I caught the following on fordmuscle.com. The author agreed to let me republish it here:
There’s an old saying, “Everyone is a capitalist on the way up and a socialist on the way down.” While GM’s circumstances are tragic, we need to let capitalism take its course. Propping up GM hurts the competitors who aren’t asking for handouts. It makes the playing field un-level. Ford is the fittest, and when resources are scarce, the fittest shall survive and the weak potentially go extinct. Ford stands to increase its market share dramatically if GM (and Chrysler) were allowed to fail. By doing so Ford would be able to make more cars, hire more workers, and be a better competitor in the global automotive market.
The US is better off with one strong company rather than three weak, government supported entities. No democratic government should pump $30 Billion of taxpayer money into a single company, let alone one that is otherwise destined to fail. It is a horrible investment of gigantic proportion. Look at it this way, the government could distribute $1 Million to 30,000 small and entrepreneurial businesses—sort of a Treasury backed Venture Capital effort—and just about be guaranteed of an economic turn around.
There are currently around 5.5-6 million small business employers in this country. 30K more wouldn’t be statistically significant, especially 30K more businesses that couldn’t get funded anywhere else because their business model stunk.
Otherwise, right on.
i am no fan of gm or chrysler (or ford for that matter) but one must ask how much was pumped into AIG or Citibank… why is it not good for the car industry but ok for other sectors?
Yet no one ever mentions corporate welfare.
No one ever mentions Lockheed Martin.
No one mentions the 99 Billion to be spent on the F22 – which will be obsolete in less than 5 years by the next wave of radar systems… or the billions we wasted on the RAH66Comanche Program (or the Millions we paid to cancel the contracts).
What’s funny is, the Republicans are intent on letting America’s last manufacturing plants fail.
What then will this country produce? NOTHING
We’ll all be servants to the rich – or, if you are smart enough to be a teacher, fireman, policeman ,etc – you’d be a typical government employed slave working in social services.
I’m totally for the government saving GM and FORD. chrysler I don’t think is profitable and can’t stand on its own, so they need to be absorbed into the Big 2.
Not that I don’t agree… but there is still the issue of suppliers. Ford cannot survive without GM because their suppliers are too intermingled. That said, I think that all the money requested by GM should go directly to suppliers that supply Ford, Toyota, Honda, etc. So when the inevitable comes to pass, it doesn’t do anything more than clean up a serious mess – as opposed to creating a larger one.
Ditto! Thanks for the article.
Here is a question about the mortgage bailout plan…
How many of you can tell me right now WHAT WILL HAPPEN TO
– state revenue
– pensions
– state programs
if we allow the suspected 4 million or so homes to go into foreclosure?
I’m not sure if you know this but a large amount of the state revenue comes from property taxes ?
For all those Ron Paul/Peter schiff fans out there, are you aware how much government revenue comes from income taxes?
Do you know what would happen if we did what Schiff suggests and abolish THE FDIC?
Guys…get educated.
The link to this item should be sent to every member of Congress, and every Senator, and every member of Obama’s economic team.
The author, whomever it may be, has cogently and succinctly stated, in the clearest possible terms, the best course for the US Gov’t to chart through this economic morass.
In fact, this guy should be Car Czar, or at least on the committee. Maybe even SecTreas….
$1 Million given out to 30 Businesses would cause inflation. Those businesses demand on products would quickly exhaust the supply of those products and would therefore cause the supplier to increase the price of his supply.
INFLATIONNNNNNNNNNNNNNNNNNNNNN
Pork Is Tasty, or, How I Learned To Stop Worrying And Love The Bailout:
I’ve reluctantly begun to agree with Fareed Zakaria’s position that the Detroit Bailout makes no sense as a business plan, but does make some desperate sense as a jobs bill. Congress has appropriated hundreds of billions in stimulus aid, much of it proiritized for ‘shovel-ready’ projects to get people working quickly.
By this criteria, GM and Chrysler are very ‘shovel-ready’ right now. We can use shovels to dig their graves, or to throw mountains of cash into their gaping and profitless pie-holes. But either way, somebody has got to start shoveling soon.
