Wednesday, November 19, 2008

Son of the Dastardly Bastardly Bailout

This will be shorter than usual, as I've already vented my spleen and other orifici when the leaders of both parties conspired to sign that abortion of liberty for the financial sector that I aptly named the 'Dastardly Bastardly Bailout.' But since the Big Three automakers are in Washington with their hands out looking for cash (and it's likely the UAW is visiting the DNC with another appendage out requesting service), I figured I'd remind people why bailouts are the worst option anyone could ever come up with.

First of all, let's briefly look at what's happened with the DBB. Not surprisingly, some of the money hasn't gone to the prupose the politicians intended. The Bush administration and lackeys are failing to manage it properly. And in two months, the Democrats fully get their chance to bail out more shit. Oh yeah, and the Federal Reserve loaned out another $2 trillion (in addition to the $700 billion of the DBB) to keep the financial sector running. And someone whined when it was suggested that we peel off an mere $25 billion to throw a bone to the Bad Three.

This is the same Bad Three automakers that have benefitted from several decades of protectionism, been prodded by regulations to produce cars with features designed by people who hate them (envirodouches and the like), and (voluntarily) chained to the Whore of Babylon that is the modern UAW. Now, with the next generation of American car manufacturers (Honda, Toyota, Hyundai, and other foreign owned, American-made cars) the Bad Three are finally reaching the end of their lives. If they are to survive, then they need to become competetive.

This means bankruptcy.

This means letting one or more of them fail.

Now this will mean the loss of many jobs and probably the collapse of at least one automaker. But it's either let them fail now and take the resultant lumps, or prop them (and every other large employer) up until the system that props them up fails and we have even more jobs lost.

There's a principle here that the Democrats seem to have no clue about and that the GOP has conveniently ignored until they lost their ass (in part) from the fallout of the DBB. While it's tempting to "save" companies, industries, people, and the country from hard economic times, the incessant delaying of consequences, like a pendulum being pulled higher, only results in a bigger swing.

Think of it as telling a lie. First you lie about something to avoid the consequences. Then you have to lie to cover up the original lie. Then something critical relies on the truth, but you have to lie to keep yourself protected. Then someone finds out you were lying about something, so you have to silence them. But in the process, they find out even more. So you go to hit them with a brick and you kill them. Then, in trying to get rid of the body by burning it, you set some brush on fire, starting a fire that kills a few dozen people and burns billions of dollars. Oh, and for shits and giggles, this causes enough global warming to kill of the human race.

Okay, that was a little extreme, but it kind of got going there, and I figgered I'd stop there before I destroyed the galaxy. But the point is that delaying the consequences can only make them worse.

Besides that, it's not the job of the government to support private enterprises. Bush and McCain should have remembered this sooner. At least the Son of DBB is DOA now in Congress. Obama would be wise to remember this when it comes back in January.

42 comments:

Gayle said...

But they'll do it. They'll bail out the Big Three and you know they will, Patrick. Then they'll be able to control what sort of cars they make. Are you ready to drive a tin can? :(

Patrick M said...

Are you ready to drive a tin can?

My third car was a Volkswagon Rabbit. Been there, drove that.

FYI, I am looking or maximum efficiency next car I buy. But that's to save gas, not the environment.

But my problem is that the government will be in the car business by that point, because only a takeover will "save" all three of these companies.

Arthurstone said...

Back in 1973 I owned a 1961 Karmann Ghia. Great mileage and I was able to drive by many of the lines at service stations during the OPEC of 1973 - 1974. At the time American cars were big, ugly and expensive to operate. IN the years since I have drive mostly VW products and one 4 cylinder Infiniti G20 which was a wonderful car. Best built automobile I ever owned by far.

I find it incredibly insulting to have these brainiacs clamoring for a bailout after spending the past ten or so years putting their customers into even larger and less efficient vehicles. That bubble done burst.

I have never purchased a US built car and hopefully never will. Living in a city one of my goals is to never own another automobile and I'm six years into that project. Walking, bicycle, public transportation plus the occasional shared car (Zipcar by the hour) or a rental for vacation works out fine. I am fortunate to live near enough my workplace not to have to rely on a typically mediocre American non-system of public transit or an automobile commute.

But it's more than the Detroit automaker's fault. It's the consumer as well. The delusion that gasoline would always flow cheaply. That commutes could be lengthened indefinitely for everyone to drive back to their suburban dream house turns out not to be affordable and or sustainable. That investments in public transit were undesirable and that we could build our way out of congestion. Etc. Etc.

