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

Yes I have. And isn’t it interesting that now Chevrolet is attempting to build the Volt, an all electric vehicle. The biggest problem so far is workable battery technology.

And this is off topic but I’ll write it anyway. Every time I see a photo of Michael Moore my 1950’s mothering instinct bubbles up. I want to rip that silly baseball cap off his head, hand him a razor, tell him to loose 50+ pounds, eat better, and get more exercise. He can loose the rumpled clothes too.

There—whew—I’ve gotten that off my chest.

I like electric cars... in concept. One factor that is often overlooked is that batteries do not last indefinitely. If a battery pack lasts 100k miles, then replacement becomes a significant added expense in the total cost equation. This argues for electric cars with smaller battery packs that are designed for short trips... as opposed to a gas car substitute that can cruise for 200 plus miles

I have posted about the oversupply of cars in the US and only Phil has addressed that issue.

I think that issue is at the root of this problem. There are over 250 million registered cars in 2006 in the US and a few more since then. There are millions of brand new cars on dealership lots that are not registered plus a lot of used cars ready to be sold that are not registered. There are way too many damn cars in the US.

Even if the Big 3 are bailed out, production at all 3 companies has to be cut by 40-50% (and that's a conservative estimate). Thus plants still have to be closed, workers still have to be laid off.

So why not let Chrysler and GM fail? Chrysler is bankrupt already... only way it can survive is if GM buys them. GM's failed planning over the past 20 years has brought them where they are today.

With those 2 companies out of the way, demand for Ford cars will increase as well as demand for other vehicles. Toyota and Honda and VW will produce more cars in US because there will be more demand.

I work for a big financial company and I too read the news and know that my job is not secure. While Wells Fargo and Citi have cut thousands of jobs I know it's only a matter of time before Bank of America (my employer) will cut jobs. It's the reality of things and we have to face it.

Well Kap, I also agree and posted same a few hours ago. I guess you missed it. No big as that conclusion is blindly obvious IMO. And as Phil says we have built an economic world based on over consumption and purchases of basically unneeded crap. This somehow was supposed to make us happier. I don’t think so.

But now we are probably left with the very real prospect of deflation when it finally dawns on people they really don’t need 10,000 plastic and electronic items in their homes. Manufacturers will be scrambling to unload their parking lots and warehouses stacked to the ceiling with widgets. Unfortunately this will also lead to higher unemployment. By the way, you should see the parking lots full of motor homes in our neck as we have several major builders just north of here in Junction City.

I guess we can pin our hopes on the developing world following our lead of over consumption. There is lots of stuff for them to buy. What a prospect to look forward to.

I brought it up in reference to our discussion about "marketing". Remember the part of the film about ow GM tried to scare people away from buying it?

Now think about the way GM has been marketing its gas guzzlers versus the way they market their "economy" cars.

I would hope (I know it is a completely unfounded hope) that the world, and most especially the US, could come up a better solution to the over capacity problem than foisting consumerism on the developing world. We really need to rethink what it is that we can do with the production capacity and unemployed people that is consistent with goals that foster peace, survivability and sustainability.

I am assuming that this is what Steve was pointing to a few pages back. I agree with the goal, I just do not think it is easily accomplished. And it won't happen at all if we don't face the first issue, that we have over capacity not under consumption.

That’s a hopeful vision Phil but I also wonder about the following: You and I are older (and you will always be older ;)). We have already bought almost all the crap we will ever need and have come to the conclusion that it’s not all that great anyway. Maybe some items…but few. But younger people in the US still want their stuff and will buy it if they can—to say nothing of the developing world.

The developing world has just gotten a taste of consumerism and they by all accounts like it, and want more. There is a temporary (I think) glitch in the system but eventually I believe credit will begin flowing again and the rest of the world, and the US, will be able to resume their shopping spree. Eventually a global consumerism saturation limit will be reached, but not before resources become too scarce and expensive (for good this time), or the majority of people somehow have an anti crap revelation. I’m betting on the former. Stuff is addictive.

Yes Ken, I think you may be correct (youngun). Fortunately, I opted out of the consumerist culture more than many early in life (I am still a gadget freak, witness having gone through 5 bluetooth headsets in the past 2 years trying to find the "right one")

I think, however, that at least part of the attractiveness is found in the push by advertising and cultural imperatives ("keeping up with the Gutierrez's" etc)

The problem with Detroit is that instead of spending the money to improve internal controls, be innovative, and produce a better product that people want, they'll spend the money on advertising claiming that they've accomplished those ends. Ford, GM, and Dodge, however, do make good reliable trucks. Realize that some people have to carry a one ton cargo or tow a trailer on a regular basis and need the horse power and appropriate drive and suspension systems. I believe that the USA needs a manufacturing base for national security purposes. We can't afford to lose those skills. We also need engineers and that profession will go where there's manufacturing and need for their expertise.