Now that the Presidential Task Force on Automobiles (PTFOA) has pre-capitulated on re-upping Chrysler and GM’s bailout bucks, an obvious concern arises: now what? Chrysler offers a tri-branded line of non-competitive products whose sales have been propped-up by federally-funded discounts plus plus plus. GM is still in over-branded, over-dealered, over capacity hell. So, if both companies score big bailout bucks ($22B), what will they spend it on? Building cars? Inventories are already swelled and, here’s the kicker, sales are still declining. As we approach the end of the month, Automotive News [sub] is using the “T” word: “The sales numbers for March, due next week, are likely to reveal another tumultuous month. New-car sales could be down as much as 40 percent, according to J.D. Power and Associates. And the monthly sales rate will continue to flirt with lows not seen in 27 years.” Interesting choice of words; who’s about to get NSFWed here?
The taxpayer. And Ford, Honda, Toyota, Nissan, Hyundai and the rest—as Chrysler and GM do whatever it takes to move the metal on our dime. How bad will it get?
Toyota, or in mediaspeak “even Toyota,” is predicting March will come in like a slug and leave like an ant with three broken legs. “Annualized sales in January and February were a little above 9 million,” pronounceth ToMoCo Prez, Katsuaki Watanabe, “and we’re hearing that March will be about the same if not worse than February.”
This is well below Chrysler and GM’s “worst case scenario.” In other words, their viability plan ain’t worth jack. As if you didn’t know. Even the PTFOA’s head honcho Steve Rattner has admitted what the automakers won’t: they low-balled their request for aid. But that’s OK. ’Cause in Bailout Nation time is not of the essence. Not yet, anyway.
Pretty simple… Put a car crusher at the end of each assembly line.
Here is a slightly used one….
http://www.overbuilt.com/usedcrusher1.htm
The more I read about the auto industry bailout, the less I understand. This is actually a golden opportunity for the industry to shift from making cars and hoping they sell, so waiting for orders and then making the specific cars consumers have already said they want by putting money on the table.
When we make tacos at home, we make the kids assemble their own. They get to decide how much meat, cheese, tomatoes, etc. they want and how to arrange them. If they don’t like the tacos, it’s their fault and that’s all they get. Guess what, everybody eats their tacos.
GM and Chrysler simply need to make fewer cars than they sell until they get to the right inventory rate (based on today’s numbers, not numbers from the past).
I think it’d be awesome if Chrysler and maybe even GM went in together on full page colour “Thank you” ads in every daily newspaper in the U.S. After all, someone’s still gotta bailout the newspapers. It’s a win-win situation all around. Newspapers actually might make some money, and taxpayers will hate Chrysler and GM even more for squandering their money.
Even though Chrysler has already done it once, doing it a second time would be okay, because it would fit in with the definition of insanity. Everyone knows that Chrysler and GM executives are insane. I think Obama might be as well.
The more I read about the auto industry bailout, the less I understand. This is actually a golden opportunity for the industry to shift from making cars and hoping they sell, so waiting for orders and then making the specific cars consumers have already said they want by putting money on the table.
Findude, even if they wanted to (and they’ve claimed that they’ve wanted to), they can’t. It’s illegal in all 50 states, at least if it means not going through a local dealer. State legislators love their local dealers, especially compared to those far away manufacturers.
Of course, it is possible to special order through dealers right now. I think in fairness most people would still opt for “off the rack” to save time, but it would be nice to have the direct sales option.
Secondly, findude, the car companies still have to pay the workers even if they’re not making cars. Idling plants cost almost as much money as active plants. GM and Chrysler are better off making cars and selling them at a loss than keeping the plants idle, which costs even more money. At least with the current contracts.
Brettc, you’re correct on all counts. Then we all get to shave our heads and run around like ex-TV maven Susan Powter and hell “Stop the insanity.”
At least last time they got the unions to say maybe definitely they would at least possibly think about perhaps talking about concessions.
Now they don’t even go through the motions. It’s too exhausting. The car CEOs flying to Washington is too exhausting. Just take your free money. Just let us know when you’ll be needing more.
And of course the end result is inevitable. As Obama even admits as he is handing money to the car companies, only 18% of Americans think it’s a good thing. They don’t even bother to explain to Americans, they just take.
