IS THE CREDIT CRISIS about to move from Wall Street to Detroit?

[1974]

Not much you or I can really do. This economy is in the shitter. Will the government bale us out?

 

Such huge costs to insure GM and Ford debt against default indicate the market's assessment of their financial conditions is perilous indeed. Which raises the obvious question in the post-Bear Stearns rescue world: What happens if GM and Ford find themselves out of cash with no sources of financing? How does the Federal Reserve refuse the Detroit car makers when it provided financing for a Wall Street broker-dealer's takeover by the descendant of the Morgan Bank?

 

The widely misquoted statement of former GM Chief Executive Charlie Wilson held that what was good for General Motors was good for the U.S. The precedent of the Chrysler loan guarantees from the federal government nearly three decades ago stands. If JPMorgan Chase got taxpayer backing to take over Bear Stearns, how can GM or Ford be denied?

 

The sad truth about the American economy is that it has shifted from producing things to moving money; in other words, from manufacturing to finance. That's not only true in New York but even in Detroit. The profound consequences of this transition only now are becoming apparent.

 

The whole article is here.

 

http://online.barrons.com/article/SB121428...ns&ru=yahoo

[wtf]

Not much you or I can really do. This economy is in the shitter. Will the government bale us out?

 

Such huge costs to insure GM and Ford debt against default indicate the market's assessment of their financial conditions is perilous indeed. Which raises the obvious question in the post-Bear Stearns rescue world: What happens if GM and Ford find themselves out of cash with no sources of financing? How does the Federal Reserve refuse the Detroit car makers when it provided financing for a Wall Street broker-dealer's takeover by the descendant of the Morgan Bank?

 

The widely misquoted statement of former GM Chief Executive Charlie Wilson held that what was good for General Motors was good for the U.S. The precedent of the Chrysler loan guarantees from the federal government nearly three decades ago stands. If JPMorgan Chase got taxpayer backing to take over Bear Stearns, how can GM or Ford be denied?

 

The sad truth about the American economy is that it has shifted from producing things to moving money; in other words, from manufacturing to finance. That's not only true in New York but even in Detroit. The profound consequences of this transition only now are becoming apparent.

 

The whole article is here.

 

http://online.barrons.com/article/SB121428...ns&ru=yahoo

No one outside of Detroit cares if Ford or GM survive. As long as transplants are assembling vehicles in this country, loan guarnatees would be a hard sell. Most Americans believe that as long as Toyota, Honda and other foreign companies are assembling cars in the U.S., that makes them part of the U.S. auto industry. So the rest of the country views the big three as irrrelevant because we have a U.S. auto indsutry in Toyota and Honda. Industry is not considered important the the united states anymore.

[Footballfan]

No one outside of Detroit cares if Ford or GM survive. As long as transplants are assembling vehicles in this country, loan guarnatees would be a hard sell. Most Americans believe that as long as Toyota, Honda and other foreign companies are assembling cars in the U.S., that makes them part of the U.S. auto industry. So the rest of the country views the big three as irrrelevant because we have a U.S. auto indsutry in Toyota and Honda. Industry is not considered important the the united states anymore.

 

I agree, most Americans only give a damn about their little corner of the world. However, there will be a domino effect of the Big Three fold. I see the Japanese- having bought political favor and running the competition out of business- offshoring due to pressure from China in the coming decades. The end result: the auto industry will go like appliances- a few manufacturers selling a limited range of vehichles at low prices.

 

What John McLame, and these other "free marketeers" believe that having the auto industry fold and simply "retraining" people to work in lower-wage service jobs also destroys the national economy. The service jobs pay far less money (less income taxes to the fed and states), and the little office in the strip mall pays less property taxes to the community as opposed to the large manufacturing plants (less money for schools= fewer teachers and larger classes, and lower quality education).

 

This country was built on industry- it was the backbone of our economy. It is a shame that our politicians do not see it that way.

[paris]

I agree, most Americans only give a damn about their little corner of the world. However, there will be a domino effect of the Big Three fold. I see the Japanese- having bought political favor and running the competition out of business- offshoring due to pressure from China in the coming decades. The end result: the auto industry will go like appliances- a few manufacturers selling a limited range of vehichles at low prices.

 

What John McLame, and these other "free marketeers" believe that having the auto industry fold and simply "retraining" people to work in lower-wage service jobs also destroys the national economy. The service jobs pay far less money (less income taxes to the fed and states), and the little office in the strip mall pays less property taxes to the community as opposed to the large manufacturing plants (less money for schools= fewer teachers and larger classes, and lower quality education).

