Being a resident of the state, this is a giant concern for me. As it stands Michigan's economy is one of the worst in the nation, with a $920 million dollar deficit and a rising number of families on food stamps.
http://www.michigan.gov/gov/0,1607,7-168--81249--,00.html

So being a large drain on the federal government, I saw on the news that Obama is turning his attention towards Michigan. The city of Detroit alone asked the government for $10 billion- this doesn't include the Big 3. I can't even begin to describe how devastating it would be for the Big 3 to go under. As it stands they are laying off people left and right, trying to keep afloat; with the job shortage more people are going to be relying on unemployment for income because there are no available jobs.

From article http://www.freep.com/article/20081115/BUSINESS01/811150332/1014/BUSINESS01

I'm a native of your neighbor state, Ohio, and we haven't been doing too well either. Hell, since the 80s we've seen manufacturing on the decline with the auto industry being no exception. When my grandfather worked at the Delphi parts plant in Sandusky that supplies GM they employed something like 5,000+ workers. With layoffs and buyouts they were down to less than 2,000 when I left the States over a year ago. Things are bad and I know they're worse for you all up in Michigan.

The Center for Automotive Research estimates that if the Big 3 were to go under as many as three million (that's 3,000,000) jobs would be lost. That's including autoworkers, dealerships, parts subsidiaries, etc. A blow like that to an already flagging economy would be a catastrophe that would make a bad situation worse.

It's easy for someone who is not directly affected or doesn't know anyone affected by the auto industry woes to make smarmy comments about "just deserts," and that "they've been making the wrong cars for too long," and carp about "free market principles" in opposition to the proposed bailout for the Big 3 that Congress is debating. But we're talking as many as 3 million people out of work, 3 million families losing a primary source of income. As much as I agree that the US auto industry has not made the best decisions in the past decades it would be devestating to simply let them go under.

You're absolutely right. It's not just Michigan that would be affected- we're talking people all over the country. Not to mention that the collapse would do nothing but help out foreign economies car markets, taking the U.S. completely out of the industry.
This is something we simply can't afford. I support car manufacturers "going green" but that's not something that is going to happen overnight. Plus the technology is going to cost money- that the Big 3 simply doesn't have.

So what is the suggestion?
Do we earmark another $700 Billion to bail out the car manufacturers. So now the banks and the auto industry would be essentially government owned. And this coming from the "Obammie is a commie" republicans still in power? Paulson adamantly objects to spending any of the previous bail out (which is working just great - so glad we keep throwing money and crises without any kind of plan or oversight) on the auto industry.
He probably doesn't own any stock in the auto industry.

As for what to do? Well, yes, it would be terrible if these companies folded. Mostly because they have already received so much government support in the form of tax breaks and special treatment laws that they've never really had to worry and they're as symbiotically (parasitically?) joined to our economy as the banks.

Economists and politicians only shout "free market" when it is working in their favor. The free market style that has been the rallying cry for fiscal conservatives would dictate that we let all of these companies fold unless they can figure out how to fix themselves. It might actually force come competition and innovation. However, in reality what it will do is cause several CEOs to disappear with millions and hundreds of thousands to lose their job. Why innovate when they could just steal everything the company is worth and re-buy what is left at fire sale prices? Who cares about the starving and newly out of work? Feeding them would just be socialism, right? While the oil companies are making record profits and gouging the consumer for every cent they can it's "what the market can bear", but, like the auto companies, if they start to collapse, suddenly they'll need help before it causes our whole economy to crash.

And yes. I do blame the auto industry for not just their own crises, but for a great deal of our energy crisis as well. If they were not entirely complicit in the intentional stalling of alternative fuel development, they would certainly have more options than they do.

Now, however, we just have another major American industry that is holding us and their workers hostage. "Bail us out, or we fire everyone and collapse the economy". Well, if one of those companies fails, or if we save them, the first thing that needs to happen is the incompetent managers and decision makers, everyone who will watch the collapse from their own private jet, need to be held accountable.

Want to stop these major companies from folding? Stop protecting the people responsible. Company goes bankrupt? Fine, the people holding the money bags go down the tubes first. That's how it is in small business.

