Democrats & Liberals Archives

Save the U.S. Auto Industry?

The debate is on as to whether the tax payer should throw a $25 billion life line to the Big Three (Ford, GM and Chrysler). I would argue that they should, but with strings attached.

I am no fan of the U.S. automakers. They have fought every safety and environmental improvement. They have colluded to disenfranchise the country of functional mass transportation. They have colluded with big oil to make and grow oil demand. They have inserted themselves as major players in governmental policies and agencies. They have supported the global warming denial "movement." They have created demand for huge vehicles, and then blamed their lack of change on consumers. They have been profligate spenders, and not provided the innovation the nation and the world needs.

The list of egregious behavior could go on and on. They are the epitome of "bad actors.' However, I still believe that we cannot risk their failure. There are three reasons I feel we need to hold onto the U.S. auto industry: workers, economy, and maintaining an industrial base.

The table at the end of this article is from the U.S. Census Bureau 2002 manufacturing center reports. While the "Big Three" do not make up all of the motor vehicle sector in the United States, they are a healthy chunk of it. The loss of these corporations would likely result in an overall job loss well in excess of 2 million people. That does not include those in the steel or glass industries. Nor does it count those losses in auto dealerships, repairs and parts sales. Nor does it look at the loss of jobs in service industries (restaurant, retail, etc.) Nor does it count the hit on specific cities and regions of the country.

All of these losses would hit an economy already on the skids, and already hemorrhaging jobs at a horrendous rate. The failure of the major U.S. automotive industries would be a tsunami on an already drowning economy.

But perhaps the biggest long term loss would be the decimation of the manufacturing sector. The United States has already lost most of its manufacturing and industrial capacity due to the processes of outsourcing and off-shoring. We have sent it to Mexico, China, India, Eastern Europe, and other places. In the 1980s, as we made the shift from a manufacturing to a "service" economy, we sold off, and parted out, significant portions of out manufacturing capability. This included electronics, textiles, and heavy industry. Our manufacturing sector is a fading shadow of itself. As we have sold off capacity to make "real" things, we have become increasingly dependent on those who do.

There is a lot of talk about the impacts of our dependence on "foreign" oil, but virtually none on our dependence on "foreign" manufacturing. Why is that? Largely because the transnational corporations profit significantly from moving manufacturing out of the United States. The country has not profited. The tax burden has shifted more and more to the people. The people trying to earn a living (all of us) have not profited. In fact, we have seen an erosion of wages and benefits, and increasing personal indebtedness. But big media and big business are the same entities and we get the corporate view of the world. "We the people" rarely figure into that drama.

The "Big Three" are a significant part of our dwindling manufacturing capacity. Having that disappear, or be sold into the hands of international businesses, places us even further in jeopardy than we already are. It undermines our sovereignty and security. This is exactly the same situation that a number of nations are in where U.S. (and "rich" nation) manufacturing and extraction have control. The process undermines any nation's sovereignty and security. It is one of the major arguments against globalization as it has been structured. Now the United States could find itself in the same situation as Guatemala, or the Philippines, or a hundred other struggling nations.

Of course, one of the unmentionables is that one of the "Big Three" is not a U.S. company any longer. Chrysler is now owned by the German company Daimler. So part of the "bridge loan" - should it occur - will be going to bail out a German manufacturer. If Ford and GM also hit the tubes, it is likely that their loss will be filled by China, or Japan, or India, (or Dubai or the Saudis). Then, if they run into problems, they too may come hat in hand to the Congress for a bailout. But then that is perhaps the long term plan.

In a world increasingly structured around the corporation rather than the nation and people, perhaps our roles in the future will be to directly funnel tax dollars into the global corporate maw.

So, I argue, keep the behemoths alive and put big chains on the public support they receive. It is clear that the U.S. automakers have not been operating in either the public or national interest. On so many levels, there is just too much at stake, the consequences of their failure too high, to not act to keep them operating.

U.S. Census Bureau Manufacturing sub-sector Motor Vehicle Manufacturing (2002)
Sector Vehicle Manufacture Body & Trailers Parts Total
Businesses 374 2,151 5,728 8,253
Sales Value (x1,000) 241,284,704 24,373,366 204,110,290 469,768,360
Payroll (x1,000) 82,067,852 4,192,324 32,130,831 118,391,007
Paid Workers 1,676,198 127,099 728,134 2,531,431
Data from U.S Census Bureau - 2002 Census. Manufacturing - by subsector (drill down N336)
Posted by Rowan Wolf at November 22, 2008 11:53 AM
Comment #270779

Overall as much i hate to admit it, I do belive and agree that they do need the loans ( i refuse to call it a bailout, no need to give free money)

But one correction to make Chrylser and Dailmer broke up about a year and a half ago when Cerberus bought them off so technicially they are a Private American Company again.


Posted by: rhancheck at November 22, 2008 12:09 PM
Comment #270784

There is another market that employs many many of hundreds of thousands and That’s the Aftermarket the order warehouses and shops for aftermarket equipment. Big and small.

Posted by: Rodney Brown at November 22, 2008 12:38 PM
Comment #270795

Money purchasing American made cars circulates and strengthens the American economy.

Money purchasing foreign imports leaves the U.S. to circulate and strengthen foreign economies.

This is a no brainer folks! Make the loans, but conditional and with strings as to how that money is to be used WITH, WITH, WITH Criminal penalties for using the funds in ANY OTHER WAY!

Posted by: David R. Remer at November 22, 2008 3:13 PM
Comment #270803

So far in this discussion I have not heard any argument for or against letting one or all of the big three petition for bankruptcy protection.

I can see numerous benefits of bankruptcy over bail-out. Comments appreciated.

Posted by: Jim M at November 22, 2008 4:21 PM
Comment #270804

Thanks for the correction on Chrysler and Cerebus.

Posted by: rowan at November 22, 2008 4:34 PM
Comment #270806

Isn’t this a case of the market actually working?

Haven’t the American people made their choices based on quality and performance?

Doesn’t protectionism mean higher prices and lower quality for consumers?

Haven’t both political parties proclaimed Globalization a good thing?

If we are going to proclaim the corporations to big to fail, then give them the loans but,let’s not pretend that the government is going to hold them accountable for a plan. After all, they are to big to fail and they have been saying that since the 1970’s.

What happens if the customers still don’t want to buy their products or possibly can’t afford to buy them. If next year is another bad year for car sales will these corporations be back for more?