 

This country was built on industry- it was the backbone of our economy. It is a shame that our politicians do not see it that way.

The politicians actually understand more than you give them credit for. The reality of the political world is that the vast majority of their supporters do not sympathize with the plight of the domestic auto industry.

It still boils down to the premise that this country was born upon. Free competition and survival of the fittest. The bulk of the general public see the issues with the domestic players in all of the varied industries. They actually understand much more than you give them credit for. You have to understand that when the bulk of the people decide to make a major purchase such as an automobile, they base their decision to purchase on the same criteria that you or I would. What can I buy to get the most for my money? They then proceed to check out all available products and make a decision based strictly on "the most for the money" premise without any regard for the plight of the industry based here in the United States.

Why do they do that? Why don't they have the loyalty to the country and to the domestic manfacturers that we think they should? The fact is, they never have had that type of attitude. The general public has, and will always make a purchasing decision based upon what they percieve to be the greatest value for the money they are able to spend. The reason that we had an extreemely high market share years ago was simply the fact that there were very limited choices if you needed a new vehicle. Now there are many.

As you mentioned, the same thing happened to the appliance industry. There are very few left. The politicians didn't sympathize with them too much either. It's because the general public doesn't sympathize with them. If Suzuki offers a 7 year, 100K mile warranty, the public expects us all to follow that lead.

Managing the risks accociated with the potential warranty costs for some of those programs has been something that we have not been able to do. Nor do I percieve us being able to provide some of those offers in the future.

To make matters worse, the domestic auto industry in particular is viewed through a magnifying glass by the general public. The wages you make. The benefits you recieve. The general work conditions that our workers have, are all looked upon as excessive. Like it or not, these are true statements. Whenever a new contract is negotiated, the general public has complete access to all of the information. The people know exactly how much money each of you make. They also know the extent of the benefit package you recieve. They look at the price of our vehicle and say, "Im not paying extra for a domestic vehicle so I can fund those people's cush lifestyles".

Again, these are facts and not just a way for me to make it look like it's the union's fault.

What we have to do is to look at the situation through eyes that can trully see the realities of it. Don't ever expect the general public to purchase one of our vehicles because they are helping out the country, or the domestic industry. People just don't think that way. We must as a group, change the perspective of the general public in this country. We are not a bunch of overpaid people looking to the american public for sympathy. We must convey the message that our products are in fact, better quality than our competition. Do you guys remember the commercial that was on television a while back that was saying that Ford is "now equal to Toyota in quality"? Im telling you that if I had my way, I would have fired every one of those people on that marketing team that developed that slogan. And, the people who authorized it to be aired on television! The fact is, we have produced the same quality vehicle, or better than Toyota for years. That commercial only made it look like every person who bought one of our vehicles up until that point, had something inferior. Yes, that pissed me off.

Look at the Germans. They have had their share of quality issues with all of their vehicles. BMW has problems with their cars running on Ethanol. They bring $100K vehicles to the service department on flatbed trucks that wont run at all because their owner pumped gas into the car that contained Ethanol. Have you ever heard of that? Hell no you haven't. And, you wont. Because they know that perception means everything. Doesn't everybody know that BMW sets the standard for everybody else? Of course they do. What you dont know is that their service departments are full all of the time! Perception. They don't run out and tell the world that they have problems. They don't tell thier neighbors that their cars are junk. They don't sit in bars telling everyone how much money they make and how little they have to do. Their whole industry is exactly the same as ours. They have as many or more problems as we do. You just percieve that they don't.

What we need to focus on is how each of us can bring the perception to our company that we want it to have. Don't wave your paychecks in front of your neighbors. Don't sit in the bar with your company uniform on as though you are still on the clock. It comes from all of us. Change the perception now, because the company is on par with the rest of the industry in every other way. Including value!

[mettech]

I agree, most Americans only give a damn about their little corner of the world. However, there will be a domino effect of the Big Three fold. I see the Japanese- having bought political favor and running the competition out of business- offshoring due to pressure from China in the coming decades. The end result: the auto industry will go like appliances- a few manufacturers selling a limited range of vehichles at low prices.

