Auto Bailout Talks Collapse

[PatsMom]

My state ranks 39th. I think it would be higher except a lot of our parts suppliers (including the one my mother is retired from) have already gone bankrupt.

 

[Galahad]

The countries who are doing best are those that MAKE things and SELL them to other countries.

In the long run I don't think this is true. It's not the 1940's or 50's or 60's any longer. It's a different global economy.

GM and Ford compete well in foreign markets.

Which is what Honda and Toyota are doing.

I think it will be a delicious irony if President Bush may end up being the champion of those who want the bail-out.

 

[jodifla]

In the long run I don't think this is true. It's not the 1940's or 50's or 60's any longer. It's a different global economy.



Which is what Honda and Toyota are doing.

I think it will be a delicious irony if President Bush may end up being the champion of those who want the bail-out.

I agree. But if the economy completely implodes, Bush and Cheney are well aware that they'll take the fall...like Cheney said yesterday, "It's Herbert Hoover time."

 

[Galahad]

I agree. But if the economy completely implodes, Bush and Cheney are well aware that they'll take the fall...like Cheney said yesterday, "It's Herbert Hoover time."

What fall? We are being told he will already be remembered as the worst human being since Hitler. How can this make it any worse for him?

 

[jodifla]

What fall? We are being told he will already be remembered as the worst human being since Hitler. How can this make it any worse for him?

But his perception seems to have always been that history will vindicate him for the war, so he doesn't worry about that.

The fact that the Bush White House views the current economic woes so differently seems to say that they are very worried about having the collapse on their watch.

 

[Galahad]

they are very worried about having the collapse on their watch.

But how can a man of such unmitigated evil even care about a economic collapse. Surely he already "has his"..........

 

[sjaakie]

And with millions of unemployed workers, who will pay the taxes needed to get out of debt.

The countries who are doing best are those that MAKE things and SELL them to other countries. But we're about to let go of one of the best things we make and sell abroad. GM and Ford compete well in foreign markets.

I have to chime in.
Actually no.

Europe doesn’t like these cars any more. Many cities are working on rules that forbid these gas slurping and environment polluting cars to enter the cities.
Who likes to park his car outside the city and take the bus just to get to a restaurant, shopping, go to the hospital ore visit your mom?

There no future for these cars.
Actually they are called “ Fifth Avenue tractors”.

 

[minnie61650]

....Finally, Honda could sell its cars for a significant premium. Customers felt that they offered higher quality and better resale. Because they perceived the long term costs of the car as being lower, people were willing to spend more upfront.

I still think that Honda is a solid company with good long term growth prospects. I sold because I wanted to reduce my exposure to individual stocks and because I thought that the auto sector was too crowded and that competition was going to hurt profits for a long time.

I think you made a good decision selling your Honda stock.

MarketWatch.com

Asian markets tumbled Friday, with benchmark stock indexes in Japan and Hong Kong extending losses to slump more than 6% as investors sold off shares across sectors on word the $14 billion bailout deal to aid struggling automakers fell apart in the Senate Thursday night in the U.S.

The Japanese yen jumped against major currencies and crude-oil prices declined in electronic trading, after Senate Majority leader Harry Reid said the bailout package, which cleared the House of Representatives Wednesday night, fell apart in the Senate.

(snip)

In Tokyo, shares of Honda Motor Co. plunged 13.1% and Toyota Motor Corp. slumped 10.6%.nHyundai Motor Co. gave up 5.7% and Kia Motors Corp. lost 4.1% in Seoul. The automakers get a large part of their sales from the U.S, where Toyota is the second-largest seller, behind only GM.


Read more: http://www.marketwatch.com/news/story/Stocks-extend-los...

 

[minnie61650]

I keep hearing some arguments that don't seem convincing.


2) If GM/Chrysler/Ford fail, their suppliers will fail and drag down the entire US auto industry. While some suppliers will definitely fail, the demand from the remaining auto manufacturers in the US will keep suppliers in business. Some will shrink. Some will go bankrupt and re-organize as smaller companies supplying fewer customers. When there is a demand for goods or services, smart people find a way to meet that demand.

