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11/20/2008 08:03:20 PM · #126
Originally posted by Spazmo99:



Do you really think Americans are so stupid as to be led around by the nose that way?

I was exposed to all of the same marketing and advertising. I never bought an SUV, big truck or otherwise participated in vehicular excess? Ford advertised the heck out of the Edsel too. Didn't work to well.


So your supposition would be that marketing and advertising doesn't work on anyone? Seems an awful lot of money is being wasted then.
11/20/2008 08:38:12 PM · #127
When the bankruptcy option was first being discussed it made sense to me that a prepackaged deal could potentially be beneficial. However, one of the key arguments that gave me serious pause about that route was considering the impact on auto sales when a company is in bankruptcy. 74% of people said they would not consider purchasing an auto from a company in bankruptcy in a recent survey. That makes intuitive sense to me since I certainly wouldn't buy a car from a bankrupt auto company. So, how in the world would we expect these companies to avoid going into chapter 7 if they loose even half of their current market share when in chapter 11?

It sounds to me like a catch-22 is starting to take shape. They can't get the bridge loan because bankruptcy is supposed get rid of their overhead in a quick way, but if they go into bankruptcy they can't sell enough autos to get out of bankruptcy because they're in bankruptcy.

So, I think the questions here are quite fundamental. Is it important to have a domestic auto industry? Perhaps more importantly, does the risk of loaning these companies billions of tax dollars outweigh the risk of losing millions of jobs during this economic crisis?

I'm a teacher in Michigan, so for me this is also a very personal matter as I've seen countless kids' parents lose their jobs (and yes, I've seriously lost track of how many it is now). This state has seen about 8 straight years of job losses totaling around half a million and unemployment reached 9.3% in October.

Keep in mind, I didn't have a thing to do with making/marketing/selling SUVs in the 90s, I didn't get paid a 6 figure salary thanks to my union or having a position as a CEO, I didn't have anything to do with the unfortunate things that the US auto industry has been trying to fix. Still, if GM goes my job will most likely go with it along with countless other people who are not in auto related fields like mine but depend on the vast communities built around the auto industry. If I lose my job I will probably have to relocate to another state for a new teaching position, but I will almost certainly not be able to sell my house or pay it off, so I will be foreclosed on, adding further to the housing crisis. Bad credit for me, but I'll certainly be willing to make that choice if it comes right down to it and I have to just abandon my house to start relatively fresh somewhere else.

I'm fearful that the people debating this issue are not in touch with the reality of how wide the swath of economic destruction will be if these industries are allowed to go under, particularly with the economy in the state it's in. Thankfully, the new administration will be putting socialized health care in place so the rest of you remaining taxpayers can spend WAY, WAY, WAY more than 25 billion (that is not in the form of a loan that we will repay) caring for the millions of us that lose our jobs & houses after no one buys cars from chapter 11 companies and they end up going chapter 7. So, go ahead and make the crisis an indictment of the auto industry if you want, but I'm betting US taxpayers will be stuck paying a much higher price tag in the end if these companies vanish.
11/20/2008 09:06:28 PM · #128
Originally posted by Gordon:

Originally posted by Spazmo99:



Do you really think Americans are so stupid as to be led around by the nose that way?

I was exposed to all of the same marketing and advertising. I never bought an SUV, big truck or otherwise participated in vehicular excess? Ford advertised the heck out of the Edsel too. Didn't work to well.


So your supposition would be that marketing and advertising doesn't work on anyone? Seems an awful lot of money is being wasted then.

It would be interesting to see what percentage of each model's price goes to defraying advertising costs.
11/21/2008 12:13:49 AM · #129
I was too hasty comparing the morality of cigarette companies to automakers. Automakers are worse. They are risking the entire human population by ignoring the threats of global warming, not to mention overextending our dependence on oil.

JMart, the governors of CT, NJ and NY have sent a letter to washington asking for money to bailout the financial workers who are going to lose their jobs. Lots of industries in peril. Lots of people will have their hands out to the U.S. government. I'm not sure what the best answer is, but I'm thinking the government should spend money on spurring a new industry of greening America instead of throwing it at failing, poorly run businesses that are destroying the planet.
11/21/2008 06:45:06 AM · #130
Originally posted by posthumous:

I was too hasty comparing the morality of cigarette companies to automakers. Automakers are worse. They are risking the entire human population by ignoring the threats of global warming, not to mention overextending our dependence on oil.

