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Bail Outs For Auto Industry?


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For good of the Nation, for the good of Capitalism (whats left of it anyway) for the good of progress and growth.  Bailouts are unacceptable.

Americans like the  phoenix rise from the ashes and rubble, with strong enterprising efforts and dreams.  Should GM die tomorrow and we have no bail out...3 GM's full of modern ideas and meeting modern needs will slowly rise.  A Bail out ensures were stuck with the same ol same ol.

Same for the airlines...short term pain, for long term gains....Bail outs are short sighted, and anti American.

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I can't believe it took 3 pages before the UAW was mentioned.

Starting wage of $28 + per hour to sweep the floor with excellent benefits.

The unions need to get on board with the program and meet the companies 1/2 way on this one as they are also at fault.

They did step up. New hires are at $14 per hour.

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Thought you might enjoy this one from Automotive News.

Sperlich and Runkle: U.S. must spur sales to save automakers

The Detroit 3 may not survive their cash crises unless the federal government supplements any emergency loans with consumer cash incentives to spur auto sales, say two longtime industry leaders. Retired Chrysler President Hal Sperlich has written a position paper with Don Runkle, former vice chairman of Delphi Corp., calling for a $3,000 government cash incentive on the purchase of a Detroit 3 vehicle

As bad as the economy is, I might even consider buying a new GM vehicle with a $3000 voucher, along with my GM dollars on my credit card.. I could get one pretty reasonable if the dealers are dealing.

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From what I hear from a friend that is a finance manager at GM subsidiary, they are willing to deal big time.  You just have to ask and stick to your guns.
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I can't believe it took 3 pages before the UAW was mentioned.

Starting wage of $28 + per hour to sweep the floor with excellent benefits.

The unions need to get on board with the program and meet the companies 1/2 way on this one as they are also at fault.

They did step up. New hires are at $14 per hour.

Nick,

These bailout issues are all over the news and  I've been trying to form my opinion on this based on rational thought and not emotion. Can you povide some more insight from the unions point of view.

1) you mention "new hires" in the downsizing of GM Ford ect ...are their many? What percentage of the workforce do new hires make. Is it a realistic compromise in terms of cost and can you explain the details.

2) what other compromises has the unions offered?

3) is there a web site that explains the unions compromises and justifications for their positions

thanks

Bob

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I support letting the autos go bankrupt, although purely for economic reasons, not for moralistic or anything else.  Like I said, I mean no disrespect to anyone on this board that works for an auto manufacturer, a supplier, dealership, or anything.

Bankruptcy would permit rationalization that simply has proven impossible under the current structure, for a host of reasons.

Remember, the companies would continue to produce cars and workers would continue to collect paychecks, but everything would be on the table and subject to bankruptcy court, which, make no mistake, would be very tough, but necessary.

People would continue to buy the cars, too, I am sure.  If you've flown on an airline in the last couple of years, I am willing to bet you got into a silver bullet running at 550 mph 7 miles in the air that was controlled by a bankrupt company.

To me, what's stopping the bankruptcy (besides politics) is that the pensions would go over to the Pension Benefit Guarantee Corp., a federal insurance program.  The PBGC doesn't have the money for all of those GM/F/Chrysler pensions.  So, on that one, they might have to dip into the $700 b that seems to be floating around Washington, until the PBGC could reliquify by raising premiums on the companies paying in.

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In regards to Gov guarantees on defined benefit pensions it is my understanding that there are limits as to the amount covered so the worker may not get what he would under the plan.  Furthermore, this is one of the other shoes that I see is about to drop.  

Pensions are run using an interest rate assumption, that is the average return expected on investments over the long haul.  In the early 90s many plans changed that assumption from 10% to 8%.  That resulted in many plans being underfunded.  Now look at the past ten years with the S&P being flat or negative.  That spells big trouble since they haven't been getting the needed returns.  I fully expect that the Gov protection on defined benefit plans will not have the money to meet the claims resulting from plan failures.  This is a view I have had for ten years and I figured it would erupt at the end of this decade.  This will happen at the same time Social Security fails and the Euro and Japanese "pay as you go" models fail.  In other words big trouble even without the current mess.  With the current mess, a perfect storm.

Dave

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Chris Raymond

In regards to Gov guarantees on defined benefit pensions it is my understanding that there are limits as to the amount covered so the worker may not get what he would under the plan.  Furthermore, this is one of the other shoes that I see is about to drop.  

Pensions are run using an interest rate assumption, that is the average return expected on investments over the long haul.  In the early 90s many plans changed that assumption from 10% to 8%.  That resulted in many plans being underfunded.  Now look at the past ten years with the S&P being flat or negative.  That spells big trouble since they haven't been getting the needed returns.  I fully expect that the Gov protection on defined benefit plans will not have the money to meet the claims resulting from plan failures.  This is a view I have had for ten years and I figured it would erupt at the end of this decade.  This will happen at the same time Social Security fails and the Euro and Japanese "pay as you go" models fail.  In other words big trouble even without the current mess.  With the current mess, a perfect storm.

Dave

Dave--Speaking of insurance companies, I wonder how long it will take before their cash flow starts to dry up and wither away given the latest market dynamics.  Sooner or later, they're simply not going to have the cash to fund their obligations.  It's going to be an even bigger mess than we have now when Grandma and Grandpa don't get their annuity checks.

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Goldman Sachs- six billion in bonus money set aside for employee compensation. JP Morgan- six billion in bonus money set aside for employee compensation. That is where our money is going now. For every auto job lost, ten more go with it.
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Chris, I agree completely.  The return on float isn't going to be there.  This mess extends out so far it is unbelievable.  For example, endowments for universities, churches, etc.  A giant snow ball getting bigger by the minute.

Dave

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Breakfast Boy
I don't like bailouts anymore than the next guy.  But I can't help but think of the millions of jobs that could be lost if there isn't a buyout, mine being one of them.  Yes I would have a back up plan, but it would still suck.  Tough decision.
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Are we not supposed to reward hard work?  Those employees earned their compensation just like the rest of us.  If your company went tits up wouldn't you still expect a paycheck for your services rendered?
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Are we not supposed to reward hard work?  Those employees earned their compensation just like the rest of us.  If your company went tits up wouldn't you still expect a paycheck for your services rendered?

Yes, but not a bonus paid by the taxpayers.

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