GM and Chrysler should have been allowed to go into bankruptcy before we blew billions in taxpayers funds on them. They could have been allowed to restructure and maybe emerge from Chapter 11 as better companies without the money wasted. Now we have an administration who apparently want to be in the car business. These people have lost their minds.

The loss of over 3 million jobs related to the auto industry would be devasting to our economy. Bankruptcy is and should be the last option. The unions have come to the table and made many concessions. It's time for others to do the same.

GM is also the perfect example of why we need Health Care Reform. Reducing health care costs would benifit consumers and business. Economic recovery requires health care reform.

Splork you are 100% correct.

Blu - Bankruptcy does not = closing down. The airlines have been bankrupt for how long? Bankruptcy would allow stronger companies to purchase GM and Chrsyler and actually run them the right way. It would also allow them to get out of deathly union contracts who, I'm sorry, but haven't made NEARLY enough concessions.

instead now we have a president running an auto company making business decisions (which he's never made in his life) based on politics and not economics. if you look up insanity inthe dictionary there should be a picture of this plan.

I do find it kinda funny though that he's "threatening" bankruptcy when a lot of the people involved WANTED bankruptcy all along and most business people agree that its the best option.

Sounds like this "threat" is just another way to try to capture all the recognition when something finally goes right. Gotta love those Obama safety nets.

Who is going to buy a car from a company in bankruptcy? How many jobs will be lost?

The auto makers do not want to file bankruptcy. They said that would be "the death of them" (heard this on NPR this morning). Are there stronger companies willing to purchase GM and Chrysler? In this market, a stronger car company is quite relative. Toyota is doing better than GM, but has seen record losses. No one is immune and the fact is that all of the auto makers are interlinked and the fall of one would be detrimental to all, foreign and domestic.

And I completely agree with blu that health care reform is vital to our economic health and recovery.

Who flies an airline thats bankrupt? Answer: ALL OF US.

Who is buying a car now anyways? Hyundai is the only company as far as I know whose sales have actually increased, so their in a position where they could look at buying GM or Chrysler. There are MANY car companies out there, its not just GM or Toyota. And though car companies may not be strong here, they may be strong in Europe, why else are they trying to pawn off Chrysler onto Fiat?

GM is in a much stronger position than Chrysler, its a much better buy, there is no doubt another company would buy it and YES, there would be some jobs lost, but if it ultimately means a better product and a better company, why shouldn't it be done? Would we really rather have a govt owned company thats horribly mismanaged that we have to throw BILLIONS at just because we're protectionist and can be bear to have it be foreign owned? Because I truly beleive thats what this boils down to. GM = America. Well, tough. GM isn't run well and therefore needs to be bought be a company who CAN run it well. That company is not the American govt. A stronger foreign owned GM is better for everyone.

What about Ford? They came to congress and said they probably wouldn't need the money, but was there to show a united front. They are still being run well. Let GM and Chrysler shake in the wind to get rid of all the junk that needs to be let go. Get rid of the excessive bonuses and pay at the top, and get rid of the crushing union contract (No one should be getting FREE health care for the rest of their lives paid for by their employer).

Roar - I dont think anyone would tell the media that they want their company to go bankrupt. But its pretty clear that most leading business people think its the best option. I haven't heard of any C level exec say a govt bailout is the best option (other than those of GM and Chrysler), but if you know of one I'd love to read about it.

"TOKYO, Dec 12 (Reuters) - Toyota Motor Corp said on Friday that a big bankruptcy in the U.S. auto industry would worsen an already severe business environment, adding it hoped for a solution to avoid such a scenario.

"The U.S. auto market is shrinking rapidly," Japan's top automaker said in a statement. "A major bankruptcy would exacerbate an already difficult environment for Toyota and the industry. We hope to avoid this situation."

Earlier, a proposed bailout of Detroit's General Motors Corp Chrysler and Ford Motor Co failed in the U.S. Senate, raising the spectre of an industry collapse and sending automaker shares tanking in Asia.
http://in.reuters.com/article/rbssConsumerGoodsAndRetailNews/idINTFA0031...

"George Magliano, Automotive Analayst for Global Insight, doesn't think so.

"Nobody benefits from a bankruptcy," he said. "It's just gonna be too disruptive for the industry. A bankruptcy by Detroit hurts the supplier base, and everybody uses that supplier base. That's the issue."

