Will loss of automakers lead to a depression?
GM CEO Richard Wagoner, UAW President Ron Gettelfinger, Ford CEO Alan Mulally and CEO of Chrysler Robert Nardelli were back on Capitol Hill today. (PHOTO CREDIT: GETTY IMAGES)
FROM CNN's Jack Cafferty:
A top executive at Chrysler, Vice Chairman Jim Press, is warning that the failure of just one of the Big Three automakers could drive the U.S. economy into a depression.
The CEOs of Chrysler, Ford and GM were back on Capitol Hill today asking for $34 billion in aid, just two weeks after they asked for $25 billion and were shot down.
Ford CEO Alan Mulally quoted an estimate from Goldman Sachs during his testimony that said the failures of the three companies could cost the U.S. economy up to $1 trillion.
Sure the companies need cash. And sure they directly provide jobs to 355,000 workers. And an additional 4.5 million jobs in related industries. But there are real questions about whether we would be throwing good money after bad. Detroit has failed to keep up with a changing industry for years, despite the handwriting that was clearly put on the wall by Toyota and Honda, among others. American cars come with legacy costs unrivaled anywhere in the industry. Sales figures released this week were terrible. GM down 41 percent, Ford down 31 percent. Congress is grappling with whether the cure is worse than the disease.
Here’s my question to you: Will the loss of any one of the Big Three auto companies lead to a depression?
Interested to know which ones made it on air?
Chris from Savannah, Georgia writes:
I worked in the steel mills in Pittsburgh back in the early eighties. A regional depression occurred, with unemployment in the area around 23% when the bottom fell out the steel industry. That's why it was called the Rust Belt. No bailout then, whole towns were devastated. I survived and have moved on. The economy and the American people are resilient. It changed the face of Pittsburgh for good. We will survive the loss of some of the auto industry and move on and possibly come out better than before.
Nancy from Tennessee writes:
Detroit has waited too late to try and put out the cars that the American public wants and needs. Nothing makes me think that their new business models will work now. If the people leading these companies knew how to make a profit, they would have done it before getting down to one month before going bankrupt.
Doug from Dallas, Texas writes:
It depends. If they go into bankruptcy and restructure they come out leaner with a chance to return to profitability. The country has to be prepared for the ripple effect of the lost jobs but they also have to recognize that the auto industry has been bloated for years.
The only sure thing is the government can't keep bailing them out I can't afford it!
Kay from West Virginia writes:
Loss of one will almost certainly lead to loss of the other two as their suppliers are shared. I'm unsure that anything can stop us from falling into a depression given the current state of our economy.
Colin from Redondo Beach, California writes:
Not for Honda and Toyota.
Craig writes:
I say let 'em fend for themselves. Even if we bail them out, they'll move everything off-shore anyway in a couple of years citing 'cost savings.'
@jackcafferty on Twitter
when the Big 3 automakers were being interviewed, they all sounded so desperate. But when questioned about how they got to the meeting, they all came in private jets. Now they are driving up in hybrid vehicles. but they are also saying, "If we are turned down, there are other things we can do." Well, before they hit up the Govt. for a bailout, they should exhaust every other avenue. Unless they want me and everybody else in this country as major stockholders. I think they thought it was free money.
I think that if any of the 3 start to go downhill, someone or some company will buy them up, they could split up like the oil companies did many years ago. It might be scarey for awhile, but if they don't have a plan, and they have other possibilities, I bet nothing bad happens to them.
I believe with the millions of job lossess this year, the financially draining war, the millions of homes in foreclosures, the thousands of business bankruptcies we are already heading into a depression and the loss of the big three will propell us there a bit quicker. I'd like to send a huge thank you card to Bush and company (his republican cronies) for ruining this country, do you have their addresses?
Isn't the automakers' bailout a perfect time to stipulate that U.S. automakers begin to convert their commercial and personal trucks and vans to natural gas combustible engines. Would that not kill 2 birds with one stone? We help keep these companies afloat while also trying to accomplish energy independence? If not then let's let survival of the fittest happen. Everything is cyclical.
Doesn't matter if one or all three go belly-up. We're at the beginning of the Greater Depression. This country has had it. We're doomed and there's nothing anyone can do about it. In a year or two from now, the world will look like "Mad Max."
Absolutely not, but I am depressed when I think about the outrageous prices of poor quality America cars being constantly built.
James Michael Collins
Colorado Springs, CO
maybe not a depression but it will be depression for a large number of Americans. You can not work out of a recession if you reduce the amount of income (Taxes) coming in. If this loan is written up like the former Chrysler Loan than everyone will win and the Auto Industry can be dragged, kicking and screaming, into the 21st Century.
Absolutely! America is on the brink of a Depression now... After all, it took them almost a year to admit to Recession! The Wall Street boys and Big Banks got a bailout without questions. Why is it that government is making it seem like the working class can be thrown to the sharks? If we, the taxpayers, can bailout out Wall Street and the Big Banks – then by God we should help the auto manufacturers, their devoted workers, not to mention all those affiliated with the auto industry. I say, if Washington doesn't approve a package for the auto industry, then Americans need to throw all the Washington politicians out... not wait to vote them out – Throw them out!
Last I checked we were in a depression. The problem is where we want to be in 5 years, talking about bailout number 10 or bite the bullet, rebuild these companies and retrain their employees for the new economy. It was done once, very quick, remember tanks and WW2.
I don't know... I have never owned an American made car because I have never found the same quality as I have found in an import. I think if there is going to be a depression it's going to happen anyway – with or without a bailout for the American auto industry.
Put another "3 MILLION" out of work? Absolutely a depression.
Jack you're great! Yes, Bail'm'out. The BIG Three has put America and the world on the map. They have done so much for the richness of the American people. The Tax money that they have generated for the Governments is astounding and the run offs from their products has kept many Americans working for years. Yes, Bail them out.
Yes
It's serious. This almost reminds me of the airline situation a couple of years ago. Maybe automakers should look at changes made then by companies like American Airlines and devise a real plan.
jamie, st charles mo
A depression will happen when it needs to happen. It has nothing to do with bailing out any one of these companies. It has to do with a correction in the economy. There is an imbalance in the system. The automakers can't do much If working Americans don't have the money to afford the vehicles
Dartmouth, MA
We lost AMC and we lost Oldsmobile (yes a GM division) with nary a goodbye wave. If the products made by the big 3 were sorely needed, wouldn't the loss of one or more of these manufacturers cause an economic vacumn that would provide an opportunity for someone else to move into that market segment? Let's not forget this is Capitalism working here!! Do we let it work, or do we prop it up in an artificial way?
That's what they'd like us to believe Jack, but come on, didn't we go through this same thing in the 70's, and they were supposed to start manufacturing fuel efficient vehicles? What happened to that?
I still don't think they'll go under if we don't give them the money, they need to do what everyone else does, tighten your belt, cut everything you can, and start all over again. Also replace the upper management completely in all three with younger, brighter minds. It shouldn't be too hard to find anyone smarter than those guys......