 

What John McLame, and these other "free marketeers" believe that having the auto industry fold and simply "retraining" people to work in lower-wage service jobs also destroys the national economy. The service jobs pay far less money (less income taxes to the fed and states), and the little office in the strip mall pays less property taxes to the community as opposed to the large manufacturing plants (less money for schools= fewer teachers and larger classes, and lower quality education).

 

This country was built on industry- it was the backbone of our economy. It is a shame that our politicians do not see it that way.

 

That is a reflection of the outcome, not the intent.

 

The free market is to ensure that all counties get a piece of the pie and in-turn, it enhances world stability.

 

The micro side of a free market =The adjustment in wages to reflect the skill that is required for the job. A over paid job skill will damage a company in the free market. If a company pays its employees at a higher rate, it must make that up in production efficacies.

 

A Nation that trades with you is less likely to declare war.

 

A open and Free Market = a safer world.

Edited June 25, 2008 by mettech

[wtf]

That is a reflection of the outcome, not the intent.

 

The free market is to ensure that all counties get a piece of the pie and in-turn, it enhances world stability.

 

The micro side of a free market =The adjustment in wages to reflect the skill that is required for the job. A over paid job skill will damage a company in the free market. If a company pays its employees at a higher rate, it must make that up in production efficacies.

 

A Nation that trades with you is less likely to declare war.

 

A open and Free Market = a safer world.

It is not our hourly rate that is too high, it is health insurance costs that are too high. Our corrupt health care system and an open free market do not mix.

[paris]

It is not our hourly rate that is too high, it is health insurance costs that are too high. Our corrupt health care system and an open free market do not mix.

Edited June 25, 2008 by paris

[BlackHorse]

You guys ever get that feeling that things are about to change dramatically and rapidly.

 

 

 

lol

[NickF1011]

You guys ever get that feeling that things are about to change dramatically and rapidly.

 

 

 

lol

 

Oh man. One of the worst....movies....ever.

[BlackHorse]

Oh man. One of the worst....movies....ever.

 

 

Was actually just making reference to the symbolic nature of the picture, not the crappy movie.

[Mason]

That is a reflection of the outcome, not the intent.

 

The free market is to ensure that all counties get a piece of the pie and in-turn, it enhances world stability.

 

The micro side of a free market =The adjustment in wages to reflect the skill that is required for the job. A over paid job skill will damage a company in the free market. If a company pays its employees at a higher rate, it must make that up in production efficacies.

 

A Nation that trades with you is less likely to declare war.

 

A open and Free Market = a safer world.

 

I must disagree with some of your points...

 

No... a nation knowing you have the capability when provoked to send it back to the stoneage will less likely declare world...

 

No... If Macarthur, Patton and Schwartzkoff had been allowed to finish the jobs in the first place, we would have a safer world....

 

Lastly.. there is no such thing as an over paid job skill... it was the 'free market value' that enabled the salary or wage to be negotiated... kinda dumb argument to me....

 

:titanic: :titanic:

[wescoent]

No one outside of Detroit cares if Ford or GM survive. As long as transplants are assembling vehicles in this country, loan guarnatees would be a hard sell. Most Americans believe that as long as Toyota, Honda and other foreign companies are assembling cars in the U.S., that makes them part of the U.S. auto industry. So the rest of the country views the big three as irrrelevant because we have a U.S. auto indsutry in Toyota and Honda. Industry is not considered important the the united states anymore.

 

Agreed.

 

No one outside of Michigan really cares about Ford, GM, or Chrysler. As long as someone is making vehicles for us to buy, Americans will be perfectly happy. No one cared when the Pennsylvania Railroad and New York Central went bankrupt, no one cared when Pan Am went bankrupt, and no one will care when GM goes bankrupt.

 

However, if Bear Stearns was allowed to collapse, it would have caused a run on our financial institutions that would have destroyed the international financial system. Thankfully, our nation had an institution like JP Morgan Chase willing to take on the burden of covering Bear Stearns' debt with a good name and reputation. JP Morgan Chase also has executive and managers that make Ford and GM management look like the bumbling fools they are, hence the Fed feels good about lending them money.

 

On a side note, JP Morgan Chase pays my salary and bonus, so just keep that in mind when you read my assessment.

[wescoent]

No... If Macarthur, Patton and Schwartzkoff had been allowed to finish the jobs in the first place, we would have a safer world....

 

Wise and very true words, albeit VERY politically incorrect.

 

One wonders what might have happened if in the closing days of WWII in Europe, Patton had been allowed to expel the Soviets from Eastern Europe.