So the car companies who are going broke because they charge too much are propped up so that they can go on charging too much. And people of course continue not to buy. Except now they are buying it like it or not.
Wait, they don’t like it. And Washington doesn’t care that they don’t like it, and doesn’t even pretend otherwise.
If money were taken from taxpayers against their will by robbers, we’d have a name for it: thievery. If money were taken from taxpayers against their will by local politicians and given to private interests for which the government people have worked and done deals with, we’d call it graft or corruption. When it’s done on a large scale we call it Change, we call it Sharing the Burden, we call it Saving the Economy.
Just need to set the record sraight.Car/truck plants DO NOT run just to keep the UAW/CAW happy.
Management and only management balance production to sales inventory.A general rule is around the 90 to 110 day mark.If management wants to carry a 200 day supply ,they can.If they want to carry a 50 day supply, they can.Management does NOT need to consult the union,before decreasing or increasing production.
When the plant is idled for a week or a month or two whatever.Workers do not recieve a pay check.A complicated formula of unemployment benifits and depleting SUB funds,generates about 85% of take home pay.That money is then taxed.If you run out of unemployment benifits SUB will kick in untill its exhausted.After that your NSFW.ed
Why in gods earth would GM pay suppliers,so cars could sit in fields?GM will turn the faucet off in a heart beat.Just cause a myth is repeated over over again doesn’t make it the truth.Labour is just one of the many costs of running a car plant.
On a personal note.As a retired Canadian auto worker,I would like to thank the taxpayers of Canada and the United States for this loan.
God willing,its just a loan.
Thanks
Michael
I love where we are 6 months into Bail Out Nation. We had to shell out the $$$ to prevent the economy from going into the shitter and now that the economy is in the shitter, we have to continue shelling out the $$$, well, just because.
Seriously, since the existing inventory will last at least 6 months at the current sales rate, isn’t now the perfect time to allow the industry to reorg? All the scare talk about the suppliers going under and taking the industry down is patently irrelevent – nothing needs to be built until Q4 at the earliest.
Better the .gov just spend the $$$ on extended unemployment for the next 6 months than propping up this sorry mess.
God willing, its just a loan.
Sure it’s a loan. A loan that will be defaulted on.
When the plant is idled for a week or a month or two whatever.Workers do not recieve a pay check.A complicated formula of unemployment benifits and depleting SUB funds,generates about 85% of take home pay.That money is then taxed.If you run out of unemployment benifits SUB will kick in untill its exhausted.After that your NSFW.ed
Why in gods earth would GM pay suppliers,so cars could sit in fields?GM will turn the faucet off in a heart beat.Just cause a myth is repeated over over again doesn’t make it the truth.Labour is just one of the many costs of running a car plant.
So what you’re saying Mikey, is that it still costs the car companies a considerable amount of money even if the plants are idle. I didn’t say that labor is the sole cost, or that it cost them as much money to have it idle as running. Just that running it and selling cars at a loss can be a smaller loss than idling, because at least they’re selling something, even if it doesn’t pay off all the costs. To put it in economic terms, there are large fixed costs, including by your terms 85% of labor, that don’t go away just because a plant is idled. (Depreciation of capital equipment is another.) And for that reason, the car companies don’t consult the UAW/CAW, because the incentives still encourage them to run at a loss.
The other alternative would be to shutter factories permanently and fire workers, but that wouldn’t really save them enough money to be worth it either.
pretty soon, we will all be able to get a new car for free! Imagine that! In Europe they get free health care for their tax money, here we get a free Dodge! wow! Our tax dollars at work.
This is a payoff to the UAW.
Now they will take the taxpayer money and dole it out in $100k+ chunks to the UAW workers, if they will be so nice as to retire. Why don’t all the taxpayers get this deal?
The taxpayer will never get this money back.
JERSEYDEVIL-Oh great, “socialized transportation devices”. Thanks for adding to the nightmare.
:^D
Bunter
@johnthacker I don’t even pretend do understand the mystery’s of cost structure.During my 36+ yrs at the plant I did experience quite a few down weeeks.Management would tell us when field stock started rising.As soon as it started to close in on a 100 days.Down weeks were coming,that much I know for sure.
I don’t think I’m doing a good job of explaining lay off benifits.So let me try this way.Keep in mind this is the Canadian system,all my figures are Canadian.
