Capitol Hill Blue Forums Political Issues Finance, the economy & Economics Bailing out the auto industry - yes or no?

Ken, I got your joke and enjoyed it - it was the joke that made me think I was on the Round Table, in fact.

I do remember the Pinto, because I drove one, and on a busy interstate. We finally got the fault fixed - two weeks before the car was rear-ended. It probably would have gone up in flames. And, yes, it was experiences like my Pinto and SIL's Chevette that led my husband and me to a Toyota dealer in 1980. It isn't just a gas mileage issue; to be fair, for a long time, American-made cars had a really bad reputation, some of it richly deserved.

That's part of why I've been so undecided about all this. I hate rewarding companies with such lackluster performance in terms of quality, innovation, and performance. And yet I see the arguments for saving the industry, too. I like the limitations someone listed a page or two back - was it Phil?

On the cost of labor - I think these numbers are easily mucked with, which is why I don't trust them. Yes, retirement medical costs are a labor cost -- but they are not a current cost; they're a debt incurred in the past. I think costs like that can be unfairly "spun" in a way that makes current labor look really greedy. I also believe labor uses similar techniques. Let's face it, this is not an industry where management and labor have a strong history of working toward their common interests.

Olyve, you're onto something. Instead of using all this rescue money for entire industries, let's use it to buy up all the health care, and then see if industries and citizens can make it on their own when they're out from under that huge obligations.

Listening to the news this morning, I have had a change of heart. 70,000 Washington Mutual jobs lost, 55,000 at Citibank. Those two cuts alone are half of the job losses from last month, which was the highest since they started figuring it, and eclipsed the earlier record from the month before. This cycle has to be broken, somewhere, or the we're in for GDII. I think if the "bailout" is loans, or stake, and targeted toward the future, now is the time to act.

It does seem that the economic world as we know it is unraveling at an ever expanding pace. I think ultimately the loans (not a giveaway) to the automakers will be granted, but the number of companies standing in line with outstretched hands is also increasing. Is there an end—or is the The End?

"Now" won't happen until sometime after January 20.

So Michael Moore knows the answer. Good for him. But asking the Feds to instruct a company how they are to conduct business sounds a little goofy to me. The “big three” built trucks and SUV’s because the public demanded them and they sold, in huge numbers. They were the bread and butter of Detroit (why upset the apple cart) until the rug was pulled out by high gas prices and tightened credit. Toyota even attempted to jump aboard the mega truck bandwagon by introducing a gigantic, inflated Tundra pickup three years ago. Talk about bad timing. Even the Japanese don’t have all the answers.

The biggest problem, as others have pointed out, is that there are currently too many car manufacturers--period. There is an overcapacity of production. That is the problem. But telling Detroit what to build is lunacy IMO. They do know, but the question becomes if they build it, will they come?

Question, Ken - do you not think that at least part of the reason Americans bought trucks and SUV's was because advertising created an artificial demand?

Do you think that if the automakers had built smaller, fuel-efficient cars, and then sold them with the same kind of advertising push, the demand for SUVs and trucks would have grown the way it did?

I'm not excusing the actions of the buyer...but I'm saying buyers "moo'd" according to the advertising cattle prod!

Have you seen "Who killed the electric car", Ken?

I agree on the over production capacity issue in the sense that it is part of a very large problem with the American economy in particular and increasingly the world economy -- artificial demand. Our marketing geniuses have succeeded in convincing us that we need, in this case, a new car every 3 years.

In fact, cars are easily capable of running efficiently for 10 or 20 years, so the artificial demand is what caused there to be such high capacity production. Then, the constant manipulation fo the economy by lowering interest rates compounded that by making it possible for us to spend more money than is prudent.

So now we have a monster that is demanding to be fed -- a production capacity that is unneeded -- and we are being told that the world as we know it will end if that capacity is not fed with new purchases of unnecessary product.

This is where I have a disagreement with not only the auto bailout but the larger financial bailout. These constant efforts to pump more and more money into the system -- money that we don't have except by running the printing presses -- are only keeping us from facing the real issues.

We consume more than we need. This may be fine for the "bottom line" of the companies that produce this stuff, but it is terrible for the environment, it creates unstable economies, and it distorts our culture in ways that have repercussions we haven't begun to discuss yet.

Of course facing this larger issue means a major adjustment to the economy and culture of not only America but the rest of the world as well.

What we really need is a hard nosed discussion of how to grow up and be adults instead of pampered infants at the teet.

I don’t know Julia but I know the manufacturers kept making the big rigs more comfortable and powerful with leather seats and all the options. Cowboy Cadillacs. I think people liked the feeling of the power and superiority they felt driving them, instead of tooling around in a little teeny box. Whether advertising created the demand I just can’t say, but I find it difficult to believe advertising is that powerful. But maybe that’s because I like to think myself immune to the effects of advertising and rely more on product reviews etc.