Why are we so mean to the car companies (and nice to the banks)?

@usalorenz
-
I will state it again. "There is no such thing as compassionate capitalism."
-
The system is a structure, which when operational at peak efficiency, will permit creation and destruction of business enterprises and partnerships as resources, capital and persons are tasked, reallocated and sometimes removed all in the aim of rewarding useful and successful disposition of resources, capital and persons to make money.
-
It is nothing more. It is nothing less. It has no feelings and it has no capacity to be brutal. The system exists to fulfill its objective as efficiently as possible.
-
Happy Thanksgiving!!

After Romney and the rest of the rhetoric ends, there is little choice but to bail GM and company. But make it a deal that has teeth and common sense.

A BAILOUT PLAN Congress should consider >

http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html

Trying something outside the box like this, is the only way to save the U.S. Auto Industry.

There is much creative talent hidden inside the U.S. Big 3 that has been smothered by mismanagement and the UAW. ... and they actually "make" something, .... unlike Wall Street. Detroit deserves saving.

For a rebuttal to this blog see:
http://thegreatgadfly.wordpress.com/2008/11/25/hello-world/

Please everyone, realize one thing:

It does not make you sound knowledgeable and smart to say "Let the automakers go bankrupt," nor do you impress anyone with your brilliant plan for their restructuring. I love how it's so simple to you people. I wish I had figured out how to turn around a multi-billion dollar industry, and it's so simple: just cut down on the labor costs that are so high "because of the unions." Also, why we're at it, they should just cut out the legacy costs as well.

Do you people not realize that the Big Three would do these things if they could or if they would indeed increase profitability???????? Do you people think they like paying such high labor costs?????? Do you not realize that if we truly had a free capitalistic market, then the Big 3 would move all manufacturing overseas, where the foreign automakers get to pay labor costs that are roughly 90% less, which obviously allows them to make better cars?

While I cannot say for certain as I am not extremely knowledgeable on labor unions, I do know that unions have power. The Big Three hate the unions, you can be sure of that. They don't deal with them because they want to--in fact, it's just the opposite. They absolutely do not want to deal with them at all. They deal with them because they have to. In addition, there are numerous, complex regulations and laws that have been created over the last 4 or 5 decades that have made attempted to keep the auto jobs in America. Our economy allows us to be competitive in pretty much every single industry, so do you really just think that foreigners are just simply better than us at making cars?

And as for the legacy costs, many of these benefits are the exact same in every industry, indeed in the financial industry as well. What most retards do not understand is that the auto industry employs more people than most other companies and industries, so these costs in total are obviously going to be higher. And going forward, I'm sure there are plenty of reasons they cannot just cut out these legacy costs. Maybe they are legally required to abide by them. Have you idiots ever thought of that?

Maybe I should just leave you with this: please realize that if it were so simple that you are able to realize it, then there is pretty much a 100% chance that the CEOs of the Big Three have already considered it.

Also, everyone needs to remember that this is Congress we're talking about here. They are the ones raising all of this nonsense, requiring the automakers to come back with a "plan" for what they're going to do with the money. What they don't understand is this: the Big 3 are running out of cash and will be done in several months if they do not get capital. They are doing everything humanly possible to make money, and they have made the only changes they can make and are at the end of the line. These changes may work, and they will do everything humanly possible to run efficient companies, but that doesn't fix their short-term liquidity problem. Normally they would be able to get a big loan from any number of willing banks. However, the credit markets are still completely frozen. In addition, unless some of the laws and regulations are changed, they cannot cut down on labor costs any further. The unions are not going to make any more concessions. The only reason the UAW has so much power is because our government has afforded them this power.

Bankruptcy will not eliminate the UAW. Congress must do something in order to weaken the power of the UAW, and bankruptcy has nothing to do with this process whatsoever. Even if the labor contracts are released in chapter 11 (which is a big "if" by the way), the UAW will just demand identical terms in a new contract. Will Congress do what needs to be done? Not unless the Big 3 lobby the hell out of them (trust me, I'm fully aware of the irony involved here), and they can't do that if they go bankrupt.

I agree with this article, especially at the end. People can no longer identify with the auto industry, and there is nothing exciting about them for the media to report on. I would submit there are several other reasons at play here. One being that people think they sound smart when they say a company should just go bankrupt, suggesting that they just then restructure and come out leaner. I love how nonchalant bankruptcy has become. In addition, I think Paulson et al. made a mistake letting Lehman fall--at the time they didn't think things would get quite this bad, so they didn't offer enough support for a buyer, and they didn't realize how much it would freeze the capital markets. After it collapsed and everything went to hell, they then realized they couldn't let that happen again. Now they have bailed out every single financial institution that needed it, even ones that have been poorly mismanaged, like AIG and Citigroup. Keep in mind that with AIG, the shareholders did get wiped out, the same end result as bankruptcy. Thus, the too big to fail and interconnected reasoning is just bullcrap.

The market tanked after Lehman not because Lehman was so "interconnected" and not because they were so integral to our economy. Indeed, the losses from counterparty risk and other investor losses in Lehman are supposedly not even that big, only a couple of billion dollars in total.

The market tanked because of an utter loss of confidence across the board. People finally realized that if Lehman Brothers could crash, then the subprime credit crisis and housing crash were going to prove to be seriously devestating to the economy and that the world was indeed headed for a deep recession.

That realization has already passed. The market has adjusted, and so the bankruptcy of GM is not going to do much more damage. Paulson bailed out every other bank after Lehman, so it has to do the same with Citi. These are the real reasons for the hesitation to bail out the Big Three.

The U.S. Gov't did help another failing company in the 1970'S. Harley davidson, A failing company that was given a private market by heavy restrictions and tariffs on the import competitors. The simpilest way to get a business back on its feet is to eliminate the competition to that business. We as a country need our manufactures to maintain our great nation. If it worked for Harley Davidson Motorcycle