Auto Bailout Vs. Housing Bailout

[Patranus]

What was the difference between the government bailout out auto companies and not bailing out housing companies?

 

[her209]

You're kidding right? What do you think the bank bailouts were?

 

[Phokus]

Many American jobs depend on the auto companies, they have tons of suppliers. If those auto companies go out of business, a good portion of the mid west would be fucked, not just those who work at the auto companies. By 'housing companies', you mean home builders? Their suppliers would mostly be from China, wouldn't it?

I think Engineer can explain it better than i could, he's affected

 

[Patranus]

You're kidding right? What do you think the bank bailouts were?

Banks lend to people who buy both cars and houses.

I am talking about propping up 1 out of 2 industries that face/are facing similar problems.

There is really only one difference between the two. What is it?

 

[Infohawk]

Both are bad ideas. GM should have just failed. Ford would have survived. We need to let the housing market fully correct.

 

[her209]

Banks lend to people who buy both cars and houses.

I am talking about propping up 1 out of 2 industries that face/are facing similar problems.

There is really only one difference between the two. What is it?

Bwhahahah... yes, the government bailed out the banks because people weren't making payments on their car loans. Bwhahahah...

 

[manimal]

Both are bad ideas. GM should have just failed. Ford would have survived. We need to let the housing market fully correct.

GM is doing fine now and even managed to squeek in a profit. If the goverment had infact let gm die the last remaining large scale manufacturing base in the US would have died. The suppliers that supply ford, gm, crysler, toyota etc in the us auto industry would have collapsed as well. Job losses would have been in the millions....



Wonder what the collateral damage from all that job loss would have cost taxpayers....

 

[IndyColtsFan]

Many American jobs depend on the auto companies, they have tons of suppliers. If those auto companies go out of business, a good portion of the mid west would be fucked, not just those who work at the auto companies.

Yes, and let me repeat what I said in a thread months ago. I REALLY resented the fact that the CEOs of the Big 3 were called up to Capitol Hill, publicly humiliated, and were basically reduced to begging for the money they got. We were talking about millions of jobs when you considered the net of suppliers, other businesses that arose in those plant towns, etc.

What pissed me off about it is that I don't recall the Wall St. execs getting the same treatment when they were bailed out. I'm not saying the Big 3 CEOs didn't deserve it, but it seemed like a huge double standard to me and if anything, the Wall Street execs deserved harsher treatment. I know TARP had to be done but I think it lacked proper controls and accountability.

 

[Patranus]

GM is doing fine now and even managed to squeek in a profit. If the goverment had infact let gm die the last remaining large scale manufacturing base in the US would have died. The suppliers that supply ford, gm, crysler, toyota etc in the us auto industry would have collapsed as well. Job losses would have been in the millions....



Wonder what the collateral damage from all that job loss would have cost taxpayers....

Well, the government let the housing industry die and that put more workers out of work than letting the auto industry work itself out.

So, what do the workers at the auto industry have that the workers in the construction industry didn't?

 

[Fern]

What was the difference between the government bailout out auto companies and not bailing out housing companies?

I'm not sure what you mean by "housing companies"?

But the government has been bailing out the housing industry for some time now.

We've had (bank) bailouts for MBS's to keep money flowing for mortgages.

I think we've also pumped billions into Freddie and Fannie for the same purpose. (I've read $150 billion so far)

We also had a credit for home buying.

Fern

 

[Pulsar]

Both are bad ideas. GM should have just failed. Ford would have survived. We need to let the housing market fully correct.

No. We (Ford) would not have survived. I don't think you understand.

Ford got very lucky. Because of our problems early in the decade (firestone) and our reliance on SUV's, we were in serious trouble. We auctioned everything we owned, including the Ford Blue Oval, to stay out of bankruptcy. We did this before the housing bubble collapsed, so our loans were cheap. We then made some smart decisions, and when GM and Chrysler were collapsing we had the money from the loans to continue brining new product to market.

That aside, we were on the brink. Had Chrysler OR GM gone down (out of business), we would have been in serious danger of going down too: we had a running spreadsheet of suppliers we all share (including Toyota, etc). More than 40% of the suppliers were on the "failing" list should GM have shuttered it's doors.

