Third Party & Independents Archives

Great Collapse 2008: What Does Detroit Have To Do With It?

I’m happy for the autoworkers that President Bush did what Congress could not have and should not have - he gave US automakers - Chrysler and GM specifically - a $17B bridge loan. (see Reuters: ). At the same time, I’m disappointed in a Republican president who proves, once again just how hypocritical America is. The GOP has mouthed off thousands of times that the market has to take its course, and that has turned out to be a philosophy that works only during boom times.

Apparently, it is okay to intervene in business when times are tough. I understand from another version of this story from National Public Radio (NPR) that Bush proclaimed that he was conflicted because creating a loan goes against his economic principles, yet he felt he had to act. That means his economic principles aren't sound nor sustainable.

The time to act was years ago when times were good - with a sizzling economy and an even hotter housing market. Of course that is hindsight, but it is a lesson learned many decades ago and something that most economists understand - actions by Congress always have long term effects, even when the intent is short term. According to most experts the epicenter of this crisis was in the sub-prime home lending sector and it has since spread like a cancer throughout the rest of the economy. This could have been avoided with a little jurisprudence on the part of banks and lending institutions, and the governing body that regulates them - the Federal Deposit Insurance Corporation (FDIC).

Not only did the FDIC overlook, dismiss, or failed to see the errors of these risky loans, but Congress didn't ask them to look into it, the president certainly never asked for any accountability, and neither the Fed nor the Treasury took any interest, but the very bankers who made these loans came up with securities based on these loans that were so complicated even they couldn't understand it. That left only one person - the consumer - with the sole power to say 'no', which he/she had no reason to since they were asking for the loan in the first place. And thus we find ourselves in this mess. Now, we the people of the United States of America are bailing out the banks, wanna-be banks, and car makers first. If the epicenter is the consumer, why is Corporate America getting help first?

Let me be clear, I don't favor creating new regulations for every crisis or bailout. I favor executing the regulations we have in place already, and ditching the ones that are ineffective or unenforceable. I favor long-term commitments to sound economic principles, including allowing the markets to flow freely - with SOME regulations (I think of the market like a great river - let it flow, but only within its banks). With that said, this bailout - which has been widely advertised as something called TARP - Trouble Asset Relief Program - a $700B aid package for financial institutions came with virtually no restrictions, no regulations - just like the loans that started this mess. Not only that, but the Fed has been doling out an ADDITIONAL $1.2T very quietly and under the radar (Marketplace.org, Dec 22 ) and yet, very little of it has addressed the root of the problem - sub-prime loans.

So my question is - what does bailing out GM and Chrysler have to do with the sub-prime market? How does saving their skin get our economy moving again? GM and Chrysler were losing market share before the Great Collapse of 2008, and since banks aren't lending and most people buy cars using loans, it really doesn't matter what GM or Chrysler does. They cannot instantly start making cars that people want to buy,
nor can they do anything about our mortgages. So giving GM and Chrysler money today only delays the inevitable. That $17B could be put to better use, thawing the credit markets, and getting credit worthy consumers their loans to allow them to purchase GM and Chrysler (and Ford) vehicles.

Again, I'm very happy for the rank and file workers in Detroit, but after hearing from executives on Capitol Hill for a second time, I'm even more convinced they have no viable plan. And even if they did there are too many other variables beyond their control. Not sure how much these workers make, but it's worth considering paying them to stay idle until the credit markets are thawed. It may be more cost-effective to do so.

Posted by Christopher Tracy at December 27, 2008 11:30 AM
Comments
Comment #272885

The $14-to-$34 Billion bail-outs for GM, Chrysler, and Ford won’t be nearly enough to save them from bankruptcy.
Some estimates state that it will take much more money; possibly as much as $125 Billion.

For example, GM already has $45.16 Billion of total existing debt (MRQ=as of Most Recent Quarter).
Ford already has $156.79 Billion of total existing debt (MRQ).
Chrysler has at least $42 Billion of total debt.
Cerberus said it would take about $62 billion to recapitalize Chrysler and refinance its debt.
That’s at total of $244-to-264 Billion !
Chrysler has already reported that it needs $11 Billion, and the $4 Billion from TARP funds won’t be enough to prevent Chrysler’s collapse.
GM’s and Ford’s combined market value is only $10 Billion (source: theautomaticearth.blogspot.com/2008/12/debt-rattle-december-6-2008-markets-and.html).

So, if GM, Ford, and Chrysler must be saved, get ready for many more bail-outs; possibly hundreds of more billions of dollars (since all 3 have over $244-to-$264 Billion of current debt, and still growing, and likely to grow much larger with more bail-outs/loans).

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 27, 2008 2:08 PM
Comment #272887

Christopher:

Interesting post. IMO, many conservatives have been very disappointed in Bush as well as many members of congress in the past few years. It is for this reason the republicans lost control. We vote for them and send them to the Hill with promises of conservative ideals, but when they arrive in DC, they become liberals who call themselves moderates. The Republican Party will never be successful until they begin to think like and support their constituents.

What bothers me is the idea that government picks and chooses which businesses are bailed out and which are allowed to fail. IMO I believe this is a blatant violation of the core principles of the constitution. We have safety devices, called bankruptcy laws, in place to protect all parties involved. Many companies have filed chapter 11 and when the dust settled, new companies were formed. How many airlines have done this very thing? But a failing auto industry cannot go this rout.

The auto industry (big 3) is destined to fail: congress has saddled them with café standards which will not allow them to compete, the unions have negotiated contracts that may have worked 30-40 years ago but will not allow the companies to compete today, and the failure of congress to deal with energy (opening up new sources of oil) has crippled the industry. People do not want sardine cans; they want vehicles that will accommodate their families comfortably and safely. This is why pick-up trucks and SUV’s are so popular. Our government is forcing this religion of Global Warming down our throats and it is a lie. It’s a means to tax and control our lives even more. A majority of the population is against the auto bailout and the vote in congress proved this, but president Bush, for reasons of his own, decided to over-ride this vote. Now, the democrats could care less whether the auto industry succeeds or fails; their motive is more sinister. They are protecting the unions or in other words paying them back for their election support. This is only the beginning, if we bail them out, it will be a never ending bailout, because without complete restructuring the American auto industry will never be able to compete.

You said, “According to most experts the epicenter of this crisis was in the sub-prime home lending sector and it has since spread like a cancer throughout the rest of the economy. This could have been avoided with a little jurisprudence on the part of banks and lending institutions, and the governing body that regulates them - the Federal Deposit Insurance Corporation (FDIC). Not only did the FDIC overlook, dismiss, or failed to see the errors of these risky loans,”

If I understand you correctly, you are saying failure to regulate mortgage loans is the cause for the complete meltdown of the economy? If this is what you are saying, them the eagerness of Freddie and Fannie to buy up risky mortgage loans, fueled by the pressure of government officials to force banks to make these risky loans, has not only caused a financial meltdown in this country, but also globally.

Posted by: Oldguy at December 27, 2008 5:17 PM
Comment #272888

What exactly does “bail out” our automotive industry mean? Does it mean pay off their debts, and if so, what will keep them from incurring new debt? What spendthrift was ever saved by giving them even more to spend.

Does it mean providing money to Detroit until they become profitable again? If so, how exactly will they become profitable if few American’s wish to, or are able to, buy their products?

Does it mean propping up Detroit so it can continue to employ and pay its employees so they don’t join the ranks of the unemployed? If so, aren’t workers in every other industry facing layoffs entitled to the same treatment? Will a Detroit producing vehicles, only to have them languish on the dealers lot, solve any problems?

The merciful and correct course of action is to allow these companies to enter bankruptcy, restructure under the direction of a federal bankruptcy court, and hopefully come out the other side as a profitable entity.

Endless and bottomless squandering of taxpayer dollars will eventually bankrupt the country and then all will fail. The idea of the United States flat on its financial ass is nearly unthinkable, and yet, a very real threat.

Marching to the threat of failure, unless huge sums of money we don’t have is spent, is the popular political drumbeat today and it seems that PEBO will be right out front as the drum major with even more grandiose spending proposals and programs. The voices of restraint and caution have been mostly stilled in the hysteria of the moment.

We are witnessing more than just the swearing in of a Black-American president…we are spectators in the unraveling of America.

Posted by: Jim M at December 27, 2008 5:39 PM
Comment #272889

Christopher:

The time to act was years ago when times were good - with a sizzling economy and an even hotter housing market.

They did act in good times. That is when deregulation of these markets happened the most. Clinton along with over 90 US Senators tore down the wall between investment houses and banks!! Robert Rueben Clinton’s Treasury secretary, then went into the banking industry and now has been helping negotiate bail out money from the government.

To answer your question, the bailout of the big three is to contain the damage done by Congress and Presidents of both parties over the last few decades.