JMart, the governors of CT, NJ and NY have sent a letter to washington asking for money to bailout the financial workers who are going to lose their jobs. Lots of industries in peril. Lots of people will have their hands out to the U.S. government. I'm not sure what the best answer is, but I'm thinking the government should spend money on spurring a new industry of greening America instead of throwing it at failing, poorly run businesses that are destroying the planet.

I appreciate the sentiment for fighting for a green planet, but in reality autos are GOING to be driven in the US regardless of Detroit, they have poured resources (perhaps too late now)into greener automobiles and I for one am hoping to purchase a Chevy volt in two years if they pull through this.

New "greening" industries have no chance of mitigating the fallout if these companies go belly up. It is not simply a matter of replacing one business with another. It is the matter of having millions of people looking for new jobs, I'll certainly go to another state and take a job that otherwise would have gone to someone less experienced, the government will have no choice but to take care of the millions of people that can't transition quickly, and the number of abandoned house for the financial sector to deal with will rise dramatically.

This is not spending money, it's investing (literally, since it's not a give away, it's a loan). And yes, I'd bet that they will need another loan before the economy recovers. Bottom line, however, is that you and every other US taxpayer will most likely pay more for not extending a bridge loan than we risk losing. Make that case for other industries and perhaps we should offer bridge loans in some other circumstances. I think it's reckless to just fold our arms and say we won't do it because you were bad in the past and others will want loans too. Good luck when this triggers a deeper depression my friends.
11/21/2008 09:18:58 AM · #131
Originally posted by Gordon:

Originally posted by Spazmo99:



Do you really think Americans are so stupid as to be led around by the nose that way?

I was exposed to all of the same marketing and advertising. I never bought an SUV, big truck or otherwise participated in vehicular excess? Ford advertised the heck out of the Edsel too. Didn't work to well.


So your supposition would be that marketing and advertising doesn't work on anyone? Seems an awful lot of money is being wasted then.


No, but it's not as persuasive as people would seem to think.

Product development is a two way street between the consumer and the manufacturer. The manufacturer wants to make products that people want to buy and they do that, generally, based on what consumers tell them they want. Advertising is simply how manufacturers tell consumers about the things they've made that other consumers said they wanted. Sure there's some "Join the cool club, buy this gadget/car/shoes/whatever.", but that influence over consumer purchase motivation is limited.

11/21/2008 09:22:39 AM · #132
Originally posted by GeneralE:

Originally posted by Spazmo99:

Originally posted by posthumous:

Originally posted by Spazmo99:

You can't totally place the blame on the D3 either, to a large extent, they've simply been making vehicles their customers want to buy (SUV's, Pickups etc) and giving them the features that the customers demand (More comfort, more gadgets and more power...fuel economy be damned). Unfortunately, the overall market demand has shifted much quicker than their ability to re-tool to meet that change in what customers demand. (It's no easy thing to switch over an assembly plant to make little cars vs. big trucks).


Actually, they created the demand for SUVs with their marketing and advertising campaigns. There's some French guy who created a whole advertising strategy based on making SUVs as big and ugly as possible, manipulating the subconscious desires of middle america. I know it sounds like I'm making this up, but it's true. And it's infuriating.

And I'm not punishing the D3, nor do I have any blood lust. I don't want to do anything to them at all. Let them stand or fall on their own merits.


Do you really think Americans are so stupid as to be led around by the nose that way?

Yes, it's pretty well proven. Maybe it didn't affect you personally, but it would a statistically-known fragment sufficient to calculate whether a plan is economically viable.


No. That decision is not going to be made based on what the automaker is going to tell consumers to buy, it's based on what consumers tell the automaker they want to buy.

11/21/2008 10:26:50 AM · #133
How is the worsening state of the economy going to affect the wars in Iraq and Afghanistan? If the US is reeling from one of the worst recessions in history, how can the US continue to justify fighting in countries that do not want the US there? What do you tell the citizens who are losing their jobs and lifestyle when they come knocking to your door for help and you say, sorry, we already spent 725 billion on big companies that took advantage of you and we have no money left except to fight wars we probably will never win. They'll probably be handed application forms to join the army or navy.

