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RE: Economical not just technological
By fishbits on 12/18/2008 4:07:57 PM , Rating: 5
They don't have to compete. Congress will take our tax dollars and give them to car companies so they won't fail. The UAW will get a portion of this taxpayer money, thereby laundering it and kicking it back to their political patrons. To keep the money rolling in, the carmakers just have to make quarterly donnings of hairshirts, confessing to Congress how much they loathe themselves for being businesses, and how they're committed to producing cars that meet the wants of the Sierra Club, not actual car buyers.

By zombiexl on 12/18/2008 5:00:11 PM , Rating: 3
I agree they will considering how many seats are owned by the people the UAW (and unions in general) have been working so hard to get/keep elected.

RE: Economical not just technological
By AMDJunkie on 12/18/2008 6:16:33 PM , Rating: 1
Seeing as:

A) This is the first time ever that Ford and GM have had to prostrate themselves to Capital Hill for a relief loan and,

B) Most experts actually blame the US automakers for making inefficient SUVs and trucks that the American public did buy in droves when gas was still cheap, mind you, while letting their more economical models languish without update or development for their reversal of fortunes. The Japanese simply offered more refined, better quality small cars. So for several years the big three bled red ink when throughout the 90's they were riding high on Explorer and Blazer sales.

But hey, I'm sure Dick Shelby et al. from Alabama will be real happy when the foreign factories start shuttering in his state too. That might be the reason why even Toyota supports the loans. It's not the UAW or the companies, it's the credit markets, stupid.

RE: Economical not just technological
By Ringold on 12/18/2008 6:21:37 PM , Rating: 3

Credit markets were fine throughout most of 2007. Compare GM, Ford, and Toyota earnings statements from 2007. Any other excuses?

RE: Economical not just technological
By AMDJunkie on 12/18/2008 7:09:49 PM , Rating: 2
when gas was still cheap
Notice I spoke of them bleeding money during the gas price bubble because they were still making the cars that once made them money hand over fist, i.e. trucks and SUVs. Toyota had the more economical and attractive choices as the market decided it wanted fuel sippers, not gas guzzlers.

Futhermore, it only further illustrates fishbits' mockery of the big three promising "Sierra Club cars" is off-base. That is what the market wanted, and that is what they failed to provide. Now that gas is cheap again, no one can get money to finance a new vehicle, even if it is a high margin truck or SUV.

Speaking of which, compare the earning statements of Toyota to GM and Ford this year, and you'll find the attrition of sales will be atrocious by any measure. Toyota simply had more money to ride it out because they forecasted their model line-up better. In an alternate reality, this: - may have been continued had the credit crunch not hit.

RE: Economical not just technological
By Ringold on 12/18/2008 9:11:47 PM , Rating: 2

Yep, that is part of it. They made better business decisions. GM did not, and you acknowledge it. This gets to the basis of the bailout discussion; a libertarian would say, as you have pointed out, that GM made its own bed and now must sleep in it. TM, HMC, and the others better positioned themselves, and thus don't even need a bailout. This is how, libertarians would say, how business is supposed to work. The weak fail, others move on.

By AMDJunkie on 12/18/2008 11:05:42 PM , Rating: 2
Well this is where our philosophies clash: since you seem to be a laissez-faire libertarian (not all libertarians believe in that, surprisingly), you believe that companies should survive completely on their own merits. That's fine, I've once held that view myself. However, I do not agree with it for the following reasons:

A. Anyone who followed automotive press knows that GM had exciting product coming down the pipeline, and although they had been losing money for years, finally seemed poised to make a turn-around. The Titanic doesn't turn on a dime; neither did GM. Unfortunately, the iceburg seems to have struck; all indications were at the rate they were losing money pre-crisis, they still could have survived long enough to see if their efforts were enough.

B. Barring sentimentality for any GM product (which I honestly do not have a lot of), I do not agree with "bailout" terms as these are loans; they have to be paid off as Chrysler once did before in the 80's. If the credit crisis weren't what it was today, perhaps bankruptcy wouldn't be such a crazy idea. Why? Because there'd be a chance that GM could get the funding it needed through a chapter 11, and not be forced to go chapter 7, as it looks like it would today. Which is why these loans are being asked for; liquidation would kill the entire automotive market in most expert's opinion.

C. It would probably be smart for America to preserve the remnants of its manufacturing capacity. As scandal and recession reveal, we can't all be hedge fund managers and expect a healthy economy.

D. Toyota et al. also had huge tax incentives to build factories in Southern states. Perhaps the American people should ask for that money back now because we shall only allow the least intervention in the ways of business? Of course not, we gave that money to them for economic benefit. There is dubious economic benefit to the big three failing. ( )

E. Even the big three's competitors think that a bailout for them is good for business: and

If this is what deregulaltion and minimal involvement in the market brought us, I'll take a healthy dose of smart rules and controls to keep this scenario from happening again. I'm not an optimist; there will probably be a push for too much regulation because regulation looks popular, regulators need to protect their jobs, etc. But at the same time, I'd rather not have this trip again. They say the Great Depression was preventable, after all...

By Andrwken on 12/18/2008 11:19:56 PM , Rating: 2
While that's true right now, Toyota spent many years on the japanese governments bailout bankroll. Look where they are now. If the bailout gives the US government the ability to give some of these companies the kick in the tail they need (or the ability to renegotiate) then it could be the best thing for them.

In a conspirator's way of thinking, it could be just what the automakers wanted.

I understand that I am asking a lot from our government to manage something like this properly.

RE: Economical not just technological
By Dwayno on 12/18/2008 7:30:07 PM , Rating: 2

What makes you think that the credit market "only" collapsed in 2008?! This was a credit market bubble. It burst in 2008, but it's been weak for a very long time since what was inflating it was bad lending practices. The availability of easy credit affected every aspect of business, including cars. The same people that shouldn't have qualified for a mortgage were also qualifing for a new SUV/truck purchase because they qualified for that mortgage (collateral).

RE: Economical not just technological
By Ringold on 12/18/2008 9:06:41 PM , Rating: 2
You supported my point. People were able to get cars and trucks throughout most of 2007. Thus, what is GM's excuse for still losing tons of cash in 2007?

But you can go back to 2006 and 2005, too.

Over the same time period, Toyota made money.

The OP I responded to made it sound like, oh, poor GM, the credit crisis crushed them. No, sorry, long established business practices have put them where they are now.

RE: Economical not just technological
By cokbun on 12/18/08, Rating: 0
By hashish2020 on 12/22/2008 3:22:56 AM , Rating: 2
Yea, Toyota made money. Now it is losing money.

Guess why? The yen dropped from it's artificially low 110-120 per dollar range to the level around 90 that reflects real life now. The good thing about this credit problem? It is forcing Japan, Europe, and China (the "leech" countries who made their wealth on keeping their currencies weak and exporting to us) decide to take one of two paths---buy up more and more worthless treasuries, or let their currencies appreciate to what they should be.

