[Motor She Wrote]

I don't know if it's been said already, but this is a Hobson's choice for the government.

1) If the Big Three fail, it is true they won't cease operation, but a restructuring would likely result in large numbers of layoffs. These people will immediately file for and collect unemployment for an extended period of time, given the awful jobs market. This will cost the government a great deal of money.

2) Even if the Big Three go bankrupt, they can't shirk their pension obligation to their retirees (who in fairness, have worked and paid into the pension). The pension obligation would be transferred to the government's PBGC, which guarantees pensions. The PBGC is insolvent, and having to take the Big Three's pensions would push it over the edge, I suspect. Then we as taxpayer would have to figure out what to do with an insolvent PBGC.

3) Related to #1, large numbers of unemployed people are not only drawing unemployment, but not paying income taxes, payroll taxes, etc. Lots of states already in dire straits financially would lose even more revenue. That means higher taxes on their residents.

4) GMAC and other auto finance debt is widely held. A Big Three bankruptcy again slams the finance industry. The last thing we need is more stress on that industry, since it'll destabilize financial markets (which we just fixed) and I've lost enough on my 401k and IRAs, thanks.

On the other hand:

1) This continues a precedent of the government trying to protect the country from any and all economic pain. The government simply can't afford to backstop all bad financial decisions. You just can't bail out every bad American company just because there might be some economic suffering involved. How do you draw the line? Where does it end? Why would foreign investors continue to have confidence in capitalism or the US economy, and would foreigners start perceiving the US as the sick man of North America?

2) If the government extends this loan, expecting the Big Three to pay back half, and the other half repaid by giving the government a stake, this situation could be like invading Iraq: easy to get into, really, really hard to get out. How is the government supposed to wind down this stake?

3) A collapse of the Big 3 might be an opportunity for foreign automakers to expand market share and fill the vacuum created, and to do so, they would need to hire people and expand. This would cushion the blow somewhat.

4) American steel and airlines went through a crisis like this and they're still around. We still have a country and a non-3rd World way of life even though the government didn't really help them out that much. Plus, we bailed out Chrysler in 1979... and here we are again.

That said, I voted against the bailout because I think the country is approaching a day of (financial) reckoning. The bailouts only seem to postpone this day.... But I'm becoming of the guns, precious metals and bottled water mindset so what do I know?

[///Mandy]

Against it.

[gonzo]

Good or bad it PASSED.

12/10/2008

[UltimateBMW]

Originally Posted by Motor She Wrote

That said, I voted against the bailout because I think the country is approaching a day of (financial) reckoning. The bailouts only seem to postpone this day.... But I'm becoming of the guns, precious metals and bottled water mindset so what do I know?

I wish everyone would just realize this and get on with it already. The postponing and lingering of this depression everyone thinks we aren't in is worse than the depression itself will be.

[txusa03]

Originally Posted by gonzo

Good or bad it PASSED.

12/10/2008

For the shaky fortunes of the ailing U.S. auto industry, appearances could hardly have been more deceiving than they were Wednesday on Capitol Hill. Late in the day the House of Representatives passed by a wide margin of 237-170 a bill to give General Motors and Chrysler $14 billion in emergency loans from a green modernization fund that Congress created earlier this year. (Ford is in better shape and has not asked for short-term emergency assistance). But behind the scenes, things looked pretty dire for the Big Three's hopes of a rescue.


Instead of coming together to craft a plan to stave off bankruptcy, the parties in both chambers and on each end of Pennsylvania Avenue spent the day moving farther apart. Even as Senate Dems and the White House met to fashion a workable compromise, Senate Republicans made clear they weren't on board with President Bush - and that they were none too happy he was putting them in this uncomfortable position. To complicate matters, House Dems moved more to the left in their environmental demands for the plan, a luxury Speaker Nancy Pelosi could afford since her large majority allows her to pass legislation over Republican objections. Senate Majority Leader Harry Reid's razor-thin majority does not, and now Washington seems once again on the verge of a bailout blowup that could shake the markets and the economy.


After the vote, the House adjourned, aides saying they will return next week if the Senate can come to an agreement. But such an accord will not come easy. In fact the House bill was pronounced DOA in the Senate six hours before the House even voted on it. Senate Republicans are balking at a deal they claim does not go far enough in demanding that General Motors, Ford and Chrysler prove they have viable long-term business plans before qualifying for a second round of loans in March. All told, the Big Three have asked for $34 billion in bridge loans, though many economists say it will take up to $200 billion to really reinvent Detroit; negotiators have agreed to grant $14 billion to keep them afloat through March but the companies must jump through significant hurdles in order to qualify for more federal aid after that. (Read TIME's biographies of the Big Three CEOs)


Reid and Republican Minority Leader Mitch McConnell both warned that talks may go through the weekend to reach a new agreement. One plan to ease final passage would be to allow two substitute bills, one Democratic and one Republican - cosmetic votes that would fail from the get-go but would give senators the chance to vote for certain provisions near and dear to their hearts that are not in the compromise package. Democrats, scrambling late Wednesday to find a way to get a bill passed, were also considering allowing votes on amendments. "We're trying to see if there's any flexibility out there," a top Democratic aide said of the search to scrounge enough votes. (See the 50 worst cars of all time.)