Jack
Why all this concern about American companies closing their doors. This has been going on in this country for 20 years. Lot's of people have lost their jobs unnoticed. The truth is it's the last Industry of day's past. A gleaming example that all was well in America. The truth has reared it's ugly head....
yes for the auto workers most of us are already there
I don't think that the loss of any one of the Big Three auto makers will lead to a depression. It will mean jobs will be lost, which will have an effect on the economy, but cars will still need servicing and spare parts. And, there will still be a market for used cars and used car salesmen. The challenge will be finding new jobs for the unemployed.
If Ford or GM go down, the answer is yes. However, I believe that we are going into a depression anyway. And this is the reason why. We will never trust Wall Street or our financial institutions ever again. The only way out, is to change the entire system, and jail the scumbags.
Is anyone else embarrassed by the auto union's unbelievable contract for their workers? Does any other company in the U.S. pay former employees (not CEO's) 80% once they are let go? No wonder the automakers are about to go under. Let's merge them all into one car maker and throw away all the excesses and start fresh. Maybe, for the first time ever, I might consider buying an American car.
Since the "big three" automakers have far more capacity than customers, the loss of any one of them would actually strengthen the position of the remaining two. Because the fixed costs for plant, equipment, and tooling are so high for automobile manufacturing, the companies lose money at a geometric rate when sales fall below their breakeven point. Higher sales volume is just about the only way to cover fixed costs to make a profit.
Jack its like having a surgery where the chances are 50-50 if you dont you will die and you will you still might die......either now or later but you have to do it.
I do not believe that the loss of Chrysler would do substantial damage, but both GM and Ford would tumble this already depressed economy down that final slide. With over 20,000 job eliminations announced today, mine included, it seems that "Any link broke is the one that will break the camels back!!!"
Jack, the only thing I keep hearing is fear. It is fear that led us to the Iraq war. It is fear that led us to this huge bailout of Wall Street. It is fear that has us throwing money at every company coming by asking for a bailout. I have not heard one person on Capitol Hill, I have not heard one person in the White House, nor have I heard one person in the media ask, why the fear? We need to just take a breath here, figure out a plan and execute it in a concise and measured fashion. Right now, it is free money at the Washington bailout store.
Jack, we're at the pearly gates of a Depression already. The crash of the Big three will just help to 'expedite' the process. Soon we'll also see inventories accumulate at the ports, mainly with European and Japanese imports. Bottom line, vehicles will eventually have to sell at one third of the prices we've been used to paying. We need a great big world war, retool the factories to make tanks and weapons, kill off the excess and start new again.
Jack, I'm not an economist which means I have some common sense and have studied history. In my opinion, no the failure of one or all of the auto makers will not cause a depression. It will mean that more people will buy cars that are smaller and are more reliable, more fuel efficient as well as less expensive. Now as far as the future, I believe that we are headed towards being a third world country, maybe not in my life time but in my grandkids because we are losing too many manufacturing jobs to China and India.
Let's merge the big 3 into one U.S. car maker. Start fresh with all the good ideas and scrap the old, tired ones. Maybe in a few years I might consider purchasing an American made car for once.
Chatham, New Jersey
Jack,
Most assuredly yes! It will create higher unemployment and more loss of home and who knows what else to follow. However, like the automakers and autoworkers, they are not the only ones that are feeling the depression. But they do make up a great percentage of the workfare and this country needs them. Hopefully they will do the right thing and agree to a paycut themselves as their situation could be alot worse. Half of something is better than a whole lot of nothing!
Daniel Ambrose,
Atlanta, GA
I believe the automaker bailout will inevitably cause an even more devastating financial crisis regarding the economy. I don't think however it will lead to a "Depression".
I doubt it. Industry people like to point out that car sales make up a substantial portion of retail sales; problem with this point is that foreign car companies and surviving domestics make up the bulk of US sales anyway.
When you add the job losses and closed businesses to what's happening now, it would be disastrous (and this is coming from someone who's never owned an American car). I think they get it now, and should be given a chance to get it right. Unlike the financial gurus who got us into this mess, the Detroit CEOs admit they made mistakes and are willing to learn from them. Mistakes are an important learning tool. And I think we're crazy and short-sighted if we don't give them a chance.
Jack I don't think the loss of any one of the three auto companies would by itself cause a depression, however it would certainly be another brick building the road to one. The other half of this question is will a bailout of the auto companies prevent a depression at this point? Or will it even delay the inevitable failure of these companies?
Yes it will, BUT of course this can be prevented if only BIG OIL would step in and bail them out. Last time i checked cars ran on gas and Big Oil had record profits this year. It makes sense. Big Oil bails out auto industry and American cars will keep running on gas. Every body wins right?
The loss of the auto industry will not lead to a depression. We are already in a depression (economists will make that pronouncement a year from now!) and that has led to the loss of the auto industry – along with management blunders, of course.
Not if those companies are converted into other businesses that keep people employed at a decent wage. Lets convert those factories into green energy companies that will benefit all of mankind and not just the wealthy auto executives. A car is nothing but a money pit. It always requires maintenance and burns some type of energy. Solar panels and wind generators make clean energy for years and years with only minimal maintenance. It is an investment that keeps on giving.
Public transportation is cheaper better for the environment and will still be running tomorrow even if those auto plants close. We can not keep doing what we have been doing or the future looks bleak.
The air of change has taken hold here in the US and change will be difficult and trying for the industry. I think the president of Ford should lead this effort since he helped lead the restructuring of the aerospace industry while at Boeing. There are very talented people in the industry who just needs a leader with the vision and guts to set it on the right path.
Dan
West Bloomfield, Mi.
Bailing out the automakers so they can create more cars that we cannot buy. They can invest in new technology but what will happen to the dozens of cars sitting at the dealers. The money they get will not be used to fix anything, they need to be restructed. An idea is to take back all the cars that have not sold, and create jobs for their employees by using them to tear apart the cars the world population doesn't need. They need to invest in cleaning up their mess, rather than investing in new technology that will be overpriced. All in all everything is failing due to the demand in GREED. No one wants to take a loss.
Jack,
Is it only a coincidence that the only car makers in trouble are unionized?
Had it been Toyota or Nissan who were in trouble, we would not even have given them a split second of a thought. They employ several hundred of thousands of people too in the US.
Maybe one consession we should demand is to eliminate unions from companies we bail out. If we don't do that, the car makers will remain in trouble and will have to come back for more.
The same goes for the airlines. I have not heard Southwest Airlines asking for any government bail out.
Niels
Missouri
Jack,
It most certainly could. And, this will even be worse than the great
depression, as when that happened we manufactured everything
here in the United States, from tooth brushes to automobiles. There
were jobs out there to be eventually found. We did not import oil,
and we did not owe billions to foreign countries.We did not have
the largest deficit in history.
Remember over recent years our so called financial experts telling
us there could never be another despression due to the checks
and balances. Wonder what happened to them??
It is not looking too rosy. With the trickle down effect on the suppliers and all the other smaller companies that make parts and such they will lay off their workers and America is becoming what China used to be a third world country. It saddens me to think about how great our nation was in 2000 before Bush and company took office.