Even if they go tits-up in two or three years, our billions of tax dollars will hopefully keep most of their employees working *now* and maybe even for the next six or eight quarters. This will have a more immediate benefit to the economy than waiting months or years to spend out the same dollars on construction or development projects.
Even though infrastructure projects will have a more lasting value to the economy (because nobody really thinks GM will survive this) we need to do something that will immediately reduce unemployment, or prevent it from increasing.
I don’t *like* this line of reasoning, and the thought of (lavishly) rewarding (abject) failure makes me throw up in my mouth a little bit, but I grudgingly admit that it has a chance of working.
Not by ‘saving’ GM and Chrysler, but by keeping many of their workers employed for the next several quarters, until things don’t look quite so grim.
Flashpoint said:
For all those Ron Paul/Peter schiff fans out there, are you aware how much government revenue comes from income taxes?
I can tell you clearly that the net income tax revenue is NEGATIVE, if the said income is from a bailout package. In other words, it does make financial sense to stop the bailout. It will only be positive (and make sense) if the income is a justified reward from the market place (i.e. by selling cars that people like).
TonyJZX & Flashpoint[@1:25]: Are you guys saying two wrongs (or several wrongs) make a right? How does that work? More importantly, how does this work going forward? Thanks to political cowardice do we now have to bail out every single business that fails?
Just because mistakes were made in the past, does not mean we have to keep repeating them in future…
What’s funny is, the Republicans are intent on letting America’s last manufacturing plants fail. What then will this country produce? NOTHING
1. Production does not = manufacturing
2. Manufacturing is not universially failing. It is going through a (much needed) shake-up.
3. GM does not = American Auto Industry
4. Detroit does not = American Auto Industry
For all those Ron Paul/Peter schiff fans out there, are you aware how much government revenue comes from income taxes?
A: Too much!
Let’s cut to the chase here. The federal bailout of GM and Chrysler is not about rescuing two storied American corporations or maintaining America’s manufacturing base. It is all about protecting the jobs of Obama’s voting UAW constituency.
GM and Chrysler are being propped up so they can continue in their primary function as glorified workfare programs.
Interesting… GM and Ford both were trading at $1.50 from about 1-2 pm EST. GM’s share price has plummeted an amazing 23%. In one day.
Were he not freshly parachuted onto a sunny beach somewhere, Lutz would probably muse, ‘fortunately our share price has remained robust, as it’s only fallen half as much as our market share last month…’
Prediction of a 6200 Dow on the day GM declares what cousin Saab did today. By Easter.
Ford can probably (hopefully) pull it off. The other two… not so much.
Even if they go tits-up in two or three years, our billions of tax dollars will hopefully keep most of their employees working *now* and maybe even for the next six or eight quarters. This will have a more immediate benefit to the economy than waiting months or years to spend out the same dollars on construction or development projects.
Nope!
This argument assumes that the bailout money is free money. Another billion here, there and everywhere. Why worry? It comes from a bottomless pit, doesn’t it?
GM’s Chapter 11 will hit the people and businesses who chose to do business with it hard. Regardless of when it happens. You may argue that it is unfair, but that’s how capitalism works.
This downturn is the perfect opportunity for GM’s Chapter 11: now that they have to admit how bad things are. When the economy recovers, they’ll just return to the old game of denial. You know, until the next thing hits.
Downturns are a part of why capitalism works. We’re better of stomaching the bitter medicine and allowing the weak to fail. That way we free up resources for the strong and the young…
I wouldn’t argue that GM needs to fail as in quit building cars and trucks. GM needs to reorganize into a smaller more focused company that builds mostly Chevrolets at a profit in the future. Ford will build better cars and trucks with competition from Chevrolet. What GM doesn’t need to do is build Hummers, Saturns, Pontiacs, Buicks, and GMCs that are all just Chevys with more trim.
Hard to justify the independent existence of Chrysler. They have a few unique good models that could be sold to a different manufacturer. However, most Chrysler models are last place choices in their market segment that barely sell at discount prices. Nobody cares if no additional units of Caliber, Compass, Sebring, Avenger, Journey, Aspen, or Durango are made. Seems like the right time to liquidate.