So, what are the ideas for preventing this? I don't want the companies to fail, but the wakeup call may be necessary and I'd sure like something done before the idiot right media machine can lay it at the President-elect's feet as somehow his fault. New technologies might indeed be the saving factor. The big 3 don't have it? They might have to be inventive in how they get new investors. Hell, the owners might even have to chip in a little. I heard Dennis Miller suggesting today that the workers are really responsible for supporting the company and I even heard him suggest that all of these people being threatened with imminent layoffs be the ones to monetarily buoy up the companies. Anything to keep the fat cats on top and safe.

If the system fails, it will force an overhaul. Maybe we'll even see a new company once monopolies are broken. Not the best answer, but the only two I see at the moment are "give us lots of money (we don't care from where) quick" or total collapse. What's option 3?

Captain Nevarre

Paulsen doesn't want to share








Again, where is the restructuring? How are we to believe them when they say it hasn't been badly managed? Isn't this crisis the direct result of bad management and poor long-range planning? What is it a result of, then?

And a final thought - maybe, horrible though it might be, Detroit needs to die. My home town of Pueblo used to be a huge booming center for steel production a couple of generations ago. The government never even considered bailing the town out. It died and was still trying to find itself again when I was growing up there. Nevertheless, it was a good town to live in with decent employment opportunities. So, the industry, the company, or the factory died. It happens and perhaps the auto industry is heading the way of steel booms and steam locomotives. Is it the government's job to keep them hanging on? How long will they last? Will another bailout just stall things long enough to build better escape routes for the owners?

Captain Nevarre

This seems like a good moment to share Zeitgeist. Click on the video to the left, Zeitgeist: Addendum. In the first ten minutes, it pretty well explains, in simple language, how the US economy actually works. Bottom line: it's based completely on debt.

Luna- you're absolutely right. Believe it or not about 7 years ago I saw this kind of thing happening. Americans created too much debt by taking out mortgages, credit cards, car loans, etc. It was only a matter of time before it collapsed on top of us.

Captain- I don't know what the solution is. I don't have any good ideas either. I don't support the government bailout thing, but the conflict that I experience with that is if we allow the collapse of the auto industry it's just going to make things worse for more people who are already struggling to make ends meet. So the federal government should step in- in a way. My city doesn't provide affordable public transportation. There is like one cab company that will charge me $8 to go less than one mile to get my groceries home. Grocery shopping for one person might be do-able on a bus because there would be significantly less to carry, but not for a family of 3. Now I hate to sound like McCain here, but the only solution is reform. The auto industry needs to be reformed as well as the entire economy. It just looks like things are going to get A LOT worse before they get better. The only other thing I can think of is: Govenor Granholm brought Toyota to Detroit. If we bring foreign car production into the United States, we may have better options until the green technology is effective, affordable, and well...in place. I've always liked the idea of Stanley Meyer's H2O powered car, though I've heard mixed opinions on it- the one of my concern is that it's a hoax. But water is a renewable resource and the Earth has plenty of it.

Does anyone have any information on the H2O car being a hoax? I've never seen anything indicating it.

I think the government basically has to choose the lesser of two evils in this case. But which one is the lesser of two evils? Letting the auto industry in American sink- along with the 3 million affected, or bailing them out temporarily? It's a hard decision.

I agree with Capt Nevarre. The management of these companies has made them into a dinosaur. They haven't been able to keep up with the car industry since the seventies. They are in "crisis" yet I continue to see commercials offering to work with "lenders" to get you into a new car. Now if that just doesn't compound the problem. Not to mention the sheer amount of commercials I see during the football games. Maybe cut down the spending on those advertisements. And isn't Beckham advertising for Cadillac?

Another unfortunate problem is they are cutting the wrong jobs. Over the years, these large corporations/industries have shifted the labor pool into non-labor tasks which do not make money, for the most part. And I am concerned with the current state of the labor unions in regards to what they have evolved into to and what they have done to the American working force. More pay and better working conditions with lower quality/reliability and workers who are more lazy when compared to many working forces in other countries. The shipyards in Korea have a waiting list for customers. The laborers show up to work an hour early to show appreciation to the company that employs them. The laborers also get paid more than much of the management. Apparently the corporation discovered a way to satisfy the work and achieve devotion. The quality of the work is outstanding.

