MONEY CULTURE

Detroit's Delusion

The enormous gap between the Big Three's self-image, and reality.

By Daniel Gross | Newsweek Web Exclusive
Dec 3, 2008 | Updated: 6:11  p.m. ET Dec 3, 2008

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  • Posted By: jjaffie @ 12/08/2008 9:46:50 AM

    Why are we not holding Wall Street hostage like we are doing the automakers? Wall Street gets a blank check with NO CONCESSIONS OR OVERSIGHT.

  • Posted By: Duaguez68 @ 12/07/2008 12:53:50 PM

    I???ve been following this thread for a couple of days, and the intensity with which some of you despise The Big Three is surprising to me. I will admit that I have never in my entire (short) life even considered buying an American car - they lost their "soul" decades ago and have all the excitement of a damp rag, and who in their right mind really needs an SUV? However, I don't understand why some of you would want thousands of people, who had nothing to do with the decisions made up top, to lose their jobs regardless. Yes, the UAW is corrupt to the core, and went overboard esp. with job banks, but labor unions are not inherently inefficient or counterproductive. Without the past efforts of unions, many of you wouldn't enjoy things we all take for granted such as 40-hr work week, time-and-a-half overtime laws, 401K, pension, and so on. In some companies (mine included), union and management are generally in sync, with a good balance between worker protection and profit realization. A happy worker is a productive worker. I believe in "compassionate capitalism". That being said, restructuring of management and of the entire auto industry is imperative. This must include technological advances such as marketing of turbodiesel passenger cars, one area where Europe has us whipped. Upwards of 40% of cars in europe are high-efficiency diesels, and their diesel fuel has been ultra low sulfur for years (we just made the switch recently). For reasons unknown, Detroit has made almost NO effort to manufacture or market hybrid, plug-in electric, all-electric, turbodiesel, biodiesel, fuel cell, natural gas, hydrogen, or any other up-and-coming technology. What is wrong with these people?

  • Posted By: g8crapachino @ 12/04/2008 7:20:54 PM

    Here we go with a bunch of idiots commenting about the quality of US vs Foreign made car, again. You're living in the past with your assumption as that hasn't even been true for years. The simple fact is the quality of any US made car is just as good if not better then any foreign made car.

    Now, if you think that just because you drive a Toyota that you'll feel no negative affect from GM, Ford, and Chrysler going under then you're a complete fool. The domino effect caused by thousands of unemployed auto worker will spill over into hundreds of other industries. Un-employment will increase, unemployed people do not make many new purchases, therefore retail sales will fall, therefore stores and business will fail, more people become unemployed...repeat the cycle. Think about what you do for a living and the chain of other people you depend on to buy and sell your goods or services. The odds are you will feel some pain.

    • Posted By: teachabc1 @ 12/05/2008 12:17:23 AM

      Couldn't agree more. As a teacher, my students and I benefit from American manufacturing plants that pay local, state and federal taxes. Part of their taxes go to our local school districts. Those of you that have your heads so far burried in the sand, let me make this simple for you... if the US auto industry fail... we all fail!!!! No job will be safe. They fold, there will be no taxes coming from these manufacturing plants, which means less resources for your children sitting in the classroom.

      • Posted By: McLovinB @ 12/05/2008 3:30:51 AM

        Fear, uncertainty and doubt will force people to make decisions that are not in their best interests.

        You go teacher. Go scare everybody.
        I will remain objective and calm and look at the facts.

        Why exactly will no job be safe? Every job in America now depends on GM? Wow. Do tell. Last I heard, there were 300 million other people living here who lost LESS MONEY this year than GM did. 250 million of them are not fearing for their jobs like GM employees are. 230 million of them dont live anywhere near a GM plant, and at least 150 milllion of them do not own a GM car.
        Why put the burden of GM's failure follies on all of those other people?
        You are going to let the bad guys get away because some workers will have to go out now and get a real job? Apparently, if they choose to do nothing, they still get 67% pay! Wow. I wish I had that gig. You are going to burden your children and your children's children so that Wagoner can send his kids to private school and university in London?

        Panic once, think twice.

