No I'm comparing a worldwide credit crisis that smothers the economy and results in the destruction of certain parts of the economy especially in areas of large expenditures such as housing and automobiles to a natural disaster that wreaks unavoidable destruction. It effects the financial industry (bailed out) the insurance industry (bailedout partially) and other areas such as automobiles. So farm subsidies are necessary because foreign governments subsidize their agricultural industry. Foreign auto companies have been subsidized by their governments in areas such as universal health care that give them a big advantage over domestic auto companies. Sure it's easy to chaulk it up to "decades of economically unsound practices and piss-poor business management." But that completely overlooks external factors outside the control of the automakers.
Gip, But what about those factors that are within their control? The auto industry was failing long before this current economic crisis. I am with you when you talk about the industry being over-regulated, at the same time they continue to operate under the myth that they must stay in the current business model. That simply is not the case. Others who chose to do business differently are hurting like everyone else, but no where near to the extent that the Big 3 are in Michigan. You have to ask yourself, why are things so much worse for them? I tell you what... You give the big 3 that bailout and come see me in 10 years. Of all the industries that you listed, which of them is most likely to be standing there (at least once) 10 years later with their hands back out talking about the economy and how it is all everyone else's fault?
Corey Changing a model built on contractual obligations made decades ago is not simple. Auto workers who retired 20 yrs. ago with promised lifetime medical benefits are not going to abdicate their position nor will a union which is obligated to obtain the greatest benefits for their members surrender anything unless a large caliber gun is held to their heads. Turning large tanker takes miles to accomplish. So to it is with an auto industry that leashed itself to legacy promises decades before globilization. There have been a number of basic changes made in the American auto industry in the past 2 decades. Some are apparent and some are not so easy to see. The fact is no industry has been more regulated and interfered with by the federal and state governments. While Americans were demanding large, comfortable, powerful cars, the government was demanding fuel efficient, clean, safe vehicles. Making large powerful cars that the consumers wanted while trying to reduce fuel consumption was a difficult sometimes impossible task. Imagine if you would the government telling beer makers that they wanted beer to taste more like lemons and have little alcohol for safety. I guarantee you that beer sales would decline. In order to maintain profit, automakers had to overlap models destroying their identities. With margins squeezed, automakers could ill afford prolonged labor strikes. It was a vicious circle helped in no small part by the same assholes who are blaming today's auto executives for weeds sown years, decades ago.
Point taken. That still doesn't mean those weeds don't need to be pulled. Would this be a big enough gun? England's failed Auto bailout
At least these three CEOs get to plead their cases before a panel of experts on the subjects of mismanagement, greed, excess and lack of accountability. Who knows more about malfeasance than the U.S . Congress?
I read a lot of crap going both ways after today's hearings in Washington but I say heed the stern warning issued by this Ivy Leaguer: ""If we allow the most important industry in this country to disintegrate, believe me the fury will be nothing like what will happen when they hear about a $25 billion bailout," said Columbia University professor Jeffrey Sachs. "We're in the steepest descent we've been in in modern times. The American people need to understand this isn't a favor for the industry. This is to brake a collapse of our economy."
I learned something new yesterday. I spoke to a friend who is very high at one of the big three. He has the papers to file chapt. 11 in his car it's that close. I mentioned that it would at least end the legacy problem. Apparently, collective bargaining contracts can't be voided that easily. Right now the goal of the big three is to survive until the Obama administration. At that time, they're hoping for a more friendly ear in Washington.
.....what does that have to do with autos? The auto industry hasn't been the most important industry in this country in decades. At this point, it's not even close.
One thing completely not accepted around here in Detroit is the seemingly frivolous way in which the financial markets have been handed 700 billion with no struggle.....no questions asked....no admonishments.....no accountablity. At the same time the auto industry is having to labor mightily through these loan hearings to get a mere fraction of what the financial markets have been given and those greedy mental midgets on Wall Street caused the acute crisis in the auto industry to begin with. The credit freeze that ensued and amazingly enough continues to be a huge problem even now could make a loan/bail-out completely ineffective because if the Big Three can't sell cars to people because they can't get loans then those 100 year old American companies are doomed anyway. Another fact coming out is how the Germans, Italians, French and Japanese all assist their auto companies on a regular basis with no questions asked. And yet.....some Americans who claim to have reasonable minds and intelligence can somehow ignore the above completely and blame the past mistakes by the Big Three for the mess they are in. What in the hell is wrong with this country? I am dumbfounded at the stupidity and party bias that is going to ruin our nation and jeopardize our future. It has somehow become fashionable to be un-American.