It always entertains me to see people talking about this stuff when they don't really know the whole truth. The bank loans were made to keep housing loans floating. As someone else said. That WAS the housing bailout. However, the government fucked that up like they always do.

Had they given that bailout directly to the people - it would have flowed back into their debt payments and right back into the banks. Instead they gave it to the banks, who in 8 out of 10 cases did NOT loan the money out and simply used it as collateral to improve their debt statements and shore up against the chance of defaulting.

(As an aside - the reason GM and Chrysler are 'recovering' so quickly is because the bailout and bankruptcy erased their debts. Ford is being just like responsible home owners - they're making all their debt payments and watching the assholes who are taking all the government bailout plans run around with little or no debt).

 

[Pulsar]

PS - what patranous wants someone to talk about is the auto unions vs. non-union labor in the housing market.

Of course, his comments regarding which would have cost more jobs are ludicrous. I look forward to some sort of evidence backing it up.

 

[charrison]

GM is doing fine now and even managed to squeek in a profit. If the goverment had infact let gm die the last remaining large scale manufacturing base in the US would have died. The suppliers that supply ford, gm, crysler, toyota etc in the us auto industry would have collapsed as well. Job losses would have been in the millions....



Wonder what the collateral damage from all that job loss would have cost taxpayers....

That is nonsense, the other carmakers would have picked up the useful chunks from liquidation.

 

[JSt0rm]

PS - what patranous wants someone to talk about is the auto unions vs. non-union labor in the housing market.

Of course, his comments regarding which would have cost more jobs are ludicrous. I look forward to some sort of evidence backing it up.

you wont get any. Its always like this with the neocons they rabble on and on and when someone comes in with real information they stfu and move on.

 

[JSt0rm]

That is nonsense, the other carmakers would have picked up the useful chunks from liquidation.

so much nonsense that the guy above you who works in that industry broke it down exactly that way?

 

[Patranus]

No. We (Ford) would not have survived. I don't think you understand.

Ford got very lucky. Because of our problems early in the decade (firestone) and our reliance on SUV's, we were in serious trouble. We auctioned everything we owned, including the Ford Blue Oval, to stay out of bankruptcy. We did this before the housing bubble collapsed, so our loans were cheap. We then made some smart decisions, and when GM and Chrysler were collapsing we had the money from the loans to continue brining new product to market.

That aside, we were on the brink. Had Chrysler OR GM gone down (out of business), we would have been in serious danger of going down too: we had a running spreadsheet of suppliers we all share (including Toyota, etc). More than 40% of the suppliers were on the "failing" list should GM have shuttered it's doors.

It always entertains me to see people talking about this stuff when they don't really know the whole truth. The bank loans were made to keep housing loans floating. As someone else said. That WAS the housing bailout. However, the government fucked that up like they always do.

Had they given that bailout directly to the people - it would have flowed back into their debt payments and right back into the banks. Instead they gave it to the banks, who in 8 out of 10 cases did NOT loan the money out and simply used it as collateral to improve their debt statements and shore up against the chance of defaulting.

(As an aside - the reason GM and Chrysler are 'recovering' so quickly is because the bailout and bankruptcy erased their debts. Ford is being just like responsible home owners - they're making all their debt payments and watching the assholes who are taking all the government bailout plans run around with little or no debt).

The exact thing they were worried about in the car industry actually happened in the construction industry.

2 million direct construction jobs were lost and guess what, many parts suppliers went under.

The flaw that many make is that they don't consider construction "manufacturing" which is exactly what it is, but now you have government choosing to save one manufacturing component over another.

 

[manimal]

That is nonsense, the other carmakers would have picked up the useful chunks from liquidation.

Some small pieces may have survived but companies like delco and the other suppliers would have been decimated. You are talking about hundreds of thousands of jobs outside of the automakers..

In regards to Patranus's comments I do agree that construction should have recieved direct capital injection in the form of large scale building projects. The problem with this idea is that the shovel ready projects were few and far inbetween.


The benefit of large scale building projects like in the FDR era would have been tangible results the common people could see. As it is now the stimulus and the financial rescue are too hard for most people to understand.

Where I differ with Patranus is that just because we didnt save construction the rest of the world be damned...