        • Posted By: teachabc1 @ 12/05/2008 8:10:49 AM

          Where do I even start., It is NOT fear, It is called reality. You wouldn't know it ,if you were hit in the face with it. YOU are not being objective or looking at the facts. The facts ARE 1 in 10 Americans work in the US auto industry. For every one auto job, there are 10 additional non auto jobs related to it., They are BOTH white collar and blue collar jobs. They are secretaries, accountants, advertisers, mechanics, waiters, waitresses, restaurant employees, teachers, custodians, truck drivers, railroad workers, security members etc. The list can go on and on. When the avalanche begins....watch out. Just curious what do you do for a living? Is it a "real" job? Let ME decide if you are worthy of your job and wages. And, by the way... I do think everyday. Where's your brain? In the conservative, anti-union sand????

          • Posted By: McLovinB @ 12/06/2008 8:03:43 AM

            I still disagree with you on almost everthing, but I have to tell you that I loved teaching and left because I was burning out. Not burnt, but burning.
            If you really are a teacher and enjoy your job, good luck to you. Your job is extremely important for society. If you do it with all your heart, you will receive great rewards.

            And I will go out on a limb here. If you want to skewer me for this advice, you can really do it. One of the blessings and problems of being a teacher is caring very much about others. Do it too much, and you will burn out. Do it not enough, and you are not much of a teacher. My advice is that worrying much at all about the problems of multimillionaires and all of those other people is not a good use of your worrying capacity. No matter how this ends up, GM is not the shining future of America. Your students are. So please continue to do your best.

            And don't you wish teacher's unions were as powerful as the UAW?

          • Posted By: McLovinB @ 12/06/2008 7:05:09 AM

            Well, I lost most of my original reply. Too bad. Most was inflammatory, but I revealed my secret identity. All gone, too bad.
            I like my real job, thank you very much, and I am sure I can weather the storm of one or two crummy manufacturers biting the dust.

            I am a huge fan of the American organized labor movement. I wonder why union management is not bidding for the company. Probably because a) the union much prefers skimming the cream to actually churning the butter, or b) they know how messed up the company is and would prefer anything, or nothing, compared to actually being responsible for it. But that is to their credit really. No union hating here.

            Conservative? Anti-union? Me? buwahahahaahaha. Look at you, sticking up for Wagoner! Tell me the truth, you are the conservative here... aren't you! aren't you!! Oh... 34 billion certainly does make strange bedfellows. ho ho ho. Ooops. I think I let my secret identity slip out.

            Hey, I did want to make one more point. So many other companies have failed in US history, and you know what? You might be able to name five. That is how unimportant GM's failure will be. Packard, Hudson, Willy's, Studebaker... who cries for thee? Crocker Bank. Pan Am. Braniff. Oh the horror. The horror.

            That is reality TEACH. If Washington bails these clowns out, we will have threats and fear on our televisions forever as GM continues to ask for more money. If it ends now, people will have forgotten it by April... ok... June on the outside.

    • Posted By: McLovinB @ 12/04/2008 8:33:48 PM

      This sounds an awful lot like "if the liberal media reports it, it must not be true".
      Now you are saying that if consumers choose to buy foreign cars, it must be because they are misled. Consumer Reports, do they lie? Are all of the posters here just lying about their experiences? What do they have to gain from that? I have heard the "American auto manufacturers have come a long way" since the Iacocca days. I have never heard it from my friends who own American cars.

      If US automakers make stupid decisions, it must be the fault of foreigners?
      Look. Enough. When you start blaming the customer and competitors, you are finished. Everyone knows that. If everyone else is wrong, then GM must be right. Right? And that is clearly not the case.

      Then your post starts in with the FUD factor. Fear... uncertainty, .. doubt.
      Are you Karl Rove?
      Look, America will be just fine without this circus of losers. America is a great country with great people. It does not deserve to be dragged down by lazy, greedy, idiots, period. Negative effects? Pain? Bring em on. I am sick and tired of America being gutted by people in positions of responsibilty. The future of America does not have to include leeches and losers.
      They have had many chances. They have done their best. All of us deserve a lot better.

  • Posted By: Aggie Independent @ 12/05/2008 5:34:31 PM

    $700 bil is approximately $2,300 for every man, woman and child in this country. And that is just so far in this tragic bailout comedy, not even accounting for the Bush war debt. Add that to what we already own and it is more than troubling. Perhaps the country should file Chapter 11.

    • Posted By: McLovinB @ 12/06/2008 7:10:14 AM

      Don't you dare file Chapter 11.
      The Chinese will invade just to claim the collateral on their defaulted Treasury bonds.
      Russia will seize Alaska as compensation.
      The Canadians and Mexicans will want their pound of flesh too, so do not even think about it.

