The first part of your statement contradicts the second.

The market can not be "free" if it is controled by the entities you list.

I think that, most recently, economists and other commentators - even on the MSM - have avoided the term free market lately because it is inaccurate, not just because Wall Street has become unpopular.

A better term might be "open market" or "competitive market", either of which would offer the opportunity for market forces to respond freely to supply and demand forces.

But we have to recognize that participants in that market do not see themselves as being responsible for maintaining a "free market". Quite the opposite, every company seeks to maximize profit. The best market for that is a captive one - hence the popularity of patents even when the product produced is not innovative.

I see this all the time in the pharmaceutical industry. Rebranding is just one technique. Compelled to make truly innovative discoveries to qualify for patents would increase innovation in all technologies - even energy.

The auto industry is not the only one in trouble: Tribune Co. files for bankruptcy


Meanwhile, the New York Times is using its own Manhattan offices as collateral against $225 million in loans.

Newspapers across the country are in trouble. Tribune is not alone. My local newspaper just went through another round of serious (3rd) layoffs. The result is getting thinner and thinner. Its sad, but the time have changed so much over the past 15 years or so. Most people don't want to read paper when they can read online...or on their pda's.....Me I still enjoy a nice newspaper, and getting the ink on your fingers when your done.

about this auto industry bailout....

IMHO, it's like putting a band-aid on the wound of a bullet through the forehead. Useless.

The American auto industry can NEVER recover. It's dead.

TRL

What irks me is that Senator Dodd can demand the auto makers' CEOs resign, but he himself doesn't do the same. Isn't this the same senator who got a sweetheart mortgage deal from his buddies at Countrywide while so many Americans couldn't get anything so good? This is no different from that hypocrite Barney Frank whose lover was a honcho with Freddie Mac/Fannie Mae, which was part of the cause of the big credit collapse in October.

The corruption continues. Only the parties have changed. Disgusting.

Disagreements over the bailout bill in the Senate will prevent the bill from passing. Harry Reid predicts doomsday tomorrow on Wall Street. Sorry but I'm glad this thing didn't pass.

No doubt because your livelihood will not be affected in any way, shape or form. I'm sure if it meant that you had to minimize what seems to be a privileged lifestyle,you might think differently.

Eddie, this will undoubedly affect EVERYONE. Anyone thinking otherwise, despite any privileged status, will feel the effects, no matter how hard they try to fool themselves. This is horrible inaction by the Rethuglican Senate, in a feable attempt to bust unions before Obama takes office. Our country is at a time of dire need and these idiots in Washington continue to do nothing to help. What a crying shame to every working man and woman that calls America home.

Miller, why is this so bad? I'm actually ELATED this failed. It was a bad bill from the start. I'm presently a member of a union and have been a member of the Teamsters, IBEW, CWA, and SEIU during my life, and I am totally opposed to ANY bailout of the auto companies (an overwhelming majority of Americans also is opposed to this bailout). IMHO, Chapter 11 is the best thing that can happen to the Big 3.

Crew Chief what do you think of the difference in the requirements placed on the auto industry as opposed to those, or the lack of them for financial companies?

It seems to me that the wasteful investments and re-investments of those companies have done more damage to the economy than the failure of auto and other industries to innovate in the direction that consumers wanted.

Chapter 11 or 7 could mean the death penalty for the domestic car industry, making it unlikely that the US would compete in that market for a very long time if ever. The trickle down on other engineering industries: trucks, trains, perhaps even aerospace, could be widespread and devastating in the long-term as lower demand for these engineers drives more tech-savvy young people, especially college students, toward other fields.

I too would like to see sincere and wide-ranging reforms in the auto industry but I am not sure we can afford to lose it. Whereas letting financial institutions fail would have made it obvious that we are borrowing money from overseas since that is where we ultimately are getting it now. Then perhaps enough people would come to their senses about the regulation and reform financing need.

