Auto Bailout: My thoughts summed up by Adam Carolla

[Anarky]

I may own a classic Mustang, but I have no urge to buy any current production American car. Popular Mechanics interviewed Carolla about i and his thoughts resonate with me.

http://www.popularmechanics.com/blogs/a ... 94731.html

[Zeus]

The real question is actually: if we don't bail out the car companies, how badly will the economy get hurt. They're sayin' it'll collapse even more than it already has. Instantly put half a million people out of work (that's just in Canada) and it's a pretty severe impact.

You almost have to do it. But if you do, you take their balls in your hands and make them do exactly what you want them to and pay you back. Sorta like they did with AIG except you may not want to break up the companies too much

[Tessian]

I agree for the most part, but I don't think he was being critical enough of the companies. They all deserved to go under and allow to be restructured to become profitable again. It's not JUST about delivering a quality product, it's about running a profitable company.

[Mully]

Why do celebrity's opinions matter to anyone?


Where's Bono in all this? He usually speaks up about world events...lol.

[Kupek]

I bought the government's argument for the financial firms: these companies are special, they form the interconnected backbone of our world economy, and if we let them become the victim of market natural selection, it puts the entire world economy in peril. It's possible that we would have been okay had they not been taken over, but I don't think that was worth the risk.

I don't yet buy that with the automakers. They're huge, but they don't form the backbone of the economy like the financial firms did. And the American car companies are in trouble because they make an inferior product. If they get bail outs, will they turn around and make better cars and be able to turn a profit? I doubt it - there's no reason for that to happen.

I'm sympathetic to the enormous loss of jobs and the strain that it will put on the economy, but I'm not sure if that's enough.

edit: It's not comprehensive, but this NYT article talks cogently about the compensation gap between American and Japanese automakers: $73 an Hour: Adding it Up

[Zeus]

Again, it's a simple decision: if you let the automakers bleed out, what do you do with what, 2-3 million direct and indirect workers in the auto industry in the country who can't find work (it's probably more than that in the US; in Canada I believe it's around 500,000)? Sure it's unlikely and a worst-case scenario, but it's something you have to have a plan for. You can't just sit back as a government and say "whatever, dicksmacks, you got yourselves into this mess, get yourselves out".

This is why I say sure, you do it, just make sure that what comes out the other end ain't the mess you have now. You gotta clean up the companies and change philosophies. Basically, the government has to take over and do a company makeover. Otherwise it's putting a bandaid on a severed limb.

At the end of the day, the government is at the bottom of Shit Hill and there's a massive shitball coming. Either they build a wall or they get splattered in the face. Guess where all those workers will be going if they're out of work and can't get a job in their profession?

[SineSwiper]

Why do celebrity's opinions matter to anyone?

Where's Bono in all this? He usually speaks up about world events...lol.

It somewhat matters because he's going to be hosting a popular car show. (Top Gear is insanely popular in the UK, and I watch it myself.) At first, I was asking myself, "Why the fuck is Adam Corrolla going to be hosting Top Gear USA? I thought they were going to get some British guys for the show, like they said earlier." But, after reading the article, it sounds like he actually understands the subject pretty well.

It's good that he understands the electric/hybrid car industry. The original Top Gear show is too stuck-up to talk about green cars, and they make fun of them every chance they get. It would be refreshing to see this new show acknowledge that these cars will be a part of the new future of travel.

[Anarky]

Why do celebrity's opinions matter to anyone?

Where's Bono in all this? He usually speaks up about world events...lol.

It somewhat matters because he's going to be hosting a popular car show. (Top Gear is insanely popular in the UK, and I watch it myself.) At first, I was asking myself, "Why the fuck is Adam Corrolla going to be hosting Top Gear USA? I thought they were going to get some British guys for the show, like they said earlier." But, after reading the article, it sounds like he actually understands the subject pretty well.

It's good that he understands the electric/hybrid car industry. The original Top Gear show is too stuck-up to talk about green cars, and they make fun of them every chance they get. It would be refreshing to see this new show acknowledge that these cars will be a part of the new future of travel.

I listen to Adam Carolla's morning radio show everyday on the way to work. The guy knows cars extremely well and has accumulated quite a collection, even including one of Paul Newmans racecars. Adam isn't a typical celebrity to me, he started out as a carpenter in the Hollywood area who barely made ends meat for many years and eventually achieved success when he worked with Jimmy Kimmel at KROQ and then got a gig on Love Line.

An avid car enthusiast, Carolla has owned a BMW M3 E30-generation model, an E46-generation M3, Datsun 510, an Audi S4, Jaguar sports coupe, MINI Cooper S, Nissan 350Z, Aston Martin, Lamborghini 350GT, Ferrari and 1984 Nissan 300ZX Turbo (The original Newman Sharp car driven by Paul Newman and Fitzy to an SCCA national championship in 1984).

