Ceterum autem censeo, GM esse delendam

[DanS]

Originally posted by KrazyHorse

10% of GDP...

Yeah, I know. Total number of new car sales in the US is ~8 million a year. At ~25000$ a car that's 200 billion per annum, or around 1.5% of GDP.

Apparently if one of the Detroit Three goes down it'll stop Americans from buying any cars at all, 7 times over.

The Detroit Three's exaggerations are disheartening and insulting. According to the Bureau of Economic Analysis, the contribution of motor vehicle output to the economy is 2.3% right now and about 3% in good times. That includes products that the car companies don't sell (some heavy duty trucks, etc.). That includes the Japanese and European car companies who assemble vehicles in the States, and who, incidentally, have over half market share.

See line 15...

http://www.bea.gov/national/nipaweb/TableView.asp?SelectedTable=19&Freq=Qtr&FirstYear=2006&LastYear=2008

[Saras]

Originally posted by DanS


The Detroit Three's exaggerations are disheartening and insulting. According to the Bureau of Economic Analysis, the contribution of motor vehicle output to the economy is 2.3% right now and about 3% in good times. That includes products that the car companies don't sell (some heavy duty trucks, etc.). That includes the Japanese and European car companies who assemble vehicles in the States, and who, incidentally, have over half market share.

See line 15...

http://www.bea.gov/national/nipaweb/...&LastYear=2008

Not only half the market, I'd bet they also create most of the 2.3% as well.

[Sandman]

Originally posted by Boris Godunov
The big question is what to do about the thousands and thousands of employees who will lose their jobs if GM and the others are allowed to go bankrupt.

Perhaps a new massive public works project, wherein the autoworkers dig big pits and bury the Big 3 executives alive? Or perhaps just up to their necks, and then let loose the fire ants? We could also use them for mortar for that wall between us and Mexico.

Build transcontinental triple-decker maglevs. You know you want to.

[Wernazuma III]

Originally posted by Nikolai


He said "bole vocco che alec twa. Chess wa." Just like Christina Aguilera. Only with bad spelling.

It took a while, but I figured it out.

Anyway, "Hocus, locus, jocus, or in English: To the landlord belong the doorknobs" "Clunkus. Bunkus. Skunkus. It is the law."

[Nikolai]

Originally posted by SlowwHand
Den store staten av Texas.

Where did you get that sentence? It's almost correct Norwegian. Almost.

[RGBVideo]

Re: Re: Ceterum autem censeo, GM esse delendam

Originally posted by Traianvs
[...]
PS: I understand Obama's comments about aiding the automobile industry.

I don't think you "understand" the possible motivations behind his push for support at all. Detroit's automobile industry has zero value for the government of the US, they produce nothing which can't be cheaply imported and which the federal government is dependant upon. Ergo, it's not really protectionism motivated by nationalism.

edit: unless your name is Patrick J. Buchanan and you presume cars are still the most high-tech products of our era which are so hard to produce related to other products that they can be used to extort other countries which don't produce them by manipulating their export level, thus causing jeopardy in the country importing them because of the supply market of cars is still supposed to be (in this fantasy world) extremely limited.

[Verto]

Let them file for Chapter 11, reorganize, and trash all those union contracts.

[Arrian]

Well, for what it's worth (very little, I know), I sent an email to my rep asking that he oppose bailing out the automakers. I haven't seen or heard him take a position yet.

I heard one of my senators this morning (Dodd) supporting the idea. He made the right noises about how they don't really deserve it, but he thinks it's necessary. I may send him an email too (and the other ****ing guy too), but I suspect any little chance I have lies with my 2nd-term Rep, not the senators.

-Arrian

[KrazyHorse]

I heard Dodd made the claim (he talked to NPR today) that GM is far more important to the overall economy than AIG was/is, which is patently untrue. AIG's impending failure posed a truly systemic risk (due to the reckless actions it took in writing huge amounts of CDOs, as I understand it). This does not mean that AIG's employees, shareholders or management "deserves" more protection than GM's. But if the US gov't is going to be in the business of crisis mitigation then AIG makes sense. GM et al do not.

I also note that financial firms are basically unable to take advantage of Chap. 11 because their entire business model involves taking on and paying off different debts, which Chap. 11 freezes, to some extent. Force GM to go into Chap. 11, then consider giving them some gov't DIP financing. Wipe out the equity holders, convert the current bondholders (and by implication the union as well) into equity holders, allow them to re-emerge.

[KrazyHorse]

Seriously, at this point the Detroit 3 are just giant pension and health plans financed by car sales. Why shouldn't the main stakeholders in this arrangement (current and past employees) have control of and responsibility for the health of their company?

The fiction of union "negotiating" with management is outdated. The unions can win as much as they want in any contract. The only reason they don't do it is to avoid killing the company entirely.

If this is the arrangement, then make it explicit. Convert union (and other debtholders) into equity. Wish them good luck.

[The Mad Monk]

I'm rather torn on this.

On one hand, I believe the market should rule, and if the Big Three are ineffeicient and uncompetitive, should should be allowed to fail so that more suitable companies can take their place.

...

On the other hand, I work for a specialty chemical company that makes custom formulated rubber pellets that are used in comounding materials that are used for adhesives, thermal and sound insulation, vibration dampening, and sealants. We are very efficient and make the best products of their types. Most of our customers produce materials for the housing and automotive industries.

...

Most of our customers are now laying people off for lack of business.

Last month I was working 48-56 hours a week; our work week was just reduced to 32.

[DanS]

TMM: Do you sell to non-Detroit car companies as well? If so, wouldn't you say that the lack of business is due to general economic conditions and once the car industry rebounds (with or without the Detroit car companies), you will get more business?

[DanS]

This made me chuckle...

Big Three CEOs Flew Private Jets to Plead for Public Funds
Auto Industry Close to Bankruptcy But They Get Pricey Perk
By BRIAN ROSS and JOSEPH RHEE

November 19, 2008—

The CEOs of the big three automakers flew to the nation's capital yesterday in private luxurious jets to make their case to Washington that the auto industry is running out of cash and needs $25 billion in taxpayer money to avoid bankruptcy.

The CEOs of GM, Ford and Chrysler may have told Congress that they will likely go out of business without a bailout yet that has not stopped them from traveling in style, not even First Class is good enough.

All three CEOs - Rick Wagoner of GM, Alan Mulally of Ford, and Robert Nardelli of Chrysler - exercised their perks Tuesday by flying in corporate jets to DC. Wagoner flew in GM's $36 million luxury aircraft to tell members of Congress that the company is burning through cash, asking for $10-12 billion for GM alone.

http://abcnews.go.com/print?id=6285739

[The Mad Monk]

I know some of our products go to Japan, France and China, so it's not entirely dependent, no. However, our largest customers are domestic. What strikes me is how far down the line we actually are. We supply other chemical companies that supply molding companies that supply parts companies that supply the automakers, and that's pretty much the shortest chain I can come up with.

[DanS]

I mean more specifically, would it be fair to say that the product you make ends up in cars assembled and sold in the US by foreign companies? For instance, does your product end up in cars made by Honda in Ohio?