"Big Three" bailout ....
 

So what do you economic gurus think of the Big Three situation?

(And did any of you see the news report that showed that all three Executives flew to Washington this week by private jet, rather than by commercial airliner - first class is obviously not good enough for them!)

On the one hand, I feel that if we are willing to give $700 Bn to Wall St, we should help protect jobs by helping the auto industry, but - the US auto industry has been a joke for years, churning out inappropriate vehicles, and spending money lobbying congress to stop raising mpg standards instead of investing in the technology that has made Toyota and Honda so successful with hybrids and high-efficiency cars... So my gut feeling is, let them fail. At the VERY LEAST, they should fire the execs who are clearly incapable of running the companies.

I'd like to see any money tied to specific targets -
1) develop alternative fuel as a priority;
2) make SUVs conform to automobile mpg standards (instead of truck standards - a terrible loophole that was created initially to prevent truck buyers from being impacted by the extra costs of higher efficiency engines ...)
3) tie CEO pay to profitability (ha! Fat chance!)

I also heard that, if they fail, they will actually file for bankruptcy, and continue operating while restructuring, so it's not as if all 3 million jobs will be impacted. Personally, I'd sell all their assets to the Japanese who have demonstrated that they know how to build and sell good cars (my Hondas and Acuras are all made here in the US).

Re: "Big Three" bailout ....
 

I'm with you. The slightly more mature members of this board surely remember the debacle that was BL.

Re: "Big Three" bailout ....
 

I heard about the Private Jet, surely its public seen as the Tax Payer will be paying for it soon.

*scoffs*

Re: "Big Three" bailout ....
 

I certainly wouldn't help them as it would be throwing good money after bad. They seem to have their own idea as to what good fuel economy is on cars, the Cadillac hybrid that does 12 city/19 highway just takes the biscuit for me, my non-hybrid 1983 G20 van does about that so to me it's totally laughable. If they want money they should show they're in a position to compete with the competition not just give us more of the same and rely on the people that refuse to buy "foreign junk" as that group of people are getting smaller and smaller.

Re: "Big Three" bailout ....
 

Absolutely agree.

The only way I would even remotely agree with giving them any money is if they agree to the development of an affordable alternative energy vehicle, and all of their current models must have a 100% (or maybe even 200%) improvement in fuel efficiency within 5 years, or they can no longer sell them. Then they could decided whether to use that money to focus on improving the current line of cars, or focus on completely new technologies.

Re: "Big Three" bailout ....
 

Paulsen's been doing a fairly decent tap dance.

Re: "Big Three" bailout ....
 

This all reminds me of the 70s/80s bailout of British Leyland (in which Maggie, no less, participated). It's likely to be a complete waste of taxpayers money. These companies should go into chapter 11, restructure, and start making quality and efficient cars people actually want to buy. Oh, and Congress will cave, and bail them out anyway.

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Frankly I would like to see them declare bankruptcy. The Union negotiated compensation and benefits are one of the biggest stumbling blocks to their being competitive in the US Market. Even if the Unions were willing to negotiate it is unlikely they would be able to get their membership to agree to the necessary pay cuts and change in benefits.
The big 3 are paying shop floor workers $70+ benefits. Those in Toyota/Nissan are on $30+ less benefits.
The big 3 are producing more fuel efficient cars which still are unable to compete with other "foreign" cars because the reality was and the perception still is that those cars produced by the 3 are unreliable and fare worse in testing by independent reviewers.
Bankruptcy will probably put off a few more people buying as they wont feel confident that guarantees, service centers, etc will be there to support their decision.
However if these changes and the necessary but painful cuts in labor dont happen they will be finished anyway IMO. Throwing any more money into these companies is unproductive in the long term and in the short term not going to doing anything to stimulate the economy. For those laid off it would make sense in investing in retraining or relocation.
Difficult times, difficult decisions.

As for flying on private jets, they did before, they are now and they probably will continue long after the companies have been run into the ground.

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Chapter 11 isn't an option. It's very different from the airline scenario.
Paying $500 for a flight that falls through is very different from paying $30,000 for a vehicle and expecting to have a relationship with that car company for that period. Especially with respect to warranties.

The upshot is no-one will buy a car when the manufacturer might not be around to support it. Already happened with Plymouth.

Re: "Big Three" bailout ....
 

You leave my fond memories of my dads Allegro alone! :p

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first the banks, now the big three. Who is next? Let them go bancrupt and start again from the bottom.

When do the bailouts stop?

The banks got their bailout so they could continue lending. Well obviously that hasnt happened. The layoffs in the banking industry is amazing just in this past week so what exactly are they using the bailout money for? The foreclosures are not stopping either.

Re: "Big Three" bailout ....
 

If the big three don't go chapter 11 and reorganize, there is an increased chance in the long run that they will disappear.

Re: "Big Three" bailout ....
 

** WARNING ** Cindyabs ... there is an SP reference in this post. Please avert your eyes ...

They can call up Sarah Palin; one of the few qualifications on her resume is selling private jets on e-bay!

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Dealer networks are, I believe, independent, and would not be affected. Dealers and independents do maintenance. But they need parts. I would think the 'spare parts' division would be an immediate sell-off; maybe the govt. can help with that part if necessary. I would think many companies would be willing to buy up the spares division, and with that, you have continued long term support.

Re: "Big Three" bailout ....
 

30 odd years ago, the male half of a couple we were good friends with, was knocking back 750 bucks a week on the line at the local GM plant. Mind you that is one of the ones they are closing. The union did their job for the workers.