In the famously deliberative body, where the filibuster power ensures that it takes about 60 votes to get just about anything done, the Democrats' majority of 50 means they must lure at least 10 Republicans across the aisle on most bills. This hurdle is even steeper in the current lame duck Congress, given Barack Obama's resignation and the pending exits of both Joe Biden and Hillary Clinton (though sources say in extreme circumstances Biden and Clinton might consider returning for a vote). Add to that some Democrat defections, such as Montana Senator Max Baucus, who has declared his opposition to the bailout, and Democratic aides say they'll need at least 15 Republicans on board to get a bill passed.


By the end of the day it seemed hard to envision a solution. In an eerie replay of the events that led to the initial Wall St. bailout flop, congressional Democrats got the White House's blessing on a bill only to discover (yet again) that the outgoing President doesn't carry much weight on Capitol Hill. "The White House does not vote in the Senate," said one Senate GOP aide. "It's offensive to many congressional Republicans that they'd choose working with a lame duck than with their colleagues." (Many Democrats counter that the door was always open to the Republican senators - but that they simply chose not to come to the table.)


Yet again, the Administration's emissaries had little success swaying Senators' views. Senate Republicans Wednesday staged a mini revolt at a 90-minute luncheon with White House Chief-of-Staff Josh Bolten and Vice President Dick Cheney. The GOP leaders emerged from the lunch only to acknowledge that they were far from having the necessary votes. Not only are many strongly opposed to a plan they believe will only postpone the inevitable bankruptcy of GM and Chrysler, they feel that the President has a much easier alternative that would provide them political cover; allow the money instead to be taken from the Wall St. bailout funds without a vote, as Democrats had previously pushed for but the Administration has steadfastly resisted.


"The best way to describe the discussion is 'spirited,'" McConnell told reporters outside the Senate chamber, adding in an e-mailed statement, "On a bill this critical, with so much taxpayer money at stake, we cannot rush this through without adequate review."


Many Democrats are frustrated, feeling as through they have already given in on many major points to the GOP. Pelosi, for her part, was dead set against using the green fund for bridge loans, her aides arguing it forced the companies to choose between their present and their future. Having conceded that point, the Speaker was rankled that the Senate version only requires the Big Three to meet federal fuel efficiency standards and not stricter regulations like those in her native California. Her bill requires the Big Three to meet all "applicable" standards, which would include state ones - a provision the White House has threatened to veto.


Dems also agreed to scale back the sweeping powers once envisioned for the so-called car czar created by the bill to help oversee the companies' restructurings. But while some conservative House Republicans decried the very idea of such a bureaucratic watchdog, certain Senate Republicans want to further empower the official to force tougher viability plans from the automakers. Given that such clashing views are coming from within the Republican party ranks, it's no wonder that Detroit is bracing for what could be a very gloomy New Year's.

[gonzo]

Hot off the presses this morning.


If one of the automakers declared bankruptcy, Some estimate as many as 3 million U.S. jobs could be lost next year.

In premarket trading, Ford shares dropped 44 cents, or 15 percent, to $2.46, while GM plummeted $1.31, or 32 percent, to $2.81.

[txusa03]

Also hot off the presses is the bailout bill got killed because UAW is unwilling to lower wages

Why would you help someone who wont help themself and this is not a one way street.

[ENINTY]

Originally Posted by nmulax

There's a big difference between paying $300 for a one time service; and paying $30k for a product you'll keep for years.

You missed my point totally. It's called GRAVITY. $300 for a one-way ticket to the otherworld.

I'll take my chances on Lincoln MKz being supported by a Chapter 11 FoMoCo.

[nmulax]

Originally Posted by ENINTY

You missed my point totally. It's called GRAVITY. $300 for a one-way ticket to the otherworld.

I'll take my chances on Lincoln MKz being supported by a Chapter 11 FoMoCo.

I guess I did miss your point.

"one-way ticket to the otherworld." ?? What are you talking about?

[UltimateBMW]

Originally Posted by txusa03

Also hot off the presses is the bailout bill got killed because UAW is unwilling to lower wages

Why would you help someone who wont help themself and this is not a one way street.

If that is true, how unrealistic can they be? Where do they expect the money to pay for their wages to come from? Tax payer money?

[txusa03]

OMG, bush just can keep his hand out of the cookies jar

[ENINTY]

Originally Posted by nmulax

I guess I did miss your point.

"one-way ticket to the otherworld." ?? What are you talking about?

Airplane crash... death.

So to be clear (I know this is old now); the point is we all get on airplanes owned and maintained by airline companies that are in bankruptcy, or near to it, or just coming out of it. We fly 10,000 feet in the air. Hopefully the cost cutting measures the companies take, don't affect the quality of their maintenance of the airplane so it doesn't crash (usually a fatal event for most passengers) during operation.

I'd rather take my chances with keeping a car I bought from an auto manufacturer that is in bankruptcy versus flying on an airplane (and possibly crashing) from a airline company in bankruptcy.