The U.S. Auto Industry and the Ripple Effect

[HPD]

Run time: 03:58 https://www.youtube.com/watch?v=72cHfOKoA1c   Posted on YouTube: November 16, 2008 By YouTube Member: Views on YouTube: 0   Posted on DU: November 18, 2008 By DU Member: HPD Views on DU: 1080

 
I support the bailout of the US automakers. Here is a video I found that demonstrates why. Most people do not understand the wide spread of economic catastrophe if they fail. And for what? $25 Billion? Just watch and you'll see why $25 Billion is nothing when compared to what they provide back to the people and GDP.

[Narkos]

1. Video produced by GM? Like it, but it is a little biased....

[IsItJustMe]

8. It is true. Just wait and see. You think this economy is bad now?

[Idealism]

2. Obviously this video was made with an eye towards

the best interests of the automakers, and much of the claims in the video are rough estimates, you cannot deny how millions of americans will be affected by chapter 7 backruptcy of the auto industry.

-They represent all that is left of domestic manufactoring
-It doesn't think about the millions who will lose their homes if they lose their jobs associated with the big 3, further depressing home values and saturating the market with houses no one can afford to buy except the wealthy.
-Throw state budgets into the red due to hundreds of thousands (if not over a million) collecting unemployment insurance.
a. The worst part about that is some states (Mississippi I believe to be one example) must by law have a balanced budget and cannot borrow more than they collect. If you add in substantially higher costs of unemployment insurance, states will have to make cuts from somewhere and guess what will be first on the menu. Getting the knife first will most likely be the education budget, that means more layoffs, lower quality of education, and possibly more foreclosures.

[BeatleBoot]

3. And Chapter 7 would be correct - not Chapter 11

Chapter 7: Just lock the doors and be sure to turn out the lights at all facilities. All employees out now with no severance - nothing - management, blue collar - everyone out now.


I lived it.


It sucks.

[Idealism]

4. Correct: complete liquidation with no chance of reorganization or restructuring

Complete fail and it will most likely lead us into another great depression era of unemployment

[tclambert]

6. Michigan must also by law balance its state budget

That has been a real struggle the last few years with the problems the auto companies have been having. If they go under, the need for state government services will increase, but the tax base will disintegrate. The state would go bankrupt. And I have no idea what that actually means. Do they close all the schools? Do they disband the state police? Property values would plummet. Foreclosures would skyrocket. The banks would be unable to recover what is owed on the mortgages. That leads to more financial system meltdown.

Letting the auto companies fail guarantees another Great Depression.

[ksimons]

5. I don't imagine the bailout plan part B is going to pass this week

At least it doesn't sound like it will pass this time, from what I have been reading & hearing. I hope they have a back-up plan. If they are really serious about holding on, they must have some plans out there for surviving thru Jan 20th, should the bill not pass this time around.

That being said, I hope they lob off the corporate top of the beast and sign up some new management or my sense is the money is going to be used to cover their management issues only and not help the workers. That is how these corporate types think - look at the other bailout results. Banks buying other banks while borrowers are left out in the cold. Probably we'll see GM use the money to buy Chrysler - who knows? These people in control over the money are the ones who put the companies where they are today. Why would things change?

One note on the video, one of the reasons for their downfall (if you read the article thrown on the screen for a second, is a 'shift in consumer preferences'. That is not going to change, so the money is not going to fix the basic issue. I'm also surprised they only contribute 10 billion in taxes given all the numbers they are throwing out in sales, etc. Sounds like they are one of the groups who have made use of all the tax loopholes - now asking for $50 billion to hold them over for now? Interesting.

[tclambert]

7. It takes years to change an auto company.

I keep harping on this. They HAVE changed their attitude and are addressing all the issues everyone complains about. It seems like they aren't moving much because it takes years to design and produce new vehicles from scratch. GM has spent $20 billion on restructuring already. You can see some improvement in their products if you look close. But the completely new lines take something like 5 years. They still need one or two more years. Then they will be transformed. They will be able to pay off the bailout loan and became very profitable.

I agree management was stupid in the past. This is the third time they painted themselves into the same corner and sales suffered when gas prices went up. Each time they did something about it, but it took years to fix their faulty foresight. Somebody needs to put a sign up in the boardroom: "What if gas prices go up?"

[florida08]

9. absolutely

There should be some CEO salary cuts. The UAW has seen their wages go from 28/hr to 14/hr but I haven't heard Wagoner's salary being reduced. The shareholders need to take some serious responsibilities about the future of the GM if they truly want it to succeed.
I want to help the hourly workers not pad the pockets of management. When you have a downturn/recession in an economy everyone should
do their part in sharing the pain.