Posted by: Craig Holmes at December 27, 2008 7:37 PM
Comment #272890

oldguy -

You just posted a laundry list of conservative willful ignorance:

* “congress has saddled [the Big Three] with café standards which will not allow them to compete”

Never mind that the majority of foreign models have better fuel economy, huh? By this statement, you’re assuming (1) the majority of Americans do NOT consider fuel economy when they purchase a car, and (2) the government would somehow have hurt the auto industry by forcing the Big Three to keep up with everyone else.

* “the unions have negotiated contracts that may have worked 30-40 years ago but will not allow the companies to compete today”

I read a long time ago how the cost of health care added $2,000 to the price of every American-made car…and it might be twice that by now.

If we had Universal Health Care like every other modern industrialized democracy on the planet (for HALF of what we ALREADY pay, and our national life expectancy is lower than almost ALL of them), ALL industries would have less of a burden, including those companies dealing with unions. Can you imagine how many more cars we’d sell if ALL American-made cars were $4,000 cheaper?

But nah - BLAME THE UNIONS. When you do, though, be sure you point out which of our auto industry competitors in Europe aren’t unionized….

* “the failure of congress to deal with energy (opening up new sources of oil) has crippled the industry.”

In case you haven’t noticed, THE WORLD ONLY HAS A FINITE AMOUNT OF OIL…most of which is controlled by those who DON’T LIKE America.

Let’s say we opened ANWAR up - if we got the FULL amount of oil that is estimated to be there, it would supply America’s oil needs for about five hundred days. Look it up, oldguy - do the math yourself.

Less than two years…and then what?

The WISER move is to invest in other sources - wind, solar, geothermal, natural gas - AND nuclear. The more ALTERNATIVE energy sources we have, the less we pay to the Arabs and to Russia. Or is supporting them a good thing in conservative eyes?

* “People do not want sardine cans; they want vehicles that will accommodate their families comfortably and safely. This is why pick-up trucks and SUV’s are so popular.”

So WHY, then, are people on a waiting list to get a Toyota Prius when there are SUV’s that have been sitting on the Big Three’s dealership’s lots for months? WHY, then, have trucks and SUV’s NOT been the best-selling vehicle since before the Arab oil embargo? HAVEN’T YOU BEEN PAYING ATTENTION?

I’m sure you have - to Limbaugh and O’Reilly…but not to the world around you.

* “Our government is forcing this religion of Global Warming down our throats and it is a lie. It’s a means to tax and control our lives even more.”

Yes, and we never went to the moon to mine all the cheese because the earth is STILL flat.

oldguy, all I gotta do to see the proof is to look at the receding glaciers all around the planet, and look on nearby Mount Rainier here in Washington, at the Nisqually glacier that’s one-THIRD of what it was fifty years ago.

oldguy, IF we strive to stop global warming, and IF YOU are right and 90% of the world’s scientists are wrong about global warming, yeah, we’ll have increased economic hardship.

HOWEVER, IF we do NOTHING, and if you are WRONG and the 90% of the world’s scientists are RIGHT, then we may be placing HUMAN CIVILIZATION at risk.

Do you see it? If we try to stop a mythical global warming, we might damage our economy.

If we do nothing to stop a REAL global warming, then we might lose our whole civilization.

You WILL risk one or the other, oldguy, no matter what your rhetoric is. Which is the smarter risk?

* A majority of the population is against the auto bailout and the vote in congress proved this, but president Bush, for reasons of his own, decided to over-ride this vote.”

Sure, let ‘em fail! That way, we will have NO American auto companies! You can buy Japanese or German/British/French or even Indian (Land Rover), but NO American! And you can pay unemployment benefits to THREE MILLION more Americans, too! That’s a WONDERFUL way to protect the American economy, isn’t it?

* “Now, the democrats could care less whether the auto industry succeeds or fails; their motive is more sinister. They are protecting the unions or in other words paying them back for their election support.”

BUT DON’T LOOK AT THE OTHER SIDE OF THE STORY! ‘Cause if you do, you might see that the Republicans were willing to let America’s ENTIRE auto industry fail, and to let THREE MILLION people go unemployed…just to get rid of the unions.

But I don’t see it that way, either. NEITHER the Republicans nor the Democrats wanted the auto industry to fail. The Republicans knew that their constituency demanded attacks against the union, so they saw another way - they would publicly oppose it and lame-duck Bush would go to their rescue anyway…so that way they protect their “conservative street cred” while not being blamed for losing the entire American auto industry.

But they screwed up in the long run. They protected their collective reputation to the conservative base…but the majority of Americans saw that they were willing to let the auto industry fail…and you can bet you bottom dollar that the Democrats will point this out in the next election. I know I will!

Posted by: Glenn Contrarian at December 27, 2008 8:31 PM
Comment #272891

Christopher:

I would like to offer a different thesis for the meltdown this year. I am not sure I buy into it totally, and inspite of all the ecnomists I have read (probably hundreds or articles by now) in the last 90 days, not one has mentioned this as an explaination. I still wnat to run it up the flag pole.

It seems interesting to me that this crisis appeared in 2008. 2008 is a facinating year in economics. Can you name the unusual event? Something important happend 62 years ago. Hmmmm, let’s see 2008 - 62 = 1946. That is right this is the year oldest boomers can draw on Social Security.

Look at this population pyramid:

http://www.nationmaster.com/country/us/Age_distribution

We look at supply and demand, for years we had a huge demand for jobs for younger workers. There was a dramatic need for older workers to leave the workforce and make room for workers. We created great incentives to allow industry to move these workers out to pasture.

Guess what? Now we have reached a tipping point where we need to encourage older workers to stay working. Medical costs are so high now compared to 30 years ago. Older Americans need to pay for larger and larger amounts of their retirement. We simply cannot afford as high a percentage of workers sitting on the sidelines. At least older workers.

Some will say, yes but the unemployment rate is going up. But who is being laid off? Who has the highest unemployment rates? My guess is that it is the younger workers.

How does this relate to the big three? Older workers buy fewer cars becaus they drive less. Savings rate is climbing. We have a switch from borrowing to saving.

Which came first? Did the crisis cause Americans to save more, or did Americans DECIDING to borrow less and save more cause the crisis?

Which came first the chicken or the egg?

The bar for retirement is much higher now than before.

Posted by: Craig Holmes at December 27, 2008 9:08 PM
Comment #272895

Christopher Tracy

I must reject your premise that sub-prime loans were the uderlying cause of the collaspse any more than the first little breeze is responsible for blowing over a house of cards. The more relevant ,basic cause is that the economy was a house of cards to begin with. Its been pretty clear for some time the ridiculous inflation in real estate had become the national pyramid scheme and sooner or later it was going to fail. We lost track of market basics,there must be at least some relationship between value and cost.Beyond that, there were reasons that the damage to the economy is so deep and widespread. Regultion tht should hve prevented it were gotten rid of and existing regulations we weakly enforced. There were safegards built in the system that were repealed or subverted. Another more fundemental reason was the abandonment of a manufacturing/producing economy as our basis for wealth. We went to a “service” economy. How long did anyone think taking in each others laundry was going to remain a basis of an economy. The financial sector became the most important sector. House of cards. Another notable factor was the depression of wage growth. This was done purposly.Usually wages reflect growth in productivity. They haven’t for some time. The wealth generated by the dramatic increases in productivity accrued to the rich and did not “trickle down” to workers. What does this do? Henry Ford had it right. Pay workers well and they will buy stuff from you. If you get paid enough you do not need to blow out your credit cards or take a sub-prime loan or have trouble paying it back or be unable to set some money aside in savings or…………..
Contrary to some statements in this thread,most Americans do support the bridge loans to the big 3(CNN poll). Contrary to to some statements in this thread most Americans do not want big,gas guzzling cars. Last I looked Prius was the best selling car.
Saw today that GMAC has been allowed to become a bank and will be recieveing bailout funds. If they do what they said they should be able to start making little or no interest loans for the purchase of new vehicles. This can only help.

Posted by: bills at December 27, 2008 10:06 PM
Comment #272896

Glenn Contrarian

Let me ask you a question, are American auto manufacturers producing and selling fuel-efficient diesel cars overseas and yet are prohibited from doing so in the US? And for what reason?

It is more than health care. If we had universal health care run by the government, what makes you think government could do any better than they do with finances now. How long would it be before we were selling government bonds to the Chinese to pay for our health care? Ask the Canadians why they come to the US for major health care if national health care is so good above the border.

Do you think, guaranteed wage for not working is profitable? Or perhaps retiring at 45 years of age and drawing retirement for the next 40-50 years is profitable? Who do you think is paying for these benefits? Could it be, duh, consumers? Why would I want to buy a vehicle from the big 3 when I can buy a better vehicle, with better warranty, at a lower cost from American made foreign cars?

