Auto Bailout Vs. Housing Bailout

[Jhhnn]

Meh. There's no shortage of housing- it's terrifically over built, and has longterm permanence. That's why prices will continue to decline and construction suffer. There's no point in building a whole lot more in the near future.

That's not true wrt autos, which are basically consumables. Had GM and Chrysler been allowed to collapse, cease production, prices from other makers would rise drastically in the short term, and their ability to produce would have been diminished because they too depend on the same suppliers who would have gone broke right behind GM and Chrysler. That scenario covers auto parts, as well.

The bank bailout also enabled auto loans and all other forms of credit as well.

 

[charrison]

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.

There is a difference between subsidizing an industry to start it and tossing huge amounts of cash to keep a failing one from crashing into the ground.

 

[Slew Foot]

are you butt hurt about that?

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

No its just that liberals are hypocritical doofuses too stupid to listen to anyone besides politicians spewing their talking points.

 

[RedChief]

The problem with the GM bailout is not necessarily the government supporting GM. Its that the ran GM through bankruptcy very fast and then screwed over the secured bondholders in favor of the unions. Secured bondholders are supposed to be the first to be paid in a BK, but due to the government running things, the were paid pennies on the dollar ywt the unions lost very little (even though they were unsecured).

 

[piasabird]

Who gives a damn. My wife was layed off by Bank of America after 18 years of hard honest work. None of them deserved a bailout. If you cant pay for a house you can walk away from it and live anywhere. Also what would you call the lousy $8,000 credit for a first time home buyer? Whish I had a deal like that when I purchsed my house. The fact is, if you cant come up with your own money, you can not afford to purchase a house.

As far as the auto bailout the Government only actually gave a little over a third of that money to actual people. The rest of the money went to government cronies and red tape. This is how all of the plans hatched by the democrats and the government work. They waste perfectly good money.

 

[her209]

As far as the auto bailout the Government only actually gave a little over a third of that money to actual people. The rest of the money went to government cronies and red tape. This is how all of the plans hatched by the democrats and the government work. They waste perfectly good money.

Bwhahahahahaha...

You mean the auto bailout that failed to pass Congress and therefore Bush decided to use TARP funds instead?
http://www.politico.com/news/stories/1208/16753.html

 

[Jhhnn]

Bwhahahahahaha...

You mean the auto bailout that failed to pass Congress and therefore Bush decided to use TARP funds instead?
http://www.politico.com/news/stories/1208/16753.html

Don't even try to confuse 'em with facts... pearls before swine and all that.

Koch bros anti gubmint agitprop is slowly turning their minds to mush...

 

[nobodyknows]

I used to support the bailouts, but after seeing what happened, screw that shit. No more bailouts, if you don't have your house in order by now, tough tittie.

 

[charrison]

Meh. There's no shortage of housing- it's terrifically over built, and has longterm permanence. That's why prices will continue to decline and construction suffer. There's no point in building a whole lot more in the near future.

That's not true wrt autos, which are basically consumables. Had GM and Chrysler been allowed to collapse, cease production, prices from other makers would rise drastically in the short term, and their ability to produce would have been diminished because they too depend on the same suppliers who would have gone broke right behind GM and Chrysler. That scenario covers auto parts, as well.

The bank bailout also enabled auto loans and all other forms of credit as well.

That is not exactly true. While houses do last longer than cars, they both have replacement cycles. Autos in the us are typically off our roads in than 20 years, but that does get extended during recessions.

However had gm been liquidated, some investor would have purchased the profitable portions and kept them running. It does not a rocket scientist to realize a GM truck is a top seller in this country. Liquidation does not mean capacity to make cars disappears.

 

[Jhhnn]

That is not exactly true. While houses do last longer than cars, they both have replacement cycles. Autos in the us are typically off our roads in than 20 years, but that does get extended during recessions.

However had gm been liquidated, some investor would have purchased the profitable portions and kept them running. It does not a rocket scientist to realize a GM truck is a top seller in this country. Liquidation does not mean capacity to make cars disappears.

Heh. The house I live in was built in 1887, still solid, so the replacement cycle isn't a factor wrt the current economic situation. Recently built housing may not last that long, but it's still good for a very long time.

Of course liquidation doesn't mean that capacity disappears, but it's hard to imagine a seamless transition of auto production. Months or years can easily pass by before new ownership gets things going again. In the meanwhile, the cascading effect on the other makers would likely create just the scenario I described.

 

[charrison]

Heh. The house I live in was built in 1887, still solid, so the replacement cycle isn't a factor wrt the current economic situation. Recently built housing may not last that long, but it's still good for a very long time.

yes but the average is much less than that. Something like 80 years before someone scrapes off a house that is too broke to fix and starts over.

Of course liquidation doesn't mean that capacity disappears, but it's hard to imagine a seamless transition of auto production. Months or years can easily pass by before new ownership gets things going again. In the meanwhile, the cascading effect on the other makers would likely create just the scenario I described.