Surprise. It can't last forever.

Automobiles will not go away any time soon.

But going forward they are going to be a lot more expensive to operate and increasingly less convenient.

Oh well.

Satyavati devi dasi said...

Gee, Patrick.. good thing I took Latin (orifici? if not grammatically correct, I still gotcha)...

Now, I have mixed feelings on this. Putting a million people out of work with no plan in place to get them working is not something I can even contemplate.

On the other hand, American automakers should have been on this decades ago.

I am not too young (though I may look it, ha) to remember odd and even days at the pump and the more-or-less death of the muscle car.

That was the time all the research into alternative fuel and higher mpg should have started. For all I know, it did. I may be a conspiracy theorist, but I swear the oil companies had an underhanded hand in preventing them from moving from concept to car.

The technology is there. If a Japanese carmaker can spit out a hydrogen powered vehicle just like that, you know that technology's been around; they didn't dream it up last year. If one carmaker can do it, they can all do it. For why they haven't, I already told you.

Now, because they waited too long, people en masse have moved over to foreign cars. Why? Because they're cheap, they get great mileage and for the most part, they're high quality with killer warranties. I saw a car (Kia?) the other day going for under 10K. Patrick, this is what I was talking about: find a way to sell it cheaper and kill your competition with volume. The Asians know this.

Currently I'm driving a 24mpg Toyota Tacoma (because we require a truck) and my husband's got a 30mpg Subaru Forester. They both rock. I've driven American cars; I had a Wrangler (15mpg) for ten years. I still stand by the 55 Bel Air. But practicality has to win out, and Detroit gambled a little too far. My family's been VW since the 60's and the air-cooled engine. My mom has a Golf and my sister has my father's (new) Bug, both diesel. I've had a Dasher, a Fox, and a Jetta. I can't count out the whole list. They're great cars, if a bit more pricey (and lots more luxurious) than they used to be.

Gayle: American carmakers spent the 70's and 80's building tin cans.. don't you remember? Some of the worst cars, quality-wise, ever. They don't need the government's help to do that. Besides, it might not be so bad: VW was the product of the Reich, and, as my mother says, the only good thing Hitler ever did.

In the end I have mixed feelings. Any relief given to Detroit should be so tightly controlled it squeaks and given in multiple payments instead of one. The government should also insist that research, development and production turn to focus on alternative fuel. The minute one dime goes anywhere else, the money stops.

And I'm all for forcing the oil companies to invest a substantial percentage of their billions of quarterly profits into wind, solar, hydroelectric, geothermal, and hydrogen power. All this drill baby drill shit is, if you can wait the years it'll take (if ever) to get any oil they might find, is just a bandaid. For the long haul moving away from fossil fuel is absolutely necessary.

Yeah, that means government regulation of the oil companies, and not Bush-style (cmon, you can't say you don't believe that after all this time) anymore.

Patrick M said...

Arthur: But it's more than the Detroit automaker's fault. It's the consumer as well

I wouldn't go to the extreme of saying it's the fault of the consumer. After all, they didn't cause the Calcified Bad three to produce shit during the 70's gas crisis. And the consumer has voted for what they want, and the names are not of American origin.

I also wouldn't discount the American built cars if it comes from Honda (worked there) or Toyota (drive that), or any of the other more responsive and non-screaming automakers.

Saty: I like inventifying wordage like orifici. Sounds cooler than orifices. And if you get the definification, they you're good to go.

I understand the mixed feelings. But this is the problem with sustaining any company beyond its normal life.

From what I hear, the retail Icon Sears is close to collapsing. It really depends on Christmas this year. If they go under, that will also put an assload of people out of work. So should we start bailing them out? And then if we do bail them out, do we regulate them to carry specific merchandise?

Which brings me to the idea of regulating and forcing the automakers onto a specific course. The danger there is that if they don't have the right product (something we don't want), we've poured money in for nothing and then have to support them further. Maybe that means the government is forced to buy up those POS cars, maybe they come up with a voucher system like fellow blogger Dave suggests.

Either way, the companies have no real incentive to fix the problem or die. That's the reason any command economy ultimately fails.