Seems logical. In fact, Jeffrey Liker, author of The Toyota Way, agrees. He also notes that:

"GM is a partner of Toyota through [their joint venture NUMMI] as well as a competitor."

"And if the American auto companies go under or are shadows of what they were, and the foreign automakers like Toyota are still strong, there could be a political backlash."

http://www.huffingtonpost.com/daniel-hernandez/whats-good-for-gm-is-good...

What effects GM and Chrysler effects the entire industry in the US. Again I ask, How many jobs will be lost?

No one is arguing that it doesnt effect the industry. No one is arguing that jobs won't be lost. No one knows how many jobs will be lost.

Again I ask, why is the bailout a better idea? Why is a gov't owned GM thats still hemmoraging money (only now taxpayer money) and selling cars no one wants to buy (since the govt says they need to cut back on their bread and butter - trucks and SUVs) a BETTER option?

Why is having the govt run an auto company a GOOD idea?

I really, really don't understand that. Obama said yesterday he doesn't want to run it. Well he has a pretty funny way of showing it when he lays down HUGE impacting stipulations to GMs business in order to get that money.

So he might say he doesn't want to run it, but they ARE running it. That part is very clear.

"I dont think anyone would tell the media that they want their company to go bankrupt." Maybe not, but they made it pretty clear that they did not even consider it an option. And Obama does not support a never ending flow of tax payer money to keep these companies afloat. They have 60 days to get their act together and come up with a plan that will get them back on their feet again. We will have to see what they come up with. But their failure, as pointed out by the articles blu provided, have far reaching effects.

But if we give them the leeway to do a structured reorganization where they could re-negotiate union contracts, that would be the best option. Its essentially a bankruptcy but people don't like that word, so ok, lets call it something else.

Either way, they are better off being run by a strong foreign company. Toyota was mentioned, Toyota makes over 3k more on every they sell verus GM because as a foreign company, they aren't held to the same union requirements. Soon they will be and their profit margin will decrease, but they have strong enough business in Japan to still be ok. American auto companies don't have as good a position.

The bottom line is one of two options - 1)unions are going to have to accept a LOT less in order for the American auto companies to be American owned or 2) American auto companies need to be bought out by foreign counterparts who are off shore and diversified enough to withstand the losses.

I think what bugs me most about this whole situation is that this isn't news! This has been going on for YEARS. They have been dying for YEARS. They aren't competitive globally, their technology is subpar, the quality isn't there... none of this is new. They should have gone out years ago and we've just been prolonging the pain. This is only the most obvious example of the govt propping them up, but its been going on for years through legislation banning diesel technologies, etc.

I agree with your points Haus. I don't think Obama wishes to be a business owner and is trying to give the companies the opportunity to come up with a plan to restore their viability. And the union will play a big part in whether that will happen. But I don't think your two points can be mutually exclusive. Even if a foreign company is willing to buy out GM and/or Chrysler, the employee contracts are still their and still need to be honored.

They have been inferior for years, I completely agree Haus. Especially when fuel prices were going up, and the american auto makers kept producing bigger and bigger cars, when everyone else was looking into more fuel efficient, hybrid vehicles. They ignored the changing market and kept with the same old product. They seemingly conceded the fuel efficient market to the foreign auto makers. The sad thing is they have improved the quality of many of their automobiles greatly in recent years but are unable to shake their reputation as being inferior to the foreign automakers.

I disagree a bit Roar in that I dont think people really want to buy fuel efficient cars. I think we say that, but the numbers tell a different story. The Ford F150 is the #1 selling car in the WORLD. The WORLD. And its ONLY sold in North America.

When gas goes up, yes we look to buy more fuel efficient cars, but otherwise we don't. The only way to get people to buy fuel efficient cars is to hike up gas prices. Thats whats coming next. Either through a gas tax or a restriction of supply, but its coming because this Admin wants to push us to buy a certain kind of car. No matter that trucks and SUVs count for 11 of the 20 profitable GM and Chrysler models, the Admin wants us to buy greener cars and this is how they're going to do it. First they hold the nuse around GM to make sure they cut way back on the trucks and SUVs we want to buy, then they jack up gas prices.... and the result? People buy fuel efficient cars.

I don't mind incentives to buy greener cars, but I do resent the market being manipulated for political reasons and I resent being menipulated myself.

And then the Admin said GM has to kill the Volt! The only electric car they have! ahhhhhhh!!! Makes no sense.

i guess the question is, what is considered fuel efficient??

