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Old 11-16-2008   #1
yakrafter's Avatar
Whitewater Boater, Boating Whitewater
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Bailout BS

The banks get bailed, and they continue to waste funds without major consequence (in fact they waste and they come back for more)

Now GM wants a bailout and their union employees, whose pay contributes a great deal to the issues, will not comprimise on wages.

I say if we are going to bail these folks out, we get to make some rules. Rules like all wages in the bailed out companies will be instantly cut in half, benefits will be frozen and the max salary for the entire organization (CEO's included) will be $100k. Who tied things like health insurance and benefits to the nice guy who gave you a job anyway? (must be folks that did not care about long term employement, folks buy your own products, keep your employer out of it). Additionally all bailouts should be loans, owed not just by the companies, but by the employees that stick around and don't get a free market job. The parts mfger and distrubuters that depended on GM should have been more concerned about GM spending habbits, if they are truly dependant.

While we are at it we can get rid of prevailing wage. This is the highly inflated madated wage that many govts and municipalities in the US mandate that folks be paid for govt funded jobs. This is the excavator that makes $20/hour typically being forced to be paid $80/hour for a state job at the taxpayers expense. Specifically our govt madates over market pay for their work you YOUR expense. Jobs should go to the best candidate that will serve the puplic best. This would allow more businesses to grow and more small businesses to exist.

Note that many town and large cities are now in need of bailouts...and this comes from all of you (us) allowing small towns to pay $30k to reroof the shack in the back of the cemetary....literally happened, due to prevailing wage, my town paid 15X the market value for such work and now has budget problems. Keep in mind they do not feel that the citizens of that town or city should bail the city out, they want the fed to do it now. Ford said it to NYC - NO.

Folks it is time for towns and companies that can't hack it to turn off the x-mas lights and tighten the belt...or simply fail. The honeymoon is over.

If they bail out GM, I will never buy a GM vehicle again, unless they pay me back and accept market wages. I think I will do the same with Ford and Dodge, until they fix their issues, they do not deserve my money. Besides who wants a Chevy if they will not be able to get parts in a year or two. Chevy will soon invoke the same feeling as Yogo.

Call your senator/rep and make it clear which side you are on.

Side A. The side where you bail every large organization out, live by whatever rules they throw at you, pay more, not retire, ruin your kids lives and have so much regulation that everything costs so much more (US building departments have increased housing costs by something like 5-10%, will little protection relative to the expense (yes they do a job...welll...but it is not in proportion to the cost).

Side B. The side where you let things take their own path, the people that made bad decisions and those that associated themselves with them will suffer (those who took stupid loans, those who worked for inflated union wages a the expense of their future job, those that let every regulation go through while they are picking up their latte, those that only sell their products to GM).

If we spread the sufferering too evenly (bailouts funded with tax dollars) there is little incentive in the future for individuals and companies to really do well. It also concerns me that if I manage to do well my funds will be taken for those that did not pay attention in high school. If there is not incentive to do well, people will not do well. Ever work for a company that did not provide incentives to their employees? Remember how motivated folks were?

No more bailouts, you cannot afford it. Do the math, in the times when it is becoming harder and harder to make money, you will have to make 1.5-5x as much over the coming decades to cover these bailout and then all the programs you will refuse to get rid of in the mean time.

Or perhaps we can have a bailout vote and those who want bailouts can pay for them, out of their own pockets in stead of mine.

There is such a thing as conservation of suffering. There will be a certian amount of suffering, the question is who suffers. If Billy goes running through mom's garden and ruins all the tomatoes should Billy's entire 4th grade class be punished....or should we just punish Billy? Which one will make Billy think harder about where he runs in the future?

No more bailouts, no more welfare....make them all loans!


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Old 11-17-2008   #2
KSC's Avatar
Boulder, Colorado
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Nice rant. Much like the banking bailouts, I can't figure where to come down on this one. There seems to be a fundamental problem in our economic model right now where we preach government bailouts for large corporations that fail and no handouts for individuals that fail. To me it's obvious that a GM bailout:
(1) is not fair. GM can't run a business. There's a major downturn they were pathetically unprepared for and now they want someone to save their ass.
(2) if done, should come with lots of stipulations. GM CEO is saying they have to have bailout money immediately, but he won't resign his position. Absurd.