As for sucking money from the oil companies, that will take away any reason they have to produce more oil, and we're back to depending on other countries until we can magically support ourselves on all these "clean" technologies. Meanwhile, China keeps growing on the wealth redistribution checks that have come from Bush and were promised in the tax "cuts" of Obama.

As for more regulation of the auto industry, that's certainly not the answer. That's not why Toyota eclipsed GM, why Honda is constantly growing, why foreign companies are coming here and making cars while the Bad Three are looking to Mexico. Their whole problem is they've been regulated and protected and propped up so long, they can no longer stand on their own.

If you want alternative fuels to run wild, and the auto industry to rebuild, then it's time to step back and let the market do what it can do, which is find a way.

Toad734 said...

Well, unlike the financial sector, 10% of all US jobs are related to the auto industry. And when an auto plant shuts down it's not rich educated people who are sent packing as with the financial bailout.

Our economy needs the big three or at least a big two. I think they should just dissolve Chrysler and split it between Ford and GM.

And by the way, all those fuel effecient requirements and regulations were brought on because we know those things are possible as the Japanese have been doing it for quite some time.

The problem with the American auto industry is not the Union or too much regulation. Their main financial problem is that they have health care costs to worry about and the companies in Japan and Germany don't. If the US had universal coverage we wouldn't be having this conversation right now. Well, it's still up to the big 3 to buy a car that someone actually wants. I do own an American made car but most American made cars look like shit your grandma would drive. Either that or they are so big you could take one into battle. The Volt is the right direction. The big three are always behind the times because they would rather pay their CEOs millions per year than be on the cutting edge of technology and innovation. The CEOs of automakers in other countries don't earn nearly as much as their American counterparts. Robert Wagoner of GM made 14.4 million in 07. That could employ 400 people at $35000 per year.

Bullfrog said...

Let the cyclical nature of economics take it's course, I say. The reality if people losing their jobs was brought on by bad judgement and greed on the part of the "Big 3" so the government isn't "putting folks out of work" by NOT spending billions rewarding bad behavior.

I agree that maybe "The Big 2" might be a good thing in the long run if auto makers refuse to use good judgement and foresight.

Arthurstone said...

patrick typed:

I wouldn't go to the extreme of saying it's the fault of the consumer.


No one was forced to buy a hugely out of scale, inefficient gas-guzzling SUV/PU truck to taxi the little darlings to soccer, cello lessons and fetch the groceries.

And I would argue "nothing says 'fuck you' quite like a Hummer".

That's my suggestion for the new Hummer ad campaign tagline.

Lista said...

Hi Patrick,
I finally got you blog rolled on my blog. I've also written out a few thoughts on note book paper in relation to the next 4 posts down. Hopefully, I'll find the time to type all the comments into the computer soon, but since this is a short Post, I thought I might try to deal with it on the spot.

The only problem with insisting that there should NEVER be bail outs EVER is that sometimes the Economy suffers and not just the failing businesses. I would hate to go into a Great Depression in the name of teaching some failed company a lesson. The unfortunate problem is that the Bail Outs offered have been far too Large and far too Pork Laden. That should never be. We should do what is needed to protect the Economy and nothing more.

I don't know how the bail out of Wall Street could have been avoided without leading to major Depression. As to the Auto Industry Bail Out, well, I don't know. You might be right about this one.

You feel that in doing bail outs, we only delay the consequences. I guess this is especially true when the Bail Outs are so huge.

As to Government control of the Auto Industry, the reason why this isn't going to work is because unfortunately, there are valid reasons for cars with Low Gas Mileage. For example, you can't pull a travel trailer, drive on 4-wheel drive roads or even get out when it snows with an economy car. It just doesn't work.

This is why "Command Economies ultimately fail" and more regulation of the Auto Industry is not the answer. Your suggestion that the Auto Industry has "been regulated and protected and propped up so long, they can no longer stand on their own" is interesting and probably true. There are definitely times in which we need to "step back and let the market do what it can do, which is find a way".

I like Satyavati's idea of giving relief that is "so tightly controlled it squeaks and given in multiple payments instead of one." I have no idea why the Government can't just use a little common sense when doing these things. I liked her Alternative Fuel, Wind, Solar, Hydroelectric, etc. ideas as well, yet I also believe that the drilling is necessary, yet there are also times in which we need to "step back and let the market do what it can do, which is find a way". I find myself at times quite confused on these issues.

Satyavati devi dasi said...

