Sad.......when will it end?

[LindaG4458]

What bothers me about the bailout is that tax dollars are going to come from people (some with no health insurance) to fund the UAW so a retiree can have a low copay or in some instances no co-pay at all????

This is the situation here. The teachers union has always negotiated a NO DEDUCTIBLE HEALTH INSURANCE POLICY, family included. They, so far, have refused to budge during negotiations. The contract is currently in mediation. Meantime, we received the information for the new retiree insurance contract with DH's old company. We have larger deductibles, larger copays, and, of course, higher premiums. That notice came in the mail with our property tax bill. Bad timing!

Also, a new law in NH means that all provisions of the expired contract remain in effect during negotiations. Step raises, etc. all just keep happening.

Can you tell that I'm frustrated about this stuff?

 

[Quiksilvr]

Again, the Big 3 were revamping their business plans to get in the black WITHOUT government help when WHAM! the gas price spike came along then WHAM! the bottom dropped out of the economy and people stopped buying cars....ALL cars, including Hondas and Toyotas.

It wasn't the price and the reliability. We have a couple of GM products, and we're quite happy with them.

We might be one of those ones in the market for a new car, BUT not now, with jobs so unsure. THAT'S what's currently hurting the Big 3.

That's all true. However, it's also true that the Big 3 were relying on continuing purchase patterns based upon past sales, a major part of which were sales to people with questionable credit. They were banking on continuing to be able to sell cars to people less likely to be able to repay the debt.

Companies want to be able to report growth in sales and profits every quarter. To do that, they need to sell more cars. What happens when you run out of people who are qualified to purchase more expensive, high-end cars? You sell them cheap cars. What happens when you run out of people who are qualified to purchase cheap cars?

The Big 3 sold the cars to them anyway. Often at zero percent financing, or with "employee pricing", etc., all to keep sales volume growing. Now, they have lost their market.

Part of the blame here is our focus on quarterly earnings. Companies have less incentive to plan long-term and more incentive to plan for short-term wins. You'd think people would have learned the folly of that from Enron, but they didn't. The focus on short-term success is too ingrained now. I prefer the old model under which company stocks gradually rose over time but more companies also paid out dividends. There wasn't all of this frenzy over daily stock price. I guess I'm old-fashioned that way.

 

[Quiksilvr]

Vt & Quik, plus a few others, I've really enjoyed your posts!
You guys (& or gals) really did nail the problem!

The US has become a country that runs on debt, with no manufacturing base, and dependent on service jobs. Some jobs pay well (skilled) others poorly (low skill).

Can our economy recover and ever provide a sound economic base? That's what I wonder. With out any manufacturing, aren't we severly lacking?

Honestly, I believe China is where it's at and they'll be calling the shots. The best we can hope for is second fiddle.

Don't want to ruffle feathers. But those previously mentioned posters seem to know what's going on.

Thanks for the kind words. I think you're right; the power will gradually shift to the countries that can sustain growth. What tends to happen to economies as they lose manufacturing power is that they start trying to protect themselves via policy (see, e.g., the European Union). This usually has the opposite effect, but they can't seem to help themselves from going that route. I think this is what will happen in the US.

China occupies an interesting position because they have this unique status of a communist country trying to cherrypick capitalist ideas for their economy. Because the regime is still totalitarian, they can generally do what they want with respect to keeping costs down. They don't have to worry about these pesky things we have in the US called "rights". They just build factories, put people in them, and tell them to work. They also have a lot more people than we do. So long as the military controls China, there is much less economic danger than there is in the US economy with respect to public outcries and problems with greed. If the economy gets bad in China, the lower class folks will suffer and no one will do anything about it. This allows them to remain extremely competitive. I think it will be hard for the US to compete with that.

I think some manufacturing will stay in the US, but it will be much less than we have now. We'll retain the industries that can be profitable.

 

[JoiseyMom]

The picture of that man really gets to me. He has those worried, sad eyes that I've been seeing so often.

I agree that it's good to have 6 months to a year of money saved to live on. The problem is that some are still trying to recover from prior layoffs. They haven't had time to save.

Yup...that is a big problem. If you were laid off prior and had savings, youlived off them. Now you have nothing left. And what do you do and where do you go? Where are the jobs or affordable housing? Too many people are in the same boat. It's really really scary.

 

[dvcgirl]

I think we can go through a market correction without a Depression.

The autos companies are asking for LOANS, not a bailout.

They have (very belatedly) put together a lot of good plans and have a new contract that should have put them on the road to recovery in 2009, but then EVERYBODY stopped buying cars.