ACTIVE WORKER
Gross pay 40hrs =$1385 a week {approx]
Taxes, E.I Canada pension,union dues=$400
$Take home=$985
LAYED off WORKER
85% of $935=$795 – $18 [work related expenses]=$777 approx $500 from unemployment and $277 from SUB.Then it taxed at approx 22%.The layed off guy
recives $510.This come after serving 1 week waiting period every 47 weeks.Now if the guy gets called back and makes over 50k E.I claws back30%
The company funds the SUB fund,to a point.Not only that,after 30 days benifits start to get cut.
Its a far cry from 85% eh?Remember the company is only on the hook for the SUB fund.They sure don’t pay 85% out of general funds.
I just want to clear up any misconception’s.The company doesn’t hand us a check every week.It’s a long drawn out process.Forms have to be filled out,phone calls have to be made.If a guy NSFW’s one form the whole process grinds to a halt.This may come as a suprise.We don’t have a whole lot of PHDs working in the plant.Mistakes do get made and its a f—en nightmare to straighten out.
Hey I’m not crying the blues.It was a very rewarding life,for a high school dropout.Wages and benifits,way beyond my education.
We are not the most popular these days,and I fully understand that.We are however living breathing human beings,with families. We just got caught up in this mess.
Why don’t we just cease the company and hand it over to the UAW for real? Seriously. We do a BK, start the company at zero debt, and they keep all the facilities and intellectual property type stuff. Then we give them the same billions we are planning to give GM, and off they go. One catch, no more bailouts, and no more pension guarantee.
You are on your own. Sink or Swim.
How long before a bunch of guys get smart and start a union so they can stick it to management?
The CAW guys around here tell me they collect UI and/or SUB payments for three years after being layed off. A good deal if you can get it. The average taxpayer can’t.
What no one in charge wants to say, of course, is that the bailout money is really a subsidy for organized market contraction. Instead of allowing the American automotve industry to implode en masse and drag the remainder of our economy into the gutter with it, we the people are financing the industry’s slow and orderly end.
To quote my favorite television show of late, “All of this has happenned before.” The Depression’s “Carmageddon” leveled the industry widely and briskly, leaving mass unemployment and stagnation of American industrial capacity so desperate that only the single most cataclysmic conflict of human history could halt the giant economic toilet swirl. It’s hard to conceive of NYC’s Central Park as a shantytown or of mass public starvation as a legitimate problem in twenty-first century America, but the economic contractions of ’31 and ’32 made both true in their era.
GM and Chrysler are terminally uncompetitive in a market destined to grow smaller for some time to come. The Obama administration’s primary goal, then, must be to prop them up far enough into the future that other economic gains (green energy? health care? “New Deal”-like civil infrastructure projects?) can develop sufficiently to pick up the jobs and economic capacity they’ll shed.
While we’ll never get a direct fiscal return on that investment, the social and cultural benefits of avoiding Depression-era shantytowns and hard-scrabble suffering may well be worth the bill. Perhaps we should feel fortunate that we see something so benign as green energy and not, say, the Manhattan Project or the need to pound Nazis as the light at the end of our economic tunnel. Then again, the modern world isn’t without its villains and their aggressive, “Axis” powers. I’ll stop drawing frightening parallels now.
The Obama administration has concluded, rightfully, that the American automotive industry is a dead man walking. Public opinion polls suggest most Americans agree. The sooner we enthusiasts can come to terms with as much, the less painful this slow goodbye (and the “loans” financing it) will be.
“The Obama administration’s primary goal, then, must be to string them along far enough into the future that other economic gains (green energy? Health care? “New Deal”-like civil projects?) can develop sufficiently to pick up the jobs and economic capacity they’ll shed.”
Uhh, how about for votes? That’s the primary consideration.
I just wonder at what point someone steps in and calls ‘Game Over’ on this nonsense. When there’s 9 months of inventory parked on lots all over the country? A year?
‘Stop the insanity’ indeed.
mikey
The laid off guy gets 85% of take-home pay and then gets taxed 22% on that? Gotta love double taxation…
mjhy98:”While we’ll never get a direct fiscal return on that investment, the social and cultural benefits of avoiding Depression-era shantytowns and hard-scrabble suffering may well be worth the bill”
I agree – I just wish Obama could actually explain it that way; but it would be political suicide to do so.