How about an offer by Detroit to let Japan, Korea, and etc, buy up the plants? Put in stipulations that floor workers get to keep their jobs.. reshuffle top management.. retool, which, look, if the Japanese want to do it, they'll do it efficiently and not take years about it... and start production here?

Didn't this actually happen in some Tom Hanks movie?

Hell, if banks can buy each other up, why not carmakers? It'd be a huge capital investment and they can continue the brand if they like just for nostalgia's sake. I'd be willing to bet the finished product would exceed what's being put out now, have better mileage, more alternative fuel options, a improved warranty and a lower price tag.

Ford et al don't make cars just for America, they ship internationally. Whether they build over there I don't know. They might also consider downsizing by selling off European plants.

Audi, Porsche and Volkswagen are all intimately connected. There's no reason the big 3 couldn't get snapped up by Honda or Suzuki or Mitsubishi. I think we'd all benefit by it, and it would certainly reduce the amount of relief they claim they need.

Also, how big of a sign saying ASSHOLE should be taped to the forehead of every one of those jokers who took private jets to DC? Don't they know that when you go looking for a handout you have to look po and pitiful? They would have been better off digging a Pinto out of the museum and all driving in it together, or better yet, going Greyhound. Even Oliver Twist knows this.

That one little thing did a lot of damage to their own cause. Maybe someone will suggest that foreign manufacturers buy it up. I think that would be a helpful idea. The Asian work ethic would be a refreshing change.

TAO said...

AIG gets bailed out and their management runs to a spa to celebrate. The automakers run to Washington for some easy money and they take private jets!

So, wonder where the problem with our economy is? I can't help but believe that management is to blame.

Oh, but how we love to point the fingers at Unions!

Actually, I own two Toyota's and I LOVE Toyota. Not just the car itself but the service and support; from Toyota to the dealer it is first class all the way.

I do have a real issue with letting the automakers fail. Our economy just cannot afford to lose more jobs and have more people unemployed.

I think each and everyone of us needs to realize that this meltdown will eventually effect each and everyone of us...it is actually a meltdown of our standard of living.

One recent trend analysis expert predicts that by 2012 food at christmas will be the gift of choice.

Think about that...in the United States of America we will reach a point where food is the gift of choice.

Lista said...

I'm not sure which is worse, having everything bought up by the Government, or having it all bought up by Other Countries. Either way we risk loosing control over our Country.

Lista said...

The Bail Outs were way too big and way too Pork Laden. What's wrong with this Country?! We need to be reasonable when we do Bail Outs.

Patrick M said...

Toad: Even if all three of them go into bankruptcy (chapter 13 reorganization), that doesn't mean 10% of labor gets laid off. A significant number will, but that's increasingly becoming inevitable anyway.

Our economy needs the big three or at least a big two.

The problem with this is that it reinforces the "too big to fail" mentality that keeps these limping hulks going. We need to look at them, proclaim "No More!" and let them find their own way out. And the fact they didn't come up with the vehicles that are winding their way out of other countries and had to be regulated into it is another indication they need to be allowed to fail.

As for the health care, all that was brought about because of union wranglings. The other automakers I listed (like Honda and Toyota) build cars in this country with much less overhead than the Bad Three.

Bullfrog: Amen to that.

Arthur: People have the right to do so, and paid the price during the gas price spike. That the automakers didn't plan for that contingency is their own fault.

Lista: I would hate to go into a Great Depression in the name of teaching some failed company a lesson.

Well, then we need to let the companies that need to fail to do so so that balance can be restored. We've strung the last period of growth out for 15 years (through the Clinton and Bush years), and put off the failures that needed to happen for longer than that (like bailing out Chrysler and creating the conditions that created subprime loans).

The Great Depression was said to start in 1929 with the stock market crash. That was followed by problems caused by excessive debt (sound familiar?). But it was actions to protect the economy such as the Smoot-Hawley Tariff Act that cemented the collapse. The Roosevelt administration was just as ineffectual, throwing make-work jobs to keep the country going longer. But that didn't solve the problem, just extended it out until another downturn in 1937. In other parts of the world, the poverty became a rallying point for demagogues like Adolf Hitler to rise to power. The only reason we recovered was WWII.

The solution is to get the government back this time and let the economy (which still has potential) do what it does best.

Saty: A buyout by others is an option, and may be the solution that emerges. If we can keep the government out of it.

All: More in a bit, as I am out of time.

Napqueen said...