Posted by: jlw at November 22, 2008 4:40 PM
Comment #270807

If they are going to bailout GM, why not just do it by buying vehicles from them, which could be auctioned off by lottery for Volts, or sent off to Iraq in the case of Hummers, or they could simply get rid of them by sinking them offshore to create artificial reefs.

It’s the 21st century, and no company is more worthy of disappearing than GM, no bank is more worthy of disappearing than Citibank, which should be pronounced like CityWok in South Park. People who have ever run any of these bankrupt institutions should never be employed again, and US Marshalls should take them island hopping to collect reparations from their offshore accounts for the shareholders they have screwed.

Posted by: ohrealy at November 22, 2008 4:56 PM
Comment #270813


It’s a bit more complicated than what you say. Big three autos built overseas are not considered imports but what about those Honda’s and Toyota’s built by Americans?

What is an American care these days? I think the accurate definition is one assembled here with over 50% US parts. At least that would be my definition.

Posted by: Craig Holmes at November 22, 2008 10:09 PM
Comment #270814


The concern I have with bankruptcy is current pensioners and their medical benefits.

Posted by: Craig Holmes at November 22, 2008 10:11 PM
Comment #270818

Craig, and China is setting up its auto manufacturing just across the U.S. Border, as we speak, to capture a share of the market left open by the demise of the Big Three.

That money WILL NOT circulate in the U.S., but follow the other trillion dollars that now circulates and strengthens the Chinese economy.

It really is as simple as I explain it, when one takes into account all that is occurring adjacent to the Big Three’s cash and credit difficulty in this recessionary economy.

If this recession were not occurring, the Big Three would not need this cash help them through 2009. Though they likely would have still needed the retooling and redesign funds in the Energy Bill recently passed.

And after the recession subsides, if the Big Three are still here, they will make money again. If they aren’t here, China and France and Germany and Japan will fill the void with more production facilities in Mexico and S. America to export into the U.S.

As has been pointed out, there are no domestic auto manufacturers willing to buy out any of the Big Three and continue making cars. The recession is causing their own plants to be under-utilized, and ramping their production back up to capacity is a cheaper option than buying any of the Big Three on credit, even at a steep discount.

Reorganization under Bankruptcy will still result in as much as 80% sales loss for any of the Big Three that file, and open a void in market share for the Chinese and others to fill, while leaving 1 in 20 American workers without jobs or moved from full time to part time. That will be considerably more costly to our economy and tax payers than a 25 billion dollar loan that carries the Big Three through the recession to a more profitable economic afterward, jobs, pensions, and health care in tact for 1 in 10 American workers.

Posted by: David R. Remer at November 22, 2008 10:26 PM
Comment #270819

jlw, that is the best counter - argument to rescuing the Big Three that can be made. It is insufficient in light of millions of Americans who will suffer if they are allowed to fail.

This nation should not exist to serve the corporations. This nation’s political system does exist to appease the voters. That is why the rescue of the Big Three will go forward. And there will be conditions. Whether or not those conditions have teeth and are met, as you point out, remains to be seen.

Posted by: David R. Remer at November 22, 2008 10:30 PM
Comment #270820

Jim M said: “So far in this discussion I have not heard any argument for or against letting one or all of the big three petition for bankruptcy protection.”

See my reply to Craig, above, on that matter.

Posted by: David R. Remer at November 22, 2008 10:31 PM
Comment #270823


I appreciate that, but bankruptcy does not mean the end of the big three but simply reorganization. One could argue that bankruptcy is the best long term hope to prevent what you are stating.

Union contracts need to be renegotiated. I am struggling to figure out if it is Union benefits or the big three that we are debating. The big three have put our inferior products for years, (decades?).

Many airlines have gone through bankruptcy and it’s not hard to get a flight.

If it is truly Union benefits we are protecting, I’m for protecting those of retirees and taking a tough look at the rest. Obviously, Toyota and Honda can profitably build cars in the USA, the big three should be able to as well.

Posted by: Craig Holmes at November 23, 2008 12:54 AM
Comment #270824


The big three have been broken for decades seeing their market share decline. I think the fundamental reason is union contracts, that worked for many years in prior generations.

Unfortunately as much as I would love to see those contracts continue, it appears that taxpayers will need to subsidize them to keep these industries viable in economic weakness.

It’s very painful in that I come from a union household. The long term choice is to face reality and demand huge concessions or simply delay the inevitable.

Recessions force these tough choices. In fact that is one of the benefits long term to society. Weaker or foolish companies disappear for stronger wiser ones.

the same thing can be true of Nations.

I see your point, and agree with much of it. Please hear mine. The taxpayer has an interest at the table as well. How much do we need to chip in at the next recession when the problem only will be worse?

I also thing GM is an illustration of a point you have long made. As GM goes so goes America. GM makes a classic case of the age wave with high SS and medicare benefits. The choices the Big three are looking at are roughly the same America needs to make as a whole. I am for the same position for the country as a whole. Make certain retiree’s and near retiree’s are take care of as their plans are set. However, we really need to look at delaying retirement for those still with time to plan. The market is taking care of part of that right now.

It would be interesting to see what lower 401k balances do to the federal treasury. I can see pluses and minuses. Obviously many will be working longer which is a plus.

In addition, have you seen the long term market expectation on inflation? I think it’s near .7% for the next 30 years.

I wonder how that all fits together with lower returns, longer working lives, and lower inflation, assuming the markets are close to correct. (admittedly a big assumption). It will be interesting to watch the next CBO forecasts.

Posted by: Craig Holmes at November 23, 2008 1:17 AM
Comment #270825

Seems our economy is being held captive by the Wall street bankers. The big 3 claim to be in a credit squeeze caused by the Wall street bankers refusing to lend to the Big 3. Yet we continue to give more taxpayer money to the Wall street banks. If the bankers will not loan money to get the economy going again then perhaps the government should take the bail out money earmarked for the banks and loan it directly to the people wanting car loans as Ohrealy mentioned earlier. The drawback of course is the American consumer may decide to buy the Honda’s and Toyota’s instead. But then the consumer will have decided with their pocketbook on the issue.

Giving money directly to the Big 3 will only exacerbate the problem. If cars are not selling because people can’t qualify for loans the solution is the bottom up approach not giving money directly to the automakers. How can we be certain the money won’t be used to finance the global aspects of the companies and still have workers in this country laid off.

