PRUDEN: A cream puff for used-car salesmen

NO LOANS – BUT DON’T KILL THE HEARTLAND It depends on HOW a bailout is structured, but one should be attempted. BAILOUTS ARE COMPLEX BEASTS, but Try something outside the box like this to save the U.S. Auto Industry - - - http://pacificgatepost.blogspot.com/2008/11/solution-for-detroit-gm-friends.html Toyota and Honda also depend on the same suppliers who feed GM and FORD. No need to let “Detroit” disappear. There is also much creative talent hidden inside the U.S. Big 3 that has been smothered by mismanagement and the UAW. ...plus, they actual MAKE something, ... right Wall Street?

PRUDEN: A Cream Puff for Used-Car Salesmen 11/14/08 PacificGatePost made several excellent points in his previous comment re this piece. The U.S. badly needs a domestic auto-industry and its associated huge network of suppliers. Unlike Wall Street, the auto industry creates wealth. Why have the Big Three fallen on such hard times? Successful managements grow arrogant and complacent; mature bureaucracies stray far from the bread-and-butter issues; etc. But the key factor behind the incipient demise of the Big Three is the same one that is sending all of our manufacturing overseas and is turning the U.S. into a Third World country: the imnsensate greed of Wall Street, abetted by Congress. The basic purpose of the stock market is to provide needed expansion-capital to manufacturing companies, and a source of long-term profits to wealthy investors; and Wall Street matches the one with the other. In the 1920s, the stockbrokers were consumed by greed, and they invented sleight-of-hand paper instruments to enrich themselves. Thus did the Wall Street tail then wag the manufacturing dog. The inevitable result was the Great Depression. Congress put the leash back on a deflated Wall Street in 1933. By the 1970s, the new crowd of stockbrokers got greedy and sweet-talked an ever-obliging Congress into opening the market to pension funds, requiring quarterly-reports from corporations, etc. Thus they heated up the market until it became a gambling den for high-rolling speculators. The Wall Street tail was again wagging the manufacturing dog. The rule for manufacturing-company CEOs became this: convert every corporate asset you can into dividends. If you will do this, we (the market) will permit you to pay yourself an obscene salary and give yourself a golden parachute, so that when your company inevitably goes belly up, you will walk away a rich man. Ship your manufacturing jobs--and as many staff jobs as possible--overseas; and become just a design-and-marketing shell. If you don't do those things, we will pressure your board to fire you and get someone who will. In the case of the Big Three automakers, it was: build the biggest vehicles providing the maximum unit-profit, no matter the price of gas, to keep the dividends flowing. We see the results of this Wall Street greed all around us. The Bush administration and the Democratic Congress just finished rewarding Wall Street for causing the disaster. Will the Obama administration and the Democratic Congress now rein in Wall Street? If not, it won't matter in the long run whether Congress stiffs the Big Three or hands them trillions of dollars of taxpayer money; the Big Three won't be able to compete with the Japanese.

This wouldn't be a bailout for the big 3. It'd be a bailout for the UAW! That's just all there is to it. The Big 3 pay 30% more in costs, per car, than Toyota, Honda, etc. The plants in Tennessee & Kentucky give thousands of people GREAT jobs. It's also very true that American cars are garbage. My first car was a 88 Acura Legend I bought in 1997 for $5400. It had 146,000 miles on it & ran until 250. My next car was a Civic. I now have an Acura TSX. Honda makes the best cars on the road. Hands down. Performance, fuel milage, & RESALE VALUE (we all know US cars don't hold resale value for squat!) are all reasons Japanese cars are better. Toyota also has the US market(the labor & retail end) figured out. The moral of the story is, tell the union to get bent & make a better product. Then we won't HAVE to talk about bailing you pukes out all the time!

GM cannot fail because the AFL-CIO cannot fail. Obama's bailout is just a payback to organized labor.

"We should call the handout frenzy the Capital Assets Recovery Program. CRAP, for short." Wouldn't that be CARP?

CARP: a bottom feeding fish with the appearance of healthy sustenance, but full of needle-like bones that can choke and ultimately kill the consumer. Sounds like this bailout frenzy to me.