“In case you haven’t noticed, THE WORLD ONLY HAS A FINITE AMOUNT OF OIL”

This is global warming crap from the environmentalists. We will never know how much oil we have if we don’t look for it, and the environmentalists will never allow that.

“The WISER move is to invest in other sources - wind, solar, geothermal, natural gas - AND nuclear.”

Sounds good, do we put sails on our suv’s, or solar panels, or perhaps we pipe them to geothermal, do they make nuclear plants that small, and when was the last time you saw a natural gas pumping station for cars?

“So WHY, then, are people on a waiting list to get a Toyota Prius when there are SUV’s that have been sitting on the Big Three’s dealership’s lots for months?”

Because they are scared and they want to survive. The same thing happened when Jimmy Carter was president. Everyone gave away their big cars and this allowed the foreign market to get a big foothold in the US by selling small cars. Do you think this is the first time people have bought small cars, not so, they bought them before and when the manufactured oil shortage was finished they went back to the vehicles they really wanted?

Concerning global warming, a question was asked of a environmentalists by a news person the other day. He asked, “how do explain global warming when we are experiencing record cold and record snow”, the guy answered, “Oh, these too, are the effects of global warming”. So I guess it doesn’t really matter what the weather is, it’s all the result of global warming. Like I said, it is the new relgion. Yesterday it was something else and tomorrow it will be something new.


Posted by: oldguy at December 27, 2008 11:11 PM
Comment #272900

Glenn Contrarian

A web site just for you:

http://www.telegraph.co.uk/comment/columnists/christopherbooker/3982101/2008-was-the-year-man-made-global-warming-was-disproved.html

Posted by: Oldguy at December 28, 2008 7:16 AM
Comment #272902
Craig Holmes wrote: Look at this population pyramid.
The 77 Million baby-boomer bubble is most definitely one of several factors contributing to our difficulties, and it was severely exacerbated by the $12.8 Trillion borrowed (and spent) from Social Security, leaving it pay-as-you-go. There is no Social Security surplus (the so-called surplus are nothing more than I.O.U.s ; most likely, worthless I.O.U.s).

Based on the real current levels of debt of GM ($45.16 Billion), Ford ($156.79 Billion), and Chrysler ($42-to-$62 Billion), totalling $244-to-$264 Billion, the Big-3 auto-makers already have too much debt, and it is unlikely the Big-3 will be able survive, even if they were given 3 times the $14-to-$34 Billion of bail-outs already provided thus far.

Somehow, we are supposed to believe that more borrowing and creating new money out of thin air is supposed to magically create prosperity again?
Where will the money will come from to only pay the Interest alone for $54-to-$67 Trillion of current (not future debt) nation-wide debt, much less the money to stop the Principal debt from growing beyond the current levels of nightmare proportions?
If we are somehow able to borrow enough, create enough new money, and spend our way to prosperity, I will take every word of it back, and become a true believer in magic.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 28, 2008 10:56 AM
Comment #272906

The troubles of the Big-3 auto-makers are really a symptom of several more fundamental abuses, which are rooted in many decades of excessive selfishness, and we are now seeing the results: wide-spread fiscal and moral bankruptcy.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 28, 2008 12:16 PM
Comment #272918

>Concerning global warming, a question was asked of a environmentalists by a news person the other day. He asked, “how do explain global warming when we are experiencing record cold and record snow”, the guy answered, “Oh, these too, are the effects of global warming”. So I guess it doesn’t really matter what the weather is, it’s all the result of global warming.
Posted by: oldguy at December 27, 2008 11:11 PM

Old,

You are right at last…but, for the wrong reason. You wished to be sarcastic and deny Global Warming, but you forgot to ask why that environmentalist might have said what he said, i.e., Warming melts ice caps, creating a cold water flow away from the cap area…cold water, carried by winds, currents and tides, create weather changes, some of which mean colder in some areas. That is one of the reasons Global Warming is so damning…it creates change the earth can handle, but mankind will not likely be able to…not and be able to sustain any kind of normal life.

Global Warming is kinda like that war you say got us out of the depression…After all the funerals, those who are left will live on…whee!

Posted by: Marysdude at December 28, 2008 9:36 PM
Comment #272921

Marysdud

http://www.weather.com/encyclopedia/global/

http://www.businessandmedia.org/articles/2008/20080303175301.aspx

http://www.worldnetdaily.com/news/article.asp?ARTICLE_ID=53636

So who is right, the founder or the promoters of the new religion, global warming?

Posted by: Oldguy at December 28, 2008 10:14 PM
Comment #272922

Marysdud

Let me send you this link again, I don’t think you read it.

http://www.telegraph.co.uk/comment/columnists/christopherbooker/3982101/2008-was-the-year-man-made-global-warming-was-disproved.html

Posted by: Oldguy at December 28, 2008 10:23 PM
Comment #272923

Your sarcasm is well noted Old, and so is your insistance on misusing dudes’ name.
Just didn’t want you to think that effort on your part was going unnoticed…..

Posted by: janedoe at December 28, 2008 10:28 PM
Comment #272925

janedude

Sorry, typo.

Posted by: Oldguy at December 29, 2008 6:52 AM
Comment #272926

janedoe,

Be careful of trolls, you’ll be the one who ends up in trouble.

Posted by: Marysdude at December 29, 2008 6:59 AM
Comment #272929

Exactly who are we bailing out?

http://www.foxnews.com/story/0,2933,472304,00.html

Posted by: Oldguy at December 29, 2008 7:44 AM
Comment #272931

It’s going to take a while for the new administration to undo some of Bush’s handiwork. He still has a month to go, plenty of time to further beat down the middle class. Here is an excerpt from Bernie Sander’s report.
While official Washington was focused on congressional debate over the Wall Street bailout last September, the Treasury Department quietly changed an obscure corporate tax rule. The under-the-radar maneuver produced a massive windfall to American banks. Sen. Bernie Sanders will introduce legislation to close the loophole. In a letter to colleagues, he wrote, “the Bush administration is changing long-established tax code interpretations resulting in an up to $140 billion tax break for the banking industry.” The IRS changed a rule Congress created in 1986 to prevent large, healthy companies from merging with unhealthy ones as a way of avoiding tax liability. Many tax lawyers have questioned whether this change is even legal. Asked about it by the Washington Post, George Yin, the former chief of staff of the Joint Committee on Taxation, said: “Did the Treasury Department have the authority to do this? I think almost every tax expert would agree that the answer is no. They basically repealed a 22-year-old law that Congress passed as a backdoor way of providing aid to banks.”

The legislation would rescind Treasury Notice 2008-83, which “would provide an estimated $140 billion windfall to healthy banks who take-over weaker financial institutions,” according Sanders letter to colleagues.

Posted by: Roy Ellis at December 29, 2008 9:55 AM
Comment #272934

The Big-3 auto-makers, after receiving $13-to-$34 Billion (or more) in bail-outs,:

  • will still be losing money by the end of year 2009 (and 2010, if they last that long);

  • will still have tax payers paying UAW workers to not work, and Chris Dodd (D-CT) will still be defending the practice of paying workers not to work: “I don’t think that’s outrageous at all. The assumption that you just get rid of [workers] without considering their needs, …”;

  • will continue to pay idle UAW workers at idle Chrysler plants 95% of their wages;

  • will still be giving exorbitant bonuses, salaries, and/or other compensation and benefits to executive management;

  • will still be losing market share to other auto-manufacturers (many of which build vehicles of demonstrably higher quality; see rankings below);

  • will be back before Congress every 3-to-6 months asking for more bail-out money to fund this sort of activity;

  • will end up in bankruptcy anyway by 2012, because they already have too much debt, which will probably be much larger by year 2012 (current debt = $244-to-$264 Billion = GM:$45.16 Billion + Ford:$156.79 Billion + Chrysler:$42-to-$62 Billion);

If all of that is true, should the tax payers have to continue to try to bail-out GM, Ford, and Chrysler?

At only a 4% Interest rate, the Big-3 would have to pay $1 Billion per month ($12 Billion per year) for 42 years to pay down the $244 Billion of current debt.
Even at only a 1% Interest rate, the Big-3 would have to pay $1 Billion per month ($12 Billion per year) for 22 years to pay down the $244 Billion of current debt.
Even at a ZERO Interest rate, the Big-3 would have to pay $1 Billion per month ($12 Billion per year) for 20 years to pay down the $244 Billion of current debt.
That does not even include the $14-to-$34 Billion in new bail-out money, or the estimated $125 Billion required to keep the Big-3 auto-makers afloat.