We will have the auto dealerships asking for handouts next as they are not selling cars nor receiving loans from the government to stay afloat as this Country continues the downhill slide into 3rd world status.
BTW with such bad prospects of getting the loans repaid by the Big 3 an appropriate interest rate should be charged, say 29 % or so. I wouldn’t mind a much lower rate for the start up companies attempting to produce electric cars and other high mileage vehicles. But I would insist that for every dollar given to the big 3 a dollar should go to the small start ups to encourage their innovation and potential future success.

As for the government subsidizing the autoworkers wages and pensions I would say that in lieu of the government providing the money we should have a considerable excise tax on the Chinese/Mexican autos as well as the Toyota’s and Honda’s made in this country by non unionized workers in right to work cheap states. After all the real problem is trade agreements that favor the corporations and hurt the American working people as well as the foreign automakers driving wages down in these plants. If we are going to continue down the same path of globalization for the benefit of corporate America at the expense of the American workers then why bail anyone, any company or any industry out. It is a losing effort as it will just continue to snowball until the government collapses along with the industries, companies and workers.

Posted by: j2t2 at November 23, 2008 2:40 AM
Comment #270832


Of course when you the converse to your argument is at the expense of the American consumer. American consumers have been huge beneficiaries to globalization.

I personally have no issues with Union or non union plants. They can be left to compete with each other, and both have important functions.

In this crisis we are borrowing enormous amounts of debt. I understand that this is a important function of federal government, to borrow in times of crisis like war, recession etc. It would be hard to find a critic for instance of the borrowing for WWII. Britain’s debt reached 270% of gdp after WWII or about 3.5 times ours of today, and faced a stagnant future for years. Even though we are no where near those levels we still have to be thoughtful.

I think what you are saying is that we should consider using US taxpayer dollars to protect unionism. I’m not sure I can go there with you.

Posted by: Craig Holmes at November 23, 2008 11:53 AM
Comment #270833

Craig, what is your source for that inflation projection? It is preposterous on its face.

First, there is no mathematical way to project average inflation over a 30 year period. Too many variables.

Second, as history demonstrates, when this kind of money production is infused into an economy for whatever reason, inflation explodes when the economy begins to grow.

Provide your source, so I can warn others of it fantasy projections.

I hear your point about allowing the free market to naturally select the best and longest lived enterprises to survive and succeed. But, that perspective REFUSES to consider the workers thrown onto the streets of America to beg for money along side their children in order to eat that day.

We tend to think that our government doesn’t allow that to happen to people. But, there are millions of workers and former workers whose jobs provided no benefits, no unemployment insurance, and no health insurance, and no retirement savings plan. These are the first to be affected by a faltering economy.

They are hit doubly hard by the fact that charitable giving drops precipitously in times like these. The free market dismisses human suffering in its calculations. Voters don’t and won’t in a democratic society with any heart or compassion for their fellow citizen.

And that is why a pure free market solution is not, and will not be, in the offing by Republicans or Democrats. You would have to look to the Libertarian Party to be in control of government in order to see policy which sanctions pure free market approaches, which neither seek to minimize excesses nor deficits in human welfare.

But, promoting the general welfare of the people of this nation is one of the foremost goals of our founding papers and documents. No where in our founding documents does it say that free market approaches without conscience should supercede the general welfare of the people. This nation is its people. Without the people, this nation is just a piece of land mass.

The welfare of the people is the primary objective of people themselves and their government by virtue of its being a democratic republic, wherein the welfare of the people determine whether or not those fulfilling roles in the republic get to keep those roles or not.

Posted by: David R. Remer at November 23, 2008 1:35 PM
Comment #270834


Inflation source:

The markets are projecting very low inflation for the next thirty years. Just subtract the 30 year TIPS yield from the 30 year treasury yield. 30 year treasuries are at 3.69% yield and TIPS are at 3.05%. This means the market is predicting a thirty year inflation rate today of .64%. That looks pretty irrational to me, but it is what the market is predicting.

You will recall for your readers that TIPS includes adding CPI to the balance of the account so inflation is taken out of the equation.

You can go ahead all you want with warning readers about fantasy of predictions and all, as no one I remember was taking about oil below $50/barrel this soon as we saw this week. Long term predictions are just that, predictions. History is littered with long term and short term predictions being weigh off. Count me as a supporter of that position.

What is fact is that the market is predicting low inflation for 30 years. In fact the market is predicting inflation of .19% for the next 10 years. It is saying we face a decade like Japan has just gone through.

What my question is however is what the world might look like should the market be correct? There is also such a thing as self fulfilling prophecy.

I will answer your next point separately.

Posted by: Craig Holmes at November 23, 2008 1:55 PM
Comment #270836


As for throwing workers out to beg for bread. I don’t refuse at all to consider human suffering. You will notice that I am for making certain that pensioners are protected.

Of course in recessions there is much suffering because of job loss whether from the big three or elsewhere. I am fine with increasing funding for unemployment insurance as well.

I don’t accept the premise that the big three will not survive. I would offer the airline industry as an example. Here is a list of recent airline bankruptcies:

* August 11, 2002 - US Airways enters protection
* December 9, 2002 - United Airlines under protection
* March 31, 2003 - US Airways emerges
* April 1, 2003 - Air Canada files
* September 12, 2004 - US Airways re-files for protection
* September 30, 2004 - Air Canada emerges
* December 30, 2004 - Aloha Airlines files
* September 14, 2005 - Northwest Airlines files
* September 14, 2005 - Delta Air Lines files, putting 4 of the top 7 carriers in the United States under bankruptcy protection
* September 27, 2005 - US Airways emerges, in conjunction with its acquisition by America West
* February 1, 2006 - United Airlines emerges
* February 17, 2006 - Aloha Airlines emerges
* April 30, 2007-Delta Airlines emerges
* May 31, 2007 - Northwest Airlines emerges
* Dec 26, 2007 - Maxjet Airways files
* March 31, 2008 - Aloha Airlines files and discontinues passenger transporting operations
* April 03, 2008 - ATA Airlines files and discontinues operations
* April 05, 2008 - Skybus Airlines files and discontinues operations
* April 10, 2008 - Frontier Airlines files
* April 26, 2008 - Eos Airlines files and discontinues operations

We still have a domestic airline industry. We are flying to your state Texas with no difficulty next month for my son’s wedding. (How far are you from dallas/ft worth?)