Sometimes you just need a "vacation" away from politics. After a few weeks away from RCP and the pundits, I got pulled back in by this auto bailout and of course the Blagojevich scandal. Imagine my SHOCK to open this thread and see that I actually agree with mdterp 100% about a political issue! Will wonders never cease ... tee hee

To start, our economy is based on credit, which is normally a good thing (if every business had to pay cash for everything, almost no small businesses would ever get started). Our economy without credit is as productive as an office without electricity. That's why we had to bail out the banking/financial industry. It's looking like there are problems and abuses in the $700 billion financial services bailout (what massive government expenditure is problem- and abuse-free, after all?). But two wrongs don't make a right. As much as plenty of players in financial services deserve a jail cell more than a bailout, it was a necessary evil, and it should NOT justify bailing out every other struggling industry in America. One reason Republicans and conservatives resist the bailout of the Big 3 auto companies is that it will set a precedent that in our currently dire economy will never end. Newspapers need a bailout, and home builders need a bailout, and OMG even Starbucks is supposedly asking for a bailout!! Once you say "yes" to the car companies, it'll be the Johnstown Flood of bailouts. Not to mention that the figures you hear of $25-35 billion for the auto bailout are waaaaaaay too low -- $125 to 150 billion is probably more like it.

I am rather baffled by the charges the reason the GOP killed the bailout was their desire to stick it to the UAW, because in the long term, that hurts the GOP far more than it could possibly help. The GOP can't win the presidency without winning Ohio. Now that Senate Republicans have killed the bailout, the chances of winning Ohio's electoral votes in 2012 are pretty much zero. On the other hand, nobody here has mentioned that the reason the Democrats want to bail out the UAW, which is essentially what this bailout is all about, is that Big Labor donated $450 MILLION to the Democratic Party this last election cycle. Munson Man is pretty much spot-on with the facts and figures he presents about the grossly inflated salaries, pension plans, and healthcare benefits of UAW workers. The nonunion autoworkers in other states earn a market wage. Most of us in this country earn a market wage. Why should UAW workers be exempt from the free market?

The Corker plan didn't demand concessions from just the UAW. Creditors to the Big 3 would have to eat about 2/3 of what's owed to them, and the private-jetting execs would have to take huge pay cuts or resign. Corker's plan, to which the UAW responded with a big "Chuck you, Farley!!", was an attempt to impose some sort of accountability on an industry that has suffered from decades of horrendous business practices. If any of you ever read thetruthaboutcars.com, there are literally hundreds of articles about the shockingly stupid decisions the Big 3 have made. While there will be some serious pain from this Big 3 mess, I think it's pay now or pay later. The Big 3 are a MESS, and a bailout now, without forcing the necessary reforms and restructuring, only means prolonging the inevitable. So what good does it do for American taxpayers to shell out $150 billion to massively f*cked-up companies now, so that in 5 to 10 years we have to do the same thing all over again?

PS: I know the oil companies and the bashing of them are an unrelated tangent, but I just gotta say something here. If evil oil companies do indeed fix prices and gouge us poor Americans, then why is gas only $1.62 a gallon at my corner station? Why don't they keep gas at $4/gallon all the time so that they're constantly rolling in billions of ill-gained profits? And it seems we Americans never learn. With gas prices falliing so precipitously, Toyota's biggest gain in sales for November (when overall sales were down ~33%) was their biggest SUV, the Sequoia (14 mph city/17 highway). Maybe Sequoia owners will ask for a bailout when the next gas spike hits.

Sport, I confess that I'm rather ignorant of some of the issues to which you allude, but with respect to some of the requirements placed on the auto makers in general, I think they're just plain stupid. For example, I honestly think the cafe standards imposed on the auto makers are absolutely asinine and actually make matters worse. We have GOT to stop thinking these government mandates are beneficial. They're not. Not to the companies and not to our economy.

Based on this...



Whatever the issues with health costs, retiree costs, etc., the hourly wages clearly aren't out of line.

It seems to me that there have been all kinds of tax breaks given to the foreign companies to operate non-union plants in Southern states. Now it's those senators who are blocking this bailout, even after winning a number of concessions. I've also read and heard that other nations are assisting their auto industries ($3.4 billion from Sweden, for example). For our government to do nothing because of what is clearly GOP union-busting is going to be a disaster.