Yes Jack, But let's put the blame where it really should be. This mess we are in did not start until the greed got out of hand on Wall Street. Yet, the government gave them money to get out of the problems they created for themselves and the American home buyer. People can't buy cars if the loan sharks on Wall Street are sucking them dry. How do you shut down manufacturing while greedy investers get help for the mess they made for everyone else? And while we are at it, see if the Congress and the Senate will work for what they are worth. $1.00 a year sounds right to me. FRED LIVINGSTON, AL
Instead of BIG 3 asking money to the goverment either for bailout or as a loan, they should be asking BIG OIL for it. After all they (BIG 3) had been working for BIG OIL during the last 30 to 40 year. Now, while BIG 3 is in trouble BIG OIL had posted their biggest profits in our faces and in front of this worlwide economy situation. They deserve each other. Oh come on!!! Let's talk greediness!!!
Some economists say the loss of one could lead to the loss of the others. But some say that if one or more of them goes under they can come out of bankruptcy leaner and stronger. The real question is do we want to take a risk as to which result is correct.
I don't know that anyone can say for certain that it would through us into a depression, but it would definitely put us one step closer. The automobile crisis isn't just a problem that effects just "the big three." There are millions of people's lives either directly or indirectly connected. If the auto industry goes under, it will start an avalanche of related failures; more unemeployment, more forclosures, more bankruptcies, more cutbacks of essential services. The snowball effect will make any hopes of a strong ecomonic recovery unlikely for any time soon.
Not a true financial depression, but a real "Depression" for those of us (millions around the world) that bought good GM products.
We have owned 5 GM vehicles since 85 and all were excellent maintenance free and our current(Buick Ronduve) is by far the best....A full size SUV that gets 23 mpg all around driving.
If GM goes down we and millions more will be stuck with the equivelant of an "Edsel". No spare parts and no market for your used vehicle.
What company is next to ask for a bailout? Soon I will be working for free....we are as doomed as doomed can be.
I don't know if it will send our Country into a depression Jack.
But I'd be willing to bet the thousand's of hard working people that lose their job, and their families that depend on them, will be very depressed!
Recession? Depression? Who really agrees on an exact definition for these? The old joke about it's a recession when your neighbor looses their job vs. it's a depression if I loose my job is as good as any definition. So it will be a depression for 3 million more Americans if the Big 3 all fail.
It may not, by itself, lead to a depression but in conjunction with all of the other problems with the economy it could certainly move us closer. It would result in the loss, directly and indirectly, of hundreds of thousands of jobs. The country just cannot afford that kind of job loss in one fell swoop without catastrophic results.
Unfortunately yes. It would cost far more in social security, loss of taxes and lack of consumer spending than the $34B currently being asked for.
It is a problem because the executives are so inept. What is needed is a realistic plan to keep afloat combined with a vision for becoming the world leader in green technology that would make Detroit the leading inovators in the world. Unfortunately all that is being offered is job cuts!
When Michael Moore, and even I, can come up with a better plan than the CEO's are presenting then we are in serious trouble!
Don't you believe that putting all the auto makers employees out on the street along withthose working in businesses that support the auto industry will cause a depression? How about the fact that the auto industry is a major player in defense? If you really want the auto industry to heal itself mention the word "Nationalize" several times during the Congressional hearings. 😉
Jack, the only depression I will feel is the one that will be caused by the bailout. Do not give these morons another cent!!!
No. It's like the "sky will fall, if I don't get my bailout"! Too much fear building up over this bailout of whoever thinks that they need it. Those that feel that they are in trouble, should restructure their companies and cut the spending!
A loss of only one of the Big 3 would most likely lead to a deeper and longer recession. If all of them go under,that's when depression is possible. Many ancillary businesses are tied to the auto industry and millions of jobs.
we are ready at a depression everyday hearing numberous job losses since the iraq war began..the big ceos want the autoworkers to cut their retirement funds ( who are making the parts everyday) more than 20 years..why should they take a hugh scarifice of their hard earned money to take care of their families?..the big ceos should cut their salaries, cut bonuses, and cut old management jerks who are giving the american people old ideas instead using new ideas...china,india, and other countries are taking our jobs for manufacturing,computer industry etc..Is this economic depression going to stop for good? all americans are fed up with it now!
If anyone in their right mind thinks that the fall of the Auto industry closing its' doors will have little affect on the nations' economy has their head in the sand! This is not the first time the banks have been bailed out. They and mortgage companies are responsible for this mess. The only thing you have to do is study the industry, and the industries that are tied the Auto companies. Everybody that has a job is saying let them fall on their faces. When they close their doors ask yourself when do you think I'll lose mine? The government of Japan help their Aut companies and other counttries have as well. We have lost a lot of jobs in this country that will never return. Let's not lose these jobs. We have a Ford Focus and it's a great car! Be careful for what you wish for, it might come to hurt you and your familly. Save the Auto industry!
It depends. If they go into bankruptcy and restructure they come out leaner with a chance to return to profitability. The country has to be prepared for the ripple effect of the lost jobs but they also have to recognize that the auto industry has been bloated for years.
The only sure thing is the government can't keep bailing them out I can't afford it! Maybe I should form a company and ask for a bailout, LOL. Kinda like the scenario from the movie The Mouse that Roared; declare war on the US, lose and apply for foreign aid.
Of course it will, Jack. We're talking about MILLIONS of US jobs when the ripple effect is considered. All of the people saying that if one or more of our auto makers fail everyone can just drive a foreign made car and everything will be great are ignorant. Think of all the jobs that will be lost and the lost revenue, not to mention how much more money we will be injecting into foreign economies. It's time to reinvest in America.
Jack – By every measure, human and otherwise, the loss of the 3 Automakers will signal the decline of American Civilization as we know it. Therefore the answer is yes. Millions of jobs lost will severely damage the average american an lead to another depression.
I don't believe that it will! What will lead us to a depression is that the government keeps GIVING money away with no oversight, transparency, and the real knoweledge that they are really stealing that money, the government gives Mexico money to fight the drug cartels, yet it's costing us a lot of money to keep the border patrols in prison for doing the job of protecting us from those same drug cartels...hmmm..yes that makes since to any normal thinking american...and the depression will come if they don't bail out the people who really drive this countries economy...US the little people...main street...the so called middle class that I think is now "middle poor" ...Jack, I love you by the way...you're so real!
Not for Honda and Toyota
yes, however what I don't understand is the huge bailout to Wall Street and the big banks with seemingly little if any interogation, while the Big 3 have to jump through hoops for a small fraction of the Wall Street bailout.
In support of the big 3, I drive a nine year old Camaro, which runs like a top at 260,000 kilometres and counting, still gets 25 miles to the gallon. Hmmm, of course it was made in Canada...........
Writing from Kingsville, Ontario, Canada
I'm tired of our industry leaders scaring me into making a decision. The losers in this auto industry financial crisis will be the workers. There will be job losses with or without a bailout. I would like to see a pre-chapter 11 plan worked out and all of the CEO's and their high paid excutives dismissed from their jobs. The thought that no one can run these companies other than the industry leaders we have is just not true. We can find competent leaders from our diverse population and give them a fair wage and lets get the job done.