I am certainly not for the destruction of the big three or their unions. I am for their reorganization to retool for the next economy. Actually, I suppose it could happen one way or the other. It could happen with Congress demanding changes before a bailout, or through the courts. I would be opposed to money without dramatic changes.

By the way, I think the same way about the financial industry. My tax dollars used, means as a tax payer I have a right to talk to business about their practices and regulate them. This recent episode is proof QED of the need for additional oversight. I only hope Congress is wise in how they proceed to give appropriate oversight that increases long term economic growth that benefits us all. Congress unfortunately has just as much propensity to screw things up as the financial industry. checks and balances.

Posted by: Craig Holmes at November 23, 2008 2:08 PM
Comment #270837


Just for clarification. Almost no one is for pure market solutions. It is all a matter of degrees. None are advocating return to slavery, or child labor. Everyone rational believes government has a role in economics. We differ on where to set the thermostat.

Posted by: Craig Holmes at November 23, 2008 2:14 PM
Comment #270856

Lets see. If they are allowed to bankrupt they will stick billions of pension liabilities on the tax payers at pennies on the dollar to the pensioners.Time to change that law,or court ruling as it were, so that pensioners are at the top of the list for payment for any company that bankrupts. Yeah, even over golden parachutes.
We should lend them the money conditionally and that money,as well as the money lent to the banks, should be scheduled for repayment,with interest, at about 2018. That would be just in time to start paying back SS bonds. Funny how Bushcos plan to privatize SS has turned into SS socializing the private sector.Is abject failure more prone to irony than success?
Some other help that they, as well as their workers should get are changes in trade policy to give them the same playing field the importers get here. This is not against free trade but fair trade.Even if they manage to start producing better and more efficient cars it won’t help if they cannot sell them because of unfair competition in the US and abroad. Some changes in trade practices are a big reason Crysler was able to emerge stronger after the Reagan bailout.

Posted by: bills at November 24, 2008 7:33 AM
Comment #270857

This could also be an opportunity for BHO to cut a deal with the big three and the UAW to shift the medical responsibility for past and current employess over to whatever entity will be created in his upcomming healthcare proposal , thusly reducing the Big 3s huge liability and helping politically to pass the plan.

Posted by: bills at November 24, 2008 7:40 AM
Comment #270860

Bills, Carter did it,On September 7, 1979, The Chrysler Corporation petitioned the United States government for US$1.5 billion in loan guarantees to avoid bankruptcy. At the same time former Ford executive Lee Iacocca was brought in as CEO. He proved to be a capable public spokesman, appearing in advertisements to advise customers that “If you find a better car, buy it.” He would also provide a rallying point for Japan-bashing and instilling pride in American products. His book Talking Straight was a response to Akio Morita’s Made in Japan.

The United States Congress reluctantly passed the “Chrysler Corporation Loan Guarantee Act of 1979” (Public Law 96-185) on December 20, 1979 (signed into law by President Jimmy Carter on January 7, 1980

Posted by: Rodney Brown at November 24, 2008 10:12 AM
Comment #270861

>Some changes in trade practices are a big reason Crysler was able to emerge stronger after the Reagan bailout.
Posted by: bills at November 24, 2008 07:33 AM


Is the Chrysler, that you speak of, the same Chrysler that was being considered for take-over by GM? The same Chrysler that just went before Congress with tears in its eyes and its hand out for the dole? Is that the one that came out stronger after its first government helping hand?


Posted by: Marysdude at November 24, 2008 10:16 AM
Comment #270862

I guess what I’m trying to say is…if Chrysler grew STRONGER after the government stepped in, what does that mean for the government stepping in for all three of them now? Does it mean that a few years from now they will need another bailout? Will that have anything to do with their CEOs wanting another shot at government monies and a shot at their own golden parachute?

Posted by: Marysdude at November 24, 2008 10:19 AM
Comment #270863


It currently costs the big three about $30/hr more in total labor costs than Honda, Toyota and Nissan’s USA production facilities.

Trade policy will not change those numbers.

I will freely admit that a great deal of that cost is for retired members of the UAW. However it is an economic reality that must be faced.

Posted by: Craig Holmes at November 24, 2008 10:27 AM
Comment #270864

Perhaps we’d be better off if the government stayed out of the big three, and gave 25 billion to Honda, Toyota et al, for gearing up energy efficient vehicles. wouldn’t that make more sense in the long run?

Our big three are just as much foreign corporations as those others…how many major parts of GM, Ford,and Chrysler vehicles are manufactured in the United States, and how much of their occasional profits are put back into the American economy?

Giving loans and monies to corporations that will benefit our own economy and lives makes more sense to me.

Posted by: Marysdude at November 24, 2008 10:28 AM
Comment #270866

2007 Honda CEO,Honda is also looking at building V-6 diesel powered trucks and SUVs.
“Diesel is more affordable and a better solution than a hybrid for light trucks in the U.S. We want to use the new four cylinder diesel for the U.S. market [the super-clean California-legal engine that uses Honda’s revolutionary new catalyst technology will be available in Accord], but that doesn’t provide enough power for light trucks, so we are working on a V-6 as well.”

Posted by: Rodney Brown at November 24, 2008 10:48 AM
Comment #270868

new 2009 ford f150. geez no cleaner burning hi mpg fuel sipping V6 diesel. All big gas hog V8s.
Engine Specifications
Engine type 4.6L 2-valve V8 4.6L 3-valve V8 5.4L 3-valve V8
Engine electronics Electronic ignition system, EEC-V computer Electronic ignition system, EEC-V computer Electronic ignition system, EEC-V computer
Displacement (cu. in.) 281 CID 281 CID 330 CID
Horsepower (SAE net@rpm) 248@4,750 292@5,700 310@5,000-gas / 320@5,000-E85
Torque (lb.-ft. @rpm) 294@4000 320@4000 365@3,500-gas / 390@3,500-E85
Compression ratio 9.4:1 9.8:1 9.8:1
Bore x stroke (in.) 3.55x3.54 3.55x3.55 3.55x4.17
Main bearings 5 5 5
Valve lifters Hydraulic, roller finger Hydraulic, roller finger Hydraulic, roller finger
Fuel delivery Sequential multi-port electronic injection Sequential multi-port electronic injection Sequential multi-port electronic injection
Recommended fuel Unleaded regular Unleaded regular Unleaded regular/E85
Fuel Economy 4x2 14 City/19 HWY 4x4 14 City/18 HWY 4x2 15 City/20 HWY 4x4 14 City/19 HWY 4x2 14 City/20 HWY 4x4 14 City/18 HWY