20 mpg?
30 mpg?

I think the reason for the volt was because it was too expensive. It wasn't going to get anywhere in the market. And for a flailing company, it is not a good move to produce a car that won't be a big seller.

"I think we say that, but the numbers tell a different story. " I think that use to be true, but with the last fuel hike and the green movement, there has been a fundamental shift in the types of cars Americans buy. I could be wrong, but I don't see us going back to being the Hummer culture we were 10 years ago. At least we don't.

I agree with Roar, I thought the F-150 was surpassed by the Toyota Corolla or Camry March of last year. Most people I know that buy them do it for the business tax break anyway not because its the car they want to drive. Take away that break and Ford would be in big trouble too.

ITA with hausfrau and Splork on this matter.

Oh referring to post 21 (I think), my hubby and I were just doing that thing when we want to see if there are more 'small/efficient' cars compared to Ford trucks, and other SUVs (big, not so gas efficient vehicles). We like doing this sporadically (Yeah, we have no life LOL).
Of course most of the time, the SUVs and trucks have been more in the number compared to the 'small'/efficient cars. We don't know why we live in a state that's really into being 'green' and 'weird,' LOL.

Obama has already said he won't let them fail. "We cannot, and must not, and we will not let our auto industry simply vanish," he said.

He's also said that the government is going to honor the new car warranties issued by GM and Chrysler.

There is no reason for these companies not to go into bankruptcy. If Obama can agree to it, which is politically very risky since the unions dig Democrats, then it has to be a good idea.

From the AP: "The president went out of his way to explain what a court-overseen restructuring would entail. He stressed that bankruptcy would help Chrysler and GM clear old debts and place them on a sustainable path. 'What I'm not talking about is a process where a company is simply broken up, sold off and no longer exists,' he said."

That said, I deplore the government intervention into this situation. Bailouts shouldn't have been an option in the first place. They should have hauled their tails to bankruptcy court and worked it out without the government controlling the process.

The Volt was going to be sold for 40k, so yes thats too expensive. But why throw away all that technology? why not just give them money to subsidize the R&D cost that is usually responsible for the initial high cost of a new model car? Its just absurd because it was the govt that pushed them into making a super fuel efficient car and now its the govt making them throw it away. Its asinine. If they are giving them money anyways, then why not funnel some of that money into easing the burden of this car so that they can be more affordable?

Roar - I think its difficult to tell if we've had a fundamental shift. I mean, Prius sales were down 20% in Q4 of 2008. But every car has been down for two quarters now, we only really pulled out of terribly high gas prices around October of last year... so I don't think we have a clear picture of whether or not our buying habits have changed, since we aren't buying at all.

Just for info...

The Top 10 Best-Selling Cars of 2008

Ford F-Series: 515,513
Chevy Silverado: 465,065
Toyota Camry: 436,617
Honda Accord: 372,789
Toyota Corolla: 351,007
Honda Civic: 339,289
Nissan Altima: 269,668
Chevy Impala: 265,840
Dodge Ram: 245,840
Honda CR-V: 197,279

blogs.cars.com/kickingtires/2009/01/the-top-10-best.html

Theres nothing on that list that jumps out at me as being super fuel efficient. It looks to me like 3 low fuel efficient autos, and 7 average efficiency autos.

He has said he won't let them fail, but he also said "We cannot make the survival of our auto industry dependent on an unending flow of tax dollars. These companies — and this industry — must ultimately stand on their own, not as wards of the state,"
"the Bush administration approved $17 billion in federal funds to help GM and Chrysler survive. But continued government assistance was contingent upon the companies submitting viable restructuring plans to the Obama administration"

I see no evidence that Obama plans to be a business owner nor supply these companies with neverending tax dollars.

Hybrid sales account for only 2.3% of the market, even after a 38% jump from high gas prices.

When a company is being supported by government money, then government intervention in how they're running isn't so crazy, is it? I mean, these aren't private enterprises anymore. They're on welfare in the grandest scale.

Everyone is afraid of the consequences of failure. It's never good in the short term. Job loss, fear, etc.

But in the long-term, not everything succeeds. We can't all have jobs all the time, we can't all be rich.

That's just not how life works.

I think that's because Hybrid vehicles are more expensive. The Toyota Camry is roughly $21K and the Hybrid version is almost $27K. The Prius falls right in the middle of the two. And there also aren't as many hybrid models as there are non hybrids. So the options are limited.