What a pitiful place this economic situation is putting the US in. It fights wars while its population is in turmoil over bankruptcies, losing homes and losing their income sources. You can easily use the word quagmire in Iraq, and I have several times, but I think we'll be able to use it to describe the situation in the US very soon if this economic disaster is left to continue.

Greed, the scourge of our times. I'm not saying money is, it's greed that makes people do things that would seem illogical in any other time.
11/21/2008 10:47:55 AM · #134
Originally posted by JMart:

I appreciate the sentiment for fighting for a green planet, but in reality autos are GOING to be driven in the US regardless of Detroit, they have poured resources (perhaps too late now)into greener automobiles and I for one am hoping to purchase a Chevy volt in two years if they pull through this.


I don't fault automakers for making autos. It's that bit you slipped into parentheses: "perhaps too late now." Try 30 years too late. Sadly, I am old enough to remember 30 years ago, and I remember two really big issues back then: cutting our dependence on oil and saving the environment. Thirty years. And what did they do? They hunkered down and waited until the immediate oil crisis was over, and then they started making vehicles that got lower mileage. They actively quashed inventions that used alternative fuels. Mindboggling. To blame the consumers for this is to deny CEOs and boardrooms the basic capacity for judgement and decency that you would expect from any employee, any citizen.

Again, I've said nothing about punishing them. I just don't want to prop them up. If they do get any of my money, I want to regulate the hell out of them.

11/21/2008 11:23:55 AM · #135
Originally posted by posthumous:

Originally posted by JMart:

I appreciate the sentiment for fighting for a green planet, but in reality autos are GOING to be driven in the US regardless of Detroit, they have poured resources (perhaps too late now)into greener automobiles and I for one am hoping to purchase a Chevy volt in two years if they pull through this.


I don't fault automakers for making autos. It's that bit you slipped into parentheses: "perhaps too late now." Try 30 years too late. Sadly, I am old enough to remember 30 years ago, and I remember two really big issues back then: cutting our dependence on oil and saving the environment. Thirty years. And what did they do? They hunkered down and waited until the immediate oil crisis was over, and then they started making vehicles that got lower mileage. They actively quashed inventions that used alternative fuels. Mindboggling. To blame the consumers for this is to deny CEOs and boardrooms the basic capacity for judgement and decency that you would expect from any employee, any citizen.

Again, I've said nothing about punishing them. I just don't want to prop them up. If they do get any of my money, I want to regulate the hell out of them.


So, why did people buy gas guzzlers? Advertising? Come on. That's just ridiculous. The fact is that, for most people, especially 30 years ago, the low fuel prices have made fuel economy a tertiary concern at best. It wasn't until gas was at $3-4/gal that Americans began to really demand better economy. Look at the vehicles the D3 have developed in Europe, they're small, economical and popular. Why? Mostly because fuel is far more expensive there than it ever has been here.

I've never heard a popular cry for economical vehicles, no consumers beating down Ford's door begging for a domestic version of the 68 mpg Fiesta that Ford sells in the EU. I have heard people gushing over their Suburbans, Hummers and F-250's that they use by themselves for their daily commute. To say that the D3 have ignored a 30 year siren call for small economical vehicles from their consumers is ludicrous. To assert that the D3 have some kind of mind control abilities they use on consumers to force them to buy inefficient, oversized and overpowered vehicles that they don't want is beyond the limit of credibility.
11/21/2008 01:49:12 PM · #136
Originally posted by Spazmo99:

To say that the D3 have ignored a 30 year siren call for small economical vehicles from their consumers is ludicrous.


That's why I didn't say it. Why do you assume the only "call" (not a siren song) comes from consumers?
11/21/2008 01:50:10 PM · #137
Originally posted by Spazmo99:

To assert that the D3 have some kind of mind control abilities they use on consumers to force them to buy inefficient, oversized and overpowered vehicles that they don't want is beyond the limit of credibility.


Somehow Toyota was able to do very well without making these vehicles.

