Rolling US Economy Into The Shitbin Thread

too BIG to FAIL

that euphemism also needs to go

and yet too small for you ever to retire

http://graphics8.nytimes.com/images/2008/11/18/business/18paulson2_337.jpg

congressional democrats are walking into the ruin of their party's first majority presidency in forever with this shit. I'm throwing my hands up over here.

Dandy you're saying "let the Big Three fail if they're gonna fail" - unless I've misread you.

I'm saying that there's no historical or solid empirical evidence to suggest they can succeed in a declining industry without a radical makeover, a makeover so radical that it's never been successful anywhere at anytime, certainly not a scale of 4% of our GDP. Google "industry life cycle" or "product life cycle"...it's a commonly held theory. It's not cutting out the deadwood, which happens much earlier in the industry life cycle. It's burning down the whole forest. So yes, I see this as perfectly normal. (See also, the music business et al)

Is it alarming that a million people at minimum are going to suffer? Hell yes. But this smells an awful lot like a short term problem with virtually no chance of "saving" the industry. Or, in more cynical circles, a vote buying scheme.

Also, Toyota is exactly what it says it is, a motor company, while Ford and GM (and I guess chrysler to some extent but I don't know now) have long been described as loan servicers with a steel fabrication subsidiary, which we haven't gotten into much.

― TOMBOT, Tuesday, November 18, 2008 11:18 AM (43 minutes ago) Bookmark Suggest Ban Permalink

??

I saw a car on the road yesterday that looked like a cross between a pickup truck and an SUV - what is it called? The sight of that monstrosity has me leaning toward "fuck em".

Why don't we demand 50 MPG cars within a couple years? No doubt they already have this technology buried away and can dig it out at will. Hell, let's just say 50 MPG cars NOW.

Either your next car gets 50mpg, or fuck you, pay me.

It seems clear that the Big Three need to shrink significantly. That's going to be painful, either now or later. There might be a case to be made for trying to postpone the inevitable until the government can line up some significant new stimulus spending (investments in infrastructure, public transportation, rail system, bridges, etc., anyone?) which can hopefully pick up some of the employment slack.

meme on the radio, attributed to "many say", is that plain ol' Chapter 11 bankruptcy would KILL an automaker since a consumer would be ever so leery to buy from a bankrupt company. now that is some desperate pr. we fly on bankrupt airlines all the time, like anyone gives a fuck.

man i was about to pick up one of those sexy and economical Ford Foci, but now, i dunno, there's something so shaky about a detroit company these days!!1! i hear they're bankrupt!!

investments in infrastructure, public transportation, rail system, bridges, etc., anyone?

I am present, please mark me so in the attendance book. It's almost encouraging that we need jobs so badly at the same time as we need such massive infrastructure overhaul.

we "manufactured" houses for so long, lets at least run some roads and bridges out to the bullshit. broadband while we're at it, why not.

Also, Toyota is exactly what it says it is, a motor company, while Ford and GM (and I guess chrysler to some extent but I don't know now) have long been described as loan servicers with a steel fabrication subsidiary, which we haven't gotten into much.

― TOMBOT, Tuesday, November 18, 2008 11:18 AM (43 minutes ago) Bookmark Suggest Ban Permalink

??

― hyperspace situation (gbx), Tuesday, November 18, 2008 12:03 PM (8 minutes ago) Bookmark Suggest Ban Permalink

they don't sell you the car, they sell you the payment plan for the car... or the house... or college (?). how deep into subprime was GMAC? more than "none at all" i'm assuming.

a consumer would be ever so leery to buy from a bankrupt company. now that is some desperate pr. we fly on bankrupt airlines all the time, like anyone gives a fuck.

An airplane ticket costs a couple-few hundred bucks and requires no servicing. You don't expect to own an airplane ticket for several years. A car isn't just something you buy a the supermarket. I'd buy juice from a company that may cease to exist any day now, but not a car.

there might be a case to be made for trying to postpone the inevitable until the government can line up some significant new stimulus spending

Light money on fire and then go look for a bucket of water?

haha a co-worker of mine just bought a new car and there was some bizarre hitch where the loan agreement didn't make it from dealer to servicer to bank or something. effectively he got a car and the mfgr got their money but nobody noticed that he needed to start paying. free car! after an afternoon of soul searching (and me being a wet blanket) he had to log some serious phone time with a clueless broken network to make sure he didn't get thrown in jail in 3-5 years when someone finally noticed.

anyway, point is. i don't see why bankruptcy matters at all. your obligations will be attended to with the usual market-disciplined rigor. or not.

Your obligation to PAY will be attended to, sure.

well, what else is there?? this isn't a metaphysical problem, your car will still exist. try the ignition, yup, still runs.

But this is a part of what Tom is talking about -- GM (for example) doesn't just make cars, it's a giant network of dealers and service shops that you feel (rightly or not) you have a certain track record with, or at least that you can build one. And from a pure consumer psychobabble POV, cars are emotional purchases.

Oh I forgot to say banks, that's part of that network, too.