"But in the long-term, not everything succeeds. We can't all have jobs all the time, we can't all be rich."

It's not about being rich, it's about repairing this economy, about not losing whole communities to unemployment. The current economic crisis isn't simply a cyclical issue affecting one or two segments of society while others move ahead with gusto. If your leadership strategy is to let things fall, you better have a clear idea of how to pick up the pieces. Otherwise, you've lost control of what happens next.

I guess I disagree with your premise. I do think it's cyclical. Ups and downs.

I don't know. I mean, there are ghost towns from where mines went bust for a reason. I realize it's not quite the scale of this, but, it's not the first time to lose a whole community because of economic disaster.

"GM is also the perfect example of why we need Health Care Reform. Reducing health care costs would benifit consumers and business. Economic recovery requires health care reform."

IMO, this thinking makes no sense whatsoever and it is dangerously ideological. By this logic, Europe's economy should be booming, which it definitely isn't. Americans - with our private healthcare - are doing better economically.

If you want universal healthcare, fine. But don't argue that it would have somehow ameliorated the economic downturn, because that is a patently false statement.

But it's not just a mining town here or there: it's four or five states that have sizable auto-employee populations and no strong manufacturing segment to step in and pick up even half the workers.

This would be on top of all the other failing businesses and banks, unemployed workers, current foreclosure levels, etc. that communities and states are struggling with. If it's a cycle, it's more like Haley's Comet than a season.

More than just a single community will be lost if GM and Chrysler go bust. Plants will of course close. How many dealers will go out of business? How many suppliers will be forced to go out of business. Many of these companies also supply Toyota and other auto makers.

"By this logic, Europe's economy should be booming, which it definitely isn't."
If healthcare was the only or the major factor driving the current economic crisis you'd have a point. But it's not.

That was the point steph, thanks for reiterating it. Thus saying that revamping healthcare will revamp the economy is an ideological statement.

Except no one said it would revamp the economy.
Liliblu clearly wrote that it is A requirement of economic recovery. A, not THE.

liliblu clearly wrote, "GM is also the perfect example of why we need Health Care Reform." I fail to see how universal healthcare would have at all helped GM stay out of it's current situation... it certianly hasn't helped Europe.

My point is, if universal healthcare is A requirement of economic recovery, why haven't we EVER seen it help a single floundering economy? It's too big of a statement to make, and such misinformation has been bandied about in the media too much recently. Just becuase people say it will help, doesn't make it so, and history certainly sides with me on this point.

kranky health care costs add a little over $1,500 to every GM car. If I can find a particular article I'll post it. But, it stated that GM spent more on health care than it did for steel. Toyota spends $1,400 less on health care per vehicle on health care than GM. I know you like to dismiss anything you don't agree with as misinformation. But maybe you should do a little research on what health care costs consumers and business each year.

GM is a company, Europe is a continent made up of approximately 50 states each of which has a different economic system so the comparison isn't valid.

Here's what Liliblu said AGAIN:
"GM is also the perfect example of why we need Health Care Reform. Reducing health care costs would benifit consumers and business. Economic recovery requires health care reform."

Liliblu says REFORM and you keep translating it into UNIVERSAL HEALTHCARE. Reform and universal healthcare come in varying forms from place to place, on issue to issue.

It is not too big a statement to say that GM is staggering under the weight of its healthcare commitments and that reducing healthcare costs would help it.

I'm not sure if you mean that history sides with you on 'just because people say it will help, doesn't make it so' or something else.

CAPITALIZING things you want EMPHASIZED rarely makes your POINT more CONVINCING, y'all.

CAPITALIZING things you want EMPHASIZED rarely makes your POINT more CONVINCING, y'all.

"kranky health care costs add a little over $1,500 to every GM car."

This is correct, but the problem is that this cost is for retired employees. Toyota doesn't pay this because they aren't saddled with a union that wrote that (GM must pay 100% med cost for every employee until they become deceased) into their contract. That is a major reason GM is in such bad shape.

It was to highlight SWITCHED WORDS, not make a point. Must have been too SUBTLE.

Stephley, that message certainly wasn't to just you, nor was it nasty. Everyone on citizen seems to think that using caps lock will make their point better or more convincing, which it doesn't. Within this thread alone, you, Kranky, and haus all have! It was an observation, not an attack!
(and, btw, if you want to get into semantics, you did caps lock words that weren't switched)