  • Brand _______ Total ____ 2008 ___ 2007
  • Name ________ Problems _ Rank ___ Rank
  • __________________________________________
  • Porsche ________ 87 _____ 1 ______ 1
  • Infiniti _________ 98 _____ 2 ______ 9
  • Lexus __________ 99 _____ 3 ______ 2
  • Mercedes ______ 104 _____ 4 ______ 5
  • Toyota ________ 104 _____ 4 ______ 6
  • Mercury _______ 109 _____ 6 ______ 8
  • Honda _________ 110 _____ 7 ______ 4
  • Ford __________ 112 _____ 8 _____ 10
  • Jaguar ________ 112 _____ 8 ______ 6
  • Audi __________ 113 ____ 10 _____ 26
  • Cadillac _______ 113 ____ 10 _____ 25
  • Chevrolet _____ 113 ____ 10 _____ 15
  • Hyundai _______ 114 ____ 13 _____ 12
  • Pontiac _______ 114 ____ 13 _____ 21
  • Lincoln ________ 115 ____ 15 ______ 3
  • Buick _________ 118 ____ 16 _____ 14
  • Acura _________ 119 ____ 17 _____ 17
  • Kia ___________ 119 ____ 17 _____ 12
  • Nissan ________ 124 ____ 19 _____ 19
  • Volvo _________ 124 ____ 19 _____ 15
  • BMW __________ 126 ____ 21 _____ 21
  • GMC __________ 127 ____ 22 _____ 18
  • Mazda _________ 127 ____ 22 _____ 34
  • Volkswagen ____ 128 ____ 24 _____ 31
  • Hummer _______ 132 ____ 25 _____ 33
  • Subaru ________ 133 ____ 26 _____ 21
  • Scion _________ 138 ____ 27 _____ 11
  • Dodge _________ 141 ____ 28 _____ 30
  • Chrysler _______ 142 ____ 29 _____ 27
  • Mitsubishi ______ 149 ____ 30 _____ 29
  • Saab __________ 149 ____ 30 _____ 21
  • Suzuki ________ 152 ____ 32 _____ 28
  • Saturn ________ 157 ____ 33 _____ 19
  • Land Rover ____ 161 ____ 34 _____ 35
  • Mini __________ 163 ____ 35 _____ NA
  • Jeep __________ 167 ____ 36 _____ 32

Industry Average of Total Problems: 118

In the auto-makers’ defense, they are probably more deserving of bail-outs than the $3.2 Trillion (of $8.5 Trillion allocated) already spent, lent, and/or given to the banks, financial corporations, insurance companies, and Wall Street.

However, this bail-out mania, with little (if any) adequate oversight, won’t make $54-to-$67 Trillion of nation-wide debt disappear; especially when the money needed to merely pay the Interest alone (at only 4.0%) of $2.2-to-$2.7 Trillion per year (on the $54-to-$67 Trillion of current nation-wide debt) does not yet exist?
That means it will require a whole LOT of money (to be borrowed and/or created from thin air) to merely pay the Interest alone of $2.2-to-$2.7 Trillion per year ($177-to-$223 Billion per month).
Compare that amount of alone for the Interest alone on the Big-3 auto-makers’ total debt (of $244-to-$264 Billion) with the federal government’s total annual tax revenues ($2.5 Trillion for year 2007, but most likely less for 2008 and the years to follow).
That is, the federal government barely receives enough annual tax revenues to merely pay the Interest alone on the Big-3 auto-makers’ total debt (of $244-to-$264 Billion).

How did this nation go from a creditor nation to a debtor-bail-out nation?
One of the biggest causes is the incessant deficit spending and incessant inflation by the federal government and the Federal Reserve for 52 consecutive years.

The following was written in year 1966 in reference to the Great Depression and 1920s America:

When business in the United States underwent a mild contraction … the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. The “Fed” succeeded; … but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market - triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in breaking the boom. But it was too late: … the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. - “Gold and Economic Freedom, The Objectivist” by Alan Greenspan (1966).

Greenspan’s words apply today as much as they did in the 1920s.
Yet, Greenspan acted MORE irresponsibly, by creating new money, incessant inflation, stock market bubbles, housing bubbles, and consumer spending bubbles of unprecedented proportions.
And worse yet, Ben Bernanke is continuing to perpetuate the Ponzi-scheme which is akin to playing the game of Monopoly, in which one player (the bank) can create all of the money they want out of thin air, until the banks own everything, and everyone else is broke or deep in debt. Cha-Ching!

And when the debt-bubble finally bursts, we may foolishly restart the same Ponzi-scheme and the ever-growing debt-bubble, as we did after the Great Depression (creating money as debt at a steep deveraged ratio of 9-to-1 of debt-to-reserves).

Tough times are ahead for the U.S., which is strongly corroborated by the simple fact that no one can tell us where the money will come from to merely pay the Interest, much less the money to stop the Principal from growing ever larger, when that money does not yet exist.

Of course, we know what no one wants to admit.
That money will be borrowed and/or created out of thin air, and the debt-bubble (already of nightmare proportions) will grow bigger, and bigger, and bigger … until it can’t grow any more, until most Americans are broke and/or deep in debt, unemployed, homeless, jobless, and hungry.

Most economists agree that the “economic crisis” is very far from over, and all of the bail-out mania, borrowing, and new money created from thin air will come with a huge price later … most likely making things much worse later.

The popular myth that we can somehow borrow, create new money, and/or spend our way to prosperity is about to be tested (and painfully disproven).
And throwing a few tens of billions at the Big-3 auto-makers, with 25 times more current debt ($244-to$264 Billion), won’t stop the collapse.
If Congress wants to save the Big-3 automakers (if that is even possible), it had better decide if it is prepared to give them hundreds of billion$ more.

A few months ago, I went to buy a 12 passenger van, and I first asked my bank for a loan.
My bank, where I’ve banked for 14 years, turned me down, even though I had more than the price of the van in a money-market account in that same bank, and have no mortgages or any other debt.
Many banks are not loaning money to people that are more than qualified.
So, I paid cash for the van with the money in the money-market account in their bank.
That is a very stupid bank.
That bank now has $23,000 less in deposits, and is also earning no interest on a loan.
But the irony is that it is probably best to pay cash anyway, in order to get something of value for that money (i.e. a van), before the money is rendered more worthless by incessant inflation (4.0% on average for year 2008; up from 1.59% in year 2002).

Roy Ellis wrote: It’s going to take a while for the new administration to undo some of Bush’s handiwork.

True. Bush is probably among the worst 3 (if not the worst) of all 43 U.S. presidents (thus far): www.timesonline.co.uk/tol/news/world/us_and_americas/us_elections/article5029204.ece

But Bush is one person, and previous presidents, Congress, and the Federal Reserve have been digging a very deep hole for over 30 years.
Our bubble-after-bubble economy started over 30 years ago, and we’ve had federal deficit spending and incessant inflation for 52 consecutive years.
Many economic statistics all started looking worse around year 1976, such as the growing weatlh disparity, falling median household incomes, rising national debt, high inflation and excessive money-printing, illegal immigration quadrupled since the amnesty of 1986, nation-wide-debt quadrupled the size of GDP, usury and 35% interest rates, unfair trade, regressive taxation, unnecessary wars, etc.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 29, 2008 12:15 PM
Comment #272936

oldguy -

Let me ask you a question, are American auto manufacturers producing and selling fuel-efficient diesel cars overseas and yet are prohibited from doing so in the US? And for what reason?

Nice riposte, but ultimately ineffectual. Why? YES, US automakers are selling more fuel-efficient cars overseas, and they are doing so because they can get away with selling lighter - and less crash-resistant - cars there…but that does NOTHING to disprove the FACT that DOMESTICALLY, US automakers are having a heck of a time moving SUV’s, but the Prius has a waiting list. THAT, sir, is the trump that negates your whole point on ‘Americans want SUV’s!’

It is more than health care. If we had universal health care run by the government, what makes you think government could do any better than they do with finances now. How long would it be before we were selling government bonds to the Chinese to pay for our health care? Ask the Canadians why they come to the US for major health care if national health care is so good above the border.

Again, oldguy, you’re NOT paying attention to the world around you. Did you know that America is THIRTIETH on the CIA’s list of countries ordered by life expectancy? Did you know that the TOP TWENTY-SEVEN countries on that list ALL HAVE UNIVERSAL HEALTH CARE? And none of those top twenty-seven countries pay more than about half in taxpayer dollars per capita for UHC than America ALREADY does.

So HOW are you going to explain that away? If the top twenty-seven countries do it better for half the price, there’s something VERY wrong with YOUR picture.