And in the meanwhile, our government is stealing from us for their favored friends in the top 1% of the population, and for groups which habitually vote for the Democratic party.
More importantly, our lives (assuming you are unborn or elderly, or in other “costly to the government” positions), our liberty and our freedom are being stolen before our eyes.
http://www.wnd.com/index.php?fa=PAGE.view&pageId=89416
I wonder how much money Ford is burning per month, and what balance remains to be used in their credit lines?
I suspect they’ll be taking gov’t cheese fairly quickly. Sure the products are looking up, they haven’t bathed in the filth of bailout money yet, but nobody is buying cars.
“It is all about protecting the jobs of Obama’s voting UAW constituency.”
The UAW has fewer than 500,000 members. Obama won the popular vote by a margin of almost 10 million votes. Not all UAW members voted for Obama. Needless to say, he would have easily won the election without any UAW votes.
The idea that the only reason the administration might keep propping up GM and Chrysler is to buy, or pay back for, votes is at best silly.
How many bankers do you think vote for Democrats? Yet they are getting more lifelines from the feds than any other industry by a massive margin.
“… our liberty and our freedom are being stolen before our eyes. ”
Tell that to the families of the over 4,000 soldiers who died in Iraq. Conservatives often seem to think no cost in blood or money is too high to wage war, then turn around and scream bloody murder if any money is spent on the civilians at home.
Re Flashpoint :
The F22 and Comanche helicopter programs (has) had no shortage of Unionized workers – at the manufacturer and their suppliers.
Consequently, there was no shortage of Democratic support for these programs.
Be fair – you can’t finger the Republicans exclusively.
flashpoint: For all those Ron Paul/Peter schiff fans out there, are you aware how much government revenue comes from income taxes?
Unfortunately this is the assumption that keeps government large and inefficient. Keeping/raising taxes is wonderful at supporting the government machine, but shouldn’t we be questioning why were doing it in the first place? Cut the size of the bureaucracy, and reduce taxes… it’s actually a rather elegant solution to most problems; however, it flies in the face of current trends.
Well, John Horner, I’m no conservative; I’m a Constitutionalist. This means that I regard most of the wars the U.S. has been in as illegal, since many of them were entered into without the proper sanction of Congress. Ironically, Iraq and Afghanistan are not amonst these illegal wars. And were voted for a go-ahead by BOTH sides of the aisle, which grates on my nerves no end every time I hear a leftie pointing fingers at the righties. When you point a finger at someone, did you know, you actually have 3 fingers pointing back at yourself?
The other salient fact that Bush-bashers always forget is the number of dead in the current war is way too high, yes; but this pales into total insignificance in comparison to the dead of the Civil War; World War I; World War II; The Korean “police action”; and Vietnam.
Not that I can stand Bush any more than I can Obama, but I will defend someone, even Obama, from unfair condemnation. It’s only right (whoops, or should I have said “correct”?)
BTW, I know many union members, UAW and otherwise; most of them are lefties and will vote to steal out of someone else’s pocket every time.
Margaret Thatcher once said that socialism works fine, until it runs out of other people’s money to steal. Watch that happen as soon as this summer; the upcoming summer from Hell.
No one mentions the 99 Billion to be spent on the F22 – which will be obsolete in less than 5 years by the next wave of radar systems… or the billions we wasted on the RAH66Comanche Program (or the Millions we paid to cancel the contracts).
I worked on both the F22 and the Comanche programs. Just because radar technology advances does not make the F22 obsolete. It just makes it less stealthy, but it is still far more survivable then the existing F15 it’s replacing. There were far more improvements over the F15 then just the radar cross-section.
And the money spent at cancellation of the Comanche program was because component suppliers gave discount pricing during the development for designs and prototypes in return for production guarantees later on in the project. If those contractual clauses hadn’t been included you would have paid much more in upfront costs.
Mikeincanada
Newt Gingrich and Sam Nunn weren’t Democrats.
during the years republicans were in power, any democrat voting against the F22 would be labeled a TRAITOR or UNPATRIOTIC.
