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  1. #1
    lilpup Guest

    Default NPR's Talk of the Nation - Was the auto bailout worth it?

    Today's NPR show Talk of the Nation will be discussing the worthiness of the automaker bailout. The show airs 2-4 pm on Michigan Radio (webstreaming available) and other Michigan stations.

    For those who've never listened to it before this is an expert panel with call-in or e-mail format discussion show. I hope the positives will be fairly represented but expect there will be plenty of US automaker bashing, too.

    The phone number and e-mail link are on the show's webpage.

  2. #2

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    Should be in the second hour. First hour on Wednsday is The Political Junkie, a funny and lively political discussion with Ken Ruden.

  3. #3

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    Let's start the bashing: we (taxpayers) bailed out auto companies so they could hire as few of us back as posssible, and paying us wages about half as much as before the bailout. That's what I call a great return for our tax dollars.

  4. #4

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    The only reason the government needed to get involved was because the banks were so destablized that they couldn't handle holding their debt. Chrysler just repaid their government loans today. It's not what it cost us, it's what it saved us that makes it worth it.

  5. #5

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    Quote Originally Posted by Russix View Post
    The only reason the government needed to get involved was because the banks were so destablized that they couldn't handle holding their debt. Chrysler just repaid their government loans today. It's not what it cost us, it's what it saved us that makes it worth it.
    You're probably correct in the bigger picture. I'm just blowing off steam.

  6. #6
    Buy American Guest

    Default

    Who has ever taken out a car loan, a home loan, a boat loan; or any sort of loan from a bank?

    Chrysler got a loan, paid it back IN FULL with interest. What's wrong with that? It saved thousands of jobs and possibly created more jobs in the long run.

  7. #7

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    Quote Originally Posted by Buy American View Post
    Who has ever taken out a car loan, a home loan, a boat loan; or any sort of loan from a bank?

    Chrysler got a loan, paid it back IN FULL with interest. What's wrong with that? It saved thousands of jobs and possibly created more jobs in the long run.
    well... technically they just re-fied at a better rate. The loans are still out there, but they are with banks and bondholders. but still, the alternative was much worse.

    The question will be what precedent was set in this action? Do they get ANOTHER bailout if things go badly with Fiat? Does GM get ANOTHER quick rinse bankruptcy and tax payer loans if they recreate the stupidity that lead them to the last one?

  8. #8

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    Quote Originally Posted by bailey View Post

    The question will be what precedent was set in this action? Do they get ANOTHER bailout if things go badly with Fiat? Does GM get ANOTHER quick rinse bankruptcy and tax payer loans if they recreate the stupidity that lead them to the last one?
    I don't think any precedent was set. At least under this administration I believe everything will be on a case-by-case basis.

    The administration will look at the business plan to see if it makes sense
    have the companies tweak it if necessary and if it doesn't make sense they won't loan the money.

    No more of this hat-in-hand give me a bailout nonsense, at least with the current administration.

  9. #9

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    Look at it this way. In the nearest large town to me (about 20,000), the failure of GM and Chrysler would have probably cost 140 jobs (2 GM, 1 Chrysler dealer), $2.4M in lost state and local tax revenue (figure 1500 cars between the 3 at 20,000 each x 8.9% sales tax), and increased blite along with a lower property tax base due to empty dealerships. That would have been the impact in 1 town of 20,000 population.

    Figure with 39 counties in Washington state, you're looking at maybe a hundred GM dealers, and 50 or so Chrysler. Probably 7000 or so unemployed if those dealerships folded, with a tax loss of a little over $80m per annum to the state and local jurisdictions.

    Being a lazy economist, I multiplyed the figures by 50, and came up with an unemployment figure of about 350,000 and an annual tax loss of about $4 billion a year on a national level. This is only for lost dealerships.

    It would have been a desaster.

  10. #10

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    Whats even more critical than the lost dealerships are the 1st and 2nd tier supplier base. Remember auto companies make very few parts, they basically are assembliers of the thousands of parts they receive each day from there supplier base. It was for that reason as much as anything that convinced the administation that they had to do something to help the industry.