And like I've said, it's all a moot point. Can't let the auto companies go out of business for Homeland Security's sake.

Yes, but let's face it. GM came out yesterday and said it's now lost 73 Billion dollars since 2004. And at least 3 of those years were years where we had a very robust GDP.....and very easy credit for all.

GM says it needs 30 Billion of that 50 Billion just to survive. They have 16 Billion in cash, and need 11 Billion a month to pay the bills. And sales are down nearly 50%.

Their stock is trading at levels not seen since *1943*. Their market cap is now 2 Billion....which makes them a small cap stock.

GM will have to positively slash jobs and cut plants under a "best case...Uncle Sam gave us 30 billion large....scenario". And still, they may not make it.

It may come down to...."We may not be able to save them".

Imagine how you'd feel if you're the American operations head of Honda or Toyota? They're providing thousands of jobs too....and they've managed their business and balance sheets incredibly well. It's sort of like the US homeowner who didn't buy too much house and has an emergency fund. We're all bailing out those folks who got in over their heads.

And that's why this bailout stinks to high heaven.

 

[lorax123]

Thanks for the kind words. I think you're right; the power will gradually shift to the countries that can sustain growth. What tends to happen to economies as they lose manufacturing power is that they start trying to protect themselves via policy (see, e.g., the European Union). This usually has the opposite effect, but they can't seem to help themselves from going that route. I think this is what will happen in the US.

China occupies an interesting position because they have this unique status of a communist country trying to cherrypick capitalist ideas for their economy. Because the regime is still totalitarian, they can generally do what they want with respect to keeping costs down. They don't have to worry about these pesky things we have in the US called "rights". They just build factories, put people in them, and tell them to work. They also have a lot more people than we do. So long as the military controls China, there is much less economic danger than there is in the US economy with respect to public outcries and problems with greed. If the economy gets bad in China, the lower class folks will suffer and no one will do anything about it. This allows them to remain extremely competitive. I think it will be hard for the US to compete with that.

I think some manufacturing will stay in the US, but it will be much less than we have now. We'll retain the industries that can be profitable.

Unfortunately, most of the good manufacturing jobs will be high end, precision, skilled work. Not everybody will be qualified, particularly the people that need those jobs the most.

I just think we have a long, long way to go to dig out of this financial mess and when the dust is settled, I feel the bar for standard of living will be lowered.

I totally agree with everything you said concerning China. It is the 800lb gorilla now and is pretty much going to be calling the shots.

I just hope we can keep the world economy out of a depression.

 

[vt_disney_fan]

And who will be making these tanks and jeeps once the car industry and steel industry are gone? These aren't industries you can whip up from scratch in a jiffy.

Still got your eye off the ball, Jodi.

Even if the Big 3 go out of business (unlikely), the physical plants themselves will still be there.

And you're assuming we will still need a lot of tanks and jeeps...

 

[vt_disney_fan]

And who will be making these tanks and jeeps once the car industry and steel industry are gone? These aren't industries you can whip up from scratch in a jiffy.

Still got your eye off the ball, Jodi.

Even if the Big 3 go out of business (unlikely), the physical plants themselves will still be there.

And you're assuming we will still need a lot of tanks and jeeps...

 

[vt_disney_fan]

Again, the Big 3 were revamping their business plans to get in the black WITHOUT government help when WHAM! the gas price spike came along then WHAM! the bottom dropped out of the economy and people stopped buying cars....ALL cars, including Hondas and Toyotas.

It wasn't the price and the reliability. We have a couple of GM products, and we're quite happy with them.

We might be one of those ones in the market for a new car, BUT not now, with jobs so unsure. THAT'S what's currently hurting the Big 3.

WHY did the gas price spike happen? WHY did the bottom drop out of the economy? WHY did people stop buying all cars (incidentally, I've had a couple GM cars myself, and they were complete pieces of trash, so opinions vary)?

You're able to identify what the problem is (struggling economy), but you're missing the ENTIRE point, which is what is causing it! Instead, you're giving the ridiculous argument that we can't let the Big 3 fail b/c we won't be able to build jeeps anymore!

Short-sighted greed, that's the reason we're where we are right now. And eventually, to correct it, we have to pay for that greed.

 

[minnie61650]

.......
Short-sighted greed, that's the reason we're where we are right now. And eventually, to correct it, we have to pay for that greed.

I agree.
The greed of the banking industry caused the credit crunch. The credit crunch is why the car companies are in finanical trouble.