Jack,
Seeing as how thank to the Unions the car manufacturers are doingmuch better than most of the rest of the unemployeed people out there, the Union members will think that they are in a depression. I predict that if the BIG THREE bite the dust, the Germans (Volkswagen), Koreans (KIA) or the Japanese( Honda, Toyota etal) will snap them up and begin turning out the vehicles America needs instead of the vehicles the car industry tells us we need. All while paying reasonable wages, demanding good job performance and turning a profit. The Unions served us well but it is time they went the way of Jimmy Hoffa.
No...it won't lead to a Depression because our government with its limitless money will bail them out. Does anyone else see the irony? We want to bailout the automakers so we don't lose more American jobs, using money we are borrowing from China. Wow. The fact is Honda and Toyota simply do it better...no Union workers. I'm not against unions but I am against how they take advantage of the system. I would love to know if I got fired I would still retain 95% of my salary. Maybe they were built in a way that led to the foundation of the Middle Class but next to nothing about that union today reflects the current state of it. Simply stated, I lose my job tomorrow, I get $450 a week from Unemployment.
I worked in the steel mills in Pittburgh back in the early eighties. A regional depression occured, with unemployment in the area around 23% when the bottom fell out the steel industry. That 's why it was called the Rust Belt. No bailout then, whole towns were devastated. I survived and have moved on. The economy and the american people are resilient.. It changed the face of Pittsburgh for good. We will survive the loss of some of the auto industry and move on and possibly come out better than before.
Of Course it will.
Can the USA handle more unemployed workers?
There is not alot of job creation.....so what are these people that will lose there jobs, to do? They will just join so many other American's out of work with no jobs and no prospects.
It is so sad.
Letting the auto comapnies fail will send a signal that businesses had better keep an eye on what consumers want to buy and not look for handouts after bad business decisions that should not have been made.
Given their track record, does anyone really think the Big Three could manage the money they are asking taxpayers for?
I didn't think so.
If we go into a depression, it won't merely be the auto industry failures that caused it. Eight years of trickle-down economics will cause the depression. And once again, the Democrats have to clean up the mess and be accused of raising taxes to pay for Republican spending sprees.
unfortunately i would agree that no help would be too much for your economy to handle at this time, however i wonder why the big three were so short sighted. They should have been using there huge advertising dollars to get people thinking about smaller engines such as a turbo charged diesel engine that deliver torque and great fuel economy such as many european autos have, while they develop the hybrid or electric . Americans have always believed that bigger is better, is it a status thing? Because status and 2 dollars will get you a cup of coffee when your economy is on the brink! Good luck
As if all this bailout talk doesn't make us depressed enough...get real!
Regardless of what happens to the big 3, we will go through another major depression within 3 years. History repeats because we don't learn from it and with the loss of most of our manufacturing jobs to China and India we allowed this to happen or as it is perfectly said, we did it to ourselves. So Jack, tighten your seat belt and the one around your waist because times are going to get very tough.
There will be even more of a depression if we give these morons our tax dollars without a good plan for an all electric vehicle that is identical to the EV1 made in 1996. If we allow them to pour money into the volt which gets 100 miles less that the EV1 did then consumers will just go elsewhere. Currently France is building an air engine car that will go from Los Angeles to New York on one tank of fuel that is converted to air. Unless these companies get on board with this type of technology then we are going to lose these companies anyway because nobody is going to buy their product. And so far in the hearings today all I've heard is about hybrids. Hybrids as opposed to all electric or air is a sell out as the protesters so accurately shouted at the hearings today.
No it will not lead to a depression, but it will lead people to wonder why the wealthy companys allways gets help from the government,
when the a normal person working two jobs can never get a bail out
and small things in life. What the auto industry needs to do is put every vechile on sale for half price. I bet then all sells will go threw the ruff. Instead of giving them money they will never be able to spend in this lifetime. Twenty four million a year for one person is just a shame, but the poor needs to pay for them to stay rich. America is getting backward, everyday and needs smart people to operate the country. Need stupid rich people who don't know about struggle...
Yes, this will be the start of complete economic failure in the world. The global greed and the lack of smart brains in both government and business have caused this problem.
Did the loss of the slave industry cause the country to fold up and go back to Europe in the 19th century? That was a huge economic blow to the South along with the devastating effects of the Civil War. We survived that, I think we can survive these overpaid, bloated United Auto Worker jobs going away.
When people around the world start buying these new air engine cars made in France next year these three stooges from the oil industry(GM, Ford, Chrylser) wont stand a chance at keeping their companies afloat. So let them go bankrupt now before we lose more tax dollars to bailout them out when they are going in that direction anyway.
So what ! If we stay on this bumpy road, potholes are all we can see for miles. Left turn I say, left turn.
Jack -
What good does it do to give the automakers more money to build
more cars and increase their inventory when people don't have the
money to buy the cars and can't get credit?
Lois Camp
Birmingham, Al
I would be greater than the depression. It would symbolize the failure of our economy, political system and way of life.
NO loss of one of the now "lesser" three will be a blessed event. They will emerge from their Chapter 11 filing hopefully gaining some wisdom into what it means to run a company in a manner that is focused on the long term and not on a short term basis designed to maximize annual bonuses. They will learn how to effectively deal with an employee base that has lost its work ethic. They will learn that when they do away with thousands of American jobs by offshore sourcing, that the American people have a memory of their actiions. Now is the time when America MUST develop a LONG term strategy and give up the concept of quick short term gains.
Jack, we are on a downward spiral and we are sitting on the edge of disastrous and catastrophic. The difference will be whether our automotive industry survives. Our lawmakers need to take immediate action to stave off catastrophe and hopefully keep us from plunging into a deep depression. I know it is unpopular, but something needs to be done to help our automakers ASAP! We are already up the creek, don’t take away our last paddle.
Josh in Maryland
No one is telling these auto CEO's the truth-this is the 21st century. Their designs are from the 20th century and are obsolete. Like the stagecoach. Kiss them goodbye and move on.
Jack,
Depression? Well, the Big Three CEOs will certainly be bummed if they don't get the bailout. I really hope there's a reasonable way to save the auto industry, not the executives, mind you, just the industry and the folks who do the real work. The auto industry is the baby, the execs are the bathwater. Let's not throw them both out.
Jim
Reno, Nevada
Instead of giving the auto makers our money, why don't we give them our business? Why doesn't the government order 1 million plug-in, CNG or hybrid cars for all government offices and agencies. Put them to work!
hi jack
yes if the big 3 go under alot of workers will be affected,parts companys,truckers,train transport,ads to pay for news media ,trade overseas and most of all unemployment compinsation will be sky high,people will not be able to pay bills or send their kids to college,alot will happen and we will all have to drive foreign cars.
clearwater,fl
Yes it will, but I believe that we are already in one. Up until the Great Depression, all economic pull backs were called depressions. The term recession was coined to differentiate anything less significant. We are now headed into another great depression because we basically stopped making stuff, AKA adding value, and now export cardboard to China in exchange for stuff we no longer make and or can afford to buy! So much for the much vaunted 'service economy.'