Oh, and, as far as your ‘Canadians coming to America’ remark, yes, we DO have the VERY BEST health care in the world…but only for those who can afford it! But there are FAR more Americans who go overseas for medical treatment that they can’t get here - it’s called ‘medical tourism’. Experts in the field say as many as 150,000 U.S. citizens underwent medical treatment abroad in 2006 — the majority in Asia and Latin America. That number grew to an estimated 750,000 in 2007 and could reach as high as 6 million by 2010. I and my family have done so, and so have friends of mine.

No, oldguy, our healthcare system is BROKEN…we’re spending TWICE what other countries pay and we’re STILL not as well off.

There is NO excuse -
- it’s not our eating habits (England’s worse),
- our illegal immigration problem (several European countries have worse immigration problems),
- our corruption (Italy’s FAR more corrupt),
“you can only see a doctor the government chooses for you (A FLAT LIE, as anyone from Europe can tell you),
- “you’ll have to wait in line for lifesaving treatment!” (another flat lie - those who need lifesaving treatment go to the FRONT of the line…unlike here where the HMO’s say, “we don’t cover that!”)
- “you have to wait for years for ANY elective surgery” - true…unless you’re willing to pay through the nose to get it right away. Here in America, we have NO choice - it’s pay through the nose, or no go.

oldguy, the majority of doctors and nurses now support America going to UHC, as do the majority of Americans. The only ones who don’t support UHC are the HMO’s, the health insurance companies…and the Republicans.

…THERE IS NO EXCUSE.

Do you think, guaranteed wage for not working is profitable? Or perhaps retiring at 45 years of age and drawing retirement for the next 40-50 years is profitable? Who do you think is paying for these benefits? Could it be, duh, consumers? Why would I want to buy a vehicle from the big 3 when I can buy a better vehicle, with better warranty, at a lower cost from American made foreign cars?

Oh, THAT’s good - instead of fixing the problems we have here at home - SOME of which ARE the fault of the unions, but the MAJORITY of which are the fault of the car companies who didn’t want to be told to keep up with the rest of the world, let’s just let our American auto industry DIE…never mind the three million or so jobs that go with it.

Your solution, oldguy, is to GIVE UP, rather than to fix the problem.

[Glenn]“In case you haven’t noticed, THE WORLD ONLY HAS A FINITE AMOUNT OF OIL” [oldguy]This is global warming crap from the environmentalists. We will never know how much oil we have if we don’t look for it, and the environmentalists will never allow that.

WRONG! The environmentalists and the American government do NOT block the oil companies from SEARCHING for more oil! The proof? If oil companies weren’t allowed to search for oil where they aren’t allowed to drill, then how do you suppose they found the oil in ANWAR? The environmentalists and the government only block the oil companies from screwing our environment over to get to it.

NOT ONLY THAT, but do you see major finds being made overseas where the oil companies are NOT regulated? NO? Then WHERE’S ALL THE OIL that they’re NOT being prevented from finding????

If we listen to you, all we will continue to do is subsidize the Muslims and the Russians. Exactly HOW that’s somehow in America’s best interests, I can’t fathom.

[glenn]“The WISER move is to invest in other sources - wind, solar, geothermal, natural gas - AND nuclear.” [oldguy]Sounds good, do we put sails on our suv’s, or solar panels, or perhaps we pipe them to geothermal, do they make nuclear plants that small, and when was the last time you saw a natural gas pumping station for cars?

Now you’re using sarcasm. You go ahead and stay with the increasingly SMALLER segment of the American population who wants SUV’s and continue to subsidize the Muslims and the Russians, and I’ll agitate for the return of the gas-guzzler tax. Maybe someday we’ll wake up and modernize our national transportation system with the emphasis on MUCH more efficient mass transportation…like Europe and much of Asia has already done.

[Glenn]“So WHY, then, are people on a waiting list to get a Toyota Prius when there are SUV’s that have been sitting on the Big Three’s dealership’s lots for months?” [oldguy]Because they are scared and they want to survive. The same thing happened when Jimmy Carter was president. Everyone gave away their big cars and this allowed the foreign market to get a big foothold in the US by selling small cars. Do you think this is the first time people have bought small cars, not so, they bought them before and when the manufactured oil shortage was finished they went back to the vehicles they really wanted?

Nice try…and I’ll grant you that after America recovers from the current recession (although much weaker economically thanks to trickle-down economics (“Reagan proved deficits don’t matter!” - Dick Cheney)), sales of larger vehicles will improve.

BUT there is NO indication that the world’s oil supply is increasing by any amount sufficient to sustain not only OUR use of oil, but the exploding use of vehicles in China and India. THAT, sir, is the 800-pound gorilla in the room. If WE were the only ones using such mass quantities of oil, that’s one thing…but we’re not - and China (and probably India) will someday surpass our level of use. The world’s oil supplies CANNOT maintain the almost-certain level of GROWTH in humankind’s consumption of oil.

Concerning global warming, a question was asked of a environmentalists by a news person the other day. He asked, “how do explain global warming when we are experiencing record cold and record snow”, the guy answered, “Oh, these too, are the effects of global warming”. So I guess it doesn’t really matter what the weather is, it’s all the result of global warming. Like I said, it is the new relgion. Yesterday it was something else and tomorrow it will be something new.
I DO so wish that conservatives would take a course in statistics. It’s NOT what happens in ONE year in ONE region of the world. It’s what happens over decades, generations, centuries ALL OVER THE WORLD.

We’ll ALWAYS have record cold in this place or that, but using that as ‘proof’ against global warming is like saying that the San Francisco Giants were the best team in baseball when Barry Bonds was batting better than anyone else in baseball history. The Giant’s were NOT the best team in baseball because Barry Bonds was NOT the whole team.

Likewise, record cold in America does NOT negate global warming because - and I know this will come as a shock to all conservatives - America is NOT the whole world! Even if the whole planet had a spate of record cold this year, it would mean NOTHING, because we have to look at MORE than just one year - at the decades, the generations, the centuries.

oldguy, you - and all the others who are wrapping themselves in the flag, putting eagles all over their trucks and SUV’s, and decrying the slide of America over to the left - are being used by the HMO’s, Big Pharma, the oil companies…and Wal-Mart. The ‘profit motive’ is great for big corporations…but not for nations.

Posted by: Glenn Contrarian at December 29, 2008 1:44 PM
Comment #272938

d.a.n.,

I think Ford opted out of the bail out loan. Ford said it could manage until late next year without help. The 14B was for GM and Chrysler.

Posted by: Marysdude at December 29, 2008 2:29 PM
Comment #272941
Marysdude wrote: d.a.n., I think Ford opted out of the bail out loan. Ford said it could manage until late next year without help. The 14B was for GM and Chrysler.
Ford has some credit lines and cash, but Ford has more debt ($156.79 Billion) than GM ($45.16 Billion) and Chrysler ($42-to-$62 Billion) combined.

Cerberus Capital Management said it would take about $62 billion to recapitalize Chrysler and refinance its debt.

Chrysler has already reported that it needs $11 Billion, and the $4 Billion from TARP funds won’t be enough to prevent Chrysler’s collapse.

Also, GM’s and Ford’s combined market value is only $10 Billion.

That’s at total of $244-to-264 Billion of current debt, and over half of it ($156.79 Billion) is Ford’s debt!

It is not a foregone conclusion the $14 Billion bail-outs for the Big-3 auto-makers will work.
For year 2007:

  • GM reported a $38.7 Billion loss (the biggest loss ever for any automaker).

  • Chrysler reported a $2.92 Billion loss.

  • Ford reported a $2.7 Billion loss.

For year 2006:

  • GM reported a $2.0 Billion loss.

  • Chrysler reported a $1.48 Billion loss.

  • Ford reported a $12.7 Billion loss.

For year 2005:

  • GM reported a $10.6 Billion loss.

  • Chrysler reported a $2.02 Billion profit.

  • Ford reported a $1.44 Billion profit.

That comes to a total loss of $67.64 Billion ($22.55 Billion per year), and we don’t yet know what the losses are for year 2008.

Ford president Alan Mulally said his company did not need any bail-out money, yet Ford’s workforce sat at home on an extended Christmas shutdown fearing for their jobs and unable to earn bonuses and hourly allowances.

Marysdude wrote: d.a.n., … Ford said it could manage until late next year without help.
Ford has posted losses for the past 3 years and Ford is not predicting pretax profitability for 3 more years (i.e. until year 2011).