I'm pro-union, but the UAW have to be realistic. They have to be willing to accept wage cutbacks, just as other workers across the country have done. I have no sympathy for union-busting, but the unions themselves have to be realistic. The UAW members are probably following the example of their greedy, arrogant execs who want the bailout so they can continue their inflated lifestyle. In the meantime, minimum-wage earners ($8.00 hourly), who can't even afford heat this winter, are expected to contribute to the bailout. The UAW members need to wake up before it's too late, as do the execs, and accept lower wages. They can put their energy into asking for better working conditions, health insurance, vacations, etc. At this point I'm opposed to any bailout so they can continue business as usual.

I'm seeing too much of the struggle that working-class minimum wage families earning $12,000 yearly are going through to have too much sympathy for the middle-class right now. If anything, the recession will help working-class people, it will bring prices of the necessities of life down (food, housing, heat, etc.). Being laid-off & having to start over is nothing new, it's a way of life for the poor. Hopefully the auto industry (execs & workers both) will realize that they've got to make some sacrifices like everyone else, before they lose their jobs. If the union leadership would accept this it could only benefit them in the long run.

We save to buy cars. People use to even save to buy houses. Companies use to accumulate profits and re-invest them in building their business (something suggested on another blog for "Joe the Plumber" in order to reduce his taxes).

The illusion that life is impossible without credit is just that. Life is however unsustainable without the ability to pay off debt. And an economy is unsustainable with continuous growth in total debt.

What you may be asking is for union workers to share the relative poverty of non-union workers. What do you ask of employers, or better said, financiers?

It is not the people who have to spend the money they earn in order to live who are a drain on the economy. It is those who accumulate wealth that they do not need to spend, or spend it only to make more.

True pension funds accumulate a huge amount of money. But they are theoretically the income for the retirement years of a relatively large group of people.

A single wealthy individual can accumulate the equivalent of a small company pension fund and just export it.

"the relative poverty of nonunion workers"???

When I hear something like that, it makes the conservative beast within growl like a rabid Rottweiler. If you are unhappy with your income and want more money, then it is incumbent upon you to better yourself so that you can command a higher salary. Get a degree, learn a trade, amass valuable/marketable experience, whatever it takes figure it out, but under no circumstances should you blame someone or something else for your deficient earning power. It's called personal responsibility, and without it, you might as well flush our society down the toilet. OK, rant over, blood pressure lowering ... how is earning $25-30/hour (~$50-60K/year) in states with a relatively low cost of living like Mississippi, Kentucky, and Tennessee "relative poverty"?? For a job that requires only a high-school diploma and on-the-job training, a Toyota/Nissan/Honda job sounds like a pretty damn good situation.

While researching the breakdown of GM's per-hour labor costs, I had a bit of a tough time because apparently the company isn't forthcoming with the details. Some insist that the $74/hour figure you hear batted around so much includes "legacy costs," i.e., pension payouts; others maintain that it can't possibly include the enormity of GM's pension costs. What is clear is that there is something verrrrrrry wrong with the Big 3's labor contracts if benefits add an additional $40-44 per hour to labor costs. Note that at Honda and Toyota, benefits add only $18-20/hour.

So liberals are still maintaining that the Senate Republicans' rejection of the bailout was all about UAW-busting?? Sorry, but that is just a steaming pile of cowplop. Kudlow provides some excellent insight into this ugliness, but here's the gist of it: Senator Corker's plan set a 2009 deadline for union pay restructuring, it could be on December 31, 2009, as the ball is dropping in Times Square, as long as it was in 2009. Despite the fact that GM is supposedly weeks away from liquidation, UAW Big Boss Gettelfinger said no dice, we won't renegotiate until 2011 when the current contract expires. He knew he could reject the Corker plan so cavalierly because the Texas version of Karl Marx was waiting in the wings with $15 billion of TARP money. The $15 billion will easily tide GM over until Inauguration Day, when President Obama and his 58 Senate Democrats, beholden to Big Labor to the tune of $450 million of political contributions during this last election, will come in like the cavalry (wearing UAW baseball caps, of course). It's not exactly a wild leap to assume that the Dems will then safeguard the lavish benefits that the UAW "negotiated", benefits which add an additional $40+ per hour to labor costs and therefore make Big 3 cars uncompetitive in the marketplace. But why try to fix anything that's wrong when the American taxpayer will pay for your mistakes?

