Will giving the Big 3 automakers in Detroit (Ford, GM and Chrysler) $25 billion dollars help turn around the downward spiral they have been in for the past 25 years? Should the government be in the business of bailing them out at all?
To tell you the truth, I haven’t made up my mind about this issue. I was, and remain, against the $700 billion bailout of our financial industry, but the auto industry is so rooted in a specific area of the country. Markets can correct themselves, towns and families cannot.
On the other hand, it is clear that their current business model is inefficient and just doesn’t work. Why is that? Is it because of poor management at the executive level of the companies? Is it because of the UAW (United Auto Workers) union and their policies, including the pensions and health benefits for retirees? Or is it as simple as saying the products coming out of Detroit are inferior?
The answer is it’s all of the above. To make matters worse, it’s a snowball that has been rolling for way too long.
Maybe bankruptcy is the answer? The airline industry has seen many of it’s companies come out better after filing. But bankruptcy could terminate all of the union contracts, specifically the pension and health benefits for retirees. This is mostly the fault of the executive at the Big 3. They gave in to union demands. The union was only doing their job.
So what do you think the government should dol? Should they give them the money or make them go into bankruptcy? Any other solutions?
photo credit: mandj98
I am so wise says
The Big Three were grown-up run operations that should have budgeted and planned better when making agreements with the UAW. Just like the people who got subprime loans, they should have known they couldn’t afford the demands of the UAW and held out for a better deal.
Funny, the Big Three, like the people who received subprime loans, are, having received the benefits of the agreement, are now trying to dodge the bill.
Mitt Romney sums up the best solution pretty well – http://www.nytimes.com/2008/11/19/opinion/19romney.html?_r=2
Go Mitt. I seriously read that just to come back with something snotty to say, but I totally agreed with the Romster. Maybe he’ll get the nod for secretary of the treasury…
If they had negotiated prudently at that time…and held out to arbitration if need be…maybe they would be OK today.
CH 11 is the only option now. Maybe they will emerge…maybe they will be busted up and sold…maybe an investment group will step in…in any event cars will still be sold. In order to be sold they have to be made. In order to be made people will have to be employed.
Just read mits article…..dam good. Ch 11 will allow that restructuring.
Go Dagger !
AIG chairman has dropped pay to 1 dollar.
Go Dagger !
Its official…..we are in a backdated recession. Does that make us that much closer to a recovery?
vietnam vet says
Aig better get back on there feet.I have my truck & car insured there. there very cheap on there insurance. but claim service may very well be something else.
A question to ponder for you ponderers.
The banks essentially stopped all but top level credit in October. The banks have gotten a zillion dollars in relief from the government. The reason this was necessary was because they were illiquid and as a rule they must retain certain levels of liquidity. The banks have in fact , during this period of not dispensing loans and credit, received the overwhelming balance of payments for already working loans issued prior to Oct.
Considering the above…why are not the banks making auto, construction, bridge, development, and other loans as they should and exist to do.
In other words…are they HOARDING?
Go Dagger !
vietnam vet says
It’s worse Richie.there refuseing to give out free calender’s. cost to much to print they say’ a customer for 30+ plus years & no calender. advised to go the Dollar store or Ollie’s & buy one.
vet….that’s beyond reproach !