Just curious

[Dutchie]

My apologies if this has been posted elsewhere.

I have been following a little bit of the US news (been laid up with flu) and heard this morning that the bail-out for the car industry has been denied.
Also it was said that this would have disastrous consequences for the US economy with a potential 3 million employees being laid off since it was possible that GM and Chrysler would be bankrupt before the end of the year.

Other sources say that there will be a 'blood bath' on Wall Street today.

What is your opinion on this. Obviously I am too far away to know what is really going on and to get full news reports on this, but I wonder if this is like the bail out in September - it just has to be tweaked before it will be passed through.

However, I also heard that it was the fault of the unions that it didn't pass because they refused to let their members take a pay cut and this was one of the conditions that the senate wanted first.
But it seems to me (rightly or wrongly) that having a pay cut is better than having no pay at all and the company going bust. This is what we have been told, I can't imagine that it is as simple as this - let your memebers take a pay cut or it doesn't go through.
I am very curious about the opinions/thoughts from the US since the news that we getting isn't saying much.
Personally I cannot even imagine that GM and Chrysler could go bankrupt.

[frugalnana]

I was watching the hearings on Tv and didn't know they denied it. Dh told me yesterday they need to file for bankruptcy under the restructuring. Since dh has been sick I've been trying to make him comfortable.
Its a shame they denied it. But again to many people with there hands in the pot. I think that they need to let go of all the big wigs and either cut back the work force or ask the people to take some kind of cut until they are back on track.
They also could start dumping the cars that are for sale for a lower price to get some money back in the pockets.
Sometimes here in the US companies keep the ones making the money and cut the lower workers, you would think it would be the other way around.
I'll have to turn on the news when I get off here to see what the market is doing.
Maybe someone else will post with more of an update.

[Momto2Boyz]

Bankruptcy isn't the worst thing for these companies. They will file chapter 11, and at that point, they will be "restructured". What that means is that the CEO's will lose control of their companies and bankruptcy committees will be formed to take control of the companies finances. FInancially, it will be the best thing for these companies. But the CEO's will lose control, lose profit, and they will probably lay some off (but not nearly all).

Personally, I think bankruptcy is a better option than a bailout. Experts have said a bailout will last them about 3 months, then the money will run out, they will still be producing the same number of vehicles they are now, and no one will be buying them. So they will be in the exact same boat they are now.

Unfortunately, I think it comes down to survival of the fittest. You don't see Toyota, Hyndai and the companies who jumped on the hybrid wagon early crying about needing to be bailed out. Sure, their profits are down, but they are still making enough to survive.

The big 3 tried for years to make us believe that cars are disposable and we should buy new ones every few years, so they just kept making them. So shame on us American's for making our cars last longer than they wanted them too!

[Pemberleyan]

I am relieved that taxpayers will have a little less to pay than expected. The government shouldn't be involved in bailing out businesses. It's better to let these things take care of themselves. I do think unions are partly responsible for destroying industry.

[Momto2Boyz]

Honestly, I think the unions are only partly to blame. If you look, the labor unions directly related to the auto industry have taken pay cuts of up to 40% in the last 5 years. I think at this time, they are tired of being the ones to give. The management is to blame. While the unions have approved cuts (prior to now), the management has refused to take pay cuts, so they are making millions while the workers are suffering.

I have mixed feelings about unions. DH is union, so I can't specifically say anything bad about them as they have been good for us specifically. But he has been in prior unions that were corrupt and horrible.

I don't blame the auto workers for wanting to shun the pay cuts. If you look at some of the cuts that passed, Delphi cut wages from $27 per hour to $14 per hour and Mitsubishi was a bit better with only a $5 per hour cut. But could you survive if they wanted to cut your pay in half? And would you be happy about it, knowing that the management was still making well over $200K a year? I certainly would be ticked off!

[Greebo]

I'm with MomTo2Boyz.

Despite what the CEO's say, bankruptcy will NOT put them out of business. Bankruptcy is an opportunity to restructure and fix what's broken, it won't close them down. A bailout will only allow them to continue their bad practices more. Bailouts haven't saved the airlines, they won't save the "big 3" either.

