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  1. #1
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    Default Auto Bailout: Plan B

    Senate Republicans determined to block the $14 billion rescue package for Chrysler and General Motors have trotted out predictable rhetoric about the dangers of Big Government. Senator Mitch McConnell of Kentucky, the Republican leader, warned on Thursday that “a government big enough to give us everything we want is a government big enough to take everything we have.”

    As the American economy sinks into the deepest recession in a generation — caused in large part by this sort of anti-government and anti-regulatory dogma — it would be folly to allow the ideologues to undermine efforts to pull the country out.

    Let’s be clear. The rescue plan passed by the House this week won’t fix the ailing automakers that are hemorrhaging cash as sales plummet. But allowing one or more of these companies to collapse into bankruptcy proceedings could potentially cause the loss of hundreds of thousands of jobs and even greater economic havoc.

    Furthermore, if the Detroit carmakers are going to survive, they will have to completely overhaul the way they do business — and start building cars that people will buy. For that, they are going to need new leadership, a rational assessment of their long record of failure and, yes, a much larger infusion of government cash.

    The short-term bailout not only buys time, it uses the time to build a long-term restructuring plan. The incoming Obama administration can then decide whether to invest billions more to truly rebuild the industry.

    Nobody — including the carmakers — fully understands the depth of Detroit’s problems or how much money it will take to dig them out. Mark Zandi, chief economist at Moody’s Economy.com, told Congress last week that rescuing the companies would cost taxpayers $75 billion to $125 billion over the next two years. And that’s probably optimistic.

    As sales fall, the more taxpayer money the automakers will need to survive, and the more doubts will arise about whether it makes sense to support failing car companies that can’t sell cars.

    Before it makes any decisions, the next administration will need a lot more information. The current plan calls for a government car czar who would have full access to the automakers’ finances. By the end of the year, the czar would establish benchmarks to evaluate the carmakers’ progress in restructuring.

    The official would bring the companies together with creditors, workers, dealers and suppliers to hammer out a plan to restore their long-term viability. The various stakeholders would be given until March 31 to reach such a deal. And the czar could use the threat of forcing them into bankruptcy proceedings to encourage all parties to reach an acceptable agreement.

    The bill has big weaknesses. Most importantly, it fails to demand that top executives of any car company receiving taxpayer money step down. These companies need new managers who are not wedded to Detroit’s failed strategies. And the bill doesn’t set any conditions to ensure automakers invest in fuel-efficient vehicles. Any long-term plan must make sure the automakers don’t simply keep making gas-guzzling trucks and sport-utility vehicles, whose popularity — unfortunately — has recovered as gas prices have declined.

    We were distressed by reports late Thursday night that Senate Republicans were close to scuttling the deal. Despite all the flaws of the temporary fix, we don’t see a long-term solution without it.

    http://www.nytimes.com/2008/12/12/op...ml?ref=opinion
    What should the next step be?

  2. #2
    Senior Member fleurdujour's Avatar
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    All of these bailouts are bad news...

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    Senior Member Lateralus's Avatar
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    That article is BS. The Big Three don't have to survive for the US to have a strong economy. And it won't be the end of the world if they go into bankruptcy.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

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    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by 01011010 View Post
    What should the next step be?
    IMO, nothing. I don't support this bail out at all anymore.

    Dropping oil prices will do more for them than the bailout would. And the central long term plan is to reduce automobile use anyway, or at least move away from gasoline. Leaving a void in the market with a new energy plan will work vastly better than propping up and stifling competition in the market.

  5. #5
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    The next step should be the government keeping their hands OFF of the auto industry, and letting the companies continue to exist after filing for chapter 11 bankruptcy. There is absolutely no reason for us to bail them out, absolutely no reason for us to buy up 20% of the company and have government dictate to them how to run the company and make cars. This nationalist/socialist/fascist (damnit, they have too many similarities and ambiguities for me to dissect one and declare it the ONE defining term) bull crap has to stop.

    If Bush usurps their decision to reject the bailout, and decides to give them the money anyway or has the Fed do it, then we would be in serious unconstitutional territory. Alas, I think nobody in Washington gives a damn anymore.

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  7. #7
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    Quote Originally Posted by Anonymous View Post
    That's ridiculous. It's going to cost far more money in the long run.

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    Quote Originally Posted by 01011010 View Post
    That's ridiculous. It's going to cost far more money in the long run.
    Whoops, didn't mean to say that I think it should be the next step, just that the next step is probably going to be that. Personally, I agree that we should let these companies fail. But their failing needs to be controlled in some way. If we let everything just collapse, we're fucked. There needs to be some place for the workers who lose their jobs to go, and the factories that are shut down to be transformed into.

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    Quote Originally Posted by Anonymous View Post
    Whoops, didn't mean to say that I think it should be the next step, just that the next step is probably going to be that. Personally, I agree that we should let these companies fail. But their failing needs to be controlled in some way. If we let everything just collapse, we're fucked. There needs to be some place for the workers who lose their jobs to go, and the factories that are shut down to be transformed into.
    lol I didn't assume you personally think that.

    Yes. Your suggestion is the best course of action, but where would the people go? Hypothetically.

    Also, I don't think it's prudent to allow the same people to remain in the leading positions of the companies. They need to take responsibility for their actions.

  10. #10
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    Quote Originally Posted by Anonymous View Post
    Whoops, didn't mean to say that I think it should be the next step, just that the next step is probably going to be that. Personally, I agree that we should let these companies fail. But their failing needs to be controlled in some way. If we let everything just collapse, we're fucked. There needs to be some place for the workers who lose their jobs to go, and the factories that are shut down to be transformed into.
    Truthfully, we're fucked either way. All they are doing and have been doing since this began is to try and steer this crashing plane (the economy) in a way that will give us a softer landing and leave something to salvage. The problem is, their idea of "helping" this crisis is to completely ignore any capitalist principles this nation was built on, move toward nationalizing failing companies/industries and banks, and adopt the same sort of policies that were enacted during the Great Depression; an over involvement of government fiddling around with the economy and directly extending the length and severity of the depression while the rest of the world pulled out of their depressions in comparatively short order. We are repeating history, but this time we're only going to make it worse for ourselves by completely obstructing and destroying the underlying principles that make this nation work and would rebuild the economy if only left to their own devices.

    With the auto industry bailout, the unions are acting disgustingly analogous to parasites; refusing to let the host die/fail or go into terminal condition because that would compromise the health of the parasite (the unions). The parasite is being particularly fickle, and also refuses to have its blood supply diminished AT ALL. In other words, the unions refuse to accept having their wages cut and brought down to the level of any other car company, while at the same time refusing to let the company go into critical mode/bankruptcy, which would mean a loss of union jobs and renegotiation of contracts. As long as they act like parasites, they can't be negotiated with. They would rather continue to burden the auto industry and continue to contribute to what ails it. If the government folds to the whims of the unions once again to save them and their host, then we have a serious problem...

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