Ford still asked for a $9 billion “standby line of credit” to stabilize its business but Ford said it did not expect to tap the funds unless one of Detroit’s other Big Three went bust.
Ford plans to cut its number of dealers by more than 600, to 3,790 by the end of the year.
By the end of year 2009, Ford also owes more than $26 billion (of $156.79 Billion of total debt: finance.yahoo.com/q/ks?s=F ), with $6.3 billion due to its UAW trust fund.
Also, with the current nation-wide debt-bubble, falling GDP, and rising unemployment, Ford’s expectations to sell 15 Million vehicles in 2009 is far too optimistic and Ford will most likely be looking for a bail-out too before the end of year 2009.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 29, 2008 4:27 PM
Comment #272947

d.a.n.,

That’s what I said…the end of next year…

Posted by: Marysdude at December 29, 2008 7:48 PM
Comment #272951

Ford underwent restructuring of its debt and the sale of assets to cash position a couple years ago, in anticipation of its having to ride out several years of losses. That is why Ford is capable of withstanding the sales losses brought on by the recession at this time. The line of credit it said it may need is for costs associated with innovation and restructuring its product line machinery and software changover to accommodate different customer demand product lines.

Where GM has the Volt in development, Ford has yet to make those product line change investments. Hence, currently, Ford is in the better cash position. In the longer term, Ford’s ability to invest in new innovative product lines will stretch its credit credibility too thin for the private sector, and that is why Ford is asking for the line of credit.

Ford still has one strong product line even for a recession, its trucks. Quality is what keeps that product line and sales strong, even though diminished by the wary and scared consumer over the recession and potential lay-offs.

Chrysler mismanaged debt and its product lines and quality, all of which came to a crashing head this year.

GM’s product line was allowed to grow far more diverse than profitable consumer demand would support, and their reputation on quality suffered enormously over the last decade. They invested heavily in competing with Ford in truck lines, but failed to ever take much market share from Ford because of quality, and high maintenance cost issues registered by consumers, despite all their lying advertising to the contrary. Very, very bad management decisions like these, are why GM is the costliest auto maker to save.

Needless to say, each of these auto makers has unique sets of financial, management, and market issues. Government assistance, if handled responsibly, will have to treat each company/corporation as a unique and separate case. The only two things they have in common are 1) they compete for sales with the same customer base in this declining sales environment of a recession and historically against years of declining real wages of a broad segment of its customer base, and 2) they make personal and fleet transportation vehicles.

I have yet to research how government contract sales with the Big 3 were parsed out and what, if any effect these have had on the Big 3’s bottom line. I suspect the winding down of operations in Iraq is playing some role in the big 3’s gloomy parts and sales forecasts. But, I could be very wrong on that.

Posted by: David R. Remer at December 30, 2008 5:23 AM
Comment #272952

My wife bought a Chrysler (PT Cruiser).
Chrysler has some great styling (IMO), but poor quality.
The brake system on her car is crap, and the replacement parts are crap too.
Here are a few other people who agree at www.PtCruiserProlems.com.
You know something is dreadfully wrong when people start dedicating web-sites to share horror stories about their car.
With under 60K miles, the brakes rotors have had to be replaced twice (not turned); the brakes are very squeeky and noisy; the radiator had to be replaced because the engine was overheating; the engine both burns and leaks oil; the rear hatch intermittently won’t stay open; the automatic transmission is starting to slip; and for a 4-cylinder, it gets terrible fuel mileage.

Also, one day, due to what seemed to be a software problem, a dangerous situation occurred in which the car’s speed started to rapidly increase uncontrollably (as if completely floored), and the engine, when shifted to neutral, raced uncontrollably, and finally the ignition had to be turned off.
Fortunately, there were no other cars nearby when it happened.
My wife is now shopping for a new car, and needless to say, it won’t be a Chrysler.
I have a Nissan 4WD crew cab pickup with $70K miles that has never had any repairs except to replace the battery.

NHTSA PT Cruiser Recall History:

  • Fuel supply line could contact the air-conditioning tube service port, causing a fuel leak which would increase the risk of fire.

  • Some of the owner’s manuals for these vehicles are missing instructions for properly attaching a child-restraint system’s tether strap to the tether anchorage.

  • The right rear seat center lower anchor was manufactured with a wire diameter greater than the maximum specified. If child-seat connectors are not properly secured, the occupant will not be fully restrained.

  • The fuel-pump-module mounting flange could leak fuel in a rollover crash, increasing the risk of vehicle fire.

  • Power steering hose may contact automatic-transmission differential cover, potentially damaging the hose and causing fluid leakage that could result in underhood fire.

  • A software error in the instrument-cluster microprocessor may render gauges, illumination, and warning lights inoperative.

  • Faulty flywheel and clutch assemblies were installed in some vehicles with manual transmissions, possibly leading to a disengaged clutch. Dealer will inspect and replace affected part.

  • Contact between brake tube and transaxle housing over extended time period may eventually lead to perforation of brake tube, which could result in loss of braking force in left front/right rear circuit.

  • The rear quarter glass attaching fasteners may pull through their mounts and allow the glass to separate from the vehicle. Dealers will replace the rear quarter glass.
Other common problems:
  • Cruise control: An annoying surge at cruising speeds between 45-60 mph during warm weather can only be corrected by reprogramming the powertrain control module

  • The fuel gauge may not read full despite the tank being full on early production models and a countermeasure fuel pump module is available to correct this.

  • Hard starting: Difficulty starting may also require replacement of the fuel pump module with one that has a screen to prevent contamination of the integral pressure regulator.

  • The rear seats may not unlatch due to a problem with the cable and its attachments.

  • Sunroof/moonroof: If the sunroof deflector vibrates (usually above 40 mph), there is a deflector mounting kit that relocates the mounting attachments.
And guess where the PT Cruiser was built? Mexico.

Yet, our tax dollars are going to be used to help keep Chrysler afloat?

There are probably a lot of people out there who have had similar experiences and don’t really care much for the idea of bailing out Chrysler.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 30, 2008 7:03 AM
Comment #272954

GC

Why don’t we just ban all industry within the borders of the US. The left hates CEO’s, they hate big business, they hate NAFTA because it sends companies overseas, they hate companies that stay in the country, they hate oil, they hate nuclear, they hate coal, they hate the concept of protecting our own nation, the hate neo-cons, they hate evangelical christians, they hate unborn babies,they hate Bush, they hate 2nd ammendment rights, and they hate anyone who disagrees with them.

What do they love? They love whales, they love trees, they love gays, they love communists who teach in american universities, they love high taxes, they love a nation of people who are dependent on government, they love illegals crossing the border, they love the judges who legislate, they love big government, they love power. and most of all they love themselves.

Posted by: Oldguy at December 30, 2008 9:15 AM
Comment #272956

oldguy -

Giving up?

Instead of having a rational discussion, you only resorted to just making blanket statements with NOTHING to back them up.

Look back at my post. With every rebuttal to you was either proof or clear logic to back it up.

If you want to debate, then let’s debate…but do so with PROOF, with LOGIC and with RESPECT. If you only want make throwaway accusations with nothing to back it up, then you’re just wasting my time and yours.

Posted by: Glenn Contrarian at December 30, 2008 11:45 AM
Comment #272960

>Look back at my post. With every rebuttal to you was either proof or clear logic to back it up.
If you want to debate, then let’s debate…but do so with PROOF, with LOGIC and with RESPECT. If you only want make throwaway accusations with nothing to back it up, then you’re just wasting my time and yours.
Posted by: Glenn Contrarian at December 30, 2008 11:45 AM

Glenn C,

No one could have said it better…thanks!

Posted by: Marysdude at December 30, 2008 1:01 PM
Comment #272962

d.a.n, I have a similar list of complaints about our Cadillac.

Chrysler, I doubt, is going to survive, and I think next year’s government would prefer, if they can find a way, to dissolve Chrysler either through sale of assets or buy out by another car maker or industrial manufacturer. That is the sense I gained from watching the hearings. The economy can survive Chrysler failing, and most in the Congress are very dubious of Chrysler being able to put together a believable recovery plan.

GM is tentacled in its lines of business throughout the employment markets of the whole of the U.S., either through dealerships, repair shops, bus and commercial truck manufacturing, or government military parts contracts. They are too big to allow to fail at a time when fighting unemployment increases is job 1 for Congress and the President, current or new.

Ford is arguably the better managed of the three, and better positioned to withstand this part of the recession. They may not be too big to fail, but, their prospects for optimizing some government assistance into a long term profitable business plan is the most probable of the Big 3.

I am not at all sure it will play out this way, but, from what I can see, 6 months from now, there will be no Chrysler. GM will have entirely new management, dramatically cut its product line, avoid direct competition in product line with Ford where possible, and end up saved by tax payers with a reasonable chance of surviving to profitability once again as a leaner, meaner corporation when the economy begins to grow again. Saving GM will not be cheap. But vastly cheaper than saving any one of the financial institutions so far in receipt of TARP funds. And of course, a couple million jobs will have been saved.

Ford’s future and Gov’t assistance will depend almost entirely upon its credible plans for innovation and product development to compete in the small, hybrid, and other fuel economy product lines. Ford will very likely be the fastest to turn around to profitability again, and therefore the most readily to receive government assistance as warranted and needed.