Posted by: Rodney Brown at November 24, 2008 11:09 AM
Comment #270869

oops there biggest Ford engine is a E85 Bigger gas / Ethanol hog V8. / 320@5,000-E85

Posted by: Rodney Brown at November 24, 2008 11:36 AM
Comment #270870

2009 Honda Accord Diesel Will Achieve Over 52 -56 mpg

Posted by: Rodney Brown at November 24, 2008 12:01 PM
Comment #270879

my 2008 grand prix: v6 and when i turn it on, it purr’s. how could anyone in their right mind by a foreign car? states 28 mpg, but i actually get 34 (cruise control i guess), but the v6’s that chevy puts out is the backbone of america. and these cars are $10,000 cheaper than the toyotas. i am not sure why they don’t state facts. show a pontiac grand prix being turned on next to a for. car - no brainer.

that being said, if they file for bankruptcy my contract for maintenance is out the window. but worse my 70 year old mother in law is out her widow pension, her healthcare, everything her husband had secured her. not to mention the stocks are worthless right now.

if you can not see the harm of doing nothing then you are probably one of bushes compassionate conservatives. of course, we haven’t seen any compassion here below $100,000/year. since the clinton years.

and also - did you see the president bragging that he had brought in more trade deficits than ever. 60% increase in lopsiddedd trading w/china? this is what he is proud of. mr. president, please forward all calls, letters, and decisions to barack obama immediately.

Posted by: bluebuss at November 24, 2008 2:54 PM
Comment #270880

Who will buy a car from a company in Chapter 11? No one.

Posted by: Max at November 24, 2008 3:00 PM
Comment #270881

that’s right. no one will buy a car from a bankrupt company. how can we let that happen. they have already closed the delphi plant in indiana, and lost 800 jobs. this is happening everywhere everyday. we can bail out the banks, insurance companies, fannie and freddie but not gm? am i missing something? we can not loan them money to preserve mid america jobs? i can’t think of nothing more important than saving jobs right now, and these are make or brake american jobs too.

is the hold up on helping them because it may help too many americans, and not just the top 2%? think about it.

Posted by: bluebuss at November 24, 2008 3:08 PM
Comment #270883

Craig, I find no such inflation data on the Bloomberg site. Got a more precise URL for the info?

You don’t print and borrow trillions of dollars into an economy and keep a low inflation rate when that economy picks up. That figure you quote is irrelevant to reality and what we know about how money valuation works.

Craig, your airline analogy is apples and oranges. One can’t import foreign airline trips to local destinations. Get real, Craig. At least get logical. We can import cars till the cows come home, effectively eliminating any need for domestic auto production. Of course there are incredible downsides to such a scenario.

But, the airlines bailout was not even remotely analogous to what is faced with a collapse of the domestic auto industry.

Posted by: David R. Remer at November 24, 2008 4:17 PM
Comment #270888


Again, subtract the TIPS rate from the regular rate to get the market prediction.

In terms of your comment about trillions of dollars and inflation, Japan has been doing this same thing for a decade. The reason is that you do so to prevent/combat disinflation.

In terms of your comments about the auto industry, there is currently a $30/hr difference between the big three and foreign owned domestically built auto manufacturing. This will be dealt with one way or another over time. In defense of the big three much of this expense is because of an older retired workforce. Economics doesn’t care. That fact is going to change over time. We can deal with it now, or later, our choice. US Built Honda, Toyota and Nissan plants are going to take on larger and larger market share over time unless serious action is taken. My own thought is to assist with retiree’s benefits, and let the big three figure out the rest for themselves. This level’s the playing field. If they can’t make it with that then bankruptcy looks like a reasonable approach.

Posted by: Craig Holmes at November 24, 2008 6:05 PM
Comment #270895

Blue,it was a good Old engine the 3.8 litre the BOP Buick- olds- Pontiac It’s roots started in the early 1960s they sold over 20 some million of them you have the last one .2008 will be the Pontiac Grand Prix’s last year. The model was replaced by the new G8

Posted by: Rodney Brown at November 24, 2008 8:37 PM
Comment #270901

Citi got it’s bailout over the weekend. Now they can issue another line of credit cards and still have $400 million left over to put their name on a sports stadium.

How much of the car makers bailout will be used to develop new race cars for NASCAR?

A farm family in Colorado invited the public to come to their farm and glean their fields for left over vegetables. 40,000 people showed up.

Posted by: jlw at November 24, 2008 9:55 PM
Comment #270902

We don’t make our clothes, or our shoes or our pots and pans any more but, by God we still make our own cars.

My old 1995 Ford was assembled in Mexico from parts manufactured in South Korea.

Posted by: jlw at November 24, 2008 10:10 PM
Comment #270905

>My old 1995 Ford was assembled in Mexico from parts manufactured in South Korea.
Posted by: jlw at November 24, 2008 10:10 PM

That’s what I’m talking about…the big three are no longer American companies, and they don’t manufacture American cars, and they are so poorly managed they need halp getting up in the mornings.

Why not give a bundle to the Japanese and S Korean auto companies. They have shown innovation, quality of product and reliability of leadership. They could be challenged to evolve into energy efficient corporations with energy efficient products.

It seems to me that challenging them would be smarter, in the long run, than throwing money at our bunch. Chrysler was salvaged by the government several years ago, and they are back for seconds…poo! Give the money to those who are willing to make a difference.

Posted by: Marysdude at November 24, 2008 10:45 PM
Comment #270906

Rowan titled this piece, ‘Save the U.S. Auto Industry?’

My answer…it can’t be saved because it don’t want to be saved. It has been committing suicide for forty or more years…not even injections of money can save its rotting carcass.

Posted by: Marysdude at November 24, 2008 10:50 PM
Comment #270910

Craig, Obama is going to deal with that wage disparity with universal health care coverage which will eventually relieve employers of having to pay health care premiums as part of the cost of their product.