People get real. If we as a country are going to come out of this current economic and financial crisis the big guys like GM, GE ,FORD ,CHRYSLER have to survive. They must or we will really go down.. We are not only talking about the big guys by themselves but thousands of small feeder companies that supply everything from headlights to the tires, to the radios, seatbelt latchs. If the big ones fail then so do all the little suppliers. Lets lend the cash needed. LEE Iacco proved years go that payback of loans can happen.

It's these CEO's that have to go.

Napqueen said...

If G.M. and Chrysler were to go under, 2.5 million people could be out of work.
And then what?

Lista said...

Patrick,
You do make me think, yet Napqueen is just as likely to be right as you. Unfortunately, I'm not an expert in these things and there's so much at stake that it's scary.

Arthurstone said...

Patrick wrote:

Arthur: People have the right to do so, and paid the price during the gas price spike.


It isn't a question of one's 'rights' Patrick. It's a question of people making unwise decisions and insisting on buying inappropriate products. I never have written anything about abridging ones 'rights'. I have mentioned that some 'rights' are going to be an awful lot more expensive going forward.

For one it would be interesting to factor the ongoing cost of the Iraq occupation into the price of a gallon of gas.

Here's an excellent idea:

http://www.nytimes.com/2008/11/16/opinion/16sperling.html?_r=1&ref=opinion&oref=slogin

Lista said...

Didn't I mention that "there are valid reasons for cars with High Gas Mileage. For example, you can't pull a travel trailer, drive on 4-wheel drive roads or even get out when it snows with an economy car. It just doesn't work." I guess I forgot the need for trucks in order to haul things, such as the supplies you need for your business.

The link left by Arthurstone involves a large amount of Government Regulation.

Toad734 said...

Saty:

That was Michael Keaton

Patrick:

But the BMW, Toyota and Honda are building cars people want, cars that get good gas mileage, have high safety standards and good resale values.

The Detroit leadership has always been overpaid (Besides Lee Iacoca). They have continually put cars on the market no one wanted or was the opposite of what we needed, the minivan and SUV excluded. However the SUV thing came back to bite them in the ass.
THey were behind the times in the 70s with fuel economy, behind the times in the 80s on quality, behind the times in the 90s with marketing and now behind the times in next generation energy and still making shit only your grandma would buy.

So could someone explain to me how the people running these companies into the ground are pulling 14 million per year? How is that justified? He should be paying them 14 million per year and apologizing for what he did to their company. Its the same as the CEOs who thought it was a good idea to give loans to the homeless people. I guarantee I could run an auto company better than any of these guys and that isn't even a joke. Now, it would take a shit ton of money to convince me to have to live in Detroit but I think I could save GM 13 million per year by hiring me as I would only require 1 million per year and wouldn't require a private jet...I would put that shit on Ebay.

Come to think of it, weren't these companies in better shape when the government was running the show and telling them what to make?? Again, too much regulation is never the problem, too much freedom for rich people to keep their heads in their asses and do whatever they want is.

Arthurstone said...

German, Japanese & Korean auto manufacturers are based in countries with universal healthcare. A bit of an advantage cost-wise. Of course such 'socialism' has long been opposed by the (no longer) Big Three. Now they have their hands out in attempt to gain reward for their ineptitude by blaming their woes on labor.

Pasadena Closet Conservative said...

It's getting very scary out there.

Lista said...

Arthurstone,
Interesting comment. I guess Universal Healthcare might bring the cost of Labor down. People pay Extra Taxes, whether than Health Insurance Premiums. The problem is that I've heard so many horror stories about Universal Healthcare.

Patrick and Whomever,
Changing the subject, I left comments on the next four posts down starting at 7:22AM Yesterday and my comments are still the last ones listed on each of these posts.

I sort of wish that older posts would get more traffic than they do. One of my complaints about the whole Blogging experience in general is that everything moves along so quickly and sometimes the only action is on the Post on the very top of a Blog. In such a setting, you have to be really quick with your comments in order to be heard. I'm not that quick and the business of life is so distracting.

My most recent comment was left this morning on the Abortion Post; forth one down, when this Post was on top. It's sort of a long comment, so it would be a shame if not many people read it.

Robert said...

I say let them fail. Bankruptcy is a financial tool to allow businesses to restructure and NOT go under. They may declare bankruptcy without a nailout, but they wont board up the doors.

Blaming CEOs is overly simplistic. The problem is multi-faceted, and there is blame to go around.