Well, Honda and Toyota seemed very concerned:

Honda, Toyota support Big 3 bailout: McGuinty
Nov 18, 2008

Ontario's premier says Honda and Toyota want the government to help their struggling competitors – the Detroit Three.

Dalton McGuinty says when he met with the five automakers last week, representatives from Honda and Toyota were supportive of government efforts to stabilize General Motors, Ford and Chrysler.

McGuinty says both Japanese automakers are worried that the collapse of one of the Big Three will produce "supplier shock."

He says they fear companies who supply parts to the Big Three would not be able to sustain themselves if one failed.

The federal and provincial governments are heading to Washington this week to gather more information about a possible U.S. bailout package for the ailing auto sector.

Federal Industry Minister Tony Clement has mused about the possibility of a joint Canada-U.S. bailout of North America's hard-hit auto industry.

Link:

http://www.wheels.ca/article/473081

 

[AndyLL]

I was actually refering to the bank bail out, which could have been passed the first time if the dems had voted for it, instead it was they that wanted to add an extra 100B in pork to it.

Well that is absolutely not true.

The Congress leadership... both Republican and Democrat... both agreed that they would only pass the bill if it was 50-50 between the 2 parties.

The democrats delievered their 50% and the republicans didn't.

The republicans only got their 50% to vote for it when the pork was added.

Trying to cast the pork in the original bailout bill as Democrat pork only puts the rest of your 'facts' when posting into doubt.

 

[Magic Mom]

Sorry, I'm not convinced.

If only there were a few more exclamation points, then perhaps you would win me over.

!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Hands down, the best post of the month! (only one exclamation point needed)

 

[MAH4546]

I know what anti-union means, but what is 'anti-Detroit' supposed to imply?

Against the Big 3.

Every car plant in the South is ran by a Japanese, German or Korean automaker except for a GM plant in Tennessee.

 

[ScottJ]

I keep hearing some arguments that don't seem convincing.

1) We spent $X on other stuff (Iraq, AIG, etc), so why can't we spent a few billion dollars on the auto companies. The fact that we spent money wisely or unwisely in the past should not have a bearing on whether we spend money on the auto companies. If we wasted money in the past, we shouldn't waste more in the future. If the past spending was wise, it doesn't make any future spending proposal wise.

2) If GM/Chrysler/Ford fail, their suppliers will fail and drag down the entire US auto industry. While some suppliers will definitely fail, the demand from the remaining auto manufacturers in the US will keep suppliers in business. Some will shrink. Some will go bankrupt and re-organize as smaller companies supplying fewer customers. When there is a demand for goods or services, smart people find a way to meet that demand.

3) If the US auto companies go bankrupt, it will drag down millions of others. This is true to an extent, but it is a very one-sided portrayal. It will also liberate a huge amount of resources from inefficiently producing products that aren't in demand. Those resources (factory workers, engineers, factories, real-estate) won't vaporize or sit permanently idle. They'll get used for other things that are profitable. The adjustments will be painful for some involved, but that "creative destruction" is why capitalist economies outperform planned economies. The market will direct the resources to where there is a demand for them. Propping up a money-losing industry will lock those resources into over producing cars relative to the demand for them while taking resources from industries that are providing good and services that are actually in demand.

1. The only argument I have for this is if all of the statements around the globe come true. Well, the US will the be the center off an economic atom bomb. I guess it depends on if you're willing to gamble or not.

2. Once again, pretty much everyone in the World is worried about just GM failing. Where do you get this info? Honda & Toyota have said US production of their vehicles would be in jeopardy due to shared suppliers. Representatives from both the plastics industry & steel industries have release statements saying they believe their industries would collapse also.

3. Let's see we're dealing with close to the second great depression in 80 years and you want to add 3 million to the unemployed ranks & then another 2.5 million jobs in the second year. Sure things will rebound but what kinda country would we be living in.

 

[Galahad]

3. Let's see we're dealing with close to the second great depression in 80 years and you want to add 3 million to the unemployed ranks & then another 2.5 million jobs in the second year. Sure things will rebound but what kinda country would we be living in.