NO I ,don't think so
If 3 million jobs are actually at stake, it would seem the word depression could be used. Unemployment is over 6% now, I don't know what percent it would go to. Seems curious to me that in only two weeks ago the auto makers didn't have a plan and they whipped this one up. Hmmm, seems they are trying to sell the sizzle.
Not anymore. Most everybody is already depressed about the state of the economy.
Bob writing from Paris, France
Jack,
No, not a depression, but a restructuring in the auto industry. The loss of any one of the Big 3 automakers will force a consolidation in an industry that has needed a shakeup for years. As such, the two remaining North American automakers should pick up market share, thereby restrengthening their business and saving many jobs.
I hope that people will look at this in the big picture. How bad it would be with the loss of hundreds of thousands of jobs, not only the auto workers but all the businesses depending upon them. This is one industry that needs to be kept going, with changes. Certainly all the people depending on this industry (the main street folks) deserve help as well and maybe more than the banking institutions who have been taking advantage of the people for many years. A huge restructuring is needed in their case.
It would dig a deep hole in our economic and social fabric. We must take prudent steps to stem the current financial situation and set the agenda to come out stronger in the long run, Let's remember the longer term paths we must take to assure our place in the world. Time flies even when you're not having fun!
Bailing out the auto industry will not stop a depression, the only thing that can is a 'fix' to all things that's choking the economy. A bailout doesn't even gaurantee they won't go under, unfortunately there will still be jobs lost.
Not at all. The financial crises the automakers are in right now is not the direct effect and result of the slowdown of the global economy. It is the fault of their bad management and the lack of forecasting market conditions and adapting to the global economy as well as the production of products competitive in the world markets.
Not just a depression but catastrophic for America.
Not only will we lose our largest manufacturing industry, but the service industries like hospitals, restaurants, bars, local electric and gas companies, community police and fire departments, retail outlets, and on and on.
The millions upon millions of persons affected will not be paying payroll or property taxes, not have health care, draining social services.
Until we can substitute this primary manufacturing with something else it cannot go down. Just think if everyone bought American, we would all be doing our part.
Jack, the bigger question is: what will become of the American manufacturing industry if we let them fall? Remember that what won World War II for the Allied nations was the immense power of American manufacturing.
Sure, let the companies die, and let some foreign automaker buy them out; then if we end up some day going to war with that foreign country, are they going to help out the American military by building our war materiel?
Um, no, I didn't think so.
When I read polls, etc. where the question is “should we bail out the Big Three” there is always a huge NO.
I think people need to consider the repercussions of letting them die. There is more to it than just the auto industry….just think of all the business that depend on them. If we let them just fade away we’ll see unemployment, failing business, all across the board. It will destroy the US lives as we know it.
If the carmakers go down, you can kiss the recession goodbye and say welcome to depression. The loss of those jobs for the automakers and support industries would be a disaster. I just spent the past several hours watching the grilling of the CEO's by congress and I believe that the industry will comply with any sanctions that Congress can come up with.
Another loss would be with the defense infrastructure. Who will build the tanks, APC's and Hummers if they go under? Do we really want to rely on overseas automakers to build when the need arises?
Jack, I know its called a bailout, but I also think you call it a loan. Yes if they don't get help we will see something bigger the the great depression. It looks like we would have more people out of work than the great depression. We bailout the cool cats on wall street and markets is down with all our retirement moneys almost gone. The big three need the bailout and the middle class need help also.
Tom
Boone, N C
We are in a depression, but isn't it an oxymoron that the government is telling the auto industry what they need to do to keep their business? I mean, the government is being run in bigger and bigger debt every year so they make it bigger by giving away money to Wall Street with no strings attached then they make the auto industry jump through hoops and beg for a loan. They don't listen to their constituents. People didn't want a bailout for Wall Street , but they got it and Congrees doesn't even know who got the money nor how much. The auto industry isn't asking for free and clear money, they are asking for a loan. Chrysler did it before and paid the money back, before it was due with interest. I think these automakers brought much of this upon themselves, but I trust them with taxpayer money a lot more than Wall Street and their phony numbers.
The auto industry is so intertwined, I can't imagine what would happen to this economy if one of these companies were to fail! Ford seems to be in best position, only wanting their part of the Bridge Loan as a line of credit if the current economic crisis continues but If GM or Chrysler went under the hurt would be felt everywhere. The effects of would not only be felt by the manufacturers. There are thousands of suppliers who supply products to more than one company, and there many dealers who sell more than one brand of cars.
Reorganization under the bankruptcy laws wouldn't be the worst thing that could happen to the auto industry and I don't think it would lead to a depression. (The real question is why they're getting such a grilling in front of the Congress when the Wall Street money changers got shovelsful of cash no questions asked.)
The auto industry is so intertwined, I can't imagine what would happen to this economy if one of these companies were to fail! Ford seems to be in best position, only wanting their part of the Bridge Loan as a line of credit if the current economic crisis continues but If GM or Chrysler went under the hurt would be felt everywhere. The effects of would not only be felt by the manufacturers. There are thousands of suppliers who supply products to more than one company, and there many dealers who sell more than one brand of cars.
Holly – Columbus, OH
Absolutely not ! This is the Capitalistic System at work. People are worried about Warranties on cars – do you realize how many companpies would love to pick those Warranties up? Come on, we need real men and women to deal with tough times.
Joanne Buck
Minnesota
YES!!!! We cannot afford to lose 1 in 10 jobs. That's millions out of work. The government needs to bailout the auto industry. It pains me to say that. I'm so sick of these big corporations getting a pass & the rest of us can eat cake, but I understand the total impact now. I do wish the government would bailout the homeowners as well. There are too many people losing their jobs and homes.
It will not be that bad if it is handled properly. Chrysler should go Bye-Bye and both Ford and Chev. should find a way to join forces. Some means should be taken to bailout those stupid union contracts so the auto makers can compete on the world level.
It will be a depression to me if I can't service my year old Saturn. If GM is not given a bridge loan or if they discontinue Saturn, how are all of us who "bought American" service our cars?
Jack, if one of the companies go down, there will be a domino effect. We're on the brink of a Depression now. As an Autoworker, we have taken concessions for the last two contracts. We don't make $70 an hour, and many of us our college educated. We take pride in our work, and make quality vehicles. When we get done working our shift, our body aches so bad you need help getting out of your car, or to get out of bed. Ford has 13 top safety vehicles this year. Buy American that might help. We pay a lot of money in taxes. If our manufacturing jobs disappear, so will our tax money. Cities will be in a budget crunch. Police, Fire, city services, gas stations, restaraunts, bars, party stores, will close. Schools and Hospitals will be effected, and homes will be foreclosed. My home will be one of them. This will affect people across the country, such as glass, steel workers, suppliers, and so on and so on. Depression, in a heart beat!
Jack, we are in a neo-depression right now: tolerable, albeit rising, unemployment and an intolerable number of dead end, serf-like, jobs. A classic depression is a market correction so long overdue it feels like catastrophe. If we don't get a bankruptcy-catastrophe soon the taxpayers will boil like frogs (slowly and oblivious to the inevitable). I'm for getting the catastrophe over sooner rather than later.