      Just everyone be quiet and keep working and pay off that debt. Your lenders are counting on it.

  • Posted By: SeriousSolutions @ 12/05/2008 2:40:27 AM

    In comparing American car companies to foreign car companies one can see that it is similar to the airline industry. Recently created airlines are not saddled with the expense of paying benefits to retired pilots, mechanics etc and paying union wages. This allows the newer airlines to charge cheaper airfares than the legacy airlines. Foreign carmakers building cars in the US have this same advantage over American car companies. Freedom from union wages and comparitively little outlay for retired workers reduces foreign carmakers costs by thousands per car. I believe there are two possible solutions to this discrepancy. The first is obvious. The unions must realize they are in the fight of their lives and be willing make sacrafices to keep their jobs. The second solution is to pass a law that requires foreign car companies to contribute to a pool of money used to pay the retirement benefits of retirees of American car manufacturers. This would level the playing field by reducing the cost of manufacturing cars for American companies and raising the cost for foreign companies.

    • Posted By: McLovinB @ 12/05/2008 3:07:18 AM

      The Japanese should make similar laws that US farmers will have to support Japanese farmers in order to sell soybeans, right? I mean, it is only fair. And the US movie industry should provide free movies to all nursing homes in Japan.
      Japan has a much worse problem with a rapidly aging society than America does. Are you SURE you want to open up that can of worms?

      Level the playing field. Hmm. Sounds like beggar thy neighbor to me. This is what America is all about? What happened to independence and the frontier spirit? The best SERIOUS SOLUTIONS can do is steal from the other guy?
      Tell you what. Just suppose that you do that, and the Japanese manufacturers reduce their costs even further through the use of advanced robotics and superior ceramic and carbon fiber materials. Are you going to rip them off more? How much of a crutch will be enough to prop Detroit up? I think you have hit upon the nature of the problem, but I do not think you know how pathetic your solution sounds.

      • Posted By: SeriousSolutions @ 12/05/2008 12:43:53 PM

        I have 3 comments to your reply.

        1. You are correct that Japan has a population aging far faster than ours. This is mainly because the birth rate in Japan is lower than ours and because Japan has virtually no immigration like the US. Typically immigrants are younger than the population as a whole. Japan has always been a closed society and remains so today.

        2. I am not suggesting that Japan support all retired Americans only a small segment. I believe my suggestion is a way to spread the cost of supporting retired auto workers across all car manufacturers. In hindsight Detroit should not have agreed to pay current retirees so much but that was common practice for all kinds of companies in the 50's and 60's. The Japanese are late players in the game and thus not saddled with these costs. The amount foreign car companies would contribute to the pool of money would be a flat amount and not raised if a foreign car company increases their profits due to productivity gains etc. If Detroit still can't compete then let them fail.

        3 Your suggestion that "fair is fair" would carry more weight if the current trade practices of Japan were more fair but it is well known that Japan places far more restrictions on free trade than we do, particularly agricultural restrictions such as those on rice.

        • Posted By: McLovinB @ 12/06/2008 6:25:37 AM

          Hey.. get serious.
          1. Wrong again. The MAIN reason is that Japanese old people are not dying. Sure the things that you mention are factors, but that is not the main reason. The life expectancy is, I think about 10 years longer than in the US.
          2. Why should Japanese companies pay anything to support decisions made by other people many years ago? Land of the free... home of the shakedown. It baffles me that you could think this is fair. If US manufacturers are "saddled with these costs" then they should have been a little more forward thinking. Too bad for them. Why should less stupid managers at other companies have to foot the bill for idiots?
          3. "OK, you lost me on --It is well known-- I usually run the other way when I hear that. Rice. Yes. Is that the best you can do? Time and again at trade talks, the US, Europe and Japan get into huge fights about agricultural support programs. For Japan, it is rice. For the US, it is corn, beef, sugar, wheat, and four or five other products at least. I think the EU it winds up being poultry, cheese, and wine or something like that. I concede Rice to you, but now you should get ready to explain to me how RICE restrictions add up to FAR MORE RESTRICTIONS. I really do not see the connection, and I am looking at the big picture. Good luck.

          It is plain to me that you know a little about these issues. It is also plain to me that you know a little about these issues.

