Comments on: Bloomberg and New York Times Differ on Status of Auto Industry Resuce (Updated)

By: Ken Stremsky

Ken Stremsky — Fri, 19 Dec 2008 16:39:00 +0000

I think it makes sense for the federal government to loan money to the automobile companies. If they do well, economic growth and per capita income may increase in many states.

The federal government may want to loan money to manufacturing companies that make products in our country. This may increase economic growth and per capita income. This may help our country reduce our national debt that is now more than 10 trillion dollars.

Our companies may be able to manufacture products in our country that cause less air pollution, water pollution, and land pollution than companies that make things in China.

If the federal government is serious about growing the economy and creating jobs, it should stop taxing interest from savings accounts, dividends, capital gains, and estates. People will have an easier time saving for college tuitions and retirements. Businesses will have an easier time obtaining loans and investments.

I graduated from the University of New Hampshire in 1992 with a BA Degree in Political Science and a minor in Economics.

I ran for United States Senate from New Hampshire in 2002.

My website is http://www.myspace.com/kennethstremsky

By: melpol

melpol — Fri, 19 Dec 2008 13:59:00 +0000

A wonderful lifestyle is now gone with the wind. My heart is with the leaders and workers in the auto industry. I sympathize that their industry has suddenly become rusty. They no longer are able to maintain high profits and wages and are now asking for the government to buy millions of their unsold cars. But wisely the reply to their plea is to disappear in an orderly way and remain only as a memory of a glory that once was. Our pride remains as we look at our aircraft industry and its innovative management. Every airport in the world has a made in America aircraft landing every few minutes. We must never let it also become gone with the wind.

By: Anonymous

Anonymous — Fri, 19 Dec 2008 13:45:00 +0000

Given that GM’s market share is something around 22% (per my recollection), those survey results aren’t that surprising or terrifying. Apparently 78% of consumers don’t like GM products anyway. 51% of consumers not wanting to buy GM doesn’t mean anything to me in that light. Are the survey’s selecting likely GM customers?

By: Anonymous

Anonymous — Fri, 19 Dec 2008 13:32:00 +0000

I am simply amazed that the US is going through a GDII (IMHO), and is bleeding everywhere, yet TPTB can’t stop their bickering long enough to do something constructive and put aside partisan politics.

By: ruetheday

ruetheday — Fri, 19 Dec 2008 13:13:00 +0000

Bloomberg is now reporting that (though not finalized) the loans will come from TARP and be channelled through GMAC and Chrysler Financial, and will be just enough to keep them afloat through March.

By: Anonymous

Anonymous — Fri, 19 Dec 2008 10:52:00 +0000

re: dealers

I still don't understand why they are "a large potential stumbling block". What leverage do they have on these companies at this point? "If you file for bankruptcy, we won't sell your cars"? They aren't selling cars to begin with.

What am I missing?

Side note: Chrysler dealers are pulling out $60mil/day from a company fund that loans to dealers so buy cars for their lots.

By: Dave

Dave — Fri, 19 Dec 2008 09:57:00 +0000

Let them fail. It's about time that America rediscovered capitalism. There is no capitalism without creative destruction.

All these bailouts, plus too much "econoblogging" means I keep thinking of that great John Mill quote that London Banker threw out some time back:

"Panics do not destroy capital; they merely reveal the extent to which it has been destroyed by its betrayal into hopelessly unproductive works."

Why, on the back of everything that has happened to-date, would we betray any further capital on "hopelessly unproductive works"?

By: Anonymous

Anonymous — Fri, 19 Dec 2008 09:37:00 +0000

Wave a magic fairy wand over them and declare them to be banks. Paulson calls them in and offers all three of them $25 billion. Ford protests it doesn’t need the money, but Paulson gives them no choice.

By: vlade

vlade — Fri, 19 Dec 2008 08:46:00 +0000

I think it’s time the American’s faced reality. Chrysler’s dead. GM is a zombie – the only way it can survive is to immediately dump every model and every factory that is not profitable (which, according to the earlier post here is about 3/4), even at 0.
These two were unable to survive even in a climate where people bought new cars every two years. They cannot survive when people buy almost no new cars in the first place.

Saying 80% customers would not buy a car from a bankrupt carmaker is irrelevant, when 90% of all customers will not buy a new car at all.
It’s a harsh reality, but it’s bu it’s time the US faced it.
GM and Chrysler commited suicide in the last few years, but the corpse started smelling only now.

By: bg

bg — Fri, 19 Dec 2008 07:08:00 +0000

I think a lot of it may ride on Paulsons personality. I am guessing what differentiated Lehmen from the others (and now GM) is the pig headedness of the negotiators. I read that Fuld like to take negotiations to the wall. Paulson was not going to be cornered then, and won’t now.

I wouldn’t be at all surprised if we ended in Chapter 11 based on game theory alone.