Don't Let Crisis Suck Down Auto Industry

iVillage Member
Registered: 08-20-2008
Don't Let Crisis Suck Down Auto Industry
136
Wed, 11-19-2008 - 10:13pm

I am focused here on just the U.S. auto industry. People are so focused on whether the companies deserve to go bankrupt. We can all debate that. That issue pales in comparison to what will happen if we let these companies go down in the midst of the worst financial crisis since the Great Depression. As President Kennedy once said, timing is everything. And the timing could not be worse for a massive big three US auto company bankruptcy.

"U.S. auto companies employ nearly a quarter-million workers, and more than 730,000 other people have jobs producing the materials and parts that go into cars. About 1 million on top of that work in dealerships nationwide. If just one of the auto giants were to go belly up, some estimates put U.S. job losses next year as high as 2.5 million.
"If GM is telling us the truth, they go into bankruptcy and you see a cascade like you have never seen," said Sen. George V. Voinovich, R-Ohio, who was working on one rescue plan Wednesday. "If people want to go home and not do anything, I think that they're going to have that on their hands.""

http://www.google.com/hostednews/ap/article/ALeqM5iOTm71rXkkZaLSOWaaIM11o06mNQD94IAPNG0

These millions of Americans are the families behind all those mortgages, all those CDOs, and the banking crisis. These are millions of the people who can't pay their bills. Stop the paychecks now to all these people, and you ain't seen nothing yet when it comes to America's foreclosures and this financial crisis.

Here is the link the Republicans don't get about American workers. We are they. Sell the worker out by making them lose their jobs to abused foreign labor and see what happens? We just did.

This is not the time to give the auto industry, auto executives, the auto unions, or whoever, their just due. We will cut off our noses to spite our faces.

And who are the ones who are all indignant about helping our auto industry in this time of need? The "Country First" Republican Senators of course - especially the ones in Southern States with foreign auto industry donors that stand to benefit from seeing the U.S. auto industry destroyed.

This is ridiculous. Why is anyone even listening to anything the Republicans are saying anymore in the midst of the disastrous fallout from their disastrous policies regarding . . . everything. Everything. Domestic policy. The economy. Foreign policy. The failed "war" against bin Ladin and fiasco in Iraq.

Let's save our auto industry and in the process save ourselves. The Republicans say the sky will fall if we save our the car companies, but the last time we saved Chrysler lo and behold it survived for decades. When the economy is better and not fed by fear, then if one or more of these companies goes down that's a different story. Now is not the time for that.

Let's not listen to the Republican parade of horribles. Let's not listen to the Republican fear-mongering about what will happen if we save the auto industry and the millions of jobs that it supports. The only thing we have to fear is fear itself. We've got to stick together to get through this.

And when the Democrats reenter the White House and bring some competence and integrity back to our government again, we'll all be a lot better off. Then we'll get through this with hope and lots of hard work.

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iVillage Member
Registered: 01-12-2007
Wed, 11-19-2008 - 10:26pm
They need to file Chapter 11.

   

iVillage Member
Registered: 08-20-2008
Wed, 11-19-2008 - 10:33pm

"They need to file Chapter 11. Period. They can restructure and rebuild. That is the right thing to do. Enough is enough."

Your analysis, to be charitable, seems a bit superficial here. I don't think you have thought this through.

iVillage Member
Registered: 06-20-2005
Fri, 11-21-2008 - 7:16am

Ford and GM's contributions

An interesting commentary

You might find this of interest:

"CNN Headline News did a short news listing regarding Ford and GM's
contributions to the relief and recovery efforts in New York and
Washington.

The findings are as follows.....

1. Ford- $1 million to American Red Cross matching employee contributions of the same number plus 10 Excursions to NY Fire Dept. The company also offered ER response team services and office space to displaced government employees.

2. GM- $1 million to American Red Cross matching employee contributions of the same number and a fleet of vans, suv's, and trucks.

3. Daimler Chrysler- $10 million to support of the children and victims of the Sept. 11 attack.

4. Harley Davi dson motorcycles- $1 million and 30 new motorcyc les to the

iVillage Member
Registered: 08-25-2008
Fri, 11-21-2008 - 9:00am
Maybe if those companies focused on their businesses rather than charity, they wouldn't be in the shape they are in today.
iVillage Member
Registered: 08-25-2008
Fri, 11-21-2008 - 9:05am

No, I think it's you who are being superficial - taking the automatic democrat/union talking points.