"The problems in the auto industry are a direct result of the credit crisis," Wagoner said. "The U.S. government's actions to help stabilize the credit markets and eventually ease the credit crunch are an essential first step to the economy's and the auto industry's recovery, but further strong action is required."

Link to full article:

http://www.freep.com/article/20081108/BUSINESS01/811080331

 

[KristiKelly]

As far as greed goes, it's not just the mortgage companies. I live in NC, used to be all textiles. There are many, many empty textile plants just sitting in this state because companies went to China for cheaper labor.

There used to be a plant in this area that did Osh Kosh clothing, several years ago, it all went to China and everyone was laid off. The clothing was then made cheaper but the price in the stores never went down only the quality.

If these companies would open their plants back up, get them rolling again. People would have jobs, be able to pay their bills, etc. The companies bottom line might be less than when products were coming from China BUT it will be higher than nothing - which is what is happening when people have no money to buy.

I don't know, in my mind it seems very simple - bring jobs back to the U.S. This would be a step in the right direction, if companies don't - tax the crap out of them.

I also agree with a previous poster - bail out the people not the banks.

 

[lorax123]

it's not the banks greed. It's eveybodies greed. CEOs, investors, consumers... The list starts at the top and goes down to the bottom.

This is a situation that's been developing for a long time. It, in my opinion, is the one downside to capitalism. The more you get, the more everybody wants.

Consumers want it faster, better, cheaper. Investors want bigger returns. Corporations want higher profits. So we outsource, cut costs & worry only about the short term.

 

[vt_disney_fan]

I agree.
The greed of the banking industry caused the credit crunch. The credit crunch is why the car companies are in finanical trouble.

Linda, you think it's just the greed from the banking industry? Your head is in the sand.

It's greed from everyone - you, me, the banks, the investors, the big oil companies, everyone.

We want our 401(k)'s to increase. We want our home sales prices and values to be high. We want our individual wages to be high. We want corporate earnings to be high, which drives the stock market high, which makes our investments worth more, which increases our 401(k) values, which makes us feel better and more secure.

However, we also want our gas prices low. We want our car prices low. We want our food prices low. We want our taxes to be low. We want our healthcare costs to be low. By keeping these low, it gives us more disposable income, which we can then funnel into the investments and houses that we want to be worth a lot (see above).

We ALSO want to keep manufacturing jobs here in the U.S. We want low levels of unemployment. We want low interest rates on car loans, home loans, home equity loans and unsecured loans. We want the best possible healthcare service, and we want everyone to be able to have it. We want a Social Security system that works, and is stable, yet won't increase our taxes or our spending. We want to not give up any of our scientific research, arts programs, humanitarian programs or entertainment.

We want. We want. We want. We want. We want. And we want it all without giving anything up.

Do you see the common theme yet, Linda?

We CAN'T have all these things at once. It is mathematically, economically and logically impossible!

And then when things get tight, people who don't want to recognize what's really going on (or are unwilling to believe, sometimes) want to say, "it's the bank's fault." Sorry, that's the wrong conclusion.

It's ALL of our fault - and to TRULY fix it (which we all SAY we want to do, though few know what might be required of them to actually do it), we'll ALL have to give up a lot.

 

[minnie61650]

Linda, you think it's just the greed from the banking industry? Your head is in the sand.

It's greed from everyone - you, me, the banks, the investors, the big oil companies, everyone....

.

Of course there is a lot greed and a lot of blame to go around.

But the auto companies did make big cutbacks (see below) and all indications were they would have been able to make it through these tough economic times if it were not for the credit crisis.

General Motors Corp. plans to cut at least 3,500 more salaried jobs in the next few months and could be forced to cut even more as it struggles to survive, a leading labor economist said Tuesday. GM reports that 3,460 salaried workers signed up for sweetened retirement offers by Oct. 31.


GM said that exceeded its cost target under a July plan to cut costs. Most of those workers are already gone.

On Friday, however, GM said it would increase to 7,000 the number of salaried and contract jobs it plans to eliminate as part of widespread efforts to survive the current economic downturn and the worst automotive sales environment in a quarter-century.

That means at least another 3,500 jobs must go.

That would take the company's salaried ranks to 25,000. That's down from 46,000 salaried workers just six years ago.

Link:

http://www.freep.com/article/20081112/BUSINESS01/811120307

Disclaimer:

I am one of the lucky Michiganders. Dh owns his own mulit-million dollar company which often does better during tough economic times. Our close family menbers do not work for the auto companies or any company that sevices the auto companies.
We do not have a personal stake in the outcome of the auto instrusty.
But I know many families in Michigan who are/or will be affected greatly if the American auto indrusty crashes.

