Sunday, December 14, 2008

Do The Big Three Really Need & Deserve A ‘Bail-Out?’



Much posturing and whining has been going on over ‘bailing-out’ the “Big Three Auto Makers.” All three have lined up for our tax dollars, as have other industries.

Flying in to D.C. in their Private Corporate Jets prompted outrage from Congressional Democrats, who have no problem using Public Jets for their jaunts all over the world and country on our tax dollars.

To placate Congress, CEO’s arrived for their latest beg session over the road in their cars.

As corporations line up for government handouts, our National Debt is skyrocketing and tax revenues are drying up, do we really need to ‘bail-out’ all three automakers? Should we pump Billions of tax dollars to them?

Much is said about the Carter Administrations loans to Chrysler in the 1970’s as precedent for bailing out the Big Three. But much remains unsaid and unknown by the public in that deal, not the least of which is the government’s forcing Chrysler to totally abandon their research and development on their Turbine Powered Car, which had continued up until the time of that ‘bail-out.’

What isn’t said is that Lee Iacocca still had to approach the Unions and Suppliers for concessions, just as if they had filed for Chapter 11 Bankruptcy. Who can forget Iaccoca standing before the Union asking for concessions and the Union Rep asking,

“If we make these concessions, just what can you guarantee Union Members?”


Iacocca’s answer, Their jobs!

Chrysler pulled through then with concessions and by partnering with Japanese Auto maker, Mitsubishi, a partnership that somewhat continues today with the manufacture of their World Engine program, although Chrysler no longer offers Mitsubishi vehicles under the Chrysler name tag.

Now, we seem to have three major American Auto manufacturers begging for government money to remain in business, while the Japanese autos assembled in America seem to be getting by.

CATO Institute has compiled sound bites of Dan Ikenson arguing against any bailouts of the Auto manufacturers below.



We were recently told it is “unpatriotic” to not support Auto Bail-Outs, but is it any less that UAW leaders will not agree to concessions today, as they once did with Chrysler?

We taxpayers are expected to tighten our belts during tough economic times. Why not UAW members too?

Does it escape Union Leaders that if the companies file for Chapter 11 bankruptcy, they lose anyways?

Of course, just as did Lee Iacocca in the 1970’s, restructuring of the Big Three, even if they must combine operations or merge would be the most economical way out of their mess.

Do UAW leaders even admit that their excessive contracts have contributed to the current financial trouble of the big three?

As an Auto Mechanic of 42 years experience, most of it employed at Dealerships, the current one for the past 19 years, I have seen the quality of the cars that are delivered. Engineering has vastly improved but assembly often is lacking. Who assembles the cars?

When we have a warranty complaint, I am paid far less to troubleshoot and repair the vehicle than is the Union Members idly placing parts on it as it travels down the assembly line.

If my dealership faces hard times, no one runs in to bail us out and we end up unemployed, as has happened in the past.

I survived.

Although assembly of our cars is at times lacking, they are not the junk they were made out to be in the 1970’s. Imports, even those assembled in America aren’t that vastly superior. Remember, even their dealers have to employ mechanics and have repair shops.

The cry of American cars not being energy efficient is just as bogus. The imports that have the best mileage are their smallest cars with the smallest engines, something most Americans don’t buy. This is attested by the imports beginning to manufacture larger vehicles and trucks with V-8 engines to capture that market.

That being said, as is shown in the CATO video, we do not really need to bail out the Auto Industry. Chapter 11 bankruptcies are in order here to save them and yes; even mergers are in order.

Sweetheart Union contracts need to be rolled back to more align them with the rest of society.

If for no other reason, the bail out of the Auto Industry must be turned down to stop the Nationalization of the industry, as Democrats desire. If you think it is a mess now, just wait as politicians, who often stumble over themselves and have a history of corruption, begin deciding what can be built and how they will be built.

Current and past government regulations have hurt the industry, adding thousands of dollars to the price of our cars and creating as many problems as they wanted to solve. You just cannot legislate technology.

The time is now to curtail these government bailouts of private companies, if we are to retain a free market. We simply cannot afford to continue throwing money away in hopes of things getting better.

Similar policies turned a Deep Recession into the Great Depression decades ago.

We do not need a repeat of that.

9 comments:

allee said...

NO. Firmly and adamantly, NO. And NONE of the businesses being bailed out have any legitimate excuse for continuing to operate if they cannot do it on their own under standard business practices. Period. This is how a free market works, and sometimes businesses fail. Manipulation of a market from the outside causes more harm in the long run than any potential benefits seen in the short term. There is a time for risk and a time for running.

Now is the time to run.