(in order to stem an irrelevant refutation: okay, Toyota makes SUVs, but clearly that's not how they beat the American companies)

Message edited by author 2008-11-21 13:52:03.
11/21/2008 01:51:43 PM · #138
Originally posted by posthumous:

Originally posted by Spazmo99:

To say that the D3 have ignored a 30 year siren call for small economical vehicles from their consumers is ludicrous.


That's why I didn't say it. Why do you assume the only "call" (not a siren song) comes from consumers?


I don't, but they have been the focus of your discussion to this point.
11/21/2008 01:52:40 PM · #139
Originally posted by Spazmo99:

Originally posted by posthumous:

Originally posted by Spazmo99:

To say that the D3 have ignored a 30 year siren call for small economical vehicles from their consumers is ludicrous.


That's why I didn't say it. Why do you assume the only "call" (not a siren song) comes from consumers?


I don't, but they have been the focus of your discussion to this point.


No, you're the one who keeps bringing up consumer demand as an excuse.
11/21/2008 01:57:27 PM · #140
Originally posted by posthumous:

Originally posted by Spazmo99:

To assert that the D3 have some kind of mind control abilities they use on consumers to force them to buy inefficient, oversized and overpowered vehicles that they don't want is beyond the limit of credibility.


Somehow Toyota was able to do very well without making these vehicles.

(in order to stem an irrelevant refutation: okay, Toyota makes SUVs, but clearly that's not how they beat the American companies)


Sure, they filled a demand in the market that was not being met by the D3. So?

Toyota's shortcoming was, and to some extent, still is, vehicles like SUV's and full-size trucks. Had Toyota, or any other Japanese manufacturer tried to compete against the D3 in that area while establishing themselves, they'd not be in the U.S. today.
11/21/2008 02:00:13 PM · #141
Originally posted by posthumous:

Originally posted by Spazmo99:

Originally posted by posthumous:

Originally posted by Spazmo99:

To say that the D3 have ignored a 30 year siren call for small economical vehicles from their consumers is ludicrous.


That's why I didn't say it. Why do you assume the only "call" (not a siren song) comes from consumers?


I don't, but they have been the focus of your discussion to this point.


No, you're the one who keeps bringing up consumer demand as an excuse.


You've said that the customers buy vehicles from the D3 because the D3, through advertising or mind control, makes them buy those vehicles. The fact is the D3 have built those kinds of vehicles because people buy them, not in order to force them down the throats of unwilling consumers. Why would any company build and try to sell products that people don't want?

Message edited by author 2008-11-21 14:01:39.
11/21/2008 03:47:39 PM · #142
Originally posted by posthumous:

Originally posted by Spazmo99:

To assert that the D3 have some kind of mind control abilities they use on consumers to force them to buy inefficient, oversized and overpowered vehicles that they don't want is beyond the limit of credibility.


Somehow Toyota was able to do very well without making these vehicles.

(in order to stem an irrelevant refutation: okay, Toyota makes SUVs, but clearly that's not how they beat the American companies)

Japanese didn't beat American companies with gas mileage or green cars either. They beat them with reliability (not to mention low labor costs, currency manipulation and government assistance with retirement/health issues for the core Japanese parts of the company). Now the quality standards for American cars has been raised thanks to this competition, but it takes a while to rebuild a bad reputation.

There are new people running these companies, bad CEOs have been fired (notice how the big 3 CEOs are relatively new to their jobs), and the big three, Ford in particular, have been turning the tide back towards profitability. Give them a loan to bridge the banking/economic crisis and it should be much less expensive (and possibly profitable as was the case with the previous Chrysler bailout) than to suffer the economic impact if these companies go under.
11/21/2008 04:12:09 PM · #143
There was just a pretty good discussion of the future of plug-in cars over at Science Friday on NPR.

One of the ideas which came up was, instead of giving billions to the automakers, why not (taking a cue from the Digital TV Ccoupon program) let every houshold apply for a government-issued coupon good for $15,000 or so towards the purchase of an energy-efficient vehicle, and let the car companies revive through sales. This would help offset the up-front cost difference for these cars, and would let the consumers rather than the government decide which companies are worth saving, and could form part of an "economic stimulus package" which would encourage practical consumption.
11/21/2008 09:02:40 PM · #144
Originally posted by Spazmo99:

Why would any company build and try to sell products that people don't want?


