some other savings plan in the future. They are basically keeping every living employee who retired with the company on the payroll. UAW needs to open their eyes and start looking at concessions. It's very painful because nobody wants to give up what they're getting, but bankruptcy might be the only option. The airlines did it by reorganizing and the auto industry can do it as well without Government help.

[TheGrunt]

I agree, but please tell me the difference in the Fannie Mae and Freddie Mac business plan and that of GM ? Citigroup ? BOA ?

 

 

This is completely political and you can't sidestep that. The south has no interest is helping out the ironclad northerns.

 

700 Billion for financial institutions that made aggressively poor intentional decisions verse 15 billion for greedy auto workers seems like a wash to me.

 

 

Yes 15 billion is alot of money, but no where near 700 billion of uncontrolled money with no oversight. We will never know where this money was spent.

The current recession we are in started in December of 2007. One year ago, the Federal Reserve was still worried about inflation, thus increasing the interest rate rather than what they should have been doing, decreasing it due to deflation. Treasury Secretary Hank Paulson and Federal Reserve chairman Ben Bernanke, they both told the American public all year long in 2007 that "the fundamentals are sound," when in reality a severe recession was clearly taking hold. When the Fed increases the interest rate, it forces banks to lend out more money, and since Congress decided to turn its back on the oncoming crises, the banks were forced to lend money to people who they knew could not pay for the loan they were receiving. And the Government, included yours truly -- Obama -- they all took money from Freddie and Fannie, then turned their back on the crises. That's a fact that for some reason, very few media outlets are talking about.

 

So yeah, while the banks made poor decisions, Congress, the SEC, and whoever else is directly involved in this helped cause the crises we are seeing today. As for the $15 billion of taxpayer money that would go to, as you described, "for greedy auto workers." Why should taxpayers fork up more money for this? We seem to be on the same page, but we differ in that you feel we should bail out the Big 3 auto makers with taxpayer money.

 

One thing I will say, because the banks got bailed out, the Big 3 will (and I think did, today) get bailed out too. The government should not be able to choose who survives and who goes bankrupt. Plus, we're in a situation where we almost are forced to bail out the auto industry because of the unemployment rate increases it will cause. But that doesn't mean it's wasted money, because it is. We are simply allowing the auto industry to live a day longer, but I just can't see three decades of poor business practices being fixed in three months, simply because the auto industry took taxpayer dollars from the government. I suppose we might as well buy their cars now, for if we don't, they'll get our money anyway. In no way does that make sense to me.

[wiegie]

When the Fed increases the interest rate, it forces banks to lend out more money

Would you mind explaining this one to me in a little bit more detail (because it doesn't make any sense to me).

[TheGrunt]

Would you mind explaining this one to me in a little bit more detail (because it doesn't make any sense to me).

The Federal Reserve and Interest Rates

[Pope Flick]

and since Congress decided to turn its back on the oncoming crises, the banks were forced to lend money to people who they knew could not pay for the loan they were receiving.

 

 

That is complete and utter bull, which makes you sound like an apologist for the banking industry.

 

Check it - the dereg and those responsible you got largely correct. It was the deregulation that ALLOWED the banks to CHOOSE who they loaned to.

 

They weren't forced to do chit. They were given deregulatory leeway and got greedy. They CHOSE to make the loans to people because of the flawed idea that property values wouldn't go down.

 

if I'm wrong, please provide a link.

 

And your link in response to wiegie (an economic professor in case you didn't know) doesn't answer his question. He's being more tactful than I am - you're making up stuff and you have no idea what you're talking about...

 

For those who don't know theGrunt - that's par for his course.

[AtomicCEO]

Wow.

 

Increasing interest rates forces banks to lend money.

The actions of the Fed Chairman and Treasury Secretary, who were appointed by Bush, are the fault of Congress.

 

I'm learning some really interesting things from you, Grunt. Tell me again how sheep's bladders can be used to prevent earthquakes?