My grandfathers did not suffer WWII so only a few could enjoy prosperity while the majority (and vast majority of younger Americans) fight over scraps. The "its who you know not what you know," mentality needs radical electroshock therapy. If the big 3 can't take care of themselves, then institutionalize them or let them die in the streets. The corporations have personhood and this is how we treat people in the USA–no special rights for corporations.
It probably will lead toward a much deeper recession. Sen. Corker had the Big 3 on the ropes and Sen. Dodd called him off. Who's side is the committee on?
Bill (Georgia)
If the auto industry is so important why don't the Ford heirs invest back some of their wealth? Why don't the past and current auto executives and dealers invest back some of the fortunes they derived from the auto industry?
I say let the government match what they loan or invest back.
The give nada the auto companies get nada!
Not further than we are now!!
These guys had all the time in the world to not be where they are but choose to ride the system.
Let the auto market readjust itself period.
No wonder they need bailout money, the union pays workers that were "let go" 95% of their salaries, which are thousands and thousands of jobs. The bailout money is needed to pay for salaries of non-workers alone! What kind of depression is that?
We are headed into a depression regardless of what happens to the "Big 3". We must act now to keep it short-lived. At the end of WW II Europe and Asia were in shambles. America used the Marshal Plan to rebuild their infrastructure. Our intervention in their economies was profound, not nickel and dime. That is what the U.S. needs now. We need to put a massive number of Americans to work rebuilding our infrastructure. We need to fire up our steel mills, build heavy machinery, fortify our power grid, beef up our military and police forces, and build more refineries and power plants. The list is great and so is our need. Big Business has failed us because their leaders are short-sighted, focused only on the immediate profit. Our government has failed us by letting Big Business make their decisions for them. That is the change that Obama is talking about.
No. GM needs to go through bankruptcy, and get rid of some of its long-term liabilities to survive without continual subsidies, a bitter pill but still a reality. It's no longer competitive – that's what bankruptcy is for. Airlines in bankruptcy still have mileage point programs, and we frequent flyers stay loyal believing our millions of miles have value despite Chapter 11. The same is true for GM etc. Propping up GM short-term will result in greater consumer concern about longevity than bankruptcy and restructuring. You cannot run away from reality and make false arguments forever. Why should my tax dollars get spent to delay the pain and the necessary?
I don't think American is able to comprehend the fall out for letting the Big 3 fail. It is tunnel vision thinking. The tentacles of this industry are far reaching, way beyond just the auto companies, suppliers and dealerships. You will see many more businesses fail because more people will be jobless. You will see larger local and state coffers go down even more. You will see more people going to emergency rooms because even more people will be uninsured. It goes on and on. As the old saying goes "be careful what you wish for". I think that is what we will all be saying.
It looks to me like the depression has led to the loss of the big 3 automakers. Well, their own stupidity may have had something to do with the loss, too. I still think, however, that whatever gap that is left by the demise of Corporate Greed, Inc. will be filled by somebody who wants to make and sell automobiles that make sense.
Hey Jack....instead of bailing them out, why not loan them the money and have the CEO's and other executive big wigs make the payments each month out of their own mega million $$ salaries...or tell them to go talk to their oil buddies who have shown nothin but profit for several years.....sounds good to me...ya betcha!!!!
I believe that without a viable energy to fuel economy, transport, manufacturing, the U.S. is in for a depression whether the auto industry goes down or not. Cars are not the problem. JOBS are the problem.
Let's forget about all this mambo jambo and forgive all the debts of the orinary citizen, be it mortgages, credit cards, student loans, etc. Let everybody start from a clean slate come january 20th, 2009. That way the people who allegedly are supposed to be helped get the money!
The Bush administration treated financial industry differently from automobile and other industries. The treatment implies prioritized measure of importances. I believe we need to follow the capitalism principle in order to have real capitalism. Temporarily fixes using socialism approach will continue to create problems for us.
Jack, I think failure of one or more of the the automakers (even as poorly as they manage the industry) will cause deeper economic problems (job losses, business failures, etc) throughout America in the companies that supply them. The recession will deepen if not move toward depression. Bail them out with these stipulations:
– They will be run by a "turn around" company or a Management team that knows how to run a company efficently & profitably and not by the current management. They all should be fired in my opinion.
– force them to develop & manufacture efficienct & better quality products.
America really needs keep manufacturing activities in this country or we will be dependent on China & India too in addition to the Middle East.
The next Great Depression, or Super Depression ( because we love excessive hype) is already in the infant stages. And history will prove that consumer greed and suicidal trade policies, fueled by political ambition, were the root causes. Although the auto industry itself is what we look to as the premier American corporate success model, it is also the poster boy for inept management and failed technology. This depression will happen not because Detroit failed, but because consumers preferred the bliss of ignorance and believed the fairy tale that their government was protecting their interests.
Yes, I don't think there is any question about that outcome. I don't think the government should be lack in it's responsibility to the taxpayer. But, where were all of these question/concerns when it came to Wall Street companies. This auto company situation, to me, appears as a double standard to our congress.
The only thing we know for sure is that we don't know. But if untold billions, or even trillions thrown at the financial sector did not free up the credit market, what will it take if we increase unemployment ,decrease consumption, increase foreclosures, and sink the housing market even further? We could be circling the drain while the economy eats itself.
Loss of one will almost certainly lead to loss of the other two as their suppliers are shared. I'm unsure that anything can stop us from falling into a depression given the current state of our economy but if we do fall into a depression only manufaturing will get us out with a reasonable standard of living so, for that reason, they should be bailed out. Demands should be tacked on so that they pull manufacturing back into the US again, though.
Look around you, Jack, we are already in a Depression.
Brownwood, Texas
I'd hate to find out the hard way.
We are headed for a Depression no matter how you slice it. This $34 billion will only be a start for what it will take to revive the American automakers. Detroit has waited too late to try and put out the cars that the American public wants and needs. Nothing makes me think that their new business models will work now. If the people leading these companies knew how to make a profit, they would have done it before getting down to one month before going bankrupt. No one bailed out other companies to save worker's jobs. What makes the auto workers jobs sacred? Their legs can stand in the unemployment line just like the IT workers, textile workers, and manufacturing employees.
There seems to be a lot of optimists and a lot pessimists about The Big Three failure causing a depression. Unfortunately I'm one of the pessimists. If we do nothing, not only will the people in these huge corporations go under, but the ripple effect will cover the entire country from sea to shining sea. Countless millions more will lose their manufacturing jobs as a result of such a economic calamity. I don't see how we can allow it to happen.
Jack
Why not ask Allan Greenspan he has all the answers, thats why our economy is in such good shape. I would not give these three amigos a dime.
It definitely could put us in a depression. 1 out of every 10 US jobs are related to the auto industry. We can’t afford to find out what that kind of increase in unemployment would do to our economy. While reports say that Ford’s the healthiest of the Big 3 and may not need the assistance, not providing these bridge loans will drag down the ENTIRE manufacturing industry.
Jack,
I think we might can stand if the smaller, Chrysler, were to go under. I think having either Ford or GM go under would probably send us right into a depression. Having more than one would put so many more people into the unemployment line that we would be in a depression for sure.