Until the companies fix their bad practices, and the unions have to make concessions there as well (which they will have no choice about if the big 3 go Chap 11), no amount of propping up will fix the deep problems.

[Katybird]

I found it really interesting that Ford was right there with Chrysler and GM wanting the bailout money when they still thought that the money would be like the Wall St bailout where money was given with no strings and no rules regarding the usage of it. Ford quickly decided that they did not need the money when it was announced that there would be rules and regulations regarding how it was used. That said exactly where their ethics were regarding finances to me.

[sdrjeolsen]

I'm glad it didn't pass. I think they will restructure. Seems the 700 BIllion hasn't been fully appropriated or used to the best end, so, glad that more taxpayer money wasn't tossed on the fire. I think the 3 million job figure is a bit inflated. On the other side of things, people will keep thier cars longer and jobs will increase in the parts area and auto repair shops.

Anything government gets involved in becomes less prductive and so I think in the end it was a good move.

[fixer]

I think the structure behind the bailout doomed it. There was to be a "car czar" that was appointed. I have no faith in the government running the auto industry and that is what would have happened. The interesting question is will GM and Chrysler be bankrupt by the end of the year as they say? The only way this industry becomes competitive is to reorganize through bankruptcy court.

[Cricketlegs]

Something I found out is this.

American car companies have been in business long enough so that 4 out of 5 employees are RETIRING and benefits have to be paid BUT the foreign companies are new enough they DON"T have the retiree base so they haven't been hit with the massive amounts of pensions and medical benefits American companies have.

This isn't like compairing Granny Smiths apples to Fugi Apples we are talking apples and ORANGES.

The unions are killing the car companies, the CEO, I can just imagine what they have been up to, meanwhile throwing money at the problem WILL NOT make it go away.

They have to restructure.

My dh works for GM and I am worried but I am also smart enough to know the bailout is just a bandaide on a bullet wound. GM need major surgery and stitches!

I hope we keep our job. SO far we are strong.

[LastDragonfly]

The airlines have been restructuring for years, and people are still flying so I'm thinking that restructuring isn't a bad thing.

[Dancing Lotus]

Hum, the car companies are crying they need help.We offer help and they refuse it because they don't like the terms. Well my momma always said beggars can't be choosers.

[UUMomof3]

Living the the land of Northwest Airlines, I'm just as glad we aren't bailing out the auto industry. It only delayed the inevitible for the airlines. A bailout is like drinking a triple espresso when you've not slept in two days: quick fix, but you're going crash eventually anyway.

The US Auto industry is collapsing under it's own weight. It's a bit silly to run around saying "it's all the union's fault" or "it's all the CEO's fault" or "it's all circumtances". All of the above, and more.

I'm sorrier than sorry for the people who are going to lose jobs and pensions over this. The focus now needs to be on how people can help each other, not on who is to blame.

[dcompton]

I have no idea what the solution is, and don't even really know what I think should happen. I can see both sides. The thought of all the jobs lost is horrifying, on top of the employment situation which is already dismal. On the other hand, would bankruptcy even help?

The CEOs (I think) have argued that it wouldn't work, because who would buy a car from a company in bankruptcy with such an uncertain future? I think they have a real point there. I know I wouldn't. In fact, I would not buy a car from any of them no matter what happens at this juncture. You want your car company to be stable and around with parts for years to come. It's not like buying an airline ticket that is used and then its history. So are they doomed no matter what happens? If that's so, they are going to take a lot of innocent bystanders down with them - suppliers, dealers, the people who just work in towns dependent on the auto industry.... No one wants to see that happen.

I also don't think that just throwing money at it will fix it. I am very, very glad that I'm not the one that has to make this decision.

I also read this morning that since the Senate rejected it, it is possible that the Treasury can do it using some of the financial bail out money. But I don't know any details about that.

[chris w]

The reason why I wouldn't buy from a car company that is in bankruptcy is because they don't have anything I would want to own. We have a Pathfinder and an Audi A4, very nice vehicles and when these were made they really used common sense and made sure to use up all the empty space for something, whether it be extra storage or an unique and useful button. These are just better made vehicles. I know if I was one of those executives I would be ashamed that I couldn't get my company to downsize and economize and had to run to "Daddy" for money.