Auto Makers - To Bailout or Not to Bailout
Bailouts, Bailouts, Bailouts everywhere for everyone, Christmas is coming early. Every one needs a bailout of course - we are moving into a global recession. Businesses are losing money, demand is down, jobs are being lost, etc. etc. Auto makers, home builders, banks, retailers, PC makers, technology companies, are all having problems due to the global recession - caused by the housing bubble, Fannie Mae, Freddie Mac, which became a credit crunch, that then rippled across the globe.
Should we give them all money?
I think not. But we may need to do something for those companies that will cost us significantly more if they fail. But will they really fail? Can't they file bankruptcy, and restructure their costs, like the Airlines and all other businesses with financial problems have used for years? Why not, isn't that why Chapter 11 is available?
I think if any industry MAY qualify, it would likey be the auto industry - their losses ripple thru many businesses, suppliers. Many businesses, cities, people will all be negatively be impacted, much more so than other industries.
The reason the auto makers are havng their financial troubles is the significant overhead they carry due to union contracts. GM, Ford and Diamler Chrylser are all paying all retirees full benefits. Something the rest of us lost long ago. They continue to pay tens of thousands of laid off employees their full salaries, while the employees sit in malls and conference rooms all day, per contract. Other industries reduced costs to compete globally by reducing retiree benefits - for those laid off, they have to find other work, but not Auto Workers - they continue to get paid for doing nothing.
Utilizing bankruptcy, auto makers will lower costs, improve financial performance, and allow them to compete better with global players. However, the downside is that the ex-employees are really the ones that lose. They will lose the great healtcare plans they have, lose the pentions they have, those in malls and conference rooms will lose their income but can go out and get another job, any kind.
What are your thoughts and reasoning?
Should we give them all money?
I think not. But we may need to do something for those companies that will cost us significantly more if they fail. But will they really fail? Can't they file bankruptcy, and restructure their costs, like the Airlines and all other businesses with financial problems have used for years? Why not, isn't that why Chapter 11 is available?
I think if any industry MAY qualify, it would likey be the auto industry - their losses ripple thru many businesses, suppliers. Many businesses, cities, people will all be negatively be impacted, much more so than other industries.
The reason the auto makers are havng their financial troubles is the significant overhead they carry due to union contracts. GM, Ford and Diamler Chrylser are all paying all retirees full benefits. Something the rest of us lost long ago. They continue to pay tens of thousands of laid off employees their full salaries, while the employees sit in malls and conference rooms all day, per contract. Other industries reduced costs to compete globally by reducing retiree benefits - for those laid off, they have to find other work, but not Auto Workers - they continue to get paid for doing nothing.
Utilizing bankruptcy, auto makers will lower costs, improve financial performance, and allow them to compete better with global players. However, the downside is that the ex-employees are really the ones that lose. They will lose the great healtcare plans they have, lose the pentions they have, those in malls and conference rooms will lose their income but can go out and get another job, any kind.
What are your thoughts and reasoning?
posted by Benedict J. (BJ) DeFelice | 12:26 PM
1 Comments:
No I do not think we aught to give them a dime, we have given them way to much, I do not make $75 hr and why should they, not to mention I am paying for it out of my tax dollars. Do the math the best bailout for our economy would close the big three down until their wages come down and split up that money to every US Citizen 21 and older which would give them appx. 1.5 million which in return would go back into our economy and would definatly boost our economy. Most people would not get a check for 1.5 and let it sit in their bank they would be out spending it and putting it back into our economy instead of the big three's pockets.
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