I'm curious to know just how many realize that these folks we are trying to bailout have some of the highest wages and greatest benifits available anywhere. How in the world does anyone think they are going to be able to continue this great setup and sell their product to some poor sap earning minimum wage? Let them go under, what's the point in building cars that can't be paid for. Sad but true.
If the GOP let's our only big industry go Bankrupt & let millions of worker's lose their jobs, who do they think is going to fund the unemployment & health care for these people. If we are in a recession now (which took 11 months for the GOP Adm. to admit) we will surely be in a Depression if this industry goes under. We will also have to bail out all the lenders to these companies, AGAIN! This is another political ploy by the GOP to let the foreign auto industries in their red states take over more American jobs!
YES!!! and YES!!!! The USA NEEDS a manufacturing base!!! IT is a necessity and possibly Ford and GM could merg into one–start making "smart" cars and resonably priced. I'm 64 and bought Fords all my life until 4 years ago when I purchased a KIA Sonata and have had NO trouble. 30 mpg and a 10 year 100,000 warranty. WHY oh WHY did GM or FORD not do this????? Car was reasonably priced–I'm a secretary making $20,000 and that is all I could aford and still have a warrentied car.
The FEDS by now should know that these auto makers are playing the same cards like finance giants. If there is no bail out the sky is going to come down on us. Actually it is better for the auto companies to go bankrupt and fix their home under the umbrella of bankruptcy court.
No, losing one automaker will not take us into a depression, but the ripple effect will. Many businesses in this country rely on the big 3 – from tire companies, to paint makers, to major television networks. If an automaker went down, it could be the beginning of a domino effect worse than the foreclosure crisis.
Depression? Mental or Economic? Once Bush is gone that should immediately improve our collective mental health and economy.
Seriously, I don't think we can afford to let the Big 3 go down, nor can we allow them to continue business as usual. I just can't believe their alleged predicament. Their Balance Sheets didn't evaporate overnight. Methinks I smell some fat cat rats. Liar, liar, pants on fire!!!
Let them fail. Cars will continue to be manufactured by Companies that are able to exist without subsidies. These successful Companies will obsorb the market share of the failed "Big Three" and create jobs and opportunities for industries that previously served the "Big Three".
When a grocery store fails, the same amount of food is sold. The employees of the former grocer go across the street and work for the more efficient organization.
The way we do business in this Country has changed. Long gone are the neighborhood Grocers, Hardware Stores and Pharmacies. They have been replaced with more efficient operations.
Bottom line Jack, Cars are not selling. So even if you dress up the auto makers and put lipstick on them, the cars still won't sell and the automakers will go under anyways.
Jack, no depression at all! First, all overseas American Corporation should be forced to pay higher taxes, therefore this forces them to bring back the jobs to the USA. Secondly, those over paid High School diplomas at Detriot are always welcome to work for McDonalds.
Ana, Massachusetts
Do we really want to find out?
Depression will be for the CEO's who will be losing their outrageous salaries and may have to work for a living like the rest of their employees. They still do not get it. They are only offering a 20-30% reduction in their salaries. Not much when you consider the millions they take home every year.
No, it will not. It is meddling by the Fed, and our government officials, that will lead us to a Depression. The first thing to do is disband the Fed, and go back to a dollar standard, then cut back on taxes for the next four years, until income and capital gains taxes are disappear. And bring back our the troops, ships, planes, back to the USA, and put them on the borders...
The oil and the auto companies were hand in hand when things were going well. Now, that things have gone sour, the auto people have turned to the American People for a bailout. Why can or do they not go to the oil companies for help.
This reminds me of a plaque in the living room of my parents' home, that went something like this,
"When I did well, I saw you ever. When I did ill, I saw you never."
If we lost all of the Big Three auto companies, I am sure it would lead to a depression. But the loss of just one or the absorption of all three auto companies into one, not so much.
The first new car I bought was in 1974 a Dodge. In the first year it had the transmission go out three times and the chrome fell off the bumper. Next new car was in 1977 a Datsun I drove it for 12 years with no problems. If the big 3 trigger a drepression they brought it on themselves.
No, it would be a blip in the market followed by an improved market because one of the surviving two would pick up its best assets and make better use of them. A minor pain followed by something better. The effects would be two major unions that would finally be willing to talk turkey and lead to dramatic modification in guarantees, medical, pension, and COLA administration, then changes in auto design, plant usage, distribution contracts, marketing strategy, etc. That is not to say that they might not need loan guarantees...... The federal govt should be paid first or deferred payments at a higher interest rate.
Yes, without question. The trickle down to dealerships and suppliers has already begun to rear it's ugly head. I don't believe our congressional leaders are very well versed in this matter, or they would have expressed concerns when the big three chose to ignore fuel efficiency in their vehicle design. The piper is waiting to be paid, unfortunately the taxpayers will have to foot the bill.
When the market crashes and big business goes bankrupt, prices fall and unemployent goes higher and higher I would call that a depression.
When the cost of goods go higher and higher and we are working but affraid to spend for a short time, I call that a recession.
I doubt our goverment knows the difference. They tell us it could take up 2014 before the economy corrects its self.
If the auto industry fails there will be someone there to pick up the pieces for a great price.
Bail them out, but only with some conditions. They need to stop making huge SUV's that use so much gas. They need to look into alternative fuel cars and cars that are better for our environment and economical for the buyer.
Is that a chance we want to take?
Why doesn't anyone ever talk about the 800lb ape in the room? If we continue to buy foreign products and send our dollars overseas then eventually we HAVE to be broke here!
Yes. Because if one automaker collapses, it affects first the auto industry as a whole, then the oil companies, and then places like repair shops and custom body shops, producers of car paint, tires, and list goes on. Before you know it, everyone is affected.
Yes. There will be massive job losses, massive home foreclosures, massive credit defaults, many more bank closures, bankrupted pension funds, and large payouts in Unemployment compensation, medicaid to children, Hospitals putting enormous costs on states and Health Insurances, and on and on. Economists say if you do the math, the Auto industry loans are a drop in the bucket in comparison of the hundreds of billions that it will cost if they go under. The sad part is that if we Americans would support our American companies, none of this would be necessary.
Jack,
I will be the first to admit trashing the quality and durability of any domestic vehicle. Know that I know it does effects our economy and people who have been dedicated to the prosperity of this country, maybe its time for me to sell my Pathfinder and show support by purchasing from one of the big three. I cringe at the thought but, its the rite thing to do.
I'm confused at how we can literally throw hundreds of billions of dollars out there to the banking industry and then consider turning our backs on the auto industry that employs so many middle americans when they ask for a loan of between 25-34 billion. This is the chance to save the industry and force them in the direction we want them to go.......what good is it going to do us to develope all these alternative energy sources and not have a factory here in the USA that can build the cars? Make the regulations hard and enforce them, but for God's sake don't let the auto industry go belly up now.
Millions of people losing their jobs if one or more of these companies go under-yeah that would qualify as a depression and I'm no expert.
The depression will be in the homes of the Big Three executives who won't be making the millions they've been making bringing three giant companies to extinction with incompetency. The workers will have it rough but maybe it's time for them to try something new. May I suggest nursing, which is a growing field with lots of worker shortages?
