Has it been that long since 1991 that we’ve forgotten what that looks like? I know that China tries to pretend to have a more open economy but all business that you deal with is government owned. There is nothing done that they don’t know about and aren’t controlling in some way, shape, or form.

Has America been dumbed down this bad that we’re are seriously going to discuss the merits of this line of government intervention and the pros and cons of it all? You’re kidding right? Why aren’t any of you call Capital Hill and shutting down the phone and fax lines to stop this? We did it for Shamnesty. Isn’t this worse for Pete’s sake?

rokemronnie, you made a comment earlier about the transplants’ supply chains falling apart if the Big 3 went under. If you have a cite for that I’d love to read it.

DrSteve on December 9, 2008 at 2:19 PM

Not rokemronnie, and he may have better info that I’m unaware of; but from what I’ve seen this is somewhat anecdotal — as is almost all information upon which these decisions will be based.

The concern, which strikes me as well founded, is that there are suppliers who are owed a great deal of money by the manufacturers, and who are using those receivables as collateral to borrow operating funds. If GM were to go Chapter 7 — or potentially even Chapter 11 — they could default on those debts. The parts suppliers would have to write off the loss, and would have to cover the loss of collateral by immediately paying off part of their lines of credit. Of course they wouldn’t have the cash to do that, so THEY would also go bankrupt, leaving the suppliers of subassemblies and raw materials hung out to dry, so they would go bankrupt, etc.

I don’t believe any of this is knowable; I do think the potential is real. That’s why I consider it important for the government to give ironclad assurance that it will make funds available to pay suppliers before the manufacturers declare bankruptcy.

Don’t get me wrong; it makes my free-market soul shudder. But government interference (in the form of CAFE standards) had a lot to do with this. That means WE (citizens) had a lot to do with it. So we do, corporately, have some culpability and therefore some responsibility.

DrSteve,

So it’s just fine for the taxpayers to subsidize you with tax credits, but it’s wrong to help stabilize an American industry whose collapse would pose systemic risk to the economy?

rokemronnie on December 9, 2008 at 12:19 PM

Those credits and rebates subsidize people who want to buy American-built hybrids to exactly the same degree. And they don’t reward failure. And they don’t result in decades of politically distorted management decisions following the bailouts. Just look at what Durbin was saying about Bank of America and Republic in IL — he’s micromanaging an individual loan decision, for goodness’ sakes. The Big 3 are selling their souls.

I am genuinely excited about the hybrid Fusion/Milan, as I think they’re perfectly gorgeous cars (I considered the Milan with the I-4 as I was looking around, since Wright Brothers FLM where I live has them for crazy low prices). I bet I can squeeze 50mpg out of the F/M hybrid on the highway if the city EPA really is 39mpg. I will definitely test drive them when they’re out, and I will give them a fair shake once I put my customary 250k on my current Honda.

When it’s time to replace your Civic, the Ford Fusion Hybrid will be available and if you find that you need a bigger car then, that can seat 5 comfortably instead of 4, you might want to check it out. It doesn’t get quite the mileage that the Civic Hybrid gets, but automotive journalists test driving it reported over 43mpg, and it’s a midsize sedan, not a compact like the Civic.

http://www.autoblog.com/2008/12/09/autobloggreen-gets-43-1-mpg-in-the-2010-ford-fusion-hybrid/

So it’s just fine for the taxpayers to subsidize you with tax credits, but it’s wrong to help stabilize an American industry whose collapse would pose systemic risk to the economy?

What could possibly go wrong?

Suppose you were an idiot. And suppose you were a member of Congress. But I repeat myself.

- Mark TwainPuddleglum on December 8, 2008 at 6:04 PM

Mark Twain for President!

54 percent, including 59 percent of people under age 45, oppose the bailout. Good luck, Barry.

Then they should have voted differently, in congressional races at least.

Is does Mizz Nancy qualify (etc.)

GlocknRoll on December 8, 2008 at 10:18 PM

Nancy Pelosi is a national disgrace.