Most of the major airlines have been through Chapter 11 in the past 5 years.

iVillage Member
Registered: 07-25-2008
Fri, 11-21-2008 - 9:29am

Soupy I have a differing stance, I'm from the motor city, michigan is a blue state and has been ruled by long time senator carl levin and 2nd term sen stabenaw and 2nd term governor granholm and debunked Dingell andDetroit has been run by Democratic mayors since before I was born.


Dems have been bad for michigan although and it's not a republican/democratic fix, it's just industry as a cycle. Before the automobile industry many were farmers and lived off the land or were carriage makers.

iVillage Member
Registered: 08-20-2008
Fri, 11-21-2008 - 8:36pm

Whether Michigan should not have had an auto industry in the first place, or whether the Democrats are to blame for that, are big picture questions we can debate. The priority issue now is do we let the worst economic crisis since the Great Depression suck the auto companies down the tubes?

As you can see from my response below, I believe there are strong indications that letting the auto companies go down now would have a disastrous effect on our economy. Whether we should let them go down when our economy is in better shape and the impact will be more localized is another issue.

Here's my additional response (from another thread)

"CEO are certainly to blame for making these commitments with the unions but you can't have a company paying someone for not taking a job and paying someone a pension and insurance for 25 years. Plan and simple it is a bad business model it should go bankrupt."

Those like the poster above who say we should let the automakers go bankrupt don't have a lot of facts to back up their assertion. It is because it is, the argument runs. If they can't cut it through the worst economic crisis since the Great Depression because they made some missteps, we should watch them go down the toilet. They should go bankrupt. "Period."

It reminds me of what people said about Lehman Brothers before we watched Lehman go down the toilet. And boy were people wrong. Before Lehman went bankrupt we were heading into a fairly normal recession. After the situation worsened dramatically. Investor confidence crashed, the stock market crashed, credit markets seized and no one would lend to each other anymore in what has become the worst financial crisis since the Great Depression.

Many of the same people, by the way, who now are calling for the bankruptcy of the US automakers, said Lehman should go bankrupt then. These same people were in denial that the US economy was heading for a recession. They underestimated what was happening. Spending a few billion to save Lehman might have averted the US government having to spend hundreds and hundreds of billions more now.

We can't undo what happened to Lehman and we don't make decisions with the benefit of 20 20 hindsight. But we can learn from the past. This is a very dangerous economic crisis that is not to be experimented with. We can't afford to take another chance. Throwing just one of the three massive auto companies into bankruptcy could cause 2.5 million people to lose their jobs. The timing could not be worse. That's a huge chunk of American families at risk of not being able to pay their mortgages. That's a huge chunk of consumer demand evaporated.

This is not to mention that letting one or more of these companies go bankrupt now will feed the fear that is paralyzing these markets. And this during a vacuum of leadership during this period in which a failed President exits and before President-elect Obama has any power to react.

And to those who say that the US automakers would be fine in bankruptcy because they would reorganize instead of folding up shop - what assurance do you have of that? The answer is none of course. I for one am not buying a car from a bankrupt automaker. It's just common sense. The bankrupt company is far less likely than its competitors to be around to continue making parts to service the car. Once an automaker declares bankruptcy there is a very good chance it will quickly end up completely folding up shop.

Once we get through what is now the worst economic crisis since the Great Depression, then we can consider whether to let normal capitalism go back to work in the auto industry. It is worth noting by the way that the last time the government bailed out Chrysler, despite the parade of horribles painted by critics then as now, the company survived for decades and our government made money on the transaction. It is also worth noting that by letting our automakers fall into bankruptcy we will be tying our hands behind our economy's back as all our trade partners support their auto industries through this economic crisis.

iVillage Member
Registered: 04-02-2008
Fri, 11-21-2008 - 9:08pm
Exactly it is all about the unions, my two senators will vote no if it comes to them.
iVillage Member
Registered: 04-02-2008
Fri, 11-21-2008 - 9:11pm
2 decades they survived after that gov bailout.
iVillage Member
Registered: 11-20-2008
Fri, 11-21-2008 - 9:18pm
I had seen on the news that the unions aren't willing to bend, nor are the CEO's.

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