  • Posted By: feralpigeon @ 12/06/2008 12:25:14 AM

    You notice two maroon SUV's idling at a stoplight. Both were manufactured in America on a Monday in May of 2005. Both have about 100,000 "high-way" miles. One of the SUV's has screeching fan belts. There is a heavy layer of break-pad dust on the front wheels and it is dripping something near the front bumper. the other SUV looks and sounds great! Which SUV is the Ford Expedition and which SUV is the Toyota 4-Runner?

  • Posted By: archmsu @ 12/05/2008 10:20:20 PM

    NO...................the Demcrats under Reid and Pelosi have to repay their union friends. What is so said is that it really is a dead industry at it's current size and we're just throwing money away. They will be back in 5 years for more money. What i can't believe about all these bail-outs is that CEOs are supposed to be Republicans, people who detest government hand-outs because it is sure sign of weakness, for a company and individual. Do you know anyone you brags about collecting unemployment or welfare? No, because it means your a loser! Plus, do you really trust the Federal Government and who the heck wants them running American companies, they can't even run the country.

  • Posted By: Michael45 @ 12/05/2008 5:04:09 PM

    Hey Daniel Gross, how much did the Republicans pay you to type up this attack of yours on the automakers? You know, the very same Republicans that pushed this nation into the financial and economic crisis it is now facing.

    • Posted By: DarkMage @ 12/05/2008 6:04:16 PM

      Hey Michael45, how much did the Democrats pay you to type this drivel blaming Republicans? If I recall correctly, it was Barney Frank & Chris Dodd who helped start this mess in the housing industry. Now you expect these same morons to fix the auto industry. Good luck with that!

  • Posted By: austin c @ 12/05/2008 5:12:59 PM

    I have been driving GM cars for more than four decades. Overall, their engines are well built, such that I never have to worry about changing timing belt as in Japanese car. I did not have to send the car to dealer place for repair beyond the warranty period. My recent disappointment with the big3 is that most of the hybrid cars they built are not really hybrid like Toyota and Honda's hybrid. The hybrid version of Saturn and Malibu are the mild hybrid cars while the Prius and Honda Civic are full hybrid which is much more fuel efficient than the mild hybrid in GM made cars. It is not clear to me why the big 3 did not devote their effort in developing the real full hybrid cars as the Japanese did. Furthermore, the future GM plug in hybrid may not be able to beat Toyota new plug hybrid which is also to appear in 2010.

  • Posted By: Skallywag @ 12/05/2008 10:02:26 AM

    I am a firm believer that the US auto industry has engineered some of the finest autos in the world - in the past. I am a stauch believer in Chevrolet/GMC, but enopugh is enough. But poor planning on their part does (should not) make a crisis on our part. The answer is simple - no loan/assistance/bailout. Let them fail. I for one do not care about the unions, criminals that they are (been there, done that, got ripped off). The IDEA of properly organized labor to protect the worker is very good, however, The unions in this country (ALL of them) have become an ugly monster that needs to be slain. In the end, the big 3 and the UAW made their beds, now, let them lie in them. If a citizen manages his finances poorly, no one will bail him out, so the principle is the same. Stop wasting my tax dollars!

    • Posted By: summer4077 @ 12/05/2008 12:31:41 PM

      I don't see how we can bail out the banks and not the auto industry. If the auto industry tanks, hundreds of thousands lose their jobs.

      • Posted By: Skallywag @ 12/05/2008 1:41:41 PM

        The banks should not have been bailed out either. Their bad leadership got them into the mess, why do we as taxpayers have to pull them out? Don't you people understand that bad leadership, whether it be in government, business or elsewhere should not be "paid" for by the masses and should never be forgiven as "oops, sorry, I didn't mean to do that."? Nobody is going to bail you out if you screw the pooch with your own personal finances - bad plannning on your part does not a crisis on my part make. The same goes accross the board. it is bad business - and ALL the CEOs know it.

        • Posted By: summer4077 @ 12/05/2008 2:03:05 PM

          On that I do agree with you. The banks shouldn't have been bailed out. At this point, though, it's kind of hard to tell the Big 3 that they can't have federal aid after the 800 billion bailout. Banks and automakers alike acted foolishly with little regard to the future and now we're all going to pay for it.

