
Auto bailout bill dies in Senate - jasonlbaptiste
http://www.cnn.com/2008/US/12/11/auto.bailout/index.html
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mdasen
Well, the UAW doesn't want to accept parity with foreign auto-maker wages. The
article states a $3-4 disparity, but it's really more than that due to the
great benefits accorded to UAW workers.

While I generally like unions, in this case no matter how much bailout money
the US auto-makers get, they're headed for bankruptcy unless they can bring
their labor costs in line with those of foreign firms. UAW, if you're
listening, you have two options: get off your rump and drive the wages up at
Honda and Toyota (unionizing their plants) or resign yourselves to never
having any say in anything ever again.

~~~
bkbleikamp
American auto companies cars cost, on average, $2,000 more to make than those
of foreign competitors.

Until that difference is gone, they will never be competitive. They lose
$2,000 of quality or features and are expected to be competitive? Yeah, right.

In any other industry this would force a company out of business, but for some
reason we think the automakers deserve our help? If an iPod was $50 more per
unit to produce than a Zune they would never be able to compete and the iPod
would fail because they are losing $50 worth of quality per unit - whether
that quality is gone from the software, hardware, or both, it would be
impossible to compete.

~~~
programnature
health care costs per vehicle are between 1000-1700. We collectively, and the
auto industry in particular, are at a big disadvantage until these costs are
brought under control

[http://www.detnews.com/apps/pbcs.dll/article?AID=/20070227/A...](http://www.detnews.com/apps/pbcs.dll/article?AID=/20070227/AUTO01/702270372/1148)

~~~
patio11
While I know Toyota is staffed mostly by robotic ninjas, presumably they need
health care once and a while, too. Japan enjoys a standard of healthcare right
up there with the US.

Toyota also manages to pay _American_ worker's healthcare expenses _and still
profit handsomely_.

Find another scapegoat?

~~~
jimbokun
"Toyota also manages to pay American worker's healthcare expenses and still
profit handsomely."

I think it's pretty well established that Toyota pays less for health care for
their U.S. employees than the Big 3, and a large part of the reason for this
is that the Big 3 are paying for health care for a lot of retirees who are no
longer making cars. The NY Times had an analysis showing that most of the
difference in "labor costs" between Big 3 and foreign makers was due to higher
retiree benefits.

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vaksel
Seems to me, that the auto industry is paying for the mistakes, made by
congress when it came to the Wall Street bail out.

The financial industry got a blank check for 700 billion bailout almost
overnight w/o any questions, they produce nothing tangible, and there is
nothing preventing another bank from replacing any of the big ones. Its an
industry that scales easily.

The auto industry on the other hand, is getting grilled left and right over a
measly 15 billion. The money comes with a ton of strings attached. Even though
unlike the financial industry they produce a tangible product. And there are
no other competitors waiting to fill the big boy's shoes, because it takes
billions to scale.

So it seems to me that the Congress is being penny smart and pound foolish,
they give away vast sums w/o a second thought, and then turn around and penny
pinch when it comes to a tiny amount.

~~~
mattmaroon
The difference is our financial industry may be salvageable, and not trying is
disastrous. Whether or not that bailout is a good idea is certainly debatable.

But it has nothing to do with a different bailout that, without some serious
provisions to ensure long term viability, has no chance of working.

FWIW, most economists seem to be for the financial bailout and against the
auto one.

Also the financial one is not a give away, it's an investment. They're taking
equity stakes in bailed out companies and enforcing rules to ensure long term
viability. The Senate wants the same exact thing with the auto one.

~~~
anamax
> FWIW, most economists seem to be for the financial bailout and against the
> auto one.

Most economists think that they understand the financial system and its effect
on the economy better than they understand domestic car makers and their
effect. Even if they're correct (about their relative knowledge), their
ignorance about the latter makes their conclusion suspect.

"Follow the money" is a dumb rule. "Follow self-interest and self-perception"
is a great rule.