[Tessian]

Again, it's a simple decision: if you let the automakers bleed out, what do you do with what, 2-3 million direct and indirect workers in the auto industry in the country who can't find work (it's probably more than that in the US; in Canada I believe it's around 500,000)?

BULL SHIT.

I HATE people who keep defending this because "millions of people will lose their jobs" NO THEY WON'T! For one thing, those numbers assume that all 3 companies go BELLY UP, EVERYONE at the company loses their jobs and half the people around them (service industry) lose their jobs too and this would simply NEVER have been the case.

What would have happened if we didn't bail them out? Chapter 11. They would have been allowed to restructure, throw out the UAW, and never would have closed their doors. Would people have been laid off/lost their jobs? Of course, but not nearly the numbers people keep quoting out their asses. Chapter 11 was really the only chance they had of fixing their biggest problems as it's the only way they can get rid of the UAW cancer and other problems. The only other feasible worser case would be if another company bought them up and their assets, still resulting in a good portion of the workforce keeping their jobs.

That aside, I HATE the excuse that "You have to bail them out or people will lose their jobs!" WHY does that get to be an excuse? Does this mean that if WALMART, one of the biggest employers in the US, goes bankrupt on stupid ass business decisions that we'd bail them out too, just because they employ a lot of people? No! Employing a lot of people is NOT an excuse for government bailouts!

[Zeus]

Look, I ain't sayin' it's gonna happen, I even mentioned it most likely won't. But you have to be able to explain what you will do IF it did, what your contingency plan is.

Chrysler's already been bought by a venture capitalist company. They're big enough with enough assets that someone will come in at a bargain basement price to snatch them. But from a PR point of view, you have to be able to answer the "what if" question AND be prepared to account for the inevitable large loss of jobs if any major restructuring happens. One thing's for sure, if they get bought out and restrutured, there will be a very large decrease in the workforce.

[RentCavalier]

Whatever happened to "survival of the fittest"?

Look, if we were in a healthy economy, these big companies collapsing would just give way to better companies (like Toyota or Mitsubishi) filling in the gaps. Jobs will be lost, but more than likely, these new, conquering companies will want to rehire the same workers because they are already qualified.

I'm not against the bail-out, though, because I'm not entirely sure we are IN a healthy economy. 9/10 times, the problems we see happening are because Congress tries to control the economy by doing something idiotic (like the Federal Reserve Act of 1913) and this creates huge problems that ripple through the economy for decades to come.

A "free-market" doesn't NEED Congress' help. In an ideal situation (and I will stress again that I am not sure if our current situation is "ideal") the economy would simply take care of itself, not needing anybody's intervention.

[Tessian]

I'm not against the bail-out, though, because I'm not entirely sure we are IN a healthy economy. 9/10 times, the problems we see happening are because Congress tries to control the economy by doing something idiotic (like the Federal Reserve Act of 1913) and this creates huge problems that ripple through the economy for decades to come.

Please explain how throwing money at failed companies like this doesn't also count as "Congress trying to control the economy by doing something idiotic." Also, we're not in a healthy economy, it's a recession

[Don]

It seems like everybody is too big to fail these days.

[Anarky]

[Zeus]

Whatever happened to "survival of the fittest"?

Look, if we were in a healthy economy, these big companies collapsing would just give way to better companies (like Toyota or Mitsubishi) filling in the gaps. Jobs will be lost, but more than likely, these new, conquering companies will want to rehire the same workers because they are already qualified.

I'm not against the bail-out, though, because I'm not entirely sure we are IN a healthy economy. 9/10 times, the problems we see happening are because Congress tries to control the economy by doing something idiotic (like the Federal Reserve Act of 1913) and this creates huge problems that ripple through the economy for decades to come.

A "free-market" doesn't NEED Congress' help. In an ideal situation (and I will stress again that I am not sure if our current situation is "ideal") the economy would simply take care of itself, not needing anybody's intervention.

I'm all for survival of the fittest. Under most circumstances I'd say "let them burn, they were greedy fucks who have a very antiquated business model and this is the end result. Good riddance". But there are other factors here.

First of all, there was that post regarding how much they pay for each employee. I'm sure that includes all of the insane benefits each person gets amongst other perquisites. Now, I'm all for unions....to a degree. But there's no way you can convince me that the level some of the big unions - UAW is one of the biggest - have gotten to is healthy for anyone....even the workers. And who's fault is that? Regulators, period.

Second, you have the sheer number of people involved that makes this more than just a free-market issue. It's a societal issue. As we discussed above, even if the chances of a complete collapse is minute you still are going to have some significant fallout should there be wholesale changes (which is required). And I don't think anyone is going to argue that some seriously restructuring is going to take place with these companies, it's almost inevitable. So you have to have some contingency plan about what you're going to do with all those people. The economy is shrinking and, by extension, so are the number of jobs available. Add if even 500,000 become jobless it's a huge problem. A problem that becomes the governments' if there's nowhere for these people to go.