    • Posted By: Disabled_Marine @ 12/05/2008 10:15:27 AM

      I am sorry you were fired or laid off by a union. Maybe we should help no one because you were laid off. But why punish America because you are upset at the unions? The Big 3 are the backbone of our industrial sector.
      But who knows, you may have you way and get even with the auto industry. I hope not, but with the LIBERAL Congress we have. Heck, they may even decide to "Bailout" the Taliban. But why help America?

      • Posted By: Skallywag @ 12/05/2008 11:36:55 AM

        I was not laid off or fired - I quit because they were taking a huge percentage of my hard earned pay for their pockets under the guise of dues, strike funds, etc. They still are. Even the governement doesn't take that much. The union owes me a lot of money, but refuses to pay. After I quit, I Enlisted. Served my country for 21 years, retired as a Chief. The big 3 has bad leadership that made bad deals and, let the unions run the show - now they are ready to go belly up because of poor leadership. By bailing them out, we are condoning poor leadership - something I believe you will agree is a very bad thing. A lot of people might have to tighten their belts but if GOOD leadership prevails, the USA will come out stronger wihtout the bailout - it's analogous to tough love.. You fought (literally) against socialism, and a bailout is nothing but corporate socialism. We already subsidize farming but a loaf of bread costs way too much anyway, heck lets go all out and subsidize it all. I don't know about you, but I'm tired of being cannnon fodder for the government and I don't want my kids to be either. By the way - I don't think it gets said enough - Thank You Marine, Semper Fi.

  • Posted By: williambanzai7 @ 12/05/2008 12:22:28 PM

    The Night Before Bailout Christmas
    (The Night Before Christmas)
    WilliamBanzai7

    Twas a fortnight before Christmas, when there came to the House
    A cadre of Detroit clowns doing a sad bailout grouse.
    Their company's were hung by years of inept stupidity and greed,
    Now there they were standing, the last of a dying breed.

    The union ranks were nestled all snug in their beds,
    While visions of hybrids and plug-ins danced in their greedy heads.
    And John Dingell with his big auto ???kerchief, that old Detroit hack,
    Had just settled his brains for some more motown crack.

    When out on the lawn there arose such a clatter,
    It sounded like a vehicle powered by reverse anti-matter.
    Away to the window all flew like a flash,
    Tore open the shutters and threw up the sash.

    There on the pavement without snow
    With the lustre of well designed objects below.
    What to their wondering eyes should appear,
    But a brand new Toyota Prius powered by eight tiny reindeer.

    With a little old driver, so lively and quick,
    All knew in a moment it must be Bailout St Nick.
    More rapid than eagles his coursers they came,
    And he whistled, and shouted, and called them by name!

    "Now Toyota! now, Nissan! now, Daihatsu and Honda!
    On, Isuzu! On, Suzuki! on, on Mistubishi and Mazda!
    To the top of the market! while the big three all fall!
    Now dash away! Dash away! Dash away all!"

    As dry leaves that before old hurricane Katrina fly,
    When they meet with an obstacle, mount to the sky.
    So up to the rotunda the coursers they flew,
    With the hybrid sleigh full of Bailout Toys, and Bailout St Nicholas too.

    And then, in a twinkling, there was heard under the Capital roof
    The silly prancing and gnawing of each Big 3 auto goof.
    As all shook our heads, and made a skeptical frown,
    Then through the hearing room doors lept Bailout St Nicholas with a bound.

    He was dressed all in red Texaco overalls, and black harley boots,
    And his clothes were all tarnished with 10W40 and soot.
    And billions of bailout dollars he had flung in his bailout sack,
    And he looked like a used lemon peddler, just commencing his attack.

    He spoke not a word, but went straight to his work,
    And filled all the bailout stockings, then turned to those three Big 3 auto jerks.
    And laying his fingers to cover his nose,
    While giving a nod, all the taxpayers got hosed!

    He sprang to his Bailout sleigh, to his team gave a whistle,
    And away they all flew like one big Detroit bailout missile.
    But they heard him exclaim, ???ere he drove out of sight,
    "Happy Bailout Christmas to all, see you next year good-night!"

  • Posted By: Disabled_Marine @ 12/05/2008 9:56:49 AM

    What has happened to America?
    I am a Disabled US Marine Veteran. I had saved for a long time to help with my future retirement. However, when I heard that OUR American auto makers were in trouble. I took most of the funds saved and purchased a New 2008 Dodge Ram 1500 pickup. I live on my Social Security with the help of what my wife makes as a house keeper. Plus the VA pays me $117.00 per month.

