Auto bailout makes no sense

[disneysteve]

Not that I'm surprised, considering the source, but the terms of the bailout as I understand them make no sense.

The government is going to lend money to the automakers. They will then have until March to provide evidence that they have a viable business plan. If the government determines that the plan is not viable, the loans will have to be repaid at that point.

Sounds great, but if the automakers can't turn around their situation between now and March, where exactly are they going to get the money to repay the loans? They are running out of money now. They will burn through whatever the government lends them over the next 3 months most likely, leaving them in the same situation they are in right now.

The government may be calling this a loan, but I suspect it won't ever be repaid.

[maat55]

Deleted

[minnie1928]

The government may be calling this a loan, but I suspect it won't ever be repaid.

My husband and I were saying the exact same thing last night...

[maat55]

I just created a thread of the same without knowing you had this one. I labelled it a joke because we all know there will be no fix or payback, it was nothing more than a Bush short-term subsidy at our expense.

[kork13]

There are occasionally times that I consider the possibility of sometime in the far future trying my hand in politics, like going for congress or something..... and then times like these make me wonder what narcotic/hallucinagen I was on when I had those thoughts. Stuff like this makes me extremely cynical of our entire political scheme....

[jIM_Ohio]

But if they go bankrupt, Bush will NOT be the President when it happens.

[maat55]

But if they go bankrupt, Bush will NOT be the President when it happens.

IMO, it doesn't matter when they go BK, I won't blame Bush or Obama. They have a bad business model and the economy is a product of poor policies from Clinton through Bush.

[GREENBACK]

Not that I'm surprised, considering the source, but the terms of the bailout as I understand them make no sense.


The government may be calling this a loan, but I suspect it won't ever be repaid.

Look at our national debt. That's considered a loan as well. That's a long, long ways from getting paid back. It's like the goverment thinks all you have to do is keep throwing money at thee problem.

[sweeps]

I agree in principle, but it's not just about the loan. There are concessions being made, including from the union:

UAW sacrifices look to some like surrender
Members' wages and benefits will be slashed under federal loan deal

[Inkstain82]

Look at our national debt. That's considered a loan as well. That's a long, long ways from getting paid back. It's like the goverment thinks all you have to do is keep throwing money at thee problem.

There are times when that's all the government should do, and this is one of those times.

It's just incredibly tricky to know when to take the foot off the gas pedal. They need to do it the *moment* the economy begins to creep forward, not when the media and public finally notices it is.

[Goldy1]

"The wage concessions could force average wages down to $24 an hour from $28 an hour, analysts said. "
Oh Boo hoo big whooping deal. My dh is an engineer who got laid from an autosupplier making less than that to do highly skilled work that required education and we paid a lot for our benefits and he never got "laid off"where he got paid to not work. OH and no jobs bank or pension etc. for him.
I don't mean to undermine the uaw (my dad is member and put me thru college)but guys here would wait in line for days to take this jobs for $14 an hour.

[sweeps]

"The wage concessions could force average wages down to $24 an hour from $28 an hour, analysts said. "
Oh Boo hoo big whooping deal.

That's almost a 15% pay cut, and the article says benefits would be cut too. I would consider that pretty significant.

[maat55]

That's almost a 15% pay cut, and the article says benefits would be cut too. I would consider that pretty significant.

Significant is useless if the auto makers are not viable. Lowering the compensation of an overpaid worker to a less overpaid worker, you still have an overpaid worker and an employer going bankrupt.

Unionization to some degree is nothing more than mob rule, I don't here any of them admitting to being overpaid in their industry.

The reason this country is not a true democracy is because people would only vote for gimmies and no givvies. IMO.

[Helena_Handbasket]

That's almost a 15% pay cut, and the article says benefits would be cut too. I would consider that pretty significant.

I agree - it is a big step. And it probably will not be the last of this type of cut. As the company's operating costs are reassessed after the first round of cuts, they will likely see the need to continue cutbacks to remain viable.

[sweeps]

maat, you take a greater-than-15% pay cut and we'll see how productive you are. These guys are unquestionably overpaid, but you have to be reasonable. The cut in labor's pay and benefits is just one piece of what should be an overall reduction in costs by the automakers.