Auto bailout a barrier to Armageddon?

According to the 2007 annual reports from GM & Ford, less than 40% of their auto manufacturing base is in the North America. If the Government gives them $25B, on a prorata basis, it means $15B will go outside overseas. The remaining $10B will be divided between US, Canada and Mexico. Doesn't seem to fair to me.

Dodd's "nightmares" speak volumes on the state of Dodd's mind--but nothing more.

All this is is scare talk in order to justify big government and higher taxes. And to buy the votes of Michigan Auto Union workers whose mammoth hourly compensation is the cause of the problem.

Since neither Dodd nor any of these Congressmen foresaw this so-called "crisis", why in the world should we trust their expertise (let alone trust their "nightmares") in "solving" the "crisis"?

What do the experts who got this RIGHT (Paul Krugman, that guy whose name I forget but was ridiculed as "Dr. Doom," etc.) say? They may want huge government intervention, but not blind -- Krugman didn't like the Paulson mortgage deal and preferred, logically enough, that the money go directly to revive the credit markets. If Dodd is such an economic genius, where was he with Freddie Mac?

Bankruptcy provides an orderly process for prioritizing debts and reorganizing an enterprise. This is the normal consequence of business enterprise failure. The failure of two of the Big Three goes far beyond the credit crisis. We have a statutory system, not anarchy. We need to step back and let it work.

As pointed out here, one companies bankruptcy affects much more than the three companies involved. It will affect the financial istitutions holding their debt, both US and foreign. It affects the roughly 2.5 million people employed either directly or indirectly by the automotive industry. It affects your ability to get credit to buy every day items, as the big three default through bankruptcy credit will become increasinly tight. Not to mention the affect a bankruptcy will have on sales of these three, pushing them into almost certain insolvancy. As far as those complaining of auto workers wages, keep in mind the wages of the factory worker directly affects that of management. In both union and non union companies. And also keep in mind, tradesmen in Chicago make more than what UAW auto workers do. Also it is the publics misconceptions that have led to this. Ford leads in the JD Power rankings, while GM has the most fuel efficient lineup of all manufacturers. Yet most of you moaning about the bailout see them as inferior which is not the case any longer. In fact GM is leading the charge in electric vehicle design. If you think their bankruptcy doesn't affect you, it is time to look outside your bubble. Because it will. One last fact. 2.5 million workers multiplied by $12,500(Estimated unemployment payout) is the equivilant of $31.25 billion. Either way we are paying. I'd rather give them a loan.

Let's do it, America and get on with the reviving of an American economy that was devastated by the most incompetent and corrupt administrations, the Bush years, in our history !!! Give the Big 3 the assist you gave the Boys on Wall Street. There are a lot more lives affected by the destruction of the Automotive industry, than there would have been if AIG, Goldman Sachs, or Bears Stearns were to have failed. The other greedy Banks would have sucked them up, in a minute.
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE AND WHOLE. NOW.

Bankrupt the taxpayers in order to prop up bloated auto union worker contracts.....

In an economy where too much borrowing is going on--and borrow more billions...

Take an industry (auto) that is already ruined by government regulations, and ... add another layer of government interference.

This bailout is economic insanity. Sadly, Congress probably will vote for it.

I am tired of hearing about big business making financial mistakes or shall I say filling the CEO's pockets with millions of dollars at the expense of their employee's sweat and hard work. This is money the middle and lower class would dream of having to financially support their families into the future. Not for extravagances but for every day necessities. Why haven't these auto geniuses given the public clean fuel cars? I remember as a teenager back in the 70’s the country talking about a cleaner environment. What happened to those 60’s & 70’s idealists who wanted a cleaner Earth? It took a little less than 10 yrs. for us to get Man to the moon and here we are some 30 yrs. later still using gasoline to fuel our automobiles. I say let them go out of business our country was built on innovation from the everyday Joe worker and as they say “Out of necessity comes Invention.”