A report on NPR yesterday pointed out that the 3 million figure is grossly overstated - that even if all three went under the total - direct and indirect - losses would be less that a million. Still pretty bad, but it doesn't help the "cause" by buying into an exaggeration.

 

[ScottJ]

I invested in Honda for about a decade. I read my annual reports pretty carefully. We made good money in the US most years. Honda built plants in the US and around the world because they wanted to manufacturer in local markets. That helped insulated them from exchange rate risks, political risks (tarriffs and quotas), and local economic conditions.

Honda's US plants were significantly more efficient than the big three. The biggest difference wasn't in unit costs per labor; instead it was primarily in the amount of labor required to build a car. Honda's manufacturing got more done with fewer man hours of work.

Another big advantage was that Honda could easily shift production between models. That allowed them to shift as demand for models changed from our forecasts. It also allowed them to introduce updated models more frequently.

Finally, Honda could sell its cars for a significant premium. Customers felt that they offered higher quality and better resale. Because they perceived the long term costs of the car as being lower, people were willing to spend more upfront.

I still think that Honda is a solid company with good long term growth prospects. I sold because I wanted to reduce my exposure to individual stocks and because I thought that the auto sector was too crowded and that competition was going to hurt profits for a long time.

Since you were a shareholder you see that Honda makes ton of money off of realized exchange rates. Japan has been taken to task regarding its manipulating the exchange rate. Currently the EU is battling with Asian countries regarding this issue. This is why Japanese & South Korean companies keep imports at over 50%.

I give Honda credit. They do make a sound car. I know several people who are in sales & management for auto suppliers. I won't get into here as to why Honda makes the products they make or who the industry benchmark is for drivability or engineering. It's not who you'd think it was.

 

[ScottJ]

A report on NPR yesterday pointed out that the 3 million figure is grossly overstated - that even if all three went under the total - direct and indirect - losses would be less that a million. Still pretty bad, but it doesn't help the "cause" by buying into an exaggeration.

I think this comes down to who you believe or what you fear the most?

 

[ScottJ]

"The Center for Automotive Research (CAR); a comprehensive study on the impact of a 100% failure of the Big Three in the U.S.:

In the first year, the U.S. economy would lose 3 million jobs (about nine additional jobs for each auto worker that is laid off). It would lose another 2.5 million in year two and 1.8 million in year three.

U.S. personal income would decline by over $150 billion in the first year and another $250 billion in the next two years.

Our government would also lose $60 billion in 2009 and almost another $100 billion in the next two years."

Like I said it depends on what you believe in or are willing to take the risk on.

 

[CarlaKay]

Oh, and there's a memo out now....turns out an action plan went out for Republicans to oppose the bailout to punish unions for the election. Will try to get a copy to post it.

You are correct. Here is a link to this memo http://thenewshole.msnbc.msn.com/archive/2008/12/12/1713569.aspx

Republicans should stand firm and take their first shot against organized labor, instead of taking their first blow from it.

A large portion of the GOP opposition to saving jobs is a desire to punish the UAW for its past support of Democratic candidates.

 

[MarkBarbieri]

You are correct. Here is a link to this memo http://thenewshole.msnbc.msn.com/archive/2008/12/12/1713569.aspxA large portion of the GOP opposition to saving jobs is a desire to punish the UAW for its past support of Democratic candidates.

Hmmm...when I read it, it sounds as much like a defensive move (stopping Democrats from rewarding unions) as it does offensive.

Regardless, if the Democrats wanted this, they could have passed it. My understanding is that 52 Senators voted for it. That was 40 Democrats, 10 Republicans, and 2 Independents. 4 Democrats (apparently in a fit of evil ) voted against it, including Majority Leader Harry Read. 4 other Democrats didn't bother to vote, including the Vice President Elect. I didn't see the President Elects name on the list. I guess he has already resigned his seat and Blagojevich hasn't closed a sale on it yet. If only those darned evil Democrats had united behind the bill, they could have passed it.

 

[Maroon]

Sure they are. but if I.