1) Government. Fuel efficient, smaller, economical cars go like hotcakes in Europe. We offer billions in financial incentives to get foreign companies to invest here, but the favor is not returned.

2) Unions. Can't say it enough. Look at the overall situation in Detroit where things are unionized, and then look at the south where the auto industry frows every year. There is a lsit of foreign companies building cars in the U.S. and making huge profits. Mercedes-Benz, Toyota, Nissan, Volkswagon is building a plant, Hyundai, Kia...guess what? They are not union. The wages are extremely high for the area, yet only 67% of what a union worker makes. They don't strike, work 8 hours a day, are given fantastic bonuses, and the businesses thrive.

Bad management decisions is not the same as bad management. SOme cars don't sell, and the auto makers can't forecast the price of oil three years down the road when they spend 500 million to build a plant to make an SUV.

The American economy will survive a Big 3 bankruptcy. Regardless ofthe bailout, people are still losing their jobs across the board. THe bailout won't change the fact that no one is buying cars. GM needs 11 Billion dollars a month to get by at their current status. How far will 25 billion go? The 750 billion bailout has done nothig for the economy, giving away MY money to keep GM operating for another three weeks won't change anything.

Toad734 said...

Lista:

You haven't heard horror stories about American Universal Healthcare. And I guarantee you have heard more horror stories about our health care system than any other system in the Western World.

I know someones life may be worth more than $100,000 but if you get into a car accident who can actually afford to pay a medical bill like that, especially when there is no oversight to keep costs down.

And heres a Universal Health care horror story, they pay 1/6 the price for prescription drugs as we do in the states. Why? Because the governments say if you want to sell your products here, we will only pay this much, take it or leave it.

Toad734 said...

Robert:

2. On your point about Unions, these companies down south are not owned and operated by greedy CEOs who make far more than the CEOs of Toyota and Honda and the Toyota and Honda plants are churning out cars that people buy, the ones in Detroit aren't. That is why they are out of cash. The UAW was founded in 1935. If Unions were the problem they would have been in this situation long ago. Japan, Germany, UK, all have unions.

Patrick M said...

Napqueen: I actually have a brother-in-law that doesn't know if he's ging to get the ax (as he works for a parts supplier for GM).

But that doesn't change the fact that these companies are becoming more and more dependent on (and more controlled by) the government. I understand that not loaning them the money is going to hurt. But at some point they have to take the hit, or it will simply ripple on into another sector. This crisis was caused partially by the gas price spike, which was heavily driven by speculation.

And the sales have further tanked because of the financial crisis that was decades in the making.

There comes a point at which the market has to correct. On far too many fronts, we've been delaying it, and the result is the Bad Three needing to reorganize. Big time.

Arthur: Iraq is not the source of all problems in this. The price spiked occurred only after years of the war.

As for the article, a price floor, just like a price ceiling, is absolutely asinine. It involves the federal government introducing another element of a command economy, will grow another tentacle to the government monster, and simply reduce our freedom further. Of course, the next step is to offer tax incentives for bubble cars, then put a sin tax on big cars, then mandate the auto industry to produce the cars people who hate automobiles want produced. And since that idea worked so well in the old nation of Yugoslavia (famous for that piece of shit called the Yugo), why not apply that here?

I never have written anything about abridging ones 'rights'.

And yet you give me an opinion piece that does just that.

Also, you have heard about all the plants that foreign companies open up here to produce cars and their parts. I've worked at two myself, Honda and AAP (they make cast aluminum wheels). Strangely, they don't seem to be having the same problem.

Toad: Are you actually with me on letting the Bad Three figure it out for once?

However, the CEO pay (and their private jets for to a-go a-beggin') are a symptom of the problem and not the problem itself. How they'll straighten this out I'm not sure, but there's a reason why Michigan has been in recession for a while now.

Lista: Fine. Change the subject (temporarily). See if I care (or moderate). :)

In short, such are the perils of missing a day (which I did thursday).

Robert: I could have said it better myself. But you said it, so why spoil the fun?

Lista said...

Robert,
There are people, like yourself, who say that "The American economy will survive a Big 3 bankruptcy." and yet I also hear that the jobs effected may be as many as 10% of all American jobs.

Patrick,
I was just concerned that maybe what I had written was not being that widely read. At least one of the reasons that I moderate my blog is one that fast and efficient bloggers would never and a million years think of. I deliberately slow my own blog down, so that I can keep up with it and not be left in the dust by my own blog.