  11. #11

    Default

    Of course it was worth it. It would have been very tragic if they just let them fail, like the idiot republicans wanted. We aren't out the woods anyway as long as the repubs are in control. Stay tuned.

  12. #12

    Default

    Quote Originally Posted by firstandten View Post
    Whats even more critical than the lost dealerships are the 1st and 2nd tier supplier base. Remember auto companies make very few parts, they basically are assembliers of the thousands of parts they receive each day from there supplier base. It was for that reason as much as anything that convinced the administation that they had to do something to help the industry.
    True. And when the suppliers went down with GM and Chrysler, Ford would have been dragged down as well because they wouldn't have anybody to get parts from. That's the very reason why Mullaly was there taking his lumps in front of those congressmen even though Ford wasn't asking for any money. It wasn't out of charity. Trust me, if Ford could find a way to eliminate two competitors as big as GM and Chrysler without destroying Ford as well, there is no way Mullaly would have shown up in DC in the first place.

    All three of them would have went down.

  13. #13

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    Since the Federal Government came to the rescue, GM has had money to open a huge plant in Brazil, GM just announced or opened a new engine plant in Mexico, Obama has expanded a free trade agreement with S. Korea, Fiat has attained a 46% ownership share of Chrysler, and Chrysler union workers agreed to cut back on what Chrysler owed them. Had the federal loans not been given, more workers would have probably been hired by Ford and by other auto makers with plants in the US thus offsetting Chrysler job losses assuming other auto manufacturers wouldn't have bought some of Chrysler's plants or taken over Chrysler which Fiat is doing in conjunction with the federal loans.

  14. #14

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    Had the federal loans not been given, more workers would have probably been hired by Ford and by other auto makers with plants in the US thus offsetting Chrysler job losses assuming other auto manufacturers wouldn't have bought some of Chrysler's plants or taken over Chrysler which Fiat is doing in conjunction with the federal loans.
    That's a very big "probably". I would stick with the GM plants in Brazil & Mexico and an occupied Ren Cen & Tech Center.

  15. #15

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    Quote Originally Posted by xD_Brklyn View Post
    That's a very big "probably". I would stick with the GM plants in Brazil & Mexico and an occupied Ren Cen & Tech Center.
    I always say that "probably" translates to "I'm just making shit up".

  16. #16
    lilpup Guest

    Default

    Quote Originally Posted by oladub View Post
    Had the federal loans not been given, more workers would have probably been hired by Ford and by other auto makers with plants in the US thus offsetting Chrysler job losses assuming other auto manufacturers wouldn't have bought some of Chrysler's plants or taken over Chrysler which Fiat is doing in conjunction with the federal loans.
    Nope, they would have just increased their line speeds, their imports, and the prices of their cars.

  17. #17

    Default

    There are really two answers to this question. If GM was allowed to do business as usual and not make some changes to their business plan, model mix etc, etc, then the bailout would not have been worth it.
    But because GM was forced to make some major changes in the way they do business. The fact that they told Waggoner to take a hike, it actually made it seem like a loan that would be paid back with interest, rather than a throwing good money after bad bailout.

  18. #18

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    Quote Originally Posted by ghettopalmetto View Post
    I always say that "probably" translates to "I'm just making shit up".
    Perhaps. Are you suggesting that if Chrysler completely shut down and GM had to further trim its production, that prospective car buyers who had wanted to buy Chrysler or GM products would have dropped completely out of the car market rather than buying Ford or other auto makes or just trying to be obnoxious?

    What we do know is that GM built three overseas plants in 2008 including the $1B Brazil plant.
    http://www.democraticunderground.com...ss=389x4510648

    GM just announced the construction of another auto and engine plant in Mexico that will cost $500M. http://www.industryweek.com/articles...ico_22462.aspx

    and GM has just begun rolling out Saabs at another plant in Mexico.
    http://www.just-auto.com/news/gm-pla..._id109179.aspx

    How's that for a great use of taxpayer money to put Americans back to work? The best part is that maybe our government paid for part of these new foreign plants with loans from China.

  19. #19

    Default

    First we have the complaint of government motors or the Obama administration telling GM how to do its job. From the last post its obvious that the government was not telling GM what to do.

    What GM had to do was redefine its product mix especially for North America.