Let me understand this correctly. Banks made bad lending decisions and get bailed out, borrowers stupidly over extended themselves and get bailed out, U.S car makers screw up (I don't see foreign manufacturers in problems) and get bailed out. I live responsible, little debt, take public transportation, and save money and I get to bail out losers. What a screwed up system we got.

I really don't believe in this bailout. Haven't there been bailouts to auto companies in the past? Sure. But I'd like there to be a big catch. 1) Cut back significantly on production, 2) Cut back significantly (for the duration) on the CEO/Upper Management salaries...with success comes benefits, with failure, you see my point, 3) Close at least half of the GM dealerships in the next few years. There are way too many dealerships, too many cars sitting around and they'll close anyway from lack of sales/profit, etc. There is so very much the auto industry can do to improve their situation and it may be too late. I don't want to see tax dollars thrown away on filling pockets, keeping the status quo, and heavy spending just to help keep everyone's (including suppliers etc) jobs. Surgical scale down is paramount, otherwise the industry just looks like a typical example of a person with too many credit cards; spend, spend, spend to keep afloat, and BAM! Fail anyway. Finally, what would happen if they got the money and went bankrupt anyway?

Do you people realize the people that will be hurt if the Big 3 go down?

Let's see:
Steel, plastics, rubber, electric components, trucking, railroad, Detroit, Cleveland, well most of the midwest. This is just to name a few. What about the local business owners near these plants? What about the cities tax base? They list goes on.....Then comes the unemployment checks....how much do you idiots think that will cost you?

People wake up. Dump your ignorant hate. This is a HUGE player in the game. If they go down, it will be only a matter of time before we all go down.

Clearly the citizenry isn't well informed enough to know whether government needs to prop up the Big 3.

It seems likely to me that a collapse WILL bring down the enconomy by driving unemployment HERE up another 5-10% within a year, and send us into an actual prolonged depression.

It also seems to me that the benefits of a bailout, if administered well, could far outweigh the costs. (That is, it would pay for itself.)

But what the heck do I know. I'm just a guy who consumes every scrap of info I can and tries to form an opinion based on "conditions on the ground" -- not my ideology.

Here's a couple of questions for all of you "let's let them sink" folks. What do you do for a living? How do you get back and forth to work? How do you get to the grocery store, the doctor, the bank, the hardware store, how do you get your kids to school, how do you get the dog to the vet, etc.? What do you drive? Is it foreign or is it one of the big 3? How old is it? When did you last need repairs? The big 3 go under and you will be touched negetively, one way or the other. They go, their suppliers go, the suppliers suppliers go, so on and so on. Give them the money but don't give it to them without a plan in place and strict oversite. No golden umbrellas, no bonus's, Exec's drive company cars and fly coach, union workers must make concessions, slash and cut model production that doesn't reach set price point criteria, shut down plants for a 2 days each month. Remember the 6 degrees of seperation and how they can affect you. It ain't pretty but it's doable with the right management.

Filing bankruptcy doesn't mean going out of business. It means reorganizing the business so it can succeed going forward. I don't hate anybody and I'm not an idealogue. I just prefer using the legal structure we have for this situation rather than throwing tax dollars away.

How about this:

If Detroit takes the money, they cannot donate ANYTHING to ANY politician for twenty years.

Think Congress will go for it?

I completely agree with Jim. Where is my bailout? I worked and I saved and I didn't borrow tons of money, and so therefore I get punished. That is a screwed up system. There is no better way to extend a bad economy than to reward the bad companies and punish the good ones, because soon all companies will become bad companies so they can get rewarded too. Everybody seems to be thinking that if these companies go under, there will be no other companies ever to employ these people again. That is ridiculous. We must get rid of the bad to make way for the good, and we need to do it as soon as possible.

This is a loan, not a gift. When you relieve a bank by buying their bad assets, it is a gift.