My Left View said...

The conservatives are just trying to make themselves look good. They know how to work the public opinion. Make the liberials look greedy and the righties look like 'apple-pie
Americans' They are'nt. They're the same corrupt bastards they always were. They just want to make us think they are'nt.

I don't give a damn. I'm just glad they stopped the Bush/Paulson plundering bill from being inacted.

Called me a hopeless optimist but I believe in the end, with the American people ready to kick ass if it doesn't, Congress will pass a recovery plan that gets us out of the mess we're in.

Arthurstone said...

patrick typed:

'And yet you give me an opinion piece that does just that.'

Sigh. Poor you. Victimhood becomes you. Cheap gas is a thing of the past. That is a fact. The proposal I referenced is but one way confront the issue. Our elected representatives will deal (or more likely not deal) with the problem And you will get on with your life.

He added:

Also, you have heard about all the plants that foreign companies open up here to produce cars and their parts. I've worked at two myself, Honda and AAP (they make cast aluminum wheels). Strangely, they don't seem to be having the same problem.

You have hit the nail on the head. Much of what this is about is ousting the unions and setting up new operations as things are done in the American South. Union free.

The Reagan legacy lives on!

Patrick M said...

Lista: Tell me about it. I took Thursday off. Haven't caught up yet. It's Saturday.

MLV: WTF?!?!?!?! What conservative is so corrupt in this? I can name plenty of Republicans (including my idiot Senator, Voinovitch) who need to go. But conservatives?

I think I've pointed out both parties have fault. However, your optimism in this case is my pessimism. The idea of bailing out businesses who have dug themselves in a hole is something that has happened under Bush and will happen under Obama. The scary thing is that conservatives AND liberals are fighting this, and it's the great corrupted center that's going along.

BTW, the big bailout did pass, with all the pork and loopholes in place.

Arthur: Cheap gas is a thing of the past.

I paid $1.61 last night at the Wal-Mart gas station (with the 3 cent card discount). Looks like cheap gas is back.

I don't necessarily have a problem with gas going up a little. I do have a problem if the government is taxing and mandating a price to control our behavior. You bitch about Bush taking away freedoms, and yet you support more freedoms being taken away.

I'm getting sick of this collectivist bullshit.

Speaking of collectivist bullshit, the reason the union (not all, but definitely the UAW) needs to go is that they are killing their own damned industry, with the help of a hapless and stupid set of automakers that learned early on that the government would keep them in business. So now they can't compete anymore, the unions don't want to give up anything, and now the government (both Bush and Obama) want to come to the rescue. The question is: Who are they rescuing? The workers, the companies, or the union?

Arthurstone said...

Patrick typed:

'I paid $1.61 last night at the Wal-Mart gas station (with the 3 cent card discount). Looks like cheap gas is back.'

Two things. We're in a recession and demand has dropped precipitously. Once recovered the price will again go up. Indians. Chinese. Brazilians all are drive, drive driving more and the price of gas will remain high. Secondly we can't all (thankfully) work at Walmart where wages and benefits are kept low. Likewise they are by far the largest private company doing business in China. Yet another way prices are kept low for Americans who complain about jobs gone overseas.

He added:

'I'm getting sick of this collectivist bullshit.'

So you are. But there remains a need for workers to protect their interests and banding together in unions remains the best way for them to do so. Blaming the unions for the Detroit debacle is a bit off the mark. The auto companies built cars they couldn't sell and made agreements they couldn't sustain. So it goes.

David said...

If the auto manufacturers fall it will cause a domino effect.
The tire mfgs, will go, the radio mfgs. will go and so on..the rest of the dominoes will fall like a house of cards. ...

It won't be the Executives of the auto giants that hurt if they don't get the $25 Billion, it will be the little guys in the industry. It will also be the little guys in the companies that provide the steel, and all the miriad other supplies/parts that go into building the vehicles we all depend on. In the end, it will be you and me, my kids and your kids, my grandchildren and yours that will suffer the pain, if we cannot rescue the auto industry from falling over the edge!
Sure, we DO need to make sure the executives of the Big 3 are required to make changes in their products and methods, to produce a leaner and meaner industry

Patrick M said...

Arthur: Cheap gas may not remain. That's one reason I drive a small car with a small engine. The other is, of course, because I drive really fast and a little car doesn't.