It’s a solution that is long overdue. Can’t blame the unions for wanting health care. You can blame conservatives who refuse to accept that they can’t have their cake and eat it too. If we are to remain competitive, we must adopt universal health care like our competitor’s nation’s, and relieve our businesses of the majority of such wage and employer cost disparity between our businesses and theirs.

And like I said before, decade projections of inflation rate are meaningless. Such measures are geared to facilitate trading today, and are in no way designed to actually measure projected inflation years out. Too many variables to make such measures meaningful, and the simple fact that Bloomberg’s stats don’t seem to even take into account the effect of trillions of dollars of infusion cash infusion into the economy by our Treasury’s printing presses, says it all.

Ask a Brazilian business person what debt and printing money to cover that borrowing means in terms of inflation. They will immediately recall a time in their past when wheel barrows of money were required to buy groceries for the week.

Our inflation picture for when our economic engine fires on all cylinders again doesn’t portend such a bleak picture, yet. But we better not take our eye off the fact that the Government is out on the limb for and additional 7 trillion dollars of new printed money if things go really badly in the near term future of the next few years. That 7 trillion in handouts, loan guarantees, insurance stop backs, and shares in corporations committed to in just the last year is an animal that will seek to free itself of its leash. Buddha help us all if it chews through it.

I can’t think of a better reason to make damn sure Sarah Palin never runs for the White House. She would set that beast free in a heart beat and never realize what she was doing or what consequences would result.

Posted by: David R. Remer at November 25, 2008 4:20 AM
Comment #270911

Rodney Brown
I stand corrected. I believe it was Reagan that tightened trads policy subsequently.
Crysler was doing well. They managed to pay off the loan at ant rate. They have since blown it of course.
Craige Holmes
An even better way to level the playing field, and one we might even see under under BHO and a Dem congress, is a repeal or modification of the Taft-Hartly laws that keep the low wage states where forign car makers love to set up their plants poor on purpose.

Posted by: bills at November 25, 2008 6:27 AM
Comment #270913

>Crysler was doing well. They managed to pay off the loan at ant rate. They have since blown it of course.
Posted by: bills at November 25, 2008 06:27 AM


Yeah, that’s what I’m talking about. They took our help…paid us back, with interest…then screwed the pooch…again. Pouring money into that sink hole doesn’t seem too smart. Pour it into something that might do us some good into the future…the big three ain’t it…Toyota, Honda, etal, are proven successes and are innovative, have already been working hard on eco-friendly vehicles and energy efficiency…that would seem to be the future, not Chrysler, Ford or GM…they would seem to be the poor relatives of the past.

Posted by: Marysdude at November 25, 2008 8:38 AM
Comment #270928


Craig, Obama is going to deal with that wage disparity with universal health care coverage which will eventually relieve employers of having to pay health care premiums as part of the cost of their product.

That will not address the issue. The $30/hr figure is the difference between Honda, Toytota and Nissan’s USA wages and the big three. All wages are for US employees.

And like I said before, decade projections of inflation rate are meaningless. Such measures are geared to facilitate trading today, and are in no way designed to actually measure projected inflation years out. Too many variables to make such measures meaningful, and the simple fact that Bloomberg’s stats don’t seem to even take into account the effect of trillions of dollars of infusion cash infusion into the economy by our Treasury’s printing presses, says it all.

It’s really not Bloombergs stats. Bloomberg is mearly reporting data. The key fact is the difference between the TIPS rate and US Treasuries. It is investors who are predicting low inflation. At the minimum it means that low inflation expectations are “well anchored” in investors mindset.

Even without the TIPS US Treasury comparison, there is not chance investors are concerned about inflation with 30 year treasuries under 4% yield. A greater concern at this time is the opposite. It’s preventing declining prices. The battle is right now on the other side of the coin.

I think that a point you should be making is that the old saying as goes GM so goes America has some truth to it. I think the big three are caught in a situation with declining market share and an aging workforce. This issue of the big three can be a laboratory for the rest of the country concerning ours and Europe’s future. The big three are making your point about America. You should be trumpeting that point.

When I think back to many of our previous debates,you have consistently said America is in deep trouble if it doesn’t get it’s house in order. The big three and UAW made decisions in good faith over the years that have brought them to this point, as have Congress and different presidents. Roll history ahead without addressing the issues, are isn’t America in the same place as the big three?

Posted by: Craig Holmes at November 25, 2008 11:53 AM
Comment #270931

An interesting link on deflation:

I think this may be one indicator that things are much worse than the general press and talking heads are letting on…

Posted by: googlumpugus at November 25, 2008 12:14 PM
Comment #270939

Bill S.

An even better way to level the playing field, and one we might even see under under BHO and a Dem congress, is a repeal or modification of the Taft-Hartly laws that keep the low wage states where forign car makers love to set up their plants poor on purpose.

I would be opposed to that. Unions are an important part of our financial fabric. They should be able to compete head to head. Denying right to work states would be a loss for the consumer who should be able to buy these products at competitive prices.

Unions should be able to compete just fine.

Posted by: Craig Holmes at November 25, 2008 1:25 PM
Comment #270941

jlw said ” We don’t make our clothes, or our shoes or our pots and pans any more but, by God we still make our own cars.

My old 1995 Ford was assembled in Mexico from parts manufactured in South Korea.”I agree we were sold out.

Posted by: Rodney Brown at November 25, 2008 1:51 PM
Comment #270943

Craig: I recently watched a show on India’s virgining auto industry. There is a huge pent-up demand. The same is true in China. Both nations with populations over a billion people, now have a middle class that is the equivalent of our entire population. They are tired of Americans shoving their materialism in their faces and as one Indian put it, “It is our turn now.”

Don’t you think that is going to have a major effect on inflation?

IMO, the only way that inflation is going to average .7 percent over the next 30 years is if the world does actually experience another great depression.

Marysdude and Rodney: I am positive that my car has some domestic content but, those who claim that many domestic content producers will lose jobs is exagereate to some extent. I would like to see the facts on how much of the manufactured content going into the big three’s products is made in America and how much has been outsourced to other countries.

Up until the corporations drafted the China Trade Agreement and other, similar agreements, industry and government touted the American workers as the best most productive workers in the world. Of course, that all ended with $180 per month benefitless wages.

Posted by: jlw at November 25, 2008 3:12 PM
Comment #270945

in 2007, Russia, Brazil, India and China saw the most rapid growth, I know Brazil makes clean cars, but the other three . ?