    But we are still waiting on the lenders to decide on whether we are credit worthy? I can't understand how we can give 100s of billions of dollars to financial institutions. Then for them to sit on these funds and hold Americans hostage. But they paid shareholders back first. In fact, one shareholder in particular made me ill to the point of chest pain. This prince from some oil rich country bragged on how he got all his bad investment back and smiled and joked how America is so stupid.

    We would rather give money to terrorist countries banks and investors. Then to help our industrial backbone. What has happened to our Pride, our Love, and our "Don't tread on me" vision? If the Democratic Congress is permitted to put the auto industry out of business by doing nothing for the Big 3. Then allow congress to finance terrorist via "Bailout" funds to investors who in turn pay those funds to terrorist, just like this prince.

    Then all our military person(s) past, present, and future have died for nothing.

    Help AMERICA first. What is so hard about doing that? God Bless America....

  • Posted By: joeyg @ 12/05/2008 9:36:47 AM

    THE GUYS ARE THIEVES!!!!!!!!!!!!! Screw them all. If we have to give them any more money and concessions, they need to step down. WOW they'll work for a $1 a year. BIG DEAL!!!! They have raked in milllions upon millions over the last few years. Nardelli took $210 million from Home Depot when he left and he brought Home Depot to it's knees!!! HEY Nardelli, use some of your quarter of a billion dollar Home Depot golden parachute to help out your firm. I haven't bought an American made car in over 15 years. I could if I wanted to, but the quality isn't there, the service at the dealer level isn't there, etc. I AM SO PISSED OFF, I think I may move to EUROPE......

  • Posted By: tripjokerz @ 12/05/2008 9:33:50 AM

    wonder why our economy is falling? Sustained high fuel cost=failed mortgages + Overvalued sectors=Panic now you know the rest of the story...and dont let anyone fool ya.....high fuel caused this mess primarily

  • Posted By: tripjokerz @ 12/05/2008 9:29:29 AM

    amen brother/sister...I for one am very happy that our economy is falling why you ask? because we needed a fleecing of the overvalued bs...now what are the legal gangsters gonna do? They will have to see what its like to truly work for a living..I guess what blows my mind is that when you invest in the markets there is an assumed risk on your money, and people now are like waaaaaa! dont look for my shoulder no symathy here. As for the UAW I have a giant box of pacifiers you can pass out at the next meeting . This time is great for the average Joe...cheap gas=savings/feed family/maybe a movie/etc. we finally caught a breather...now we have to ensure that we dont get caught like that again. Now is the time to write our reps and tell them we demand fuel efficent cars, etc. etc.

  • Posted By: bobkat810 @ 12/05/2008 9:17:23 AM

    The big three & the UAW must have rocks for brains if they did not see this coming. The writing bwas on the wall since the early 70's.

    A) They danced around the presence of the high quality cars flooding the market from overseas.
    B) They also ignored, as did our own government, the real impact of the 'Arab oil embargo' years ago.
    C) Cheap labor and all the free trade agreements

    The big three had to produce quality cars equal or better than the foreign cars or give up a huge chunk of the car market to foreign manufacturers.

    Oil was not cheap any more and we imported more and more oil maiing us more dependant on foreign nations to feed our SUV's.

    Nothing destroys a Union quick that cheap labor and the UAW did nothing to keep the big three competitive. Their only concern was their own selfish interest. Market be damed.

    Now we have to bail them out for being incompennt! Why not, we bailed out all the otehr incompenents like AIG..talk about a bottomless pit! Now who will bailout what left of the taxpayers? Social security, unemployment fund, yada yada..changing for a manufacturing country to a service country is going to destroy our economy. A economy based on high payed workers to one of competitive low paying service jobs will fail..dont believe me! Just look around..

  • Posted By: RobJaff65 @ 12/04/2008 4:42:49 PM

    We are bailing out the Financial industry because they are the fuel that ignites our ecomomy. Tens of millions of companies borrow money to make payroll, inventory, cashflow and growth. In term, these help sustain and grow jobs in other segments of the economy besides financials. The financial companies also have business models which are profitable--most operate 70 to 80 business units most of which make money. I'm not making any excuses for wall street and the sub-prime debacle....this was morale hazzard at its best. However, we can survive the big three failure because they can re-organize under chapter 11. The gov't could never assume the role of financial companies because they do not have the expertise in risk management to lend to companies outright.