Most politicians I've heard supporting the bailout seem to agree with the above 2 statements. But their argument is there will be catastrophic repercussions throughout the economy if we let GM fail (which seems quite probable at the point). Furthermore, they say, under normal circumstances, we could let it fail, but the economy is currently so frail it will converge into a perfect storm that will bring the US economy to a standstill. Not only will we relinquish millions of jobs overseas, billions of dollars of revenue streams, but also the government will be burdened with paying out employee pensions. Is it all true? I don't know? How am I to evaluate this?

I guess it feels like the safer approach is to bail them out, but force them to accept all kinds of strict short term and long term restrictions as part of the deal. I'm really not sure though. And of course the slippery slope argument comes into play. Do we continue to bail out company after company? Airlines next? Then who? These bailouts have serious economic repercussions as well. Anyone have any links to intelligent analysis on the subject?

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Old 11-17-2008   #3
Denver, Colorado
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All this talk of bailouts misses the REAL problem. These bailouts all require getting loans. Debt is a claim on future labor... it is a subtle form a enslavement. We rationalize this fact as, "well, this is just the way it is."

The Federal Reserve IS the problem. International bankers are the problem.

Screw getting loans from the bankers who will loan money by creating it out of nothing and then charge interest... they are the problem.

Sir Josiah Stamp, director of the Bank of England and the second richest man in Britain in the 1920s, who was speaking at the University of Texas in 1927, spoke these words:

"The modern banking system manufactures money out of nothing.
The process is perhaps the most astounding piece of sleight of hand that was ever invented. Banking was conceived in inequity and born in sin . . . . Bankers own the earth. Take it away from them but leave them the power to create money, and, with a flick of a pen, they will create enough money to buy it back again. . . . Take this great power away from them and all great fortunes like mine will disappear, for then this would be a better and happier world to live in. . . . But, if you want to continue to be the slaves of bankers and pay the cost of your own slavery, then let bankers continue to create money and control credit."
Nothing will change until the majority decides to stand up and fix the current banking and monetary system.

"... a long habit of not thinking a thing wrong, gives it a superficial appearance of being right, and raises a formidable outcry in defense of custom. But tumult soon subsides. Time makes more converts than reason."

Common Sense could be a very useful thing right now.

Not only is virtually the entire money supply created privately by banks, but a mere handful of very big banks is responsible for a massive investment scheme known as "derivatives," which now tallies in at hundreds of trillions of dollars. The banking system has been contrived so that these big banks always get bailed out by the taxpayers from their risky ventures, but the scheme has reached its mathematical limits. There isn't enough money in the entire global economy to bail out the banks from a massive derivatives default today. When the investors realize that the "insurance" against catastrophe that they have purchased in the form of derivatives is worthless, they are liable to jump ship and bring the whole shaky edifice crashing down. -Ellen Hodgson Brown, author of Web of Debt
There are other alternatives for a new monetary system. Here is one: The Money Masters
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Old 11-17-2008   #4
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Durango, Colorado
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I'm torn about the auto industry bailout. The hardball approach is, "you built crap no one wanted to buy, time to take your medicine." Makes perfect sense... until you think about the thousands of small businesses that supply that industry with parts. The Midwest, already in serious economic trouble, would collapse along with the auto industry. There is the real possibility of a bad recession deteriorating quickly into major depression.

So do we bail out companies that built vehicles nobody wanted, so they can build some more vehicles that nobody wants? Sure, lots of people get employed in the process, but then the market is flooded with crap that no one wants... or that no one can afford to buy.

During WWII, the American auto industry retooled pretty quickly to meet the challenges of wartime manufacturing. Seems to me that those Detroit manufacturing facilities could be put to better uses than building gigantic SUVs that extend our oil addiction and contribute to global warming.
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Old 11-17-2008   #5
Golden, Colorado
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Here's a good article on why a bailout wouldn't work and why the Big Three must be allowed to go under if they can't survive on their own.