Guess what…by changing our order from 750 – 400 Raptors, Lockheed increased the price per unit. I believe the current PPU is about $180M
The last person I heard to speak up against the F22 was Barney Frank.
This article raises a good point. Ford recognized its problems, brought in some fresh outside talent, and set about trying to improve a car company. Its two primary competitors go go uncle sugar, get BILLIONS of dollars in aid, and promptly start slashing prices and offering 0% financing. Without government intervention, GM & Chrysler would not have been able to afford these incentives. Elsewhere on TTAC, an article floated the prediction that the feds may write conditions into certain stimulus payments, requiring state and federal government purchases of cars to come from GM & Chrysler, who need the sales to have any prayer of paying back the loans. Doesn’t Ford need these sales too?
I have yet to hear an informed person offer a plausible scenario as to how Chrysler will survive as a stand-alone company. But every day that Chrysler remains in business, it will build more cars which it will (eventually) sell at a loss. Every car Chrysler builds is a car that (a.) Ford (and GM) will not sell, and (b.) that will further depress the price of every car that Ford (and GM)DOES sell. Keeping Chrysler alive is not helping, but is hurting the US auto industry.
I can hear Alan Mullaly saying: “Thank you so much, Uncle Sam, for taking MY tax dollars and the tax dollars of all of my employees and shareholders and using them to bleed us to death by prolonging the agony of our near-lifeless competition.”
This encourages what the economists call Moral Hazard. Penalizing those who have been prudent and subsidizing those who have not been prudent makes everyone realize that prudence really does not pay. There are hard choices to be made here, and the government’s failure to make them is hurting us all.
Funny how so many women seemed all so fired up about BO and how quickly they’ve turned on him.
Of course, we’re in the company of both genders here, but for us guys, by about oh age 5 or 6, we have already figured out that the fairer sex can turn their moods on a dime (I’m putting that very diplomatically, eh?)
Women on the web article here, showing BO’s “grade point average” for his first month (not very successfully) on the job…. apparently it’s way above his pay grade.
http://www.wowowow.com/post/liz-peek-barack-obama-economy-stimulus-214454
I am unyoung enough to remember another amateur half-baked wannbee president; Carter. He was nearly the ruination of our nation.
Carter II already is and he’s been in a month.
By my accounts, if the stock market continues downward in the same trend as it has today, it’ll be ZERO within 44 days.
But yes, apparently it has become a moral hazard to live in the US and actually act in a responsible manner, pay your bills and mortgage.
@Flashpoint.
What’s funny is, the Republicans are intent on letting America’s last manufacturing plants fail.
Hey, the election is over. Your guy won. Enjoy.
I couldn’t agree more. Turn the Detroit 2.8 in the the 1 real fast and it might have a flying f__k of surviving. I don’t give one rats ass about saving names like Corvette, Jeep, or Chevrolet. The market has long ago decided they should die. Heck, the market had decided Ford should die too, but thankfully they had an ounce of intelligence and got better management. So, gov’t should escort GM and Chrysler to a prearranged Chapter 7 and keep their hands off the rest of the still functioning US auto sector ~ Toyota, Honda, Hyundai, etc. included.
Same goes for the banks. Time to deep six CITI, AIG, etc.
Edit: by the way I don’t drive or own an Ford and am not a fanboy.
How many bankers do you think vote for Democrats? Yet they are getting more lifelines from the feds than any other industry by a massive margin.
The financial industry gives more money to Democrats than to Republicans.
Menno,
“Margaret Thatcher once said that socialism works fine, until it runs out of other people’s money to steal.”
It seem that the exact same thing can be said about the rapacious capitalism which marked the last few years. Bernie Madoff’s Ponzi scheme is the ultimate poster child for this behavior.
Regarding the F-22, it will go down in history as the last of its kind. Manned fighter planes are as outmoded as the battleship.
Flashpoint: What’s funny is, the Republicans are intent on letting America’s last manufacturing plants fail.
No, they believe that inefficient companies should either fail or go through the bankruptcy process to emerge leaner and better able to compete.
And please note, as others have already said, that American manufacturing does not consist solely of GM and Chrysler.