So they can corner the market first and then create demand. There would be no demand for SUVs if somebody hadn't built SUVs. Customers did not invent the concept, the car companies and their marketing departments did.

Listen, all you have to do is convince Paul Krugman. I'll go along with whatever he says.
11/21/2008 09:17:29 PM · #145
Originally posted by posthumous:

Originally posted by Spazmo99:

Why would any company build and try to sell products that people don't want?


So they can corner the market first and then create demand. There would be no demand for SUVs if somebody hadn't built SUVs. Customers did not invent the concept, the car companies and their marketing departments did.

Listen, all you have to do is convince Paul Krugman. I'll go along with whatever he says.


Oh please...

There have been SUV's in one form or another since the first GI came home from WWII, bought a surplus Jeep and started tinkering. After that came Toyota Land Cruisers, Range Rovers and any number of vehicles.

Why should I care what Paul Krugman thinks anyway?
11/21/2008 09:19:40 PM · #146
You do realize that even the foreign car makers support the loans to the D3, right? That their survival, at least in the U.S. market, depends on it just as much as the D3.
11/21/2008 09:33:40 PM · #147
Originally posted by Spazmo99:

You do realize that even the foreign car makers support the loans to the D3, right? That their survival, at least in the U.S. market, depends on it just as much as the D3.


I like this debate. It makes me feel like I'm holding onto 25 billions dollars and deciding whom to give it to. :)

Tough beans, foreign car makers.
11/23/2008 08:51:52 PM · #148
Originally posted by GeneralE:

There was just a pretty good discussion of the future of plug-in cars over at Science Friday on NPR.

One of the ideas which came up was, instead of giving billions to the automakers, why not (taking a cue from the Digital TV Ccoupon program) let every houshold apply for a government-issued coupon good for $15,000 or so towards the purchase of an energy-efficient vehicle, and let the car companies revive through sales. This would help offset the up-front cost difference for these cars, and would let the consumers rather than the government decide which companies are worth saving, and could form part of an "economic stimulus package" which would encourage practical consumption.


Sounds much better than what is currently being proposed but something like this would never take place, what with all the hands in other people's pockets in Washington/Detroit.

Message edited by author 2008-11-23 20:53:15.
11/23/2008 09:22:04 PM · #149
Originally posted by posthumous:

Originally posted by Spazmo99:

You do realize that even the foreign car makers support the loans to the D3, right? That their survival, at least in the U.S. market, depends on it just as much as the D3.


I like this debate. It makes me feel like I'm holding onto 25 billions dollars and deciding whom to give it to. :)

Tough beans, foreign car makers.


Hmm, I did read a column by your buddy Krugman where he says that while you'd be hard pressed to find a less deserving group to provide emergency funding to, it's highly likely that one and possibly all three would never emerge from bankruptcy and that would likely destroy the D3 as a consequence severely cripple the nation's economy in the process. The main reason being is that the credit markets are frozen which would eliminate their ability to restructure under Chapter 11.
11/23/2008 10:11:32 PM · #150
Originally posted by Spazmo99:

Originally posted by posthumous:

Originally posted by Spazmo99:

You do realize that even the foreign car makers support the loans to the D3, right? That their survival, at least in the U.S. market, depends on it just as much as the D3.


I like this debate. It makes me feel like I'm holding onto 25 billions dollars and deciding whom to give it to. :)

Tough beans, foreign car makers.


Hmm, I did read a column by your buddy Krugman where he says that while you'd be hard pressed to find a less deserving group to provide emergency funding to, it's highly likely that one and possibly all three would never emerge from bankruptcy and that would likely destroy the D3 as a consequence severely cripple the nation's economy in the process. The main reason being is that the credit markets are frozen which would eliminate their ability to restructure under Chapter 11.


Their restructuring success would be based on two things that a bankruptcy judge alone could provide; voiding the current labor contract and no longer having to pay retirement medical (those folks will just have to get by with Medicare like everyone else) and jobs bank, and being able to shut useless divisions (Pontiac, Buick, Mercury, etc) without having to pay tens of billions to disenfranchised dealers. That would bring their cost structure down and they could begin to use some of the revenue they earn to actually develop modern product. Its not like they dont all sell a hell of a lot of cars, it just costs them way too much to make them.
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