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nihilocrat
Why are people so concerned about major industries collapsing? There will
always be entrepreneurs to take their place. They will not be able to replace
the industry overnight, but it will all work out and give a better result than
trying to barter or bail out with people who are devoted to making crappy
products.

The problem here is inherent in the car companies: it is simply a case of them
making products no one wants. They either need to reinvent themselves or cease
to exist so other, more capable people will take their place.

There are clever, motivated people who are going to notice these opportunities
and capitalize on them. There always have been. I hate to sound pigheaded, but
calls of "well... well... what if the world ends because we didn't bail these
guys out?!?!?" are just FUD.

~~~
Retric
If they had zero debt they would not be in trouble so it's not just them but
everyone who they owe money to (including retired people) that stands to lose
money.

PS: This bailout if it worked is far less costly than taking over their
pension plans would be.

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jdbeast00
everyone loves obama / democrats until a bill actually comes up that they care
about. thank god for republicans! we're gonna miss you these next 2 years.

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pasbesoin
The following essay was cited over at reddit. Don't let "Marx" in the title
put you off; it is well worth the read. Boiled down, a bailout buys time when
it is desperately needed. Even if there is failure in a couple of years, that
time would come as a bargain. Second, the "$72" figure doesn't include legacy
health care costs. Foreign manufacturers in the U.S. benefit from long term
social planning in their native countries. Of course, the author is more
thorough and a lot more eloquent.

[http://news.yahoo.com/s/huffpost/20081129/cm_huffpost/147114...](http://news.yahoo.com/s/huffpost/20081129/cm_huffpost/147114/print)

cited over at reddit

[http://www.reddit.com/r/reddit.com/comments/7j1kg/it_is_crit...](http://www.reddit.com/r/reddit.com/comments/7j1kg/it_is_critical_to_recognize_that_the_72hour/)

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newt0311
Thank god. Heres to hoping that Obama never gets around to bailing these
industries out either so that they finally declare bankruptcy and let the
market work out its own (significantly more efficient) solution.

~~~
programnature
573,000 jobs lost last month and people want to dance on the grave of a MAJOR
national industry?? This not good news for people like me who worry things are
gonna get a lot worse before they get better.

Anyway, with all that capital just floating around it should be a snap to
recreate a heavy manufacturing based industry. Maybe those free market
geniuses can make it as awesome as the financial industry or the health care
industry.

~~~
tdavis
What were you expecting? Things were always going to get worse before they got
better. This is the restructuring of a global economy that had become far too
reliant on debt. More companies and industries will go under; more jobs will
be lost. Remember, the employees may not have chosen the company strategy, but
they chose to be with that company.

I will dance on the grave of every company and industry that dies now because
it means the restructuring is working. Nobody is putting them on life support.
Nobody is saying, "It's okay you royally fucked up." They're dying, as they
should be.

~~~
programnature
There are a lot of exciting opportunities to restructure things that have
sucked for a long time. This is a good thing.

However, your logic doesn't make any sense. A bank can be totally solvent, but
be wiped out by a bank run due to forces outside of their control. Similarly
plenty of otherwise profitable businesses can be wiped out when the entire
economy heads south. This is called throwing the baby out with the bathwater.

What I am expecting in governance that doesn't dig us into a deeper hole.

By the way, the worse the US economy gets, the worse the world economy gets.
Do you really want a nuclear pakistan/india go off the deep end?

~~~
s_baar
The banking system isn't solvent if people can lose their money based on
competing on-demand claims to the same cash. I honestly don't know why we
don't shift to a time-deposit system. It would work nearly exactly the same in
every way and we wouldn't need an FDIC as much or worry about bank runs.

~~~
eru
Some of the apparent sight deposits already have some clauses that make them
more like term deposits. I.e. I read the fine print on my savings account and
that talks of certain limits and (mild) penalties for withdrawing too much
money at once.