And yet somehow you’ve managed to make yourself look 100 times more contemptible.
____________________________________

I feel so caught in the middle of this. I’ve never bought a new car that didn’t have a big-3 nameplate (well, one used Mitsubishi POS and one used Mazda POS for my kids when they were learning to drive. The cars didn’t last any time, but they were bought to be disposable since teenagers tend to dispose of them). My last three new cars have all been Fords, and have all been excellent — reliable, comfortable, nicely styled (a matter of taste, of course, but my ‘07 Stang Convertible gets a lot of compliments). And my best friend works for Ford, in (lower) management. So I have no desire to see any of the big 3 shutter their factories and go out of business.

But I remember all too well what happened in the steel business. Between the labor unions and the EPA, it became financially unfeasible to make steel in this country. Now, we’ve lost that industry for good. And we’ve been headed in the same direction with the automobile industry for the last 30 years or so.

Now we’re faced with three alternatives:
1 – Cancel Christmas, add potentially 3 million to the unemployment rolls.
2 – Make the car companies permanent wards of the state, and begin producing American Yugos (look it up, you young ‘uns).
3 – Make the necessary changes to make American car companies profitable again.

Obviously, #3 is the one we all want. And we have a template for how to do it, in the car companies that HAVE operated at a profit in the U.S. But the unions will not make the necessary real cuts in wages and benefits, and the management will tighten their operations as needed, until they are forced to do so.

Now, setting that aside for a moment, let’s agree that compared to the financial bailouts the car companies are asking for chump change, and that (apart from principled objections to ANY government interference) it makes sense to spend some government dough IF we can get back to option 3 above.

Given that it’s worth doing, and with all due respect to those whose livelihood is affected by this, it’s going to be rough. The government needs to put the dough on the table, and let car companies know that it will be there to help them get through — say it with me — chapter 11. And as silly as the whole “car czar” idea sounds, I heard an outstanding suggestion on Fox this morning: put Jack Welch in charge of the necessary restructuring. Here’s the key, though, the Fox didn’t mention: to do this correctly, Welch needs to be appointed to the bench as a bankruptcy judge. Since the money will already by promised, there must be leverage to force the parties involved to make the necessary changes. He needs to be able to make rulings and dispositions that would be inappropriate for a government “regulator”. He needs to be able to turn to the union and say “the new wage is XX”, and turn to management and say “these people have to go, and these people can only stay at this salary”, and to tell the EPA “back off on your cafe standards for a bit.” The money the government loans needs to be sufficient to meet 90% or better of the current payables to suppliers, but of course they will also have to bear some of the pain. In short, it will be painful to everyone. That’s just the way bankruptcy works.

But it’s still the best option.

What kind of car do you drive? Did you comparison shop any American brands?

rokemronnie on December 8, 2008 at 9:46 PM

2007 Civic hybrid. EPA at the time I got it (numbers have been revised) was 50, and it gets 50 in and out. I’ve put 50,000 miles on it since I got it. Mechanically it’s the best car I’ve ever owned. I got it for just over $18k with the tax/rebate treatments (no griping to me about that, the domestic hybrids are eligible too).

I’m 6′2″, 240. It’s perfectly comfortable for me and 3 other adults to ride in.

Show me your Detroit comparables. I’m all ears. You can start with the mpg number, I’ll give credit for any class of vehicle.

What kind of car do you drive? Did you comparison shop any American brands?

rokemronnie on December 8, 2008 at 9:46 PM

2007 Civic hybrid. EPA at the time I got it (numbers have been revised) was 50, and it gets 50 in and out. I’ve put 50,000 miles on it since I got it. Mechanically it’s the best car I’ve ever owned. I got it for just over $18k with the tax/rebate treatments (no bitching to me about that, the domestic hybrids are eligible too).

I’m 6′2″, 240. It’s perfectly comfortable for me and 3 other adults to ride in.

Show me your Detroit comparables. I’m all ears. You can start with the mpg number, I’ll give credit for any class of vehicle.

Does this include a Five-Year Plan, comrades?

No. She used to be an attractive woman, but now she’s starting to look like Michael Jackson. I think that’s a new nose job.

Jaibones on December 8, 2008 at 11:30 PM

Define “used to”. The last time I checked, she was a dog the moment she popped out of the womb.