    More importantly, why should taxpayers bail out Chrysler when its owner Cerberus (80% stake & conrolling interest) took out $2 billion in cash in the first quarter and refuses to lend the company money. Obviously, they realize you don't throw good money after bad. Plus the UAW has been bleeding Detroit for decades and the management of the big 3 mirrors the 3 stooges. Their plans will fail because they have no plan. One month ago, they came to Washington asking for credit lines as stop/gaps for a downturn in the economy...today GM and Chrysler will fail by year end. What a difference a month makes.

    • Posted By: pauz21 @ 12/04/2008 7:14:41 PM

      Why does a company need to borrow money to make payroll?...to adjust for inventory and cashflow?...OK, maybe for growth. But the rest of it is a bad business plan made by those who are rewarded, handsomely, for short-term and artificial profit. It is a bad model. Why are taxpayers paying to sustain a corrupt unsustainable American business machine? We need corporate law reform that removes power from corporate boards and puts it back with the stockholders.

      • Posted By: RobJaff65 @ 12/05/2008 9:15:24 AM

        companies borrow to make payroll and purchase inventory because they don't have enough capital to sustain their business without it. Most companies give terms to their customers (30 days), while many of their customers will pay within 45 to 60 days. However, employees expect to be paid weekly or bi-weekly and the gov't collects payroll tax each payroll, and you also need to include insurance, rent, etc.....to run a business. It's not a bad business model if the company is making money. It's just the way of the world. Even the most profitable businesses incur debt.

  • Posted By: Pativan @ 12/05/2008 2:28:04 AM

    Hey teach, it seems the school district for which you work is not doing too good a job, judging by your spelling. Did you get hooked on phonics? I find it APPALLING that you spelled APPAULING. Maybe it is a good thing if the failure of an inefficient car industry drags down with it your school district.

    • Posted By: teachabc1 @ 12/05/2008 8:26:46 AM

      Thanks for the correction. That's what happens when you try typing too fast late at night. At least, I can admit when I'm wrong. That is more than I can say for some here. By the way, 90% of our students meet or exceed state standards on our state achievement tests. Our district and our students are doing just fine!!! The point is... if taxpaying industries continue to close, the burden of replacing those taxes will fall on people like you.

  • Posted By: bap01 @ 12/05/2008 12:37:49 AM

    Anyone who thinks an auto company filing chapter 11 will help that company survive is using that as an excuse kill off the American automotive manufacturers. I don???t understand why Americans hate American companies and think only the foreign manufacturers know how to build great cars. I guess boring is great to some people. True, Detroit built a lot of bad cars in the 70s, 80s, and 90s but so did the Japanese. They just started to build them better before Detroit did. They had help from their government financially and by regulation. America is the only country to allow foreign auto manufacturers to sell their vehicles without making them jump through hoops plus give them a tax break. And we wander why Detroit can???t compete with their high labor/legacy costs. I will support our country first.

    • Posted By: McLovinB @ 12/05/2008 3:18:20 AM

      The Kyoto Accord. Cop6. Do you even know what that is?
      To combat global warming, all Japanese auto makers were forced by the Japanese government to comply with extremely strict emissions regulation and anti pollution measures. They achieved that while lowering costs and competing in America.
      More than 100 nations adopted those standards.
      The US? Detroit lobbied against signing the treaty and it was not signed by the US. Detroit cannot meet the world's standards for emissions controls. Detroit instead pumped out more and more SUVs.
      Detroit lobbied for and got tax breaks on SUV purchases and against tax breaks on hybrids.
      Detroit has kept Washington in its pocket while foreign manufacturers have been good world citizens.

      Your assertion that the US government freely allows the sale of foreign automobiles is wrong. Do you have any information to back that up?

      Patriotism is the last refuge to which a scoundrel clings.

  • Posted By: RO in Reno @ 12/05/2008 2:45:54 AM

    As long as we have the lame duck Republicans having their votes counted in the Congress This government will not bail out the auto industry no matter the effect on the economy, Republicans hate organized labor and always have.
    Of course without organized labor you would be working for the same wage as your grandfather, The Government did not create the working middle class organized labor did. But that is the Republican vision for America cheap labor and that means you and they would distroy this country to get it.

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