”While we’ll never get a direct fiscal return on that investment, the social and cultural benefits of avoiding Depression-era shantytowns and hard-scrabble suffering may well be worth the bill”
Many think exactly the opposite is true – that the social and cultural benefits of manning up and facing change with confidence in our ability to adapt and overcome would be well worth the temporary difficulties.
The alternative being the current state of Henny Penny alarmism over every threat to the status quo. We’ll destroy our economy heading down this Bail Out path.
No person in power (politicians, managers, CEOs, etc.) has first hand knowledge of how depressions work. They are debt driven. Until the debt is cleared it doesn’t end.
Recessions can be fixed with government spending and bailouts and it’s worked every time since the last depression.
What you have now (and it’s getting worse) is that more and more people globally are slipping into a depression like outlook. Things have been bad for so long, people start to forgot what “good” feels like.
This doesn’t end until the debt is cleared. This is already happening via a combination of:
– Hard work and sacrifice
– Debt forgiveness
– Currency inflation.
The pickle is that forgiveness and currency inflation are the easiest but also force the creditor to take it in the shorts and then the lender has less to lend and trusts the borrower less and less.
It’s a hard road to rock bottom. Stage I is about done (significant reduction in new credit as the lenders figure out that folks are maxed out).
Stage II is just warming up.. (unemployed are just now running out of options and the tent cities start ramping up)
The government spending is faking people out.. it’s always worked in the past so surely it will work this time… So consumer spending bumps up for a short period of time before folks figure out the deal.
Once the media starts to track debt reduction figures and starts preaching debt payoff we are getting closer. Imagine 50 Dave Ramseys blanketing the airwaves every night…
lw,
“Recessions can be fixed with government spending and bailouts and it’s worked every time since the last depression.”
I take it your a Keynesian. I heard somewhere that Keynes claimed not to be a Keynesian, and that he was appalled that a whole school of though had been formed based on a misinterpretation of his work.
At any rate, this is a statement of belief, not fact. Even if government ramps up spending on every recession, that doesn’t mean that its curative. It just means the government sees a recession as an opportunity to spend more of our money.
I agree that the end can come because expectations are reset.
I don’t agree that things have been bad. They really haven’t. Maybe that’s the problem. I know last time I missed a few meals it was only a few months before I had 3 jobs. Yes, THREE. And not ONE of them paid a “living wage”. Yet, they did pay enough to live, learn, and improve.
Landcrusher,
I belong to the school of common sense. If you have too much debt, more can’t fix it. Last time we had too much debt was the 1930s..
Regarding the “things aren’t that bad” it’s all relative. During the height of the great depression we had > 70% employment.
If you have a recession because key industries are hosed (like if typewriter repairmen make up 10% of the economy and some jerk creates a word processor). Government spending can fix it by keeping them on unemployment / creating govt jobs until they find something else to do.
We aren’t in a recession, but it takes awhile for people to admit/accept it. Another year or two of significant net job losses should expose the truth. Sure the US government is digging a deep hole deeper, but they are only doing what we allow them to do.
I take it your a Keynesian.
It’s not as simple as that. The belief that government can use policy to fix the problem is a widely held belief among both Keynesians and monetarists.
The common path is to start with monetary policy, and to supplement with fiscal policy if the monetary policy wasn’t adequate. Most are in agreement that with respect to the current crisis that the monetary policy alone wasn’t enough, so that the next steps must occur on the fiscal side.
You’ll have a few “Austrians” howling about their take, but they are on the fringe and widely dismissed by economists on all sides. When I stumble upon those internet clowns who are fixated on blaming the Fed or the lack of a gold standard for everything, I hit the mute button and move on.
You worry about debt and deficit in times of prosperity, not times of recession/depression.
The last two people to try to balance the budget during a depression were Herbert Hoover in 1932 and Franklin Roosevelt in 1937. Both times they reduced government spending and it caused a nasty contraction.
Worrying about the debt during an economic downturn is nearly as stupid as lecturing a soldier on the dangers of smoking in the middle of battle, or lecturing a firefighter on water conservation while he’s trying to put out a three alarm fire.
The Republicans got it completely ass-backwards–they told us not to worry about the debt during the boom, and are now howling about it in the midst of a nasty recession.
Any time a significant part of the economy (government, large corporations, etc) stops spending the economy contracts.