The more valuable the resource, the more seamless the transfer would be. GM sell 500k trucks a year, I doubt there would be any downtime for those production lines.

 

[Jhhnn]

yes but the average is much less than that. Something like 80 years before someone scrapes off a house that is too broke to fix and starts over.

The more valuable the resource, the more seamless the transfer would be. GM sell 500k trucks a year, I doubt there would be any downtime for those production lines.

The first point is irrelevant and you know it.

The second is wishful thinking. Conventional bankruptcies leave creditors holding the (empty) bag, meaning that a lot of GM's suppliers would go under at the same time. Can't run a production line w/o parts, no matter how badly we might wish it were otherwise.

 

[charrison]

The first point is irrelevant and you know it.

Not really.

The second is wishful thinking. Conventional bankruptcies leave creditors holding the (empty) bag, meaning that a lot of GM's suppliers would go under at the same time. Can't run a production line w/o parts, no matter how badly we might wish it were otherwise.

But things that are productive and profitable, stay running. You know that.

 

[Jhhnn]

But things that are productive and profitable, stay running. You know that.

Only in a rightwing dream world. Productive and profitable doesn't mean that such businesses have the capital to weather a storm, particularly with the credit situation being what it is. Remember all the threads about going concerns shutting down because their line of credit evaporated?

Takeovers of distressed companies usually involve a lot of pain for the communities affected, as well. Capitalists rarely fail to press their advantage, meaning that new ownership often means new wages, too... much lower wages. Which isn't because the company wasn't profitable before, but, well, because.

 

[JSt0rm]

you cant argue against their ideology. They cling to it like religion and guns. They would let the country become a 3rd world firepit as long as there ideology stood.

 

[Pulsar]

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.

One again, you fail completely at understanding.

Who said anything about demand for cars?

SUPPLIERS would have disappeared when GM and Chrysler did. SUPPLIERS. Liquidated, shuttered, gone bub-bye. The billions of dollars Ford (for instance) has invested in tooling at those suppliers would disappear at the same time.

You just don't get it, do you? The supplier of Ford components are the as GM, Chrysler, Toyota, etc. If a supplier that supplies ECM unit for a car just up and shutters, you don't just walk down to the next ECM supplier and pop one it.

How can you even argue this point? Have you done the research? Every credible source out there, including Foreign auto execs, were worried. Toyota made comments to congress saying that if GM and Chrysler dumped, they were in serious trouble. That's right - a COMPETITOR to GM and Chrysler was arguing to save them, because of the supply base that supplies everyone.

Come back once you understand what you're talking about.

 

[Pulsar]

Not really.
But things that are productive and profitable, stay running. You know that.

No, no they don't.

Ok, I have to ask. How old are you?

You have distince lack of knowledge how any of this works. Do you realize even huge companies have outstanding loans?

Do you understand that when loans dry up, MANY small companies, even profitable ones, do not have the operating cash on had to make their paychecks?

You need a class in accounting.

 

[charrison]

One again, you fail completely at understanding.

Who said anything about demand for cars?

SUPPLIERS would have disappeared when GM and Chrysler did. SUPPLIERS. Liquidated, shuttered, gone bub-bye. The billions of dollars Ford (for instance) has invested in tooling at those suppliers would disappear at the same time.

You just don't get it, do you? The supplier of Ford components are the as GM, Chrysler, Toyota, etc. If a supplier that supplies ECM unit for a car just up and shutters, you don't just walk down to the next ECM supplier and pop one it.

How can you even argue this point? Have you done the research? Every credible source out there, including Foreign auto execs, were worried. Toyota made comments to congress saying that if GM and Chrysler dumped, they were in serious trouble. That's right - a COMPETITOR to GM and Chrysler was arguing to save them, because of the supply base that supplies everyone.

Come back once you understand what you're talking about.

The thing you just dont get is that is GM/Chrysler went away, there would still demand for cars. Which means there would still be demand for those suppliers. Yes it is all interrelated and complicated, However these two companies held some 30-40% of US marketshare for cars. I wont disagree that a mishandled liquidation or bankruptcy could have caused significant problems across the industry, I wont agree that a govt bailout was the only viable option. I will stand that my claim that the profitable portions of these two companies could have been liquidated without a $50B bailout from the govt and not had a horrific impact on the industry either.

 

[charrison]

No, no they don't.

Ok, I have to ask. How old are you?

Old enough to know our auto industries have always been in trouble.

You have distince lack of knowledge how any of this works. Do you realize even huge companies have outstanding loans?

OF course they do. ANd when they cant pay that is what bankruptcy and liquidation is for.

Do you understand that when loans dry up, MANY small companies, even profitable ones, do not have the operating cash on had to make their paychecks?

I do.

You need a class in accounting.[/QUOTE]

Thanks for the tip. You might want to take one economics.