I am very concerned for them.

JMHO

 

[vt_disney_fan]

Of course there is a lot greed and a lot of blame to go around.

But the auto companies did make big cutbacks (see below) and all indications were they would have been able to make it through these tough economic times if it were not for the credit crisis.

You're not seeing the forest for the trees. You keep trying to find what's killing the Big 3 right now, and you're attributing it (and probably rightly so) to the credit crisis.

BUT WHAT HAS CAUSED THE CREDIT CRISIS? This is the real question which I've been addressing, while you're still focused on the Big 3. Since you're a Michigander, I can understand your affinity to Detroit, but they're not the ONLY people affected by this, and the cause of it all is still not being addressed.

Look at my last post. Look at the number of jobs that GM is having to cut, just to even attempt to stay afloat. We can't have it all.

 

[Quiksilvr]

You're not seeing the forest for the trees. You keep trying to find what's killing the Big 3 right now, and you're attributing it (and probably rightly so) to the credit crisis.

BUT WHAT HAS CAUSED THE CREDIT CRISIS? This is the real question which I've been addressing, while you're still focused on the Big 3. Since you're a Michigander, I can understand your affinity to Detroit, but they're not the ONLY people affected by this, and the cause of it all is still not being addressed.

Look at my last post. Look at the number of jobs that GM is having to cut, just to even attempt to stay afloat. We can't have it all.

This isn't exactly a direct response to your comment, but it is related.

The cause of the credit crisis was greed. Everybody's greed. Not just investment bankers (I happen to know a number of investment bankers and they weren't any greedier than some of the secretaries in my office, the IBers were just playing with bigger numbers).

The American mantra has become "blame somebody else." Passing the buck. It's all we do. Nobody takes personal responsibility for anything; it's always someone else's fault. It's easy to point fingers at the Wall Street types because they were the ones who held the purse strings, but lower and middle America is the group that greedily stuck out their little hands to take the easy credit offered by the Wall Street companies looking to make money off of lending money. It took two to tango in that particular dance. But, people want to blame the banks for opening the purses and refuse to admit culpability for taking money they could not repay. It's always someone else's fault.

I agree wholeheartedly that the standard of living for many Americans will likely go down in the coming decade. Americans have bought into this idea that most "wants" are really "needs" and that we "deserve" these things.

I'll tell ya... when I was a kid, going to DisneyWorld was a huge deal. Most kids NEVER got to go, and almost nobody got to go more than once. It was all too expensive. I barely knew anyone who had been on an airplane. Life was just different. And I lived in a middle class family! I got to go to WDW multiple times because we did things on the cheap. If I was coming up now, my mom would totally have been a Budget Boarder.

Now, things have changed. A lot of people seem to think that they have a right to annual trips to WDW. "But we deserve it," we cry. "We work hard! We deserve vacations!" That may all be true, but that doesn't mean you can afford it. When I was a kid, most of my vacations happened because my dad had to go to a conference somewhere and we all tagged along because the company was paying for the hotel room and the gas. Of course I was jealous of the people with more money who didn't have to do things that way, but it was my lot in life and I didn't worry about it too much. I think it was harder on my parents.

I think that we're all in for a rude awakening. This consumer nation is going to get a shock to the system. I think that capacity will go way down because the markets for certain products will dry up. I think that people will lose jobs. I think the only people who will end up being safe and prospering during this period are those with skills that are hard to come by.

 

[eliza61]

What's even sadder Quikslvr is that it's not going to change. I'm a sociologist by schooling (I've moved on to another field) but our attitudes have not changed at all. Americans are terrible short sighted.

I've been taking my oldest son around to college open houses these last few months (he's a H.S. senior) he's gotten more credit card apps than financial aid applications. When I mentioned to one bank representative that he doesn't have a job or any income, he just laughed and said "he doesn't need a job to qualify" WHAT!!!
35 years ago we were a nation of savers (anyone remember when you use to get a toaster for opening a savings acct). the savings rate has dipped into the negative in 2004.

No matter how many bailouts we have until we lose the "I deserve" attitude we'll always have an economy in crisis.

 

[Quiksilvr]

What's even sadder Quikslvr is that it's not going to change. I'm a sociologist by schooling (I've moved on to another field) but our attitudes have not changed at all. Americans are terrible short sighted.

I've been taking my oldest son around to college open houses these last few months (he's a H.S. senior) he's gotten more credit card apps than financial aid applications. When I mentioned to one bank representative that he doesn't have a job or any income, he just laughed and said "he doesn't need a job to qualify" WHAT!!!
35 years ago we were a nation of savers (anyone remember when you use to get a toaster for opening a savings acct). the savings rate has dipped into the negative in 2004.

