The Back Alley Archives

An interesting take on this is the Japanese auto makes are wanting the US to bail out the US automakers because there are smaller companies that make parts for US auto makers. The foreign auto makers, specifically Japanese, use the companies, not at much as the US auto industry, but they do need them and believe that as the big three go under so do these smaller companies and thus the Honda, Toyota, etc cars made in the US would come to a haul because of their need for these smaller parts. While they use them, their business isn't enough to keep these smaller companies in business.

While I HATE it, again, I think it is a necessary evil to help out these companies or we could be in a HUGE depression when the aftershocks of the auto industry failures are felt.

i agree with you todd though i'll hate to admit this, the US auto industry, as it is compared to other countries auto industries, is inefficient and 'bulky' and can stand to be subjected to an overhaul....the bloodletting might be something that can help us in the long run.

Maybe they can tag any kind of help and have it be dependent on the auto industry getting it's act together...although that will never happen.

btw todd - did you know that there are more GM plants in canada than there are in detroit?

I gotta think that the auto industry isn't going to recover unless the UAW gives in a little.  Labor in the auto industry is way overpaid to do substandard work.

Lefty economist Robert Reich agrees.

Of course, this lefty economist complains that auto workers only:

1. Make $25 an hour in base pay (that's $50k a year before overtime); and
2. Get an additional $15k in pension benefits; and
3. Get an additional $25k in health care benefits

Now, I know that he just pulled the last two numbers out of thin air to try to figure out where the Wall Street Journal is getting their data, but still.

Where else can a blue collar worker make $50k a year, PLUS a pension PLUS employer-paid health care?

Nowhere. Shit, I've got 7 more years of education than the average auto worker and while my base pay is substantially more than $50k (but also substantially less than $100k a year), I get NO pension and NO health care.

While I think unions are a necessary evil, in the case of the automotive industry they've inflated the cost of labor far beyond what the market would ordinarily dictate.

I did not, but how many GM plants in US vs Canada. Detroit vs Canada isn't a good comparison.

I agree Doc. The UAW is holding the industry hostage and helping to drive them into the ground. Not saying it is entirely the UAW's fault but they have been a big piece.

Let them fucking crash. Isn't that what happens in business. Once they fail another automaker will rise and do it more efficiently. I hate handouts to people who use shitty business practices and run companies into the ground.

I'd like to see that too Eric, but the repercussions would be far reaching. It would put several sectors of the US economy into a tailspin. I would be willing to wager that it would put the US economy into a depression.

We are already in a depression. Should it just be business as usual? Give 'em 50 billion and then next year, after another shitty year of business practices, they could back and ask for more. Then more, then more and we have to just keep giving because of the possible repercussions. Fuck that. Take the hit and let a company that can tell the UAW to go fuck themselves and actually use affordable labor so they can be profitable come in.

GM pays some goombah with a 7th grade education $30/hour to put two screws into a headlight assembly once every 15 minutes on an assembly line and can't figure out why they can't turn a profit. Shocking.

there's 10 in ontario alone (2 that are closed though)...only 1 that's operational in detroit

seems as if flint, MI and the state of Ohio have taken over though.



http://en.wikipedia.org/wiki/List_of_GM_factories

i can't argue erics thinking though i'll disagree on us being in a depression.

You don't think we are in a depression?

no

Wikipedia

Considered a rare but extreme form of recession, a depression is characterized by abnormal increases in unemployment, restriction of credit, shrinking output and investment, numerous bankruptcies, reduced amounts of trade and commerce, as well as highly volatile relative currency value fluctuations, mostly devaluations. Price deflation or hyperinflation are also common elements of a depression.

I think you can answer "yes" to every one of the indicators. I could be wrong though.

Some economists believe you have to a 10% drop in GDP to characterize as a depression but that definition hasn't been widely accepted. We could be splitting hairs but all of the indicators are there and we still have a long way to go before we are out of this mess.

i appreciate that.

i consider depression to be a world wide recession...i know that japan has recently come out and said that with 2 successive quarters of negative growth to GDP, they are technically in a recession...technically, the US and GB are not...neither are china and india.

the eurozone is...but i'll argue it might have more to do with the fact that the euro is a main tie-all and germany is more of a net exporter than the rest
Austria
Belgium
Cyprus
Finland
France
Germany
Greece
Ireland
Italy
Luxembourg
Malta
Netherlands
Portugal
Slovenia
Spain

had the original bailout never happened, would 'the big 3' be in washington right now?