 

[Pulsar]

That is nonsense, the other carmakers would have picked up the useful chunks from liquidation.

You just don't get it, do you. I'm not saying Ford was close. I'm saying they were ON THE BRINK. There wouldn't have been any picking up the pieces.

How can I put this any more clearly? What aren't you understanding? Do you think a company's stock price dumps to under $2 a share because they have cash sitting around waiting to snap up other companies?

 

[manimal]

You just don't get it, do you. I'm not saying Ford was close. I'm saying they were ON THE BRINK. There wouldn't have been any picking up the pieces.

How can I put this any more clearly? What aren't you understanding? Do you think a company's stock price dumps to under $2 a share because they have cash sitting around waiting to snap up other companies?

The ideologues cant admit anything the Obama administration did was beneficial to the country...

 

[Slew Foot]

so much nonsense that the guy above you who works in that industry broke it down exactly that way?

People in the industry dont know what they're talking about. At least, thats what all the liberals tell me when I talk about health care.

 

[JSt0rm]

People in the industry dont know what they're talking about. At least, thats what all the liberals tell me when I talk about health care.

are you butt hurt about that?

Lets hold hands and walk on the beach and talk about it.

 

[charrison]

You just don't get it, do you. I'm not saying Ford was close. I'm saying they were ON THE BRINK. There wouldn't have been any picking up the pieces.

How can I put this any more clearly? What aren't you understanding? Do you think a company's stock price dumps to under $2 a share because they have cash sitting around waiting to snap up other companies?

How can I put it any more clearly, that just because gm/Chrysler would disappear, that does not mean demand for cars would disappear with it. Someone would have purchased the usefull chunks and continued to make cars.

Yes dumping $50B into the automakers saved them. We are going to be lucky to get 1/2 of that back. Maybe we will get all back over a very long period of time.

There is no longer any more hazard in the auto industry, they know govt will be there next time.

 

[charrison]

The ideologues cant admit anything the Obama administration did was beneficial to the country...

Yes he saved the auto industry at a cost of $50B. I am not sure that was beneficial to the general population.

 

[Phokus]

How can I put it any more clearly, that just because gm/Chrysler would disappear, that does not mean demand for cars would disappear with it. Someone would have purchased the usefull chunks and continued to make cars.

Yes dumping $50B into the automakers saved them. We are going to be lucky to get 1/2 of that back. Maybe we will get all back over a very long period of time.

There is no longer any more hazard in the auto industry, they know govt will be there next time.

You do realize that Japan used to pump money into their auto industry for a loooooong until they stopped sucking, right? If not for government protections on their manufacturing base, Japan would be a 3rd rate country trading in raw materials like silk instead of being a 1st world elite country.

 

[Darwin333]

Banks lend to people who buy both cars and houses.

I am talking about propping up 1 out of 2 industries that face/are facing similar problems.

There is really only one difference between the two. What is it?

You can't be serious.

The home buying credit? Or how about the FRB purchasing all of the banks fucked up housing paper at full face value? Or how about the little fact that Fannie has backstopped 90% of the home loans so far this year? Legalizing accounting fraud so the banks don't have to realize losses on the fucked up paper they still hold (probably just to buy them enough time to sell it all to us)? Hell, they aren't even throwing banksters in jail when the FDIC takes over and ooops, our assets (mostly home loans, and 2nds that are worthless because the first is underwater) are worth 35% less than we said they were. If I make a 35% "accounting error" in my business I would be facing charges and would likely be looking at time in FPMITAP.

Have you even seen the still absurdly low requirements to get a .gov guaranteed home loan? With the credit you could actually purchase a house with a .gov guaranteed loan and pay virtually nothing down. How about the .gov doing their damnedest to push down interest rates on mortgages, this allows you to "afford" more house since we buy on payment not price (if you can afford $1K for mortgage at 4.5% you can afford a $200K house, at 7.5% you can afford a $150K house)?

The list goes on and on. They have used damn near every bullet in the gun to try and prop up housing prices. Personally I think its more to help the banks and not necessarily to help YOU but thats another topic.

The .gov has been intentionally keeping housing prices artificially high and that is a fairly well known fact. Housing prices haven't fallen anywhere near where the need/should be. Wake me up when the average house is 3Xs the median families income.