Don't get me wrong, there is soooooooo much more wrong with the Big 3 than just the UAW contract. Despite their ever-shrinking market share, they have too many products, too many brands, and too many dealerships, which all compete against each other, thereby cannibalizing sales and costing millions extra in marketing/advertising. Plus you have unbridled GENIUS like Ford's handling of the Lincoln Continental. In the early 1990s, the Lincoln Town Car/Continental netted Ford almost a billion dollars a year of profit - repeat: NETTED. While Toyota was spending billions developing its amazing new Lexus sedan, while BMW initiated a $5 billion product development plan, what does Ford do with its most profitable product? Nothing, well, almost nothing, the car has barely changed since the early 90s. No serious money for product development to ensure that the Lincoln remained king of the luxury hill. Now the only people driving Lincoln Town Cars are limo drivers and octagenarians. Why should American taxpayers fork over $150 billion of their hard-earned money to subsidize stupidity?

The Canadian gov't is prepared to offer a bailout for the Canadian Big 3.... IF the U.S. bailout goes through.

The vast majority of the Canadian auto industry is in southern Ontario: GM (Oshawa--east of Toronto), Ford (Oakville--west of Toronto) and Chrysler (Windsor--across the border from Detroit). Apparently "Seven of the world's largest vehicle manufacturers operate 14 plants in Ontario." This would include Toyota and Honda. There are also many related industries, such as auto parts.

BoSox, you ask why taxpayers should fork over $150 million for the bail-out? Simple! It beats forking over $500 million! Next question!

Whether or not I live a privileged lifestyle is not the issue. I am a fiscal conservative who does not believe in this type of government intervention. I am so on board with BoSoxRudy on this one. As I had said in my first post about this, who will be the next company, industry to have their sweaty palm out for a bailout should the big 3 get one? File for chapter 7 or 11 like many other companies have done, clean house in your board rooms, and get to making some freakin cars that people actually want to buy, and are up with the times. This would set a really bad precedent if it were to go through.
Now I don't want to see anyone lose a job or have to suffer. No one WANTS to see that. However, I do believe that a bailout would be a tiny band aid on a GAPING WOUND! Seriously....this is like keeping someone on life support who is essentially brain dead. I do not want to see the companies go under completely. They need to reorganize and start again from the ground up.

An editorial I read referenced this article which suggested a plan in which the three companies would compete for bailout money. The two companies that came up with the best plans for revamping their business would get the money. The third would be denied.

The funny thing about the article is its author: former New York governor Eliot Spitzer, who starts it with this line: "A crisis is a terrible thing to waste." A crisis such as being caught spending lots of money on a hooker?

There are so many one-sided and shallow simplifications in that post that I can not begin to unravel them. Suffice it to say that none of them seem to address the other big cause of the current mess: the housing/credit crash and the financial doings on Wall Street that were the primary cause of it.

Canada's social safety net is very different from the US. But fortunately that may soon change, and because of, not despite the financial situation.

I suspect it would be much cheaper to retool the current infrastructure.

In the meantime allowing the current auto market to collapse may not be in anyone's interest accept foreign car-makers, who are predominately in the states of Republicans who are the keenist to let the unionized version disappear from the competitive market. If we had a single-payor health system, alternative to private insurance, we likely would not have a failing domestic car industry. But now we have an opportunity.

So true Sporty, but many people think a "Walmart" style economy is the ultimate solution.

Well yeah I should have stated that better. I didn't mean scrap everything and start over, but rather they do need to clean house big time and come up with a completely new operating and design system. So yes, if they "retool" it needs to be the biggest of retooling efforts a company has ever seen. There aren't just a few loose wires that need changing here. This is a systematic corporate failure that has been years in the making and allowed to let happen by an obviously incompetent executive administration.