Posted by: Rodney Brown at November 25, 2008 3:33 PM
Comment #270946

Posted by: Rodney Brown at November 25, 2008 3:35 PM
Comment #270947


I agree with you about inflation. Remember Greenspan’s famous phrase “irrational exuberance”. Now we have the reverse. There is irrational pessimism so great that people are investing into 30 year treasuries at 3.66%.

If you notice my comments, what I am saying is not that I am predicting .7% inflation but that the markets are predicting .7% inflation. I personally don’t have a clue. In such cases I tend to believe that markets move back to the mean over time.

Posted by: Craig Holmes at November 25, 2008 3:44 PM
Comment #270951


If there is pent up demand, why is China injecting a stimulus package of it’s own?
Yes, I agree there is a growing (or at least will be one) market there sometime down the road, but not right now. Inflation is not an issue here or there. Deflation is.

Posted by: googlumpugus at November 25, 2008 4:12 PM
Comment #270958


How many major parts of foreign company made vehicles that are built in America have less major components that are made in America than the big three use? Does Honda import more parts for their American built cars than Ford does for theirs?

American made just ain’t American made, so tossing our monies at major foreign corporations might be the best idea yet.

Posted by: Marysdude at November 25, 2008 4:54 PM
Comment #270959

I just was wondering how much Cheap oil has had an effect on this inflation -deflation debate.

Posted by: Rodney Brown at November 25, 2008 5:15 PM
Comment #270961


I think cheap oil makes a great point in the debate which is how wrong we all can be. Only 4 months ago oil was $147/barrel, now about $50.

As smart as we all are, I know of no one who predicted oil at these prices this fast.

That is why I am careful to point out the markets are predicting low inflation not myself.

Back in 1999 the average investor as measured in surveys expected a return of something like 20% a year on stocks.

Remember just a very short time ago, intelligent people made some very very stupid bets on financials because of their expectations about real estate.

If someone were to put a gun to my head and force me to predict how we will look back on these times, I would be forced to say, the same as 1999 only in reverse, (inverse?). Right now we have successfully moved the bubble from tech stocks, to real estate to commodities and now to US Treasuries and the dollar.

This whop a mole economy where we see a bubble and whop it had better end, or God help us the pessimist will be right!!

Posted by: Craig Holmes at November 25, 2008 5:25 PM
Comment #270962

Goog: The deal made by our government, on behalf of our corporations and companies, with the communist Chinese government was that we would move much of our manufacturing base to China and in return, our consumers would support their expansion. Unfortunately, our consumers are not at this time, able to uphold the agreement made on their behalf by our government.

In addition, the American consumers were promised that the products would be less expensive and that really never paned out. Instead, the only things that are cheaper are the quality and safety.

I did mention depression as a possible means of achieving that .7% inflation rate. Isn’t deflation usually a precurssor of depression.

Deflation is definitely a problem, especially in the housing market. But, the price of housing is still above where it was just a few years ago when the inflation in the market expanded tremendously.

I really don’t feel sorry for those banks who issued morgages based on the grossly inflated prices. Nor do if feel much sorrow for those home owners who said, oh my, my house is worth nearly twice as much as it was last year. I am going to refinance and get one of those low interest, variable rate morgages. What they did is screw over many people who were prudent, who did not seek advantage in that market.

All during the runup in the price of oil, some experts in the field, I believe Boone Pickens was one of them, were saying that based on demand, the price of oil should be around $50 per barrel.

While the housing market is the primary cause of our current financial problems, the grossly inflated runup in the price of oil was a major contributing factor.

I personally believe that the drop in oil has more to do with the several pieces of anti-oil company legislation the democrats have pending in the Congress than does the modest drop in demand. Perhaps if they act like good little boys, the liberals will give them the oil leases they are after.

The market, as far as I am concerned, should be shut down, those who have been running it should replaced and new legislation to govern it should be implemented before it is reopened. The same for the SEC. It would also be nice if we could do the same with the government, shut it down and replace the politicians who got us into this.

Many warnings were issued about the housing market. They were ignored by everyone involved. Then came a shot out of the dark in September. Our whole economy is about to go under unless we have a huge bailout. But, don’t worry, we will let the unborn worry about the cost. All of you are going to get a tax break. Do us and the Chinese a favor, go shopping.

Our greed and our hedonism may not get us this time but, it will eventually. Maybe the market knows this and thus the .7% inflation prediction.

Perhaps many of my baby boomer generation are hoping that the crap finally hits the fan after we are gone from this earth. We certainly aren’t going to pay off the debt that our government has incurred on our behalf.

Posted by: jlw at November 25, 2008 5:59 PM
Comment #270964


Here are my markers on debt.

After WWII we were over 100% of gdp on debt. Japan is now there.

After WWII Britain was at 280% of GDP on debt or about 4 times where we are now. They lost their empire but got to keep their country and eventually worked their way out of it.

After WWI Germany had a debt imposed on it equal to 350% of gdp. or about 5 times where we are now. That level of debt brought in Hitler.

So here are my numbers.

First percentage is less than 100, we are fine.

Over 100% time for serious action

Over 200% military comes home.

Over 300% good bye America.

We are still way too high however. If we are at 70% now, that means there isn’t much for a real national defense emergency. It’s not the deficit spending in times like this that hurt us, but rather the deficit spending in good times.

Hopefully this crisis will change us to be come a people with less debt over time.

Posted by: Craig Holmes at November 25, 2008 6:41 PM
Comment #270968

jlw said “All during the runup in the price of oil, some experts in the field, I believe Boone Pickens was one of them, were saying that based on demand, the price of oil should be around $50 per barrel.” I remember him saying to congress back in july 2008 that oil could hit $300.I thought they were pushing it at $150. something had to give.

Posted by: Rodney Brown at November 25, 2008 8:11 PM
Comment #270972

Off subject;

A lot of you guys hammered me for implying that Tiffani Martin was a plant. Her last article in the liberal column was almost a month ago. Where is Tiffani?

Posted by: Oldguy at November 25, 2008 9:33 PM
Comment #270975

Tiffani lost patience with those who called her names, and decided it wasn’t worth the guff she was taking…after all, she wasn’t running for office…

Posted by: Marysdude at November 25, 2008 10:33 PM
Comment #270978

“Off subject;

A lot of you guys hammered me for implying that Tiffani Martin was a plant. Her last article in the liberal column was almost a month ago. Where is Tiffani?”