Flashpoint: What then will this country produce? NOTHING
Let’s see…Hondas, Toyotas, Nissans, Hyundais, Fords, advanced medical equipment, agricultural equipment, locomotives, Harley-Davidson motorcycles, specialty steel, jet airplanes (both military and passenger), electrical equipment, helicopters, personal aircraft, personal boats…
That list hardly constitutes “nothing.”
Flashpoint: during the years republicans were in power, any democrat voting against the F22 would be labeled a TRAITOR or UNPATRIOTIC.
No, during the years Republicans were the majority in Congress, the Democrats still supported projects such as this because they knew it would benefit their constituencies, too.
I’am new to this site but after reading this I had to respond I think the author has more insight than all of our elected officals, Let the weak die so the strong may live and prosper,Who gained sales when Hudson.Packard,and Studebaker failed?
The same thing could be said for the USA. Capitalist on the way up and socialist on the way down.
Engineer said:
Thanks to political cowardice do we now have to bail out every single business that fails?
There is actually a sense of equality if we indeed bail out every single business.
The sad part is that we are only bailing out thugs.
I live in Canada. Our government is bailing out foreign car companies (GM/Chrysler) in the amount of 20% of whatever they receive from the US government.
Remember that GM/Chrysler are not and will not be under Canadian control and have made no commitment of keeping jobs here.
On the other hand, Nortel, a truly Canadian business is forced to file for bankruptcy with no bailout.
The only difference: programmers didn’t join the CAW (Canadian version of UAW, i.e. the thugs).
I have a question (if anyone cares to answer I would be much oblidged):
Is there anywhere on the Autoblogsphere or the web as a whole where one could find an online petition protesting auto bailouts?
I have tried the usual search engines and I have written to my elected reps etc. but for the life of me I find it difficult to understand why there isn’t an outpouring of rightoues indignation at giving money to those morons in RenCen and Auburn Hills?
Anyone?
I would suggest that you call your local friendly congressman. Increase the frequency, if no immediate result is perceived.
“Ford stands to increase its market share dramatically if GM (and Chrysler) were allowed to fail”
If that was at all true, Ford would not have been in congress…next to GM and Chrysler asking for money.
I know that Ford made it seem like they didn’t take any money…and are using that falsity as a PR booster, but the fact is (and Ford has said as much):
If GM or Chrysler fail, then it will bring Ford down with them. So, indirectly, Ford was asking and took that money.
Ford will need money by the end of the year. They don’t have the brand perception (or product really) to survive and gain market share. Remember we are talking about the same Ford that said that Mazda and Volvo were not for sale…
How about a little honesty here?! True, Ford is light years ahead in the management department due to having brought in Mullaly from Boeing. False as false can be that Ford won’t be sucking Uncle Sugar’s teat very, very soon.
Mullaly hocked everything Ford had including the silverware and managed to dump off a couple of brands before financing was cut off. GM and Chrysler waited too long to do it. Ford has a bit more of a cash cushion than GM or Chrysler but is still skydiving without a parachute. Considering the acres of finished iron parked around all of the domestic auto plants AND the overflowing import storage yards around all of the sea ports even if GM and Chrysler folded tomorrow Ford would run out of cash long before all of the mountains of existing inventories would be sold off. But if GM and Chrysler go through bankruptcy reorganization and shuck their high labor/healthcare/retiree costs Ford will quickly find itself being the highest cost producer and facing bankruptcy liquidation due to being too late to the reorganization party.
The only way for Ford to survive may be a simultaneous BK filing with GM. The only way Chrysler survives imho is if all three go bk and they skulk through quietly and unnoticed.
@Flashpoint:
Sam Nunn *was* a Democrat and *is* advising Obama as we speak. (http://en.wikipedia.org/wiki/Sam_Nunn)
The original point was correct that the F-22 had bi-partisan support, as did the Afghan and Iraq Wars.
Mouth frothing is more effective when you get your facts straight…
It seem that the exact same thing can be said about the rapacious capitalism which marked the last few years. Bernie Madoff’s Ponzi scheme is the ultimate poster child for this behavior.
If Bernie Madoff represents capitalism, then Adolf Hitler represents socialism.