Don't we all wish there was an easy answer (or even a hard answer). This problem has been 50 years in the making. If we let them fail, Toyota and Honda will make more cars in the US to satisfy whatever demand is out there. They'll hire quite a few of the people who lose their jobs at GM & Ford. But, what happens to pensions, health care, outstanding debts? This is a huge problem that requires some form of policy response. Name calling and hand wringing feels good - doesn't help.

I thought Barney's "MO" was to tell me everything is hunkey-dorey w/ the Big 3 before he tells me to start sending him a check. Why aren't they comparing this pirate to Ken Lay....they both are pumpers and dumpers?

collardgreens1 you are mistaken that Wall St. caused the current problems (I assume you mean in the financial markets). As usual the problems were caused by government, in this case, government sponsored entities known as Fannie Mae and Freddie Mac. Those two were the ones along with Democrats in government (Dems even run Fannie and Freddie) that created and started peddling the MBS's that Wall St. bought. The very idea that Washington would think about making "The Big Three" nothing more than the Fannie and Freddie of the auto industry is enough to make one gag. We will know we are in for real trouble (as taxpayers) when a President Obama appoints Jamie Gorelick, Franklin Raines or other Democrat political figures to run the auto companies just like Clinton appointed them to ruin, I mean "run" Fannie and Freddie.

The Big 3 are in trouble but foreign owned auto companies making cars in the U.S are not going down the drain. I guess the rigid work rules and fringe benefits won by the UAW now hurt the Big 3. Historically this was a big win for workers, but now it is time for the UAW to help the Big 3 by changing into a workers Guild. Help the Big 3 out of this economic catastrophe. Become major stock holders in the Big 3 and spread the dividends among your members. I know it is a pipe dream.

collardgreens, where did you learn about economics, in a union meeting perhaps? Let me start off by saying I drive American Made (Chevy's, Fords and one dodge)vehicles and always have and hope to always do so in the future! You really have a narrow view of the world that is affecting your job and life. You didn't mention one time the cost of the hourly workers pay and benefits. It's over $75 per hour. There is where your problem is! It's not wall street, congress, president bush, evil foreign car companies or southern workers. A bailout won't help, obama won't help, barney frank won't help, reid and pelosi won't help. It's $75 per hour times hundreds of thousands of workers! Look, I mean nothing bad, mean or nasty in what I say. I worked for the airlines as an IAMAW represented employee for 15 years. Made a decent living, but as soon as they came with their hand out wanting pay cuts, i knew it was the beginning of the end. I left, started my own company and make a very comfortable living today! I'm just trying to give you a wake up call. If GM, Ford, and chrysler survive, their hourly employees will be making the same as the people they compete with, nissan, toyota, etc. These companies hourly workers make about $40 per hour (this includes benefits). So, get used to the idea of a $35 per hour cut in pay and benefits. Its coming or you won't survive anyway!

Capital Assets Recovery Program. That's CARP. Not Crap.

I'm shocked and disappointed by Mr. Pruden's vitriolic attack on the choices of the Big 3 to build SUVs and other gas guzzlers. It is not the Detroit executives who choose what vehicles to build; it is the American consumers who choose via their buying decisions.

They ARE going to bail out this industry... it is inevitable... however I think it should come with strings and a plan to pay the American taxpayer back. First and foremost, it should require that half of all cars made should be fuel efficient and create nearly no harm to the environment. Second, they should pay interest for the money they take, and if they fail to produce cars that compete with the Japanise, German, and Korean auto makers the penalty interest will double! They can build an SUV that is fuel efficient. It is possible, but they choose not to. That choice should come with consequences, unlike now when the consequence of a bad business model is a payday from the taxpayer. Can anyone say "KACHING!" ?? SUV's are not the enemy folks, the engine is the problem... we have went from horse to the moon in less than 100 years, but we are still using the internal combustive engine? What the heck? Seriously, WHYYYYYY? Its time to move on, to move forward, now we have a chance! Lets take advantage of the moment, seize the day... make, no FORCE them to make cars and trucks that make sense.. since we have to pay for it anyway... why not?

" We should call the handout frenzy the Capital Assets Recovery Program. CRAP, for short. " Chapter 11, Reorganize to compete, then consider LENDING some more capitol. We already commited 25 Billion. We tend reward failure way to much. Case in point, Fannie & Freddie, who were allowed to collapse the world wide economy. People ! When are we going to wake up?