No matter how many bailouts we have until we lose the "I deserve" attitude we'll always have an economy in crisis.

Agreed. I don't think American attitudes will change until they are forced to change by an external force. Although consumer credit card debt is a drop in the bucket compared to the mortgage debts, it is indicative of the attitude we have as a nation. We "deserve" things today (even if we can't afford them), so we buy things on credit to satisfy the itch.

American companies and their marketing have something to do with this; the marketing media has convinced everyone (over a 20 year period) to buy into this "Deserver" mentality as a way to boost sales. A lot of folks have bought into it lock-stock-and-barrel because it's attractive and seductive. Easy credit added fuel to the fire. It's going to be difficult to really change things unless something forces us to do so.

 

[vt_disney_fan]

This isn't exactly a direct response to your comment, but it is related.

The cause of the credit crisis was greed. Everybody's greed. Not just investment bankers (I happen to know a number of investment bankers and they weren't any greedier than some of the secretaries in my office, the IBers were just playing with bigger numbers).

The American mantra has become "blame somebody else." Passing the buck. It's all we do. Nobody takes personal responsibility for anything; it's always someone else's fault. It's easy to point fingers at the Wall Street types because they were the ones who held the purse strings, but lower and middle America is the group that greedily stuck out their little hands to take the easy credit offered by the Wall Street companies looking to make money off of lending money. It took two to tango in that particular dance. But, people want to blame the banks for opening the purses and refuse to admit culpability for taking money they could not repay. It's always someone else's fault.

I agree wholeheartedly that the standard of living for many Americans will likely go down in the coming decade. Americans have bought into this idea that most "wants" are really "needs" and that we "deserve" these things.

I'll tell ya... when I was a kid, going to DisneyWorld was a huge deal. Most kids NEVER got to go, and almost nobody got to go more than once. It was all too expensive. I barely knew anyone who had been on an airplane. Life was just different. And I lived in a middle class family! I got to go to WDW multiple times because we did things on the cheap. If I was coming up now, my mom would totally have been a Budget Boarder.

Now, things have changed. A lot of people seem to think that they have a right to annual trips to WDW. "But we deserve it," we cry. "We work hard! We deserve vacations!" That may all be true, but that doesn't mean you can afford it. When I was a kid, most of my vacations happened because my dad had to go to a conference somewhere and we all tagged along because the company was paying for the hotel room and the gas. Of course I was jealous of the people with more money who didn't have to do things that way, but it was my lot in life and I didn't worry about it too much. I think it was harder on my parents.

I think that we're all in for a rude awakening. This consumer nation is going to get a shock to the system. I think that capacity will go way down because the markets for certain products will dry up. I think that people will lose jobs. I think the only people who will end up being safe and prospering during this period are those with skills that are hard to come by.

Exactly right - I think we've both been saying pretty much the same thing the whole time.

 

[vt_disney_fan]

Agreed. I don't think American attitudes will change until they are forced to change by an external force. Although consumer credit card debt is a drop in the bucket compared to the mortgage debts, it is indicative of the attitude we have as a nation. We "deserve" things today (even if we can't afford them), so we buy things on credit to satisfy the itch.

American companies and their marketing have something to do with this; the marketing media has convinced everyone (over a 20 year period) to buy into this "Deserver" mentality as a way to boost sales. A lot of folks have bought into it lock-stock-and-barrel because it's attractive and seductive. Easy credit added fuel to the fire. It's going to be difficult to really change things unless something forces us to do so.

And we'll never vote people into office - not jus the POTUS, but Senate and Congress as well, both state and federal - who understand this, b/c they're all in the same boat of wanting more than we can realistically have.

It's like a balloon, and all our "wants" are like more air. We keep pumping more and more air into the balloon. The balloon has gotten too big to take more air (aka the current credit crisis), so we let a little "air" out and deflate the balloon a bit (aka the bailout and lower oil prices), but pretty soon, the balloon gets full again. At some point, it will pop. Everyone's trying to avoid the popped balloon, but nobody's doing anything to stop putting air in it, which is causing the problem in the first place. Our current politicians might SAY they want to fix it, but in the end, they aren't doing any better than you or I in fixing it, b/c everyone's hand is in everyone else's pocket.

It's a vicious cycle, and until the American voting public wakes up and gets upset and REALLY wants to do something about it, it will continue to be a bandaid on a broken arm.