Arguing about the government spending too much or too little right now is like arguing with your death row cell mate about your respective last meals.
The problem is trillions of much debt spread across 1+B people. It’s worldwide. The US government isn’t big enough to solve the problem and probably isn’t making it much worse by spending. It’s just an interesting thing to talk about by pundits and such.
WWII ended the depression by giving people a common mission and inflating the US currency to generate the cash flow to fight the war, which in turn covered up the debt.
We won’t know what ends this one until after it happens. Could take many years until we find the “reset switch”.
lw,
Sorry, but that sounds contradictory. If you are saying that only a government with a surplus of cash should increase spending in a recession, I will agree whole heartedly. Otherwise, government spending IS borrowing.
PCH,
It’s not as simple as that. The belief that government can use policy to fix the problem is a widely held belief among both Keynesians and monetarists.”
I am not in disagreement with your overall post, but to me it is simple. Policy is a wiggle word. It has too many definitions that could apply here. It CAN have an implication of expediency, OR of prudence. Those two are often contradictory. The current idea of spending hundreds of billions we don’t have to fund non-stimulus, new entitlement government spending is not prudent. It’s damn expedient if your goal is to use the current crisis to dismantle many legal protections so that a few hundred folks in DC can take a stab at running the country however they please while blaming all the bad results on others.
Government spending / borrowing.. Either doesn’t matter much. We the people drive this ship. Our officials do what we want. Right now we want bailouts and the cost is the borrowed money plus interest. That cost is just fine for the majority of people.
If we didn’t want these bailouts then the American people would stop funding the campaigns of the folks in congress. Imagine Pelosi running her next campaign with $50 and a smile.. She wouldn’t get far.
The real power is with the people. If we are really upset with GM for being bailed out, then their sales would drop significantly as compared to say Ford, which they haven’t.
When GM sales are 50% lower than Ford sales, then people have made a decision.
The current idea of spending hundreds of billions we don’t have to fund non-stimulus, new entitlement government spending is not prudent.
Within the mainstream, the issue of stimulus is not whether there should be one at all — just about everyone agrees that there should be some kind of stimulus — but of how large it should be and what should be included.
In the short run, the deficit is less important than the other problems. The goal is to pay the deficit at a later date when we can afford to pay it. We are currently in survival/ cleanup mode, and not stable enough to grapple with all of the cost components. The deficit will certainly become a problem if it is never addressed, but for now, it’s fairly low on the crisis totem pole.
No one is saying we should reduce spending. Heck, extra spending may be called for. However, “spending” is NOT a solution unless the “spending” helps. “Spending” on it’s own is neither a good or bad thing.
Therefore, any non-speciofic claim that a government should increase spending during a recession are actually false because it is quite apparent that we must state that the spending must be stimulative and prudent.
It’s a shame that prudence can’t be assumed, but since neither party seems to believe in SAVING during times of growth and prosperity, it is obvious that our language needs more precision. The assumption that spending will be wasteful and imprudent, if not downright unethical, is no longer skeptical. It’s OBVIOUS.
“No one is saying we should reduce spending. ”
Several Republican Senators have called for a spending “freeze” which is the dumbest thing I’ve ever heard of in a time like this.
“It’s a shame that prudence can’t be assumed, but since neither party seems to believe in SAVING during times of growth and prosperity,”
What happened in 1993-2001 then?
Not only 1993-2001, but 1946-1981? The debt as a percentage of GDP consistently went down every year from the end of WWII until Reagan.
http://www.intelligentguess.com/blog/wp-content/uploads/2007/04/usa-historical-debt-as-a-of-gdp-from-1929-w2.jpg
PCH,
I doubt your premise. We may be in survival mode, but we need to calm down. The only real need here is to fix the regulatory system on our so called banks so they can’t do this to us again. I think we need to seperate the bank holding companies from their other assets, and stop trying to securitize home mortgages. I don’t see that it will ever be the wealth builder that we thought it was, so why keep trying? We also need to put people who used credit default swaps to manipulate stocks and bonds in jail. If we can’t, then we actually do need to write a new law for that.
BDB,
They want a spending freeze on normal budget items and government departments. Very few, if any, want the government to both cut spending and and do nothing stimulative. They want extra spending to at least look like it will be stimulative while having the least long term ill effects. It makes plenty of sense to push forward spending on capital projects that we will need in the next few years anyway. Who disagrees with that idea?