So now the merger talks are back on between GM and Chrysler.

And if GM and Chrysler merged, what parts of Chrysler and GM should be saved?

Jeep? Probably, as there's a market for them. They'll need to cut models though.

Dodge trucks? Don't know. GM has a truck division, and the GM trucks are rated better
than Dodge.

Chrysler cars? Why? Other than the PT Cruiser having a niche market, what cars do they have that are competative? They have 1 compact SUV crossover, and no sub compact. Nothing really to save.

Chrysler minivans and vans? Again, the GM product is farther ahead in redesign, so basically let it go.

Did I miss anything in Chrysler?


Now for GM.

Saturn? Started great, but since they have had their parts and frames standardized with the rest of the GM lineup, there's nothing unique to save.

Pontiac? A couple of models, like the Grand AM and Grand Prix sell well, but I don't know of any other Pontiac Models that are worth saving. Make the GA and GP part of Chevrolet.

Hummer? Shut it down

Cadillac? There's a market, so keep it, cut models, and reengineer it to be the luxury brand again.

Chevrolet? Keep the small cars, scrap the rest.

Oldsmobile. Already shut down in Canada, don't know about the US.

SAAB: Sell. Volkwagon, Renault or Fiat would be interested.

Buick: Good cars, keep it as an upscale line.

GMC: Good trucks, good market for them. Keep

GM Daewoo: Sell.

Holden: Never heard of them. Anyone know about them?

Opel: Keep. Opel is popular in Europe, and will provide a base for smaller cars in North America

Vauxhall: Again, keep. Drove a Vauxhall in 2000 in England, and liked it. Again, there are models that could be re-tooled for the North American Market.

Remember that both Opel and Vauxhall have almost every model that runs on clean diesel. If you can get the North American market to switch to the European clean diesel, both Opel and Vauxhall would be light years ahead. These 2 brands could be the dark horse success for a combined company.

According to my partner they dominated the Aussie market.

The automobile industry's problems are a symptom more than a cause. We've been buying the equivalent of low-nutrition Twinkies when we needed high-protein bars. The auto industry sought the highest profit part of the market that required the least investment in conversion.

I think the plan that Obama was looking for from them was one for switching to the cars that we need. But at the same time he wants to maintain the current greed-driven and lawbreaking market-based system.

He also seems inclined to leave in place the decimated less-progressive taxation that has sucked the market dry since the Bush cuts reversed the Clinton era enforcement - weakened as it was Reagan/Bush I neglect.

The most important positions in the coming administration may the SEC and Treasury, making the hearings on the nominations of Mary Shapiro and Timothy Geithner the most critical since those offices were established.

If there is any place that "change" is critical, it is those two offices and IRS. Without reforms there he is lost.

I believe GM has taken to rebadging some Opel and Holden models for the Saturn marque. GM is discontinuing unique Saturn designs.

Hummer is the civilian version of the Humvee. The military won't let that go.

Holden is the Australian GM marque.

We Saab afficionados all knew the end was near when GM bought the brand in '03. Sure enough, the design distinctiveness disappeared within two years, and Saab now looks like every other car. I'm holding on to my wonderful 5-door 1999 9 3. It's got 120,000 miles on it and runs perfectly. I hope the Swedish government somehow intervenes and persuades a Swedish company to buy Saab and restore the brand to what it was, otherwise when the MunsonMobile finally goes I won't know what to do.

The MunsonMobile? Do you park it in the MunsonCave? Did you post from the MunsonComputer? Do you get emergency calls from the commissioner on the MunsonPhone? Talk about a gay superhero -- and we won't even go into the subject of the Boy Wonder... Okay, back to serious discussion...



They can keep making Humvees for the military without selling Hummers.

Canada will provide bailout based on U.S. deal. Chrysler workers in Windsor whoop it up.

Click image to enlarge
(h/t A. Sullivan)

From Obama's quotes on economics on the campaign trail:Missing: how do you pay for all this without increasing taxes at some point? Can he get an economic turnaround to happen with new money?