Bail Out Capitalism, Not The Big Three -

Their business models were broken before the financial crisis hit; the crisis just accelerated the inevitable. The only questions are how soon and how much of the taxpayer's money they'll consume before they face their fate, since they have structural problems that will not be resolved until they go bankrupt.

In the 1980s, when the Big Three had virtually no competition, they sold their souls to the devil unions, signing contracts that put them at an incredible competitive disadvantage in today's environment where consumers don't have to buy American and have plenty of choices.

Bankruptcy is a blessing, not a curse. Contrary to common perception, bankruptcy doesn't mean that the Big Three will disappear. Not at all, and quite the opposite. It will insure that they'll be around 50 years from now. While in bankruptcy, they will be able to break contracts with unions that are choking them, lower their debt burdens by turning debt holders into equity holders (and regrettably wiping out existing shareholders). Their hands will be untied to right-size by shrinking their operations, cutting costs and becoming competitive again.
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Old 11-17-2008   #6
Golden, Colorado
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Oh, and here's the number to the congressional switchboard. 1-866-340-9281. These jerkoffs in congress and the oval office are going to do nothing to fix any of this. They just look out for their constituency, and campaign contibutors anymore. It's up to us now.
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Old 11-17-2008   #7
Golden, Colorado
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Oops, I guess that one's been disconnected. Call 800-833-6354 and enter your zip code to be connected to your representative or senator.
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Old 11-17-2008   #8
Join Date: Nov 2004
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I'm with Mr. DurangoSteve and the speed we switched to wartime production. They could do that now. This country needs to fuel itself. Wind and solar and/or nuclear, whatever plants we build, could come from parts made in these existing factories. People keep their jobs and more are made. Tell that to your congressman/woman. Maybe that is what people want when they voted a few weeks ago.
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Old 11-18-2008   #9
thornton, Colorado
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Boy did you hit the nail on the head marko: Take that same nail worth 1/4 of a cent and build a house with it, allow the banks to loan you money on that house, and that nail will have cost you five dollars by the time that house is paid off. You might as well take that nail, and drive it through one end of a rope and put the other end around your neck with a noose.( talk about becoming a slave to the banks)
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Old 11-18-2008   #10
Self-Aggrandizing jackass
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The Ranch, Colorado
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Nevertheless, we deal with the economy we have. I'm in agreement with Marko about the Austrian school, and real-money standards.

All of these bailouts should be on the condition that bankruptcy is declared first. Chapter 11 reorganization is necessary for ALL of these companies that are now clawing at government tits. Chapter 11 requires full accountability of assets, liabilities, owners equity, and cash flows (among others).

Delving into the morass of accounting data will provide historical lessons of how the world came to be where it is now, which is essential to trying to ensure it doesn't happen again. And it's probably essential to trying to return to a gold standard or other, similar standards.

If you look at the Big US Three, management and unions are to blame, and this reckoning has been a while in coming (do a lexis-nexis on Big Three competing effectively with Japan: we've been saying it's about to happen for 15 years).

On the one hand, management drove the marketing of big, gas-guzzling, grotesquely large SUVs (full disclosure, I drive an early X-Terra and I love it), without taking into consideration the gas price model of 2005 through 2007, which should have shown what was going to happen to gas prices (and why, which would show that, absent this recession, it wasn't going to change back).

On the other hand, one of the chief reasons why the Big Three auto-makers have marketed these large vehicles is because that's where their profit is, and their profit is severely restricted by union contracts and the myriad requirements those impose. Making one big car was more profitable on margin than selling 5 smaller cars because the US pays such high labor costs for union workers (not just in the form of wages, but in the form of 50s-era compensation benefit packages that are in most cases totally out of whack with the rest of the US, or Japanese manufacturer labor contracts). It is the labor cost issue that continues to allow Japanese and Korean manufacturers to compete at a better pace than US companies even when they build cars in the US, as does Japan's big three.

"self-aggrandizing jackass" - it says it right on the label
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