Hey being fashionable is a basic right of Americans. You know, the same right that enables folks to oppose the US in its wars. Who latch onto every casualty report as if it were some justification of their views. Who not only hope we lose ( for political gain) but who distort the truth when things are going well because politically that would be bad for them. Sorry, you're falling on deaf ears on this one.
That's all you got BT? No plausible explanation as to why after all those billions were infused into the financial markets that no one can get a car loan? If they can't sell cars then where do you suggest the car companies get their revenue needed to survive?
They have not been able to sell cars for a generation now.....they lost market share in great times, they lost market share in good times, they lost market share in not so good times and they lost market share in really tough times to the point that their basic viablility is at issue.....sounds to me like it's broken and needs to be blown up and fixed. An enlightened management team would realize that this represents the best opportunity to address the basic structural deficiencies that they've had in our lifetime..... The sports analogy would be giving the Lions a bridge loan to so they can keep paying people to clean the urinals and paint the turf. It makes you feel good, on the surface it appears as if you're doing something but it ain't gonna work and does nothing to change the fundamental competitive dynamic....a complete waste of money and only delays the inevitable. Never confuse activity with progress....... The notion that the Detroit-based, domestic auto industry is as important to the world economy as the sound functioning of the financial system is like comparing your desire for chocolate with your need for oxygen.....you'd like to have both, but one is somewhat more important than the other....
http://usnews.rankingsandreviews.com/cars-trucks/daily-news/081202-November-Auto-Sales-Reports-Expected-to-be-Bleak/ No one is selling cars....not the Big Three and not the foreign manufacturers either. The Asians reported "slightly less severe" declines. That isn't good. Nissan and Mitsubishi have pulled their displays from the Detroit Auto Show and across the board all manufacturers from every country involved have made severe cuts to their auto show budget. And yet....you....mistakenly like some of the blowhards in Congress want to single out the Big Three for their decline in car sales as their own doing completely. Why no acknowledgement by you of the credit crunch that is the real causative factor behind the absolute crisis in this industry worldwide? "the weak overall economy and the continued lockup of the credit markets has overshadowed concerns over fuel prices."
Business cycles, like the weather, have been around for eons.......in every downturn, consumption slows, credit contracts and car sales decline. Every single time, without exception.....strong companies with strong management teams who have been structured to guide their companies through the downturns by acting decisively and fashioning a business system designed with the necessary structural flexibilty to survive in the face of reductions in demand and output will survive and prosper. Weak ones, who have built a business model with a crushing fixed cost burden and have shown a complete inability to compete will not, nor should they. There is no question that the downturn is responsible for reduced demand across every business sector, in virtually every industry.....as it has been throughout recorded history. It is not the real causative factor behind the crisis in the Detroit-based domestic auto industry......dumb is forever.
Wow....spoken like a true heartless banker. We had better stick to Texas-OSU where we can both agree. How you can fail to acknowledge that the mortgage and finance boondogle brought on by greed and Wall Street idiocy and the resultant credit freeze has anything to do with low car sales is beyond comprehension. I guess everyone should have cash for the cars they want? Maybe a little home equity.....no wait.....exactly!!! :roll:
Fundamentally, the credit debacle had a great many fathers beyond Wall Street up to and including Main St and Capitol Hill. So I reject your premise as to the cause of the downturn. Secondly, I have never said that the credit issues had nothing to do with low car sales. Quite the contrary, indeed they have contributed.....however, they have also contributed to a reduction in demand for virtually everything produced on our planet. The overwhelming majority of commericial enterprises on the planet will experience a decline in the demand for their product. The overwhelming majority of those enterprises will remain viable without resorting to grovelling in front of congress and the world for public assistance.....why is that and how can it be?