    GM has plants all over the world tooled especially for specific vehicles some of which are sold in the US some sold in the local market where the plant is located.

    By looking at this as solely a GM North American hourly worker problem while correct this only takes in a small part of the problem GM was having. (the supplier base and the jobs connected with that is just as important if not more)

    What makes that even more of a challenge is that GM North American plants tend to build the big gas guzzlers which makes this article a piece of good news about how the loans did work

    http://www.freep.com/article/2011052...yssey=nav|head

  20. #20

    Default

    If GM and Chrysler had been allowed to close up shop, many of the suppliers would have gone out of business as well because they depend on them for survival. Anyone who believes Ford or other auto companies would just step right up and buy all the closed factories and hire all the unemployed is either naieve or just blinded by their hatred of Obama. Even the president's biggest critics have to give the man credit for saving thousands of jobs.

    As for GM opening plants in Korea and elsewhere, those cars manufactured in Korea are for dealerships in Korea. Many of those autos built overseas aren't even offered in the United States and to imply otherwise just shows how little you know about the business.

  21. #21

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    Took my Durango in recently for some routine maintenance at the local dealership(Austin); just my way of supporting an organization that has always treated me fairly & honestly. A huge contrast from the bankruptcy days as they've hired more sales people & service techs since then. The complex has been completely remodeled & consolidated with Chrysler, Dodge, Ram & Jeep. They can't keep enough Rams, Grand Cherokees or Challengers on the lot. In addition I was told the 200 has been a good seller for them & the Super Bowl ad generated a big interest in more people passing through the showroom. I didn't ask, but also noticed a few vehicles of different makes(Ford & Buick for instance) in service bays; I remember Marchionne wanting dealerships to start offering maintenance on other makers' vehicles to increase business. So, my take is that it has had a positive effect. The Italians are much more serious in making this company a winner as opposed to what Daimler & Cerebrus did.

    http://www.allpar.com/news/index.php...canadian-loans
    "Chrysler announced the repayment of $7.6 billion in U.S. and Canadian government loans, in full, more than six years ahead of schedule."

    http://www.allpar.com/news/index.php...expansion-news
    "Sergio Marchionne is expected to announce new investments in Toledo, and perhaps in the Trenton Engine North or another idled engine plant. Pentastar V6 demand is expected to be considerably higher than the capacity Chrysler currently has in Trenton South and Mexico, and reports from the company suggest that further investments in Mexico may be unlikely."

    http://www.allpar.com/news/index.php...dd-third-shift
    "Sergio Marchionne has just announced a second shift at the Sterling Heights plant which makes the 200 and Avenger (Sterling Heights), despite a tight supply of Pentastar V6 Engines (they can also use four-cylinders). "

    http://www.allpar.com/news/index.php...omo-investment
    "Chrysler confirmed its plan to invest $843 million to modernize and update its transmission and casting plants in Kokomo, Indiana."
    "This will bring Chrysler’s total investment in U.S. facilities to nearly $3 billion since June 2009."

    http://www.allpar.com/news/index.php...to-fortune-500
    "Chrysler is growing: to relieve overcrowding at its Auburn Hills headquarters, the company has leased 210,000 square feet of additional office space in a building at 1075 West Entrance formerly occupied by EDS. The new facilities will have enopugh space for about 1,300 workers. The plan is to consolidate information technology staff from the Chrysler Tech Center, Sterling Heights Assembly Plant and Mopar’s Ceinterline distribution center. The space left in the Tech Center building will accommodate engineering staff working on new vehicles. Chrysler is adding 1,000 new engineers to its staff."

  22. #22

    Default

    Quote Originally Posted by Detroitej72 View Post
    If GM and Chrysler had been allowed to close up shop, many of the suppliers would have gone out of business as well because they depend on them for survival. Anyone who believes Ford or other auto companies would just step right up and buy all the closed factories and hire all the unemployed is either naieve or just blinded by their hatred of Obama. Even the president's biggest critics have to give the man credit for saving thousands of jobs.

    As for GM opening plants in Korea and elsewhere, those cars manufactured in Korea are for dealerships in Korea. Many of those autos built overseas aren't even offered in the United States and to imply otherwise just shows how little you know about the business.
    No one suggested that Ford would have bought up all the closed GM and Ford factories and hire all the unemployed. Of course, some factories and employees are still not producing after this bailout either.