My objection is not the fluctuations of price, but the creation of price controls.

As for the unions, they have to be willing to bend at this point or they may quickly find the companies they infest to die out from under them. I've seen it happen around here.

Times have changed and whether the unions are still necessary is part of yet another debate.

David: That's why there's bankruptcy. It's the only sane way to force the situation to improve, rather than the government intervening, putting conditions on the bailout that may not reflect the market conditions (one of the triggers that caused the crisis), and the companies emerging even weaker than before, then being in worse shape in the next crisis and doing more damage when they fail.

Lista said...

When prices are controlled, often it changes the non-money cost of an item to match the actual demand. For example, when the price of gas was too low, there were gas lines. The money cost was held down, but the price in time and inconvenience went up. This also happens when ever there is a sale on something.

Is this a negative? Well, you know, the person who is benefited and hurt in each situation changes. When the price is in dollars, it is the poor who suffer. When the price is temporarily in time and inconvenience instead, the business man is the one who suffers because "Time is Money".

The other thing that happens is the rules change from buy only as much as you can afford, to first come first serve and this sort of levels the playing field a little. Whether or not this is a negative depends on your perspective.

I don't know what to do about this Union thing. When they don't exist, Employers get greedy, when they do exist, the Workers get greedy. It doesn't seem to matter who has the power. Everyone is greedy.

As to Bankruptcy, I just heard a discussion on the radio about it and the point that was made is that Airlines are not like Car Dealers because the purchase of an Airline Ticket is a much smaller investment than the purchase of a Car and people are not going to want to take the risk of buying something as expensive as a car from a company that may not make it, after all, if the company fails, whose going to fix and make parts for the cars? Consumers are probably not going to want to take this risk.

That's a very interesting point, Patrick. How am I supposed to know that you are right and not them?

Patrick M said...

Lista: Just assume I'm right and everything will be ok. :)

Actually, I'm not worried about the survival of the Bad Three necessarily. What I am worried about is the Republican (not conservative) and Democrat philosophies of continuing interference in the markets to make things more stable.

Think of the economy as a giant pendulum. Normally, without government interference, it swings between good and bad periods. and because of a force I'll name the "winds of change," it's often pushed in one direction more. Usually the winds are to our benefit. But occasionally we'll catch a bad wind as the economy swings to the negative. That's where we're at now.

Enter the Government. Because the President (and Congress to a lesser extent) is lauded or blamed for the economy whenever it's election time, their motivation is to have a good economy come November. So they try to hold the pendulum in place. But it's tiring to do so, and it's easier to stretch out and hold the pendulum higher rather than just to the side of good. Because this pendulum does not stop swinging.

So imagine what happens if the Government is stretched out as far as it can, holding that pendulum, the wind shifts against us, and the government slips.

We call it a depression. The government has been trying to hold the pendulum way too long as it is, and the result of that is making this situation worse. At some point, we have to let them fail, or the future could be much worse.

Lista said...

I do not believe in Socialism. My argument with the Democrats is that they give out too many hand outs without expecting anything, not that they are willing to help people and also that they are too loose with their moral stands on Abortion and Homosexuality.

The fact that Democrats occasionally do things to try and Stabilize the Economy is not my issue with them and the fact that many Republicans agree with the practice does not bother me too much.

There is a possibility that you are right about your pendulum idea. Yet unfortunately, I do not know enough of the details about our history to know for sure what is right and what is not.

Patrick M said...

Lista: From what I've read, paired with my instinct for seeing answers without all the information, we could be headed for depression if we don't figure it out in time.

Last time, it was a combination of crippling weather patters (the dust bowl), overextension of credit (stocks bough on 10% margins prior to the crash) and government meddling (smoot-hawley tariff act, the New Deal), along with bank and industrial failures that put us and kept us in a crippled economic state until we got our war on. Take out the parentheses and see if it looks familiar.

Lista said...

Maybe there isn't even a solution to figure out. Maybe it's already too late.

Patrick M said...

Yep.

On the plus side, we'll be all better after the Great Depression 2K.

And the libs'll blame Bush.

Lista said...

How are we going to be better off after the libs blame Bush?

Actually there is plenty of blame to go around. The Liberal Congress made some pretty serious mistakes as well.

Patrick M said...

We won't. But I guess it will make them feel better. At least until they start blaming Sarah Palin in four years (I hope).