Light money on fire and then go look for a bucket of water?

Yes, you're right, Don, building much needed infrastructure is exactly the same as lighting money on fire. Strange I hadn't noticed that until you pointed it out.

you misread him completely

Did I? I can't parse it any other way - though I'll admit it doesn't make much sense to me the way I read it originally.

I was about to say, that's not what Don meant at all.

OK, so "postponing the inevitable" is the lighting money on fire? I don't see that that has to be the case. The postponing could take the form of loans that would rank senior to any other claims in the event of an eventual restructuring.

I really don't see the point in that either. Just build new bridges and roads and levees already, stop wasting time worrying about one state out of fucking fifty.

And from a pure consumer psychobabble POV, cars are emotional purchases.

― fiscal liberal (kenan), Tuesday, November 18, 2008 12:26 PM (6 minutes ago) Bookmark

oh barf

Meanwhile today's David Brooks column is LOL-worthy:

They will suffer lifestyle reversals. Over the past decade, millions of Americans have had unprecedented access to affordable luxuries, thanks to brands like Coach, Whole Foods, Tiffany and Starbucks. These indulgences were signs of upward mobility. But these affordable luxuries will no longer be so affordable. Suddenly, the door to the land of the upscale will slam shut for millions of Americans.

http://www.nytimes.com/2008/11/18/opinion/18brooks.html?_r=1&ref=opinion

Won't someone think of the bobos?!

i mean, you're right, they ARE emotional purchases for a lot of ppl, but that to me is part of the problem.

Yeah it can't be that frickin' hard to give government money to companies and write it somewhere in the contract that they can't pay dividends or executive bonuses with it. Let's do that next time, by all means.

oh barf

Yeah, I know. But the heavily-sponsored American car culture has done a bang-up job of connecting people to their cars in ways they are not connected to other products.

xposts

Loans are not free. They are money, they affect our monetary system, etc. Tombot OTM. There's no sense in having one bailout program there to set up another. That was my original point about lighting money on fire.

xpst

I'm not sure about the wisdom of allowing such a big shock to the system at this moment, when the economy is already reeling. I think it might be worth the side-effects to try and spread out the timing a bit.

That's for Bush to try to fuck up and Obama to try to fix.

It's okay if a few million people lose their jobs and their homes, it's flyover country anyway.

let's wait until the economy has been stagnant for five more years, then it's okay to let horrendous leadership out to pasture. Right now though we need people who haven't a fucking clue how to run a goddamn casino in charge of a big chunk of our GDP.

http://www.nytimes.com/2008/11/18/business/economy/18sorkin.html?_r=1

G.M is using money so quickly that a $10 billion infusion made today would disappear by February. That is why taxpayers shouldn’t fork over a cent, at least until shareholders are wiped out, management is tossed out and the industry is completely reorganized.

this is an interesting bailout alternative.

ive been thinking about this a lot and i still think, at the very least for market stabilization reasons that a "bailout" of some kind is necessary.

Maybe running a dozen car ads every commercial break on prime time network television every day for the last 20+ years is not a smart way to spend your money.

oh, and then there's the bailout bill itself. Parsed nicely here.
http://dealbook.blogs.nytimes.com/2008/11/18/parsing-the-auto-bailout-bill/

^^^^^^^xp

GM SAVED BY ZERO

Maybe running a dozen car ads every commercial break on prime time network television every day for the last 20+ years is not a smart way to spend your money.

Ha, I have totally been thinking this myself lately. "They're still paying for ad time? With what, blood?"

well contracts take some time to unravel. there was an article in the times about GM cutting back on advertising and sponsorship

that bill really isnt going to pass though, don. and there's still a fair amount of disagreement about where the money is going to come from no? and if it comes from TARP that necessitates new legislation.

A good article by Joseph Stiglitz on lessons from the current crisis and how to move forward:

http://www.motherjones.com/news/feature/2008/11/the-seven-deadly-deficits.html

Maybe running a dozen car ads every commercial break on prime time network television every day for the last 20+ years is not a smart way to spend your money.

And yet it seems to work for Toyota... or at least it did until they got into the fullsize pickup market...

I've got more perspective on this than I can really share in a general economy-into-the-shitbin thread, but suffice to say that yes painful rightsizing is the only longterm solution for GM and Ford. And for once rightsizing is really the right term: the enterprises are very simply way too large for their current and future market share to support.

That potentially leaves a lot of empty factories, which the UAW ain't having. Hence the stalemate of the past 20 years. This nut's going to be very hard to crack, cash isn't going to fix it, and the UAW has shown no sign of willingness to make the concessions that the US industry's long-term health would require (I'm not certain it should - that question is VERY complicated and I just haven't thought it through clearly enough to take a position.)

Chrysler, otoh, was a lost cause before Cerberus stepped. Dudes were actually hiding inventory in parking lots and recognizing it as sales!!! At least burning cash would generate light and heat.

does "job retraining" ring hollow to anyone else? to do hwat, might i ask...

to do hwat, might i ask...

Work at Wal-mart, if they're lucky. xp