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Why should the American people bail out the industry when it was the American people not giving the industry the money to begin with. We love the idea of globalization and a free market until it starts affecting our own pocket-books then we scream “government intervention!” and “help!”.

My question, is if we did help the auto industry out…what about the sales? Just because we give money to the auto factories does not guarantee people will be even more inclined to buy a vehicle. What then? Will the government offer to buy all the fuel consuming SUV’s because we “feel bad?”

I do, however, disagree with labeling Obama a socialist. People are quick to throw that word around. It is becoming increasingly difficult to tell if it is because someone truly believes it to be socialism or if it is because of bitterness that their candidate did not win. Even if Obama WAS socialist…the American majority voted for him.

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Im not shifting all the blame to him either. Please note I said that greedy politicians and CEOs piggy backed. You mention the tech bubble, and whether intentionally or unintentionally, Greenspan, to lessen the blow from that crash, opened the flood gates to the housing market. All the greed flowed into it. Expontentially compounding the problem and not actually addressing it. At least greenspan has been willing to admit he made mistakes. The biggest being his naivity over greed, when it was staring at him in the face during the tech bubble.

The debt comes callin when the money runs out. The housing market has crashed.

So how do you fix it? Well the greed needs to go away. The thinking that we can be back to 14k in the DOW is fruitless if your trying to rebuild the greed. To me, bailing out failing banks, firms, auto industries, or any other business is attempt to simply do just that. But it wont work.

Greenspan was smart enough to realize he had to funnel demand elsewhere. So he chose the housing market.

The government, should do two things. 1. stabilize the borrower while still requiring repayment 2. find an industry worth investing in and minimize the greed.

The best upcoming industry to me would be environmental. As Obama will push for it anyway. But at the same time, you cant up restrictions on the industry. If you force that too hard too soon, youll only collapse your economy.

But the demand is there…not quite housing market demand as it once was, but its a reasonable option. I’m sure there are others. You have to find a demand and stability that responsible investors will easily invest in.

The biggest problem with bailouts though, is that, the greedy and stupid are still in play. There is no quick fix to the economy, so we might as well take our lumps, learn our lesson, and look foward to a long term stronger economy.

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A CAW response to GM;

http://ago.mobile.globeandmail.com/generated/archive/RTGAM/html/20080606/wgmstaff0606.html

yet its not the worker’s who led to this crisis, they worked hard. Buried in the article is the record of the Oshawa plant
The closing was announced one day before the annual J.D. Power and Associates study showing that the plant ranked highest among all GM truck plants in terms of the quality of the vehicles it produced last year. On Thursday, the annual Harbour Report on assembly plant productivity showed that the Oshawa truck plant was the second-most efficient GM pickup truck plant in North America. As measured by hours required to produce a vehicle, the plant was 10 per cent more efficient than GM pickup truck factories in Silao, Mexico, Pontiac, Mich., and Flint, Mich.

GM management made poor decisions and misallocated the use of its highly efficient labor force

The pay grid you linked to includes total compensation which I take to include health benefits. Here again you see the problem the lack of gov’t paid universal health care poses for US corporation. I would be interested in a comparison between US and Canadian GM workers total compensation. They have similar hourly wages but health care costs differ. Secondly, there is no indication whether this pay grid displays only the average compensation for hourly paid union workers. If it includes any non-union managerial type positions this may indicate a different problem at the Big Three.

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I know these things to be true. My family’s business has experienced this in the past. Because we have very little debt, we have been able to weather the storms, but many businesses aren’t so lucky.

That said, I oppose a government bailout of GM. The resulting bankruptcy will be painful and will affect our economy in ways most people don’t realize, but it will be a strengthening experience in the long haul.

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If they wish to persuade American drivers to buy their cars, the auto industry is going to have to produce automobiles tailored to American demand. True, they may not have the money to do that. Also true, we should not be paying for an industry to formulate a product that we like. We purchase the finished product, if it is worthy. To insist otherwise is not at all fair to the American consumer.

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Milton Friedman was right in his view that most disagreements among economists result from differing views of the short-run v. the long-run (He explained this in the first chapter of his, unfortunately, not widely read ‘Dollars and Deficits’). People favoring the short-run are distrustful of the market process, since the market process takes a longer time in coordinating massive changes. Whilst, the machinery of government may turn the wheels of industry through centralized command in the matter of days.

But long-run consequences are either defined away as ‘neglible’, or as problems that further justify government intervention.

The most tragic outcome of this situation is not for GM to get a bailout without conditions, but for the US federal government to micromanage business trends. No government that has sought to predict, or to influence, business trends has been succesful. I see no reason for a departure from this subtle truth.

Of course people point to various industries that got their start with the help of defense spending. However, we did not spend those funds with the purpose of establishing niche industries within the U.S., but rather we spent those funds to the end of defeating Nazi Germany and then the Soviet Union.

We’re only delaying the inveitable if we are to prolong the existence of GM and the other Detroit manufacturers. The best outcome would be for a private equity firm to buy out these companies, reorganize them, resist union influence, and come back with a product line American’s like.

The important thing is to make sure GM’s capital (how measly it is) is reallocated in a manner that provides for the best long-term outcome. Unfortunately, the most efficient process of doing this (Chapter 11 Bankrupcy) is not as smooth due to the dysfunctional credit markets. So, as opposed to a “bridge loan to recovery”, we should offer a “bridge loan to bankruptcy”.

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