I won't bother with the stock market effects. Let those rich fucks who ruined our economy burn.

Yes, the car companies are trying to exploit that as much as possible. But that don't mean they don't need nothing (wow, three negatives in a sentence, I'm impressed :-). How it's going to happen and who is going to give it to them is up to debate but they probably need something. And the government will probably have to be involved if nothing else than a facilitator. They have to there is some public interest at stake.

I say there can be a bailout on some level but with some serious consequences (AIG is the example I always go back to). No way you just give money to ANYONE not even the financial institutions. You have to ensure shit like this don't happen again. Of course, that also means some serious regulatory changes so we'll see if that happens (no way IMO).

[Zeus]

It seems like everybody is too big to fail these days.

If the Titanic or Enron taught us anything is that very thinking is a fallacy.

[kali o.]

It's pretty simple to me:

The automakers aren't providing a social or vital service, therefore there should be no bailout from citizens (ie: government). They are not teachers, or airlines, or banks, or hospitals, etc...the make fucking cars. If their product is substandard, outdated or anything else that prevents their profitiblity, they deserve to go/change.

I'd elaborate with my thoughts on what this is all a symptom of (an unrestricted global market+thoughtless western consumerism = progressively fucked economy), but I just don't care anymore.

[Kupek]

First of all, there was that post regarding how much they pay for each employee.

The NYT piece I linked to actually made worked its way up to two points that I'm not sure you made it to. One, the labor costs are only about 10% of the cost of a car, and even adjusting for that, American cars are $2,000 more expensive than the Japanese cars. Two, about $15 out of that $73 actually goes to retirees.

[Tessian]

Anarky I fucking love that poster. It's getting sent around the office tomorrow.

[Julius Seeker]

The Money Hole

[Tessian]

The Money Hole

"If you are a patriot, you throw money in its (America's) hole"

Every now and again the Union ain't bad I can't get over that the one guy there is from the Sonic commercials... can't even pretend to take him seriously, haha.

[SineSwiper]

Whatever happened to "survival of the fittest"?

Look, if we were in a healthy economy, these big companies collapsing would just give way to better companies (like Toyota or Mitsubishi) filling in the gaps. Jobs will be lost, but more than likely, these new, conquering companies will want to rehire the same workers because they are already qualified.

I'm not against the bail-out, though, because I'm not entirely sure we are IN a healthy economy. 9/10 times, the problems we see happening are because Congress tries to control the economy by doing something idiotic (like the Federal Reserve Act of 1913) and this creates huge problems that ripple through the economy for decades to come.

A "free-market" doesn't NEED Congress' help. In an ideal situation (and I will stress again that I am not sure if our current situation is "ideal") the economy would simply take care of itself, not needing anybody's intervention.

People have this odd Ayn Rand version of Capitalism, as if the system can survive anything. An important thing to remember is that Capitalism is not a completely stable, self-sufficient system. It has weak points, and the whole thing can come down if they are struck hard enough.

Why do we have laws against abuses of monopolies? Because it's a weakness in the system, that would destablize competition. We have many other laws to try to protect those weak points as well.

As far as the auto bailout, it's still a loan, and it's still going to cause some restructuring. The UAW make be overzealous about their workers, but keep in mind that only 10% of a car's cost has to do with the workforce. (Kupek already pointed that out TWICE.) The car companies, even with the bailout, are not going to survive this as the same three companies. I think (I hope) they understand that if they don't fix their situation fast, they are going to continue to go down their hole, and the government won't bail them out a second time.

I'll a little pissed that they have resumed SUV/truck commercials, but I guess they still have a shitload of stock to sell off, now that gas is $1.33/gal. Ford, Chevy, and GM better be digging out those electric cars they buried in Nevada, or they are going to be crashing and burning fast.

[Mully]

I hate the term "car tsar."

[Flip]

lol @ Anarky, thats an awesome JPG.

[Tessian]

Saying the workers salary only represents 10% of the car's price doesn't really say much without comparison. How much is the workers salary in a a Toyota, Honda, Lexus, etc car? If it's 9.5% then you're right, that's nothing. But if the average turns out to be 5-6% of the car's price for foreign brand then that says something. Don't just write off the percentage cause it's a low number.

[SineSwiper]

Saying the workers salary only represents 10% of the car's price doesn't really say much without comparison. How much is the workers salary in a a Toyota, Honda, Lexus, etc car? If it's 9.5% then you're right, that's nothing. But if the average turns out to be 5-6% of the car's price for foreign brand then that says something. Don't just write off the percentage cause it's a low number.

Hey, all I'm saying is that there's some better low-hanging fruit out there.