By creating $700 billion lines of credit to (not FOR, but TO - there is a distinct difference, and don't even get me started on the national debt) the federal government to dole out, the Federal Reserve is creating money out of thin air. A person (myself, for example) must barter something of value - my ability to work - in exchange for a Dollar. I am creating something my employer wants and receiving money for it. (This rule is ignored when Democrats are in charge, when everyone gets something even if it's for nothing, which TOTALLY defies logic.) Then over there we have THE FED. They do nothing to CREATE wealth, they do not produce anything of value, yet they have unlimited Dollars, which they turn out hand over fist - at interest, to people like me (taxpayers). We are buying nothing with everything.

Creation of too much money (whether it be coin or paper or imaginary dollars on a computer AKA line of credit) overinflates the money supply and saturates the market, making each $1 worth less and less, every time more is created. So instead of being worth $1, it's only worth 70 cents. Then you (the person CREATING wealth) have to work longer and harder to make up that difference - while the Fed continues to create more and more out of thin air.

When the dollar becomes overinflated, it is devalued and after a while becomes useless - worth nothing more than the paper it is printed on. Combine that with the fact that there is nothing - AND I MEAN NOTHING - physically backing that dollar and that we owe far more to our creditors than we could ever repay, how does it make sense to continue to create more imaginary money? Cut the money supply. I guarantee you'll see inflation plummet, commodities lower in price, the budget stabilize, and the debt disappear.

Why is that so freaking hard to understand? Do any of these guys "in charge" actually have to STUDY econ before they step into these high-power positions?

Ms Calabaza said...

Lew,
great post. I loved your picture. My father was an auto mechanic and was a union member for over 30 years. Still, I'm with you and I believe if my dad were still around he would not agree with this either...

Lew Waters said...

Great statement, allee. Another thing we need do is get back on the Gold Standard and stop printing worthless money.

Ms. Calabaza, I took that photo in 2004 in the small community outside of Dallas, Texas, Little Elm, when my youngest daughter lived there with her now ex.

I too was once in the Union, the Machinist Union, who covered Auto Mechanics here years ago. Unions have a purpose, but all too often, Business Agents end up manipulating a complacent membership and negotiate excessive contracts. What many don't realize is that when the 'boss' must pay out more, they simply raise prices, which also affect those who just received the increase.

It turns into a vicious circle until it ends up where we are now.

allee said...

I can't help asking WHY so few can grasp these concepts (like about the unions). Is our society too "me" oriented now, everyone looking out for #1 (even if they don't realize that what they're doing is going to undermine "me" also)? Complacency? Outright stupidity? Malice? Too much defecation in their gene pool?

I try to give the benefit of the doubt (even when it is denied in return). I've tried thinking down on that level (that's an exercise, let me tell you!).

Have we just run our course, some type of "payback" for manipulating the meanings of "freedom" in this country? Unfortunately, the only way we may be able to "fix" it is by rebuilding from the ground up, after they implode, hoping they don't kill us all in the fallout.

u∃∃l!∃ said...

Where was your out cry when they were voting in favor of the financial bail out?

Why were so many Republicans in favor of the Financial Bail out (a certain Senator from Oregon lost my vote over this.)

I agree with Lew's statement related to Unions, at least he doesn't see the union concept as evil and Marxist (which it is not); but sees the real problem with what has happened to Unions.

I agree with the money thing. Every time the Government just makes up more money, they steal from me and everyone else who has saved money for their future.
It was this behavior, by the government, that caused so many of us to invest in other things (like 401K mutual funds) for our retirements.

Ms Calabaza said...

Lew,

I've posted a story on the biggest loser, your favorite: John Kerry (did you know he was in Vietnam?) ...

Lew Waters said...

Ms Calabaza, didn't you realize that this is one of those election cycles that the Democrats don't think Military Service in Viet Nam is of any importance?

That was only important in 1988, 2000 and 2004. 1992, 1996 and 2008, it is of no importance.

Funny, huh?

pete said...

Lew

"Ms Calabaza, didn't you realize that this is one of those election cycles that the Democrats don't think Military Service in Viet Nam is of any importance?"

The Democrat's argument that they respect and support of the military evaporated with their selection of John Kerry in 2004 (not to mention Gov Rendels disqualification of overseas military ballots). Kerry's Senate testimony in 1971, his two verifiable meetings with the North Vietnamese in the early 1970's in violation of the Uniform Code of Military Justice, his "Honorable" discharge under a Carter Presidential directive, his filing of a DD215 in 2001, adjusting his discharge date to 1970 to obfuscate his Senate appearance and North Vietnamese collaberation, certainly discredited him in representing those who legitimately and honorably served in Viet Nam and other Amercian conflicts.

The party of Henry Jackson, Sam Nunn, Zell Miller, not to mention Jack Kennedy, who served their country honorably and never waivered in their patriotism, has given nothing more than lip service to supporting our military since the late 1980's. Some of us keep track and realize that the security of this country can never be trusted to the Democratic party!

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