Should the gov't bail out the auto industry?

[Pepsi]

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Here's the decision which seems to present itself:

option a) government bail out the US auto industry (aka Detroit) .   Will keep them afloat for the next year but no guarantee of future performance.

option b) the US auto industry: GM, Ford, Chrysler goes bancrupt

I've been watching the US auto industry for years and wondering how fucking stupid can they be?  How obvious was it that oil prices would eventually go up significantly, or that the economy would turn down - both of which would lead to a demand in fuel efficient/ low cost cars?     How come I can see the fact that it would have made sense to develop these cars - or better yet electric or other alternative fuel cars?    What's fueling Toyota's market dominance?  The Prius.

But yet, as a capitalist and a tax payer I have a reaction "let them fail - they deserve it".    If the whole industry fails that won't affect me much, at least that I'm aware of.   But as an American, we're talking hundreds of thousands, perhaps millions of jobs gone forever.    I can't see that as a good thing for us.    So, ultimately I lean toward the gov't should now bail them out with the loans and lines of credit they are asking for.   Even as I am not sure it will fix the problem in the long term.

[lucy]

no.

[Pepsi]

no.

Ouch..

I was reading an article in the WSJ some time ago about an American entrepreneur who for years worked to set up factories to make shoes in China, on behalf of American companies.   He decided to start his own factory in Florida to compete with those Chinese factories and what he found is he could not run successfully because of all these sub-industries needed, like zipper or button manufacturers.    His choice of limited or non-existent local suppliers led to his business dying.   

So, what we mean by this is we are no longer producing automobiles we will also lose all those supporting industries, which will make it impossible to start operations and compete again.    A lot of ramifications resulting in a lot of job loss.

[Pepsi]

General Motors Corp., Ford Motor Co. and Chrysler LLC would get $25 billion in additional aid from the Treasury's financial-rescue plan under a proposal by House Financial Services Committee Chairman Barney Frank.

Legislation is needed to authorize the Treasury to use part of its $700 billion rescue fund for the auto industry, Frank said today. He scheduled a hearing on the measure for Nov. 19.

``The consequences of a collapse of the American automobile industry would be particularly troublesome,'' Frank, a Massachusetts Democrat, told reporters in Washington.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aUR.oo1bvBc4

[lucy]

They will still go bankrupt even with the bailout unless they either correct the regs that are killing the manufacturing potential of really radically alternative energy vehicles or get the gas companies that have made a killing off the high price of oil pitch in to help the car companies since oil-guzzling cars over the years have provided a lot of income to oil companies, imo.

[Michael]

I have to agree with pepsi on this one.  It seems that the auto industry has not kept up with public demands.  It appears that they have not provided the ultimate in alternative/efficient fuel vehicles that the public wants.   But have instead made the oil companies rich, as though they made a deal with them or something? 

Then again...too little-too late, shouldn't make the entire industry fold...creating an even worse job situation than already exists.  That will hurt EVERYONE.

[Observer]

The government should not bail out the auto industry.

It should not have bailed out the banking industry.

It should not bail out people about to default on their mortgages.

[Velleity]

The government should not bail out the auto industry.

It should not have bailed out the banking industry.

It should not bail out people about to default on their mortgages.

People who think the way you do are not fit to govern.

[notoc]

Should the gov't bail out the auto industry?

Rather than sell it to the highest international bidder? It could amount to the same thing in the long run...

[lucy]

Then, the companies would still be privately owned, rather than nationalized, and basically their debt saddled on to the national debt, no?

[Michael]

Kinda like PAYING for FREE-ENTERPRISE isn't it?    Going into debt to show the world that "old school" still works?   

[Velleity]

Then, the companies would still be privately owned, rather than nationalized, and basically their debt saddled on to the national debt, no?

Do you do as Obs would do, punting 1 million high paying jobs and a trillion dollars or so without knowing anything about the ramifications or even doing so much as deliberating?

It's not good that we have businesses that are too big to fail. The Department of Justice was supposed to be in the anti-trust business, but the right has put this part of justice out of business for the past 30 years. So we do have businesses that are too big to fail.

We are where we are right now, so we have two issues going forward. We have to figure out how to deal with the immediate crisis. Then we have the longer term, which should include incorporation of something Obs isn't going to like: a concerted effort to have less concentration.

[lucy]

Why are the car manufacturers facing bankruptsy in the first place, then? Is nationalizing them more or less by giving the corporation billions of dollars going to "save" those jobs really? As for the "bailout" so far, there has been no oversight, and Fed nor Treasury (not mutually exclusive really) are willing to disclose where the money is going or to whom the money is going as yet?

Who is going to buy the cars even with a bailout?

[lucy]

hmmmm.

All those American jobs on the brink, eh?

Why is a near-bankrupt GM even considering opening a car plant in Russia, then?

[Velleity]

I have no idea why GM would open a plant in Russia. There could be a million reasons.