Still, your post makes my point. The DEBT went down, but was never paid off. Yet, the good years outnumber the bad (by definition at least half have to be good).
Also, I won’t discuss the issue of deficits with someone who wants to blame presidents for them. It’s a team effort, and the top dog is outnumbered, AND does not have the final say. If your intent is to blame Reagan for those deficits, we are done. Not that I am such a Reagan fan, because I am a fan of the Constitution of the United States.
Last I checked, the folks with the veto override have the final say. Their cowardice and lack of integrity is their own problem, and ours, but we can’t blame the presidents for that.
The only real need here is to fix the regulatory system on our so called banks so they can’t do this to us again.
That’s certainly the long-term systemic fix, but that alone won’t fix the very real short term problems of deflation and a lack of liquidity. The banks still need to be fixed, credit still needs to be restored, and a bottom established.
It’s not an either-or, it’s both. Unbolt the kitchen sink, cause we’re throwing it in. We’ve got no choice.
Several Republican Senators have called for a spending “freeze” which is the dumbest thing I’ve ever heard of in a time like this.
I can think of two dumber things. First, tax increases and, second, a Cap-And-Trade scheme which will increase energy costs across the board.
“Also, I won’t discuss the issue of deficits with someone who wants to blame presidents for them.”
Let me guess–it was the Democratic Congress in the 80s that made the debt go up?
The Democrats controlled Congress for thirty plus odd years prior to when that little line went through the roof. Four Democratic Presidents and three Republican Presidents over that same period of time managed to consistently lower the debt as a percentage of GDP. I guess it was entirely a coincidence that the debt exploded as a percentage of GDP when Reagan took office, then. No, it had nothing to do with him at all! That’s unpossible!
The debt doesn’t have to be paid off. It just has to be lowered as a percentage of GDP during times of prosperity, and we’re good for it.
Paris–
That’s why the hikes on the top bracket has been postponed until 2011 at the earliest, and they won’t be raised even then if the country is still in recession (I doubt we will be). I agree with you about cap and trade, though. Global warming (like the debt) is a long-term problem that shouldn’t interfere with fixing a very real short term crisis in the economy.
PCH,
Yes, as soon as I hear about something that has a snowball’s chance to fix deflation and liquidity, I will support it. The long term fix is still necessary, AND has the advantage that it may also help. We might as well set the broken bone while we figure out how to cure the cough since the cough may just fix itself while we are at it.
BDB,
You are correct except the unpossible part and the party part. It doesn’t matter what party did it, not really, since we now know the Repubs can do it too. Still, avoiding the fact that it’s a congressional responsibility is foolish in the extreme. If we do not hold them accountable, they will not change, and we can keep having the same problems over and over. They seem to thrive on it because they can both point fingers at the other guys. Instead, we should hold each one of them more accountable, INDIVIDUALLY.
Certainly, the debt does not HAVE to be paid off. That doesn’t mean it shouldn’t. You never have to pay off your credit cards either. Paying it off gives us all that more power to stimulate the economy when needed. It also will provide an amazing amount of moral clarity and international clout. Besides that, having tried it the other way, why would you argue with trying my way? Perhaps because the status quo has been so rosy?
Certainly, the debt does not HAVE to be paid off. That doesn’t mean it shouldn’t. You never have to pay off your credit cards either.
Comparing the public federal debt to personal consumer credit card debt isn’t just an apples to oranges comparison, it’s apples to high fructose corn syrup.
If government borrowed money at the same outrageous interest rates that credit card debt is charged, you’d have point. But it isn’t, so you don’t. Nobody in the world can borrow money as cheaply as the federal government.
It’s bad to have this debt rise to high levels of GDP for a sustained period of time, but a little bit of debt (50% of GDP or less) isn’t bad, and can actually be a good thing.
Comparing the public federal debt to personal consumer credit card debt isn’t just an apples to oranges comparison, it’s apples to high fructose corn syrup.
Correct. A better comparable that people can relate to is running a large business. A well managed business probably uses a combination of short- and long-term debt to stay afloat. Some major corporations manage well with no appreciable debt load, but most — particularly large, mature operations with low growth rates — need debt to make things work.
There is certainly a point at which debt can be excessive, but that amount isn’t just everything above zero. The point is to be reasonable, not to avoid it entirely.