Unlike the financial institution bailouts, the auto bailouts will likely be repaid, due to their management objectives and restructuring being conditions of government assistance, and the tax payers having first dibs as a creditor in the event of bankruptcy later on.

Posted by: David R. Remer at December 30, 2008 3:38 PM
Comment #272968

David to your point in your final sentence, I am pretty sure that through the RTC (Resolution Trust Corporation) and the Federal Home Loan Banking system that the S&L crisis, in large part, paid for its own demise through reduced dividends to member S&Ls with the difference going to the Goverment. S&Ls weren’t a complete loss, nor will banks.

I also think there is a big difference in a banking model versus a manufacturing model. Once liquidity flows back into the banking system, cash flow will improve, earnings will improve as a function of interst income, and it will be far easier for the financial services industry to repay its debt.

I think the auto makers are hamstrung by their poor operating model. Harley Davidson asked for government tarrifs and import bans, for three-four years I believe. Begging legistlators to give them a chance to be competitive again. And they did. Auto makers have been given that chance again and again and blew it.

Posted by: Honest at December 30, 2008 8:36 PM
Comment #272979

GC

“oldguy -

Giving up?

Instead of having a rational discussion, you only resorted to just making blanket statements with NOTHING to back them up.

Look back at my post. With every rebuttal to you was either proof or clear logic to back it up.”

No, not giving up. Since I made a blanket statement, I believe it is necessary to give a blanket support for my statement. My proof comes from the still best selling book on the market and is completely logical:

I Corinthians 14:38, “But if any man be ignorant, let him be ignorant.”

Concerning logic, liberals do not know the definition of the word “logic”. They operate strictly by emotion.

Posted by: Oldguy at December 31, 2008 9:42 AM
Comment #272981

Honestly, I read some of the stuff written by the left and I laugh my butt off. Some of the liberal’s so-called logic is hilarious.

It’s like reading the book about Chicken Little when I was a kid, when he ran around crying, “the sky is falling, the sky is falling”.

Let me throw a general blanket statement again:

The sky is falling.
We’re out of oil.
We’re destroying the planet.
The trees are disappearing.
The polar bears are loosing icebergs.
The ocean is rising and gobbling up coastal property.
The temperature is rising.
We’re all going to die.
The Japs are eating the whales.
And the best, dogs and cats need to be neutered because they are breeding all over the place and are homeless.

On the last, why don’t ship all the dogs and cats to Africa and eastern countries so they will provide food for starving people. Since our illustrious leaders by the support of ethanol have driven the price of grain through the roof.

Posted by: Oldguy at December 31, 2008 10:19 AM
Comment #272986

oldguy -

Oh, that’s VERY good.

Instead of presenting PROVABLE FACT that Universal Health Care is more expensive and less effective than what we currently have, you give a Bible verse.

Instead of presenting PROVABLE FACT that mankind has nothing to do with global warming, you give a Bible verse.

Instead of presenting PROVABLE FACT that the majority of Americans want SUV’s instead of cars that get better gas mileage, you give a Bible verse.

The Bible says NOTHING about Universal Health Care, global warming, or vehicle mileage. If you really want to take this to a Biblical level - sure, I can do that…and I promise you that you wouldn’t enjoy it.

For instance, the verse you quoted from Paul’s first letter to the Corinthians was referring to the conduct of believers as part of the CHURCH - it has NOTHING to do with knowledge/ignorance of worldly matters.

If you’re going to quote Scripture, then do so within the context wherein it was originally written, and not so obviously out of context as part of some modern-day political discussion. Why? Because matters of salvation are infinitely more important than politics. In my opinion, to quote Holy Scripture out of context to try to prove a political point - or to insult, for it certainly seemed you were implying such - is an offense to God.

Yes, I am a Christian, and I strongly caution you to RESPECT the Bible by not quoting Scripture out of context for partisan political points.

Posted by: Glenn Contrarian at December 31, 2008 11:49 AM
Comment #272996

Something interesting i was reading about chrysler….

“According to a new Automotive News article, Cerberus is planning to give away its entire stake in Chrysler - roughly 80% of the company - to labor and creditors. [Update: Cerberus did not announce whether it would be giving equity solely to the UAW, or to the UAW Employee Beneficiary Trust and to individual autoworkers].

Bush’s loans require Chrysler to provide half of its obligation to the UAW Employee Beneficiary Association trust with equity. In addition, Cerberus has said it would exchange equity for the UAW’s agreement to take immediate severe pay and benefits reductions (the UAW has already agreed to these cutbacks as of the expiration of the current contract). Cerberus is also offering equity to creditors in return for lowering of debt.

As a result, Chrysler would be entirely owned by labor, creditors, and Daimler. It appears that the UAW (including the health-care fund) would have the most equity. The move leaves Cerberus with Chrysler Financial, which is likely to be a strong profit-maker when the economy turns around; the private equity firm has already agreed to invest the next $2 billion in Chrysler Financial profits in Chrysler, LLC.

Cerberus also noted that it had not invested more in Chrysler because its charter limits how much it can invest in any one organization.

Some questions remain, including whether the CAW or its workers would receive equity, the status of employees in Mexican plants, and whether the UAW or individuals will receive equity in return for wage cuts.

The move should put aside rumors of merging with General Motors and being purchased by a Chinese company. However, because Cerberus will still own Chrysler Financial, it will still have a stake in ensuring Chrysler’s future success. If Chrysler regains status and sales, Chrysler Financial is likely to achieve high profits.”

The question that begs to be asked IMO, Is that if the UAW itself ends up “owning” one of the manufacturers…would be that some sort of conflict of interest for the union itself? Would Union funds and dues paid by all employees of the big three be then poured into Chrysler to attempt success since the profits i would assume would go back into the union? Myself, I have been a chrysler fan since I was old enough to notice (k-car era) just seems an unusual solution

(the article is from www.allpar.com/news)

Posted by: rhancheck at December 31, 2008 4:00 PM
Comment #272997

I would like my last comments for 2008 to end on a positive note and therefore offer this encouraging article written by Michael Medved.

Excerpt; “Forty years later, the incoming Obama administration worries about protecting the American dream for tens of millions of insecure middle class and working families, but there’s a profound difference between efforts to protect past gains or reforms to allow the first chance ever for advancement. Impoverished households of forty years ago lived with isolation all but unimaginable today – frequently without cars or telephones or television (assets that poor families possess today in abundance). Life expectancy, access to college education, and quality of healthcare have all vastly improved for every segment of society. While today’s crisis may damage American families for years to come, no one expects the current downturn to erase the breathtaking progress of the last forty years. By objective measures, even typical poor families in 2008 enjoy a healthier, more mobile and more comfortable standard of living than most middle class families at the end of the ‘60’s.”

Link; http://townhall.com/columnists/MichaelMedved/2008/12/31/think_2008_was_a_bad_year_reconsider_68_for_a_sense_of_perspective

Posted by: Jim M at December 31, 2008 4:16 PM
Comment #272998
oldguy wrote: We’re destroying the planet.
That’s true in some places.

More than 10 million people in 9 different countries are at serious risk for cancer, respiratory diseases, and premature death because they live in 11 of the most polluted places on Earth:

  • Chernobyl, Ukraine

  • Dzerzhinsk, Russia

  • Haina, Dominican Republic

  • Kabwe, Zambia

  • La Oroya, Peru

  • Linfen, China

  • Maiuu Suu, Kyrgyzstan

  • Norilsk, Russia

  • Ranipet, India

  • Rudnaya Pristan/Dalnegorsk, Russia

  • New Orlans, LA., USA

Consider these top 13 most polluted places/cities list (year 2006/2007; not ranked in order):

  • 01: Dzherzhinsk, Russia (300,000 people in Dzherzhinsk, a chemical weapons manufacturing site, have a life expectancy about half that of many nations).

  • 01: Chernobyl, Ukraine

  • 02: Norilsk, Russia (world’s largest heavy metals smelting complex)

  • 03: Rudnaya Pristan, Russia

  • 04: Linfen, China (many people in coal-producing Shanxi province, suffer from bronchitis, pneumonia and lung cancer because of the poor air quality)

  • 05: Tianying, China

  • 06: Haina, Dominican Republic (severe lead contamination as the result of battery recycling)

  • 07: Ranipet, India (leather tanning wastes contaminate groundwater with hexavalent chromium)

  • 08: Sukinda, India

  • 09: Vapi, India

  • 10: Mayluu-Suu, Kyrgyzstan

  • 11: La Oroya, Peru

  • 12: Kabwe, Zambia

  • 13: Sumgayit, Azerbaijan (Organic chemicals, oil, heavy metals including mercury, from petrochemical and industrial complexes)

Over-population exacerbates these problems, and the world population grows by 211,000 per day (that’s all births minus deaths).