Nacy Pelosi recently said, "It is ridiculous to ask American taxpayers to support an industry that is handing out millions of dollars in bonuses while it is losing billions of dollars". Was she talking about the banks or the automakers? It must have been the car builders because she ramrodded the bank bailout through. After we supported them with trillions, they hoarded the money forcing thousands of companies to close and tens of thousand of people to lose their jobs, continued to foreclose on our homes, continued to charge us loan shark rates on our credit cards, and continued to pass out millions in bonuses while flying around in corporate jets.

You would think that our legislators could loan out 50 billion instead of trillions so that millions of us could keep our jobs.

http://ewebsmith.com/gov/autobailout.html

Why does the government have to bail out the big 3 when the huge oil corporations who have made billions of dollars from inflated oil prices bail them out? if the big 3 does not want to innovate and still stick with what their familiar with, then the oil companies should put out the billions to help their fellow comrades!

Congress should make mortgage interest 200% tax deductible. This would target the root cause of the economic crisis by serving to lower most everyone's effective mortgage interest rate, which would serve to ease the foreclosure problem and give an incentive for renters to purchase homes. Moreover, this would cause more homeowners to access their home equity lines of credit, which would stimulate the economy. Finally, this plan would use taxpayer dollars to help taxpayers - not financial institutions that ruined the economy in the first place.

My thoughts are...they absolutely positively needed the $700 billion to bailout Wall Street...has that collapsed with using only a portion of these funds? We gave Paulsen a blank check for the money and what has he done in the meantime? Anything profound except for covering HIS retirement? Will we ever know?

It would help if they made cars with 100,000 mile warranties ...if they (the cars) are so good, what's the reason they DON'T????

If the big three go under now it could increase unemployment by 10%. Assuming that is an overstatement it could be by as much as 6%. Conservative estimates of unemployment could be as much as 8%, less conservative is 9-10% Using 8.5% plus 6% is 14.5%. That is less than 2% of the average during the depression. I think those who argue against a bailout are not facing reality. It is not in the national interest to have them go under at this time. It may be only scare talk, but on a risk reward basis I think it is worth it. People talk about Ford and the other two in the same category but that is not the case. Ford has been transforming over the last few years and did have a profitable first quarter.

Don't be fooled by those who are under the illusion that markets work all the time. They do not. There was unbridled greed in the twenty to thirty years years. The most obvious greed being in financial services industry but Enron and MCI are examples of greed gone amuck. The fact that this country has allowed such a large portion of the population to be without health care insurance or bridges go unrepaired or SUV waste gasoline are small examples of the larger problem.

It is time that we as a nation come to the reality of the situation we all created, led by our president, Chairman of the SEC, the congress and the Fed Chairman. The groundwork for this problem occurred in the previous administration. We as a nation in the final outcome are responsible for these problems and we are responsible to fix them. If we keep saying it is the other guys problem it will only get worse. Obama was elected to right the direction of this country but if we do not take responsibility for what we have allowed to happen, it will keep getting worse until the time we decide that the buck stops here. We should get a large equity stake in the car companies, There is no way that Roger Smith and the other past CEOs of GM and the other two car makers who created this problem will suffer the consequences. Those that say let them fail are not letting those who are responsible suffer the consequences and it may cause us all to suffer out of proportion to our own culpability. It is just not worth it to gamble when we know what the down side risk is.

They say they auto makers will go bankrupt if we don't save them and they say that they may end up combining some of them by the end of this whole thing, but the real shocker for me is that the UAW will inevitably have to compromise in this whole thing and I personally never saw that coming. I guess this thing is sooooooo dire that they will be hurt so badly that they will HAVE TO COMPROMISE OTHERWISE BE SEVERELY HURT, but they have the idea that UNIONIZING TOYOTA WILL BE THEIR END GAIN IN THE WHOLE OUTCOME and therefore the reasoning for wanting to go along....so I hear. I also hear tell that Toyota will just pick up and leave but look at the BIG BOX groups that have tried to leave Chicago when they were driven out of that area, they were given strong fees if they wanted to leave, but a friend said they'll just pay that money and leave. Should be curious to see what takes place, any ideas on all this ???