I can understand the dire situation with the financial industry (though it's absurd that AIG execs are *still* taking luxury retreats) requiring attention. However, Detroit has had a problem for a lot longer than this recent economic crisis. The quality is lower and technology is lagging in U.S. autos.

I only tuned in for a little bit of the hearings. My two observations:

1. How stupid were these execs, flying in on private jets to ask for handouts? That's just the epitome of arrogance.

2. Note to congress critters--please know what the fuck you're talking about. The one congressman I saw asking questions during my short viewing started prattling on about how his district represents the corporate headquarters of American Airlines. He then asked if anyone thought American or the other airlines should get a bailout if they ran into trouble. Dumbass, they already did, right after 9/11! The airline industry went to Congress, just like these yo-yo's now, and they got their bailout!

had the original bailout never happened, would 'the big 3' be in washington right now?

I can understand the dire situation with the financial industry (though it's absurd that AIG execs are *still* taking luxury retreats) requiring attention. However, Detroit has had a problem for a lot longer than this recent economic crisis. The quality is lower and technology is lagging in U.S. autos.

they've been in DC all along.

i've read that GM needs 11BLN a month just to pay it's bills every month....11 frikkin BILLION!!! what's a bailout pack of 25BLN gonna do for them? really?

look at it this way, the heads of the big 3 gave it the old college try...their colleagues and employees know they've tried their best...the blame game can go around and around and the CEOs will have had their collective hands washed of any guilt...can blame the global financial crisis, can blame a lame duck congress, can blame an unpopular president, can blame a lack of consumer nationalism...can blame anyone and anything now.

so they go back to detroit and wait for the inevitable...once the bankruptcies occur and the big 3 fail to be able to pay their bills, fail to be able to pay the interest on their debt obligations, and start closing factories, then and only then will the big 3 be able to start fresh and new with what was already a flawed way of going about business....they essentially hatchet job their own industry with the hopes of improving it without having to get their hands dirty and get scooted to the back of the 'blame game' line.

obviously they've been in washington as lobbyists, but their CEOs haven't been there for congressional hearings discussing major bailouts, smartass

bob nardelli should retire from business. he just sucks.

so they go back to detroit and wait for the inevitable...once the bankruptcies occur and the big 3 fail to be able to pay their bills, fail to be able to pay the interest on their debt obligations, and start closing factories, then and only then will the big 3 be able to start fresh and new with what was already a flawed way of going about business....they essentially hatchet job their own industry with the hopes of improving it without having to get their hands dirty and get scooted to the back of the 'blame game' line.

Only after disaster can we be resurrected. It’s only after you’ve lost everything, that you’re free to do anything.

Use soap.

God there's really nothing like throwing good money after bad. I'm getting to the point that I think the only answer is revolution--otherwise our leaders will continue to tax us without regard to the effects of the insane debt we, as a society, now owe. What was it they used to say? No taxation without representation?

I'd argue that the implicit upshot of that concept is that meaningful representation is required. We have none. Not advocating violence but I am a big supporter of revolution at this point.

^^

watching the bailout testimony the other day, all our lawmakers had a common theme - "how do i justify your actions to my constituents" .... there's your representation.

bob nardelli should retire from business. he just sucks.

Thank you for making this point. That was another observation I had from my brief watching of the testimony. Nardelli is the worst businessman around.

^^

watching the bailout testimony the other day, all our lawmakers had a common theme - "how do i justify your actions to my constituents" .... there's your representation.

They had no problem justifying it when AIG wanted 90 billion dollars. It is a dog and pony show. Nothing more. I drift more towards AA's line of thinking every single day. Our founding fathers would roll the fuck over in their graves if they saw the shit that goes on today with these shady motherfuckers.