To just provide money to the big 3 without mandating change would be irresponsible.

I believe you need to go further back. During the previous 8 years when loose belts began to occur in the credit and mortgage markets.



It's not a matter of alternative fuel, many exist and have existed for some time. It's a matter of quality product at an affordable price. It's a matter of responsibility in all areas, which seems to have been purging itself from the behavior of society.

Further still. The economy is BASED on borrowing. From the beginning. Watch the short film.

You both are right. I think the only way that the auto industry is going to make that change is if the government forces them to.

Here's another article I found for those who are interested:
http://news.yahoo.com/s/nm/20081119/bs_nm/us_autos_bailout_30

Something has to be done soon, no doubt about it. Mandating the auto companies to produce affordable green cars would be the ideal situation.

You're right about the Union not being what it used to be. My Grandfather was the President of the local UAW 12079 for 17 years. He saw how the union was changing and left because of it. He ended up going into 3rd party mediation, but that's besides the point.

What can the government do to keep these 3 or 4 million people working if they don't provide the Big 3 with assistance?

EDIT: I agree also they could be finding better ways to spend money on advertising than paying celebrities to endorse them.

You're right. I don't know if a bail out is a good solution. I don't know of a good solution other than changing the entire economy as it stands. What I'm more concerned with is all the people who are going to be out of work if they go under. I think we're up shit's creek without a paddle either way.

Agreed that the economy is based on borrowing or, another view, on speculative gain on projected income. I was pointing out there seemed to be a loosening of the credit market with less screening of those applying for a loan. I recall this from the experience my parents had starting their private business, difficult to get a loan when they had suitable asset to back the loan, compared to a pre-approved credit card arriving in the mail for me when I was 24 allowing me a credit line of $10,000 with nothing other than my car and job. There has been little regulation of the credit market when it began to accelerate with no control.



Are these people willing to take a pay cut? Granted, I am sure many are tightening their belts and living within their means. Another issue is how many have multiple skill sets? My grandfather made it through the depression as a farmer in Kansas raising a total of 11 kids, though only 8 during the depression. He did this because he didn't just farm. He had a diversified skill set and was able to perform tasks here and there.

There needs to be a solution vice a bail out.



I think we have many paddles. It just depends on whether we use them and don't lock ourselves into a single knee jerk which will place the economy further in peril.

I think some states in the upper midwest need to except the fact that the manufactering sector in this country is dieing and invest in more high tech jobs. Wisconsin is investing a billion in stem cell research and other biotech industries. It is after all the year 2008, i thought robots were supposed to replace us and have all the jobs by now.

My apologies in advance because this is going to sound a bit harsh, but for what it is worth, these companies should fail. This is how capitalism works. Will people lost their jobs? Yes, but I blame the American auto industry for not seeing this coming. It would be judicially unsound to say that they never saw the economy going down hill.

One of the things my co-worker and I were discussing was to basically tell the auto industry this, you want 25 Billion bucks? Okay, make vehicles that DO NOT run on petroleum based products, that are environmentally safe, efficient and cost effective. Do it now, and not later; make them spend their money first before we even give them a dime. The technology is there and waiting to be tapped. The jobs that would be created just for that sector alone would be highly in demand. It would trigger, I think a ripple effect and this would kick start the economy.

But you see, if we did that, then the oil companies will cry foul and all that lobbyist money our thuggish leaders get will go elsewhere. Also, the price of gas will go right back up to 5USD a gallon again and the oil companies will cry poor, again. So it is a marriage a convenience for everyone involved, and will likely not go away in our life time. Something drastic has to change, and I feel for those auto workers who in the end will ultimately screwed their vampire like money sucking CEOs.

Like I said before, start learning Chinese; soon they'll be our new masters. I would say learn Mandarin Chinese, it is the language spoken by most Chinese and is pretty much well understood, even in Taiwan!