“Posted by: Oldguy at November 25, 2008 09:33 PM ” .Catch any Fish .

Posted by: Rodney Brown at November 25, 2008 10:49 PM
Comment #270982


Caught a few. Headed to FL in a few weeks. Be back in the spring.

Posted by: Oldguy at November 26, 2008 12:22 AM
Comment #270984

Unions can compete on a level playing field. They should be allowed to negotiate closed shops without government interference in all 50 states and they are not. That is the main reason we have low wage states. Wages are kept down for everybody in these states,not just union members. Another result of this is that because taxes are based on income, people in higher wage wage states basically “donate” to the so called “right to work states”. That is why states like California send more to the federal government than they recieve in benefits and states like Mississippi recieve more than they pay.
Personally I do not care wether the owners of the company are American, Japanese or Martian for that matter. If their workers are not getting a fair shake they do not deserve access to the American market.
I am hopeful that with BHO we can at least expect him to replace the union-busting schills Bush packed the NLRB with with people that are willing to perform the task the board was created for . That along with some long over due changes to the labor code should make it a lot easier for the UAW to sign contracts with Toyota et al. Your 30$ an hour disparity should disapear pretty quickly especially with healthcare reform.

Posted by: bills at November 26, 2008 4:13 AM
Comment #271005

Drive by a school parking lot or a church when there is an event. 80% of the vehicles are minivans and 90% of those are Honda Odyssey or Toyota Sienna.

That’s your big 3 problem right there.

Posted by: Schwamp at November 26, 2008 12:05 PM
Comment #271032


I think the reason some states like California, New York etc pay more taxes is because they are Urban verses rural-small town. Urban centers have higher wages, and demand higher services to function. It is an entirely different culture and mindset.

Posted by: Craig Holmes at November 26, 2008 7:57 PM
Comment #271105

To Late?

Posted by: Rodney Brown at November 28, 2008 6:47 PM
Comment #271120

No, No. I was a California carpenter making about 50,000 a year. I was paying more in taxes than a carpenter in the South making 20,000 because I was paying on a higher income at a higher rate.
I am curious as to the hourly rate for VW. They are near a 100% union and going great guns.

Posted by: BillS at November 29, 2008 7:23 AM
Comment #271158

A Fresh clean look at Diesel, wow a mid size SUV that gets 30 mpg city and over 40 mpg on the highway. Kia- Hyundai- and Nissan Maxima That 3.0 litre Diesel from renault is a gem it can run on B30 and higher!

Posted by: Rodney Brown at November 29, 2008 10:02 PM
Comment #271164


The south is more rural than California. Very different mindset. I think it is important in our country to be open to different mindsets and not impose one form of morality on the other. They should be allowed finanical freedom.

Posted by: Craig Holmes at November 29, 2008 11:27 PM
Comment #271178

The Big Three can easily make a comeback if they can simply get a couple of cars to rank in the top 1-2 in reliability ratings. Most people I know do not buy Hondas or Toyotas for their great looks.

Posted by: Tom at November 30, 2008 9:30 AM
Comment #271182

“The Big Three can easily make a comeback if they can simply get a couple of cars to rank in the top 1-2 in reliability ratings. Most people I know do not buy Hondas or Toyotas for their great looks.”

Posted by: Tom at November 30, 2008 09:30 AM
YEP, I bought my Wife a brand new 1997 Mercury Mystique,Loaded with everything, Ford spent 6 billion on that platform and the Magizines were saying it was A 10, That Pile of junk was in the dealer over sixty times in four years i have a file on it, I took it and traded it for a brand new honda accord ex and it has been the best car she has ever had. the scoop is that ford quit making them because of slow sales ie cheap oil BS.

Posted by: Rodney Brown at November 30, 2008 11:37 AM
Comment #271226

they should fix the broken heart of detroit with that bailout money, its not like the companies are even american by this point!

has anyone SEEN MOTOR CITY LATELY? god, i about cried seeing every other home burned up because people needed their insurance money so badly when their house was worth nothing when Ford dissipated from detroit.

Posted by: Emily at December 1, 2008 9:28 AM
Comment #271244

1989-Roger & Me, Almost Twenty years,

Posted by: Rodney Brown at December 1, 2008 11:43 AM
Comment #271289

Flash ford is selling Volvo, ” For the 2009 model year, Ford and Volvo led all brands with 16 vehicles on the Insurance Institute for Highway Safety’s list of the safest cars.

But despite its high safety ratings and strong reputation as a family vehicle brand, Volvo captured 0.5 percent of the market through October, compared with 0.8 percent for the same period last year. That accounts for 3.7 percent of Ford’s total sales this year.

Even with tight credit worldwide, Ford could pull off a sale because Volvo would be attractive to automakers in emerging markets such as Tata Motors Ltd. of India, said Kevin Tynan, an analyst with New York-based Argus Research Corp.

“There’s probably enough money out there for either an emerging market automaker or somebody looking to get a brand with a little bit of cache to it,” Tynan said.

Tata in March purchased Jaguar and Land Rover from Ford for $1.7 billion. The Volvo brand would complement Tata’s two luxury brands, Tynan said”.

Posted by: Rodney Brown at December 1, 2008 5:11 PM
Comment #271310

It is truly a ‘one world order’…Ford, and American company has and will sell Jaguar and Land Rover and Volvo…every one of which would be considered vehicles of foreign make. Who told the lie about the ‘big three’ folding hurting America? They are not American companies any more.

Posted by: Marysdude at December 1, 2008 8:53 PM
Comment #271311

The title of this post is, ‘Save the U.S. Auto Industry?’

I say it is impossible to save…there is no U.S. Auto Industry…it was lost a long time ago.

EJN, I’m about ready to join your revolution.

Posted by: Marysdude at December 1, 2008 8:56 PM
Comment #271370

Why not make our auto industry more competitive by taking over the medical insurance costs for workers and retirees? Should help them with their current financial problems and be a move toward universal health coverage.

Posted by: Lois Lequyea at December 3, 2008 9:12 AM
Comment #271438

As long as its just a LOAN I am OK with it but I think the Executives need to surrender their personal company stock holding as colladeral for the loan from us!

Posted by: Mark at December 4, 2008 12:25 PM
Comment #271472

GM, Chrysler say could reconsider merger.

Posted by: Rodney Brown at December 4, 2008 5:48 PM
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