    Economics; dreary semi-science as it is, would contend that if GM hadn't spent $1.5B on just the two overseas factories I mentioned, the money could have been used for something else. The question then becomes how many US citizens would have been employed by deploying the same money in the US. Or if GM had had to tighten it's belt even more, where might consumers have instead bought their cars? Then the US jobs created by those purchases would have to be compared with the jobs saved by with the government bailout. i don't know the answer but am not so naive as to believe that the issue is black and white as to how many jobs were saved with bailouts. It was good for GM and Chrysler employees at least. It probably eroded Ford's potential of hiring more employees. As it was, much of Chrysler's ownership left the country as part of the deal so some of Chrysler profit will go there now.

    Are you suggesting that the new GM production line of Saab's in Mexico is mainly for the Saab market in Mexico? Do you have knowledge that Obama's new free trade deal with S. Korea won't in fact make it easier for Korean auto parts suppliers to export their now cheaper goods to the big three? If GM can import Buick engines from one of it's engine plants in China, why do you believe Daewoo won't be sending in some cars with a GM label? Didn't I just read that Volt batteries were going to me made in S. Korea?

  23. #23

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    Quote Originally Posted by 1KielsonDrive View Post
    You're probably correct in the bigger picture. I'm just blowing off steam.
    Magnificent Valor.
    This may have been the first time I ever saw someone on DetroitYes say that to another.

  24. #24

    Default

    Keep in mind that GM does not own Saab anymore. The Saabs they are building, they are selling to Saab. That Mexican Saab is a off shoot of the Cadillac SRX.

    But that's not the point. If GM or Chrysler would have gone bankrupt in the traditional manner the economics would have been drastically different. Chances are Chrysler would have been scavenged and very little chance they would have sold any product. GM had a real interest in buying Chrysler for the Jeep line and the trucks. No interest in the dealer support. And if it would have gone that way, there would have been no stopping the closing of thousands of dealerships.

    If GM would have gone bankrupt in the textbook manner somebody would have made a play for it. And for the cash GM is making now, what would exist would be making even more. The pensions and other liabilities would have been somebody else's problem. Only people that would have kept GM going would have been retained. The UAW would be shit out of luck. It would have been a huge cost to the federal government. But around now the company would be raking in cash like you wouldn't believe. And none of that profit would be going to pensions or retiree benefits.

    So what happened wasn't really a bailout or a loan. It was what I considered "capitalization". The feds put up the cash needed to complete paper to start a new GM that has "birthed" as an American corporation. Pretty close to the same thing has happened with Chrysler. Thing is Fiat saw that their Italian heritage was going to kill them. Chrysler is going to save Fiat. IMO, Fiat is going to linger for a while and Chrysler will go on while Fiat dies. Hopefully we don't fall far for the utter bullshit like when the scumbags from Mercedes totally screwed over Chrysler to save Benz. Bob Eaton is a traitor like no other. He sold the access to Chrysler's bank accounts to line his own pockets likely knowing that would happen.

    The company that could go either way is Toyota. They had a lot of cash. The way they do business (and how we let them) is pure sleaze. They need big sales to cover debt. People have found out, they sell shitty cars. They need the scales tipped in their favor. It's not going to be easy for them. The Japanese economy did all they could to make Toyota a success. With everything going wrong they just may not be able to tilt things in their favor anymore.And it's not just about the earthquake. Their economy needs cash balances in their favor. Their banking system is ungodly corrupt. It's like thousands of Kwames being in charge. They are not well accepted in China. China remembers.

    Guess what it all boils down to is all this was about was keeping GM as an American company for a while longer. IMO, if the bankruptcies went as the book says, GM would be China owned now and we would be paying a lot of tax dollars to cover pensions.

  25. #25
    lilpup Guest

    Default

    What continues to amaze me is the way people fall for Toyota's bull. Recently there was a survey of suppliers regarding supplier/manufacturer relations that had Toyota coming out on top. Naturally this got trumpeted in headlines all over the place and I'm sure no one read the rest of the story.

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