The world population in year 1 A.D. was 250 million people.
The world population in year 1492 was 500 million people.
The world population in 1804 was 1.0 billion people.
The world population in 1922 was 2.0 billion people (doubled in 118 years; increasing on average by about 23,000 per day).
The world population in 1959 was 3.0 billion people (increased by 1.0 billion in only 37 years; increasing on average by about 74,000 per day).
The world population in 2006 was 6.68 billion people (more than doubled in 47 years; increasing now by 211,000 persons per day!).
The world population by 2039 could be 8.0 to 13 billion.

In 1959, there were 12.16 acres per person, world-wide (i.e. 36.48 billion acres / 3 billion people).
In 2006, there were 5.46 acres per person, world-wide (i.e. 36.48 billion acres / 6.68 billion people).
By 2039, there may be only 2.81 acres per person, world-wide (i.e. 36.48 billion acres / 13 billion people).

The U.S. has 3.794 million square miles, of which 3.54 million square miles is land area (for a fast growing U.S. population of 300 million people as of the end of year 2006; growing by about 5 Million per year).
That is only 8.09 acres per person in the U.S.
However, only about a quarter of that is arable land.
That means there are only about 2.02 acres per person of arable land in the U.S.

However, consider that there is only 12 million square miles (7.68 billion acres) of arable land on the planet.
And, ignore for a moment that arable land is being lost at a rate of 38,610 square miles per year.
That is, lets assume no arable land is being lost for the next 33 years. Then …

In 2006, there was 1.15 acres of arable land per person, world-wide (i.e. 7.68 billion acres / 6.68 billion people).
By 2039, there may be only 0.59 acres of arable land per person, world-wide (i.e. 7.68 billion acres / 13 billion people).

However, arable land is being lost at the alarming rate of over 38,610 square miles (24.7 million acres) per year.
Therefore, by 2039, there may be only 0.53 acres of arable land per person, world-wide (i.e. 6.865 billion acres / 13 billion people).
At the current rate of loss of 38,610 square miles per year of arable land, and even if the population didn’t grow any larger, ALL arable land could be lost in only 310 years (12 million square miles / 38,610 square miles per year)!

As for global warming, it’s hard to believe that humans, factories, cars, etc. pumping 24 billion metric tons of CO2 into the atmostphere is having no impact on the environment.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at December 31, 2008 4:16 PM
Comment #273004

Jim M -

I’ve thought often of the disparity between living standards then and now. However, we must also guard against the attitude of “good enough”. Soviet Admiral Gorshkov once said, “‘Good enough’ is the enemy of ‘better’”. If we don’t continually strive to bring up the standard of living of ALL people, then the crime and social chaos that ALWAYS accompanies great disparities in wealth will present a drag on the nation as a whole.

That, sir, is why America no longer has the highest standard of living in the world…whereas the countries that DO have a higher standard of living than America have a significantly lower disparity between the richest and the poorest.

Call that socialism if you want…but their standard of living is higher than ours, and it’s the results that must be the final judge of the matter.

Posted by: Glenn Contrarian at December 31, 2008 7:07 PM
Comment #273013

Thanks for commenting. I’m glad to see so many people realize the problems are much deeper than a single column can possibly address. Most comments I heard are credible, others are rather dubious, but….

My point, particularly as it pertains to Craig Holmes’ post, is that if we (meaning leaders who control the purse strings) have determined that the root of the problem are toxic assets, then the fix needs to address the toxic assets. Craig makes some valid points, however those issues weren’t part of Ben Bernake or Henry Paulson’s pitch to Congress to authorize this money in the first place. Allow me to simplify. Say your child won the state spelling bee and you need to pony up $50 for you and your child to attend the National Spelling Bee in Washington DC. You give you child the $50 to take to school and the school decides instead to buy a books. The premise for which you gave your money isn’t being used to address the issue for which the money was given.

The other issues mentioned are all valid, however there are deeper roots to this mess.

Oh and the PT Cruiser thing, mine has 160K miles and runs smoothly since I bought it. I do have to stay on top of it though - reading specs, talking to mechanics and and insisting on the correct oil, antifreeze, and for them to keep the $10 battery wrap attached because they always want to throw it away! I’ll bet d.a.n. that your battery wrap has been tossed and if you ask the mechanic they’ll say you don’t need it. The fact is you do - it keeps the battery from freezing (i.e. cold starts), and it protects from static electricity/stray voltages, keeping your electrical system intact. I experienced that first hand.

Thanks again for the comments. And I look forward to 2009.

Posted by: Christopher Tracy at January 1, 2009 10:44 AM
Comment #273026
Christopher Tracy wrote: The other issues mentioned are all valid, however there are deeper roots to this mess.
No doubt about it.

The root problem is excessive and wide-spread selfishness, resulting in many abuses and Corruption.

What we too often call the root problems are actually only symptoms with (as you say above) “deeper roots”.

  • Responsibility = Power + Virtue + Education + Transparency + Accountability
  • Corruption = Power - Virtue - Education - Transparency - Accountability

The irony of selfishness is that it is actually the path to more pain and misery for most people.
Unfortunately, this is a painful lesson that must be repeatedly re-learned, and progress is slow (i.e. 2.00 steps forward, and 1.99 steps backward).

Fortunately, there is a built-in self-correction mechanism: pain and misery.

That is, eventually, pain and misery leads to Questions.
Questions lead to Education (not necessarily reading, writing, or arithmetic, but Education about human psychology, forms of Corruption, the necessity of Transparency and Accountability, and how Power leads to more Corruption without sufficient Rresponsibility).

However, we may not always have the luxury of being such slow learners, now that humans have the ability to bring about their own extinction.

Christopher Tracy wrote: Oh and the PT Cruiser thing, mine has 160K miles and runs smoothly since I bought it. I do have to stay on top of it though - reading specs, talking to mechanics and and insisting on the correct oil, antifreeze, and for them to keep the $10 battery wrap attached because they always want to throw it away! …
That’s good (really). Many others were not so fortunate, which is why Chrysler ranks near the bottom at 29 of 36 brands.

Anyway, anecdotal evidence is often misleading.
That doesn’t mean all Drivers’ Edges are dishonest, nor do all PT Cruiser owners have bad experiences.
Therefore, more comprehensive studies, such as the one above, are more meaningful, and Chrysler scoring 29 of 36 (i.e. 7th from the bottom) isn’t very encouraging (far below the industry average for total problems).

Christopher Tracy wrote: … keep the $10 battery wrap attached because they always want to throw it away! I’ll bet d.a.n. that your battery wrap has been tossed and if you ask the mechanic they’ll say you don’t need it. The fact is you do - it keeps the battery from freezing (i.e. cold starts), and it protects from static electricity/stray voltages, keeping your electrical system intact. I experienced that first hand.

Regarding the battery, you’re right. The battery wrap is gone.
Also, one day while my wife was driving the car, she called and said the PT Cruiser was losing electrical power intermittently.
So, she drove it to a Drivers’ Edge near our home.
I met my wife there, opened the hood, and noticed the PT Cruiser’s battery cable was corroded, and barely attached, and when I touched it, it came completely loose.
Therefore, the problem was merely a broken battery cable right at the battery post.
I didn’t tell this to Drivers’ Edge, since I recognized this a perfect opportunity to test their honesty.
About an hour later, Drivers’ Edge called me and said the PT Cruiser needed a new alternator and possibly a new battery, and the total cost would be about $750.
I said, “No, I don’t think so. I already knew what the problem was before I brought it in. Just replace the connector on the end of the battery cable and call me back when you’re finished”.
Naturally, the Drivers’ Edge Manager was rattled, and said he would investigate the issue.
A few minutes later, he called back, and started apologizing, knowing I’d caught them red-handed in a fraud.
He blamed it all on the mechanic, and told me his mechanic got a good “talking to”.
They waived the cost to replace the $5 dollar battery connector and the labor cost.
Also, here’s an interesting point. Since the power cable came completely loose when I moved the cable, they could not have driven the car into the repair bay without either pushing the car, or touching the battery cable to the battery long enough to jump start the engine, or replacing the battery connector first, and then driving the car into the repair bay.
The moral of that story is: try to diagnose the problem first, or get a 2nd and 3rd opinion, and try to find an honest mechanic.

Anyway, many people understandably have a similar feeling about manufacturers that peddle junk that is touted as high quality, and those people also probably don’t think much of the idea of tax payers tax dollars being used to bail out such companies after decades of blatant mismanagement and shoddy products. Especially when this is not the first time Chrysler has been bailed out.

At any rate, the voters have the government that the voters elect (and re-elect, and re-elect, and re-elect , … , at least until that finally becomes too painful).

Posted by: d.a.n at January 1, 2009 3:25 PM
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