The irresponsible spending of the American people will lead to a depression regardless of what happens to the auto industry. Too many people live beyond their means.
Jack: The economic upheaval would be worse if we do not give the automakers a loan. It's a loan and not a bailout, and the automakers must convince Congress with a plan of action. Make the loan dependent on meeting certain benchmarks to get the loans. Do not give all the money at one time. Automakers must report back in person or in writing to Congress if the plan is working or failing.
John
Alabama
During hearings today, Union leader asked if he would take stock for 50% of amount GM owed and bondholders would get zero. Seemed like fair proposal but it was rejected. Now comes the bad news for me, I have a small amount of GM bonds in my retirement account. I did not realize that as part of the bailout, they would be worthless. I am sure that many Americans have the bonds, directly or indirectly. So as a taxpayer, I lose the value of my bonds and get a portion of my taxes to bailout the COmapny and its workers. I get double dipped while the Union offers to delay 100% of the amount owned to them for 2 years. Can I get the same deal and if not, why not?
Then i hear that healthcare costs are one of the main reasons that GM is not price competitive. Later in hearing, it was mentioned that while Japan pays healthcare costs, its corporate tax rate is much higher than ours – so that premise seems invalid.
What is going on here? This is starting to sound like somehting other than just saving an important segment of our economy.
If this was 1920, the collapse of the auto industry could lead to depression, but we have a much stronger economy today. Bankruptcy will allow reasonable solutions to reorganize, yes we'll take a hit on the jobs, but the strength of the union to negotiate unreasonable terms for its workers combined with poor management is part of the problem here.
Americans are automobile addicts. And just like a heroin addict, if the dealer is gone they will just find another dealer. I say let Big Oil bail them out because the two can not exist without each other. How about it , Jack..... a Shell owned Chevy? An Exxon Hummer maybe?
Not sure if it would lead to a depression, but paying out unemployment benefits to several million more people won't improve the current ecomonic situation. On the other hand if the manufacturers fail maybe the Govt can buy out their plants and rehire the workers while having them begin manufacturing alternative energy vehicles immediately for Govt use because the national and international dependence on oil for transportation is already a global security issue and that's much more problematic than saving these industries from themselves.
Recession?? We have been in a depression for quite some time, they just haven't admitted it yet. You bet, it will cause things to get worse. I say get rid of the CEO'S and let it be employee run. They would save the dollar per year they were going to get.
Looking at that glum-looking bunch is enough to depress anybody.
No because the Big 3 have become the little 3 over the past 15 years. Their share of the market and jobs has been eclipsed by Japanese, Korean, and German companies who employ thousands of American workers who have no connection to the "little 3" and will have plenty of work once American companies go kaput!
One Word–Absolutely.
No one can tell for sure, but the potential for it tipping us into a depression, or at least a much deeper recession is certainly there. It's not just the job loss, but the additional negative impact on the credit markets their succumbing to bankruptcy will cause.
We can't sustain our quality of life by selling each other junk bonds and hamburgers.
No.
I think we are already in a depression. The unemployment numbers are a joke. Many people exhausted their benefits long ago, or have taken jobs that cannot begin to pay for the necessities. The taxpayers are the ones who need to be bailed out. After getting billions of OUR dollars the financial industry, which produces nothing, cuts credit lines and raises fees. It is disgusting. Forgive the taxpayer debts and let us try to survive on our minimum wage service jobs.
Well it is a RECESSION when you are out of work and a DEPRESSION when I am out of work.
Well I am out of work. ...........................so you tell me.
Too big too fail.? Sounds like a monopoly to me. Maybe we shouldnt allow monopolies? Americans want European cars. Cant we build some?
I don't know if it will lead to a full-blown depression, but it certainly won't HELP us get out of this recession. Depression or no, with unemployment numbers at a 26-year high, we can't afford to lose any more jobs, especially when executives continue to live high on the proverbial hog.
I don't think it will lead to a depression. I believe they are just using "fear tactics" trying to weedle the money out of us.
But then, what say do WE have in this anyway.
The "Big 3" have already said they will most likely go bankrupt anyways, I say let them file it and live like the rest of us, this is America, there will be more investors, in better technologies. Havent these guys already taken enough from the public? Where has all of the profits gone these companies have recieved from previous years when auto sales were high?
Jack, You better believe it. The trickle down affect resulting in the auto industry will throw us over the cliff. Anyone who doubts this better come up w/a quick way to employ 3,000,000 affected families. Ain't gonna happen!
Will it lead to a depression...I'm already depressed!
These 3 should have changed direction 20 years ago. The economy is heading for a depression regardless of the cars makers going down. Enough is enough.
Why is it that when someone comes to congress for a handout, congress tells them no, thats not enough money, please come back with a larger request. Just like the 700 billion bailout turned into 850 billion. Is it that their scared as to be seen as not giving away our money fast enough, or is the first no, just to prove that their pertending to care!
Let the automakers fail. Just like main street, large corporations should be allowed to profit, as well as fail. Capitalism at it's best. Let things run their course.
Yes, Jack, it will lead to a depression. I live in Michigan and we are already in a depression. If you don't already feel the pain you will if the Big 3 go down.
The question we really need to ask is what about all those business's that don't receive a dime. We are creating a financial crises pushing large sums of money into the pockets of the few while thousands are at the mercy of these few flailing giants.
Don't believe loss of a big 3 auto maker will lead to a depression. If it did, then a depressiong is inevitable, because for a number of years they have been crying the blues and will eventually fail.
I guess I'll answer this question with one...are we willing to sit back and find out?
Out of all the bailouts that have been passed out, this is the ONLY one that actually makes sense. The Auto industry effects so many lives that letting them fail would be devastating to our countries economy and could very well lead to a depression.
However someone needs to tell these clowns that if they would build a car that gets 100 to 150 miles per gallon they would sell so many of them that they would never need another bailout.
EVERYONE would be knocking down the doors at the dealerships to buy one.
If we don't bail out the auto industries the US will see major unemplyment and home failures. We the people are to blame for the auto industries problems for wanting big SUV's and gas wasting cars. The people of the US got what we asked for, so we must bail them out.
Jack, we are already in a depression, they just won't tell us till the end of 2009. We need to let those companies fail, they made horrible business decisions, and now they expect the American public, which refuse to buy their cars, to bail them out?
Just baffling
Fredo
Texas
I don't think it will. If one of the big three goes down, honda, toyota, or nissan can just buy them out and take over. At least they wouldn't make the mistakes the big three did.
Anthony
Rancho Cucamonga, CA
No. The needed reduction in output will actually benefit the economy. Other auto manufacturers will pick up whatever is really needed from suppliers, will sell through their dealers whatever level of sales the economy can support, etc. The main problem is overcapacity and excessive overhead costs in excess of sales. Other, also big, problems will get settled once supply falls back to what demand can support. BTW, I don't think Congress will let any US auto company fail, so this is moot.
GM just sold their financial arm, GMAC for $X billions. What did they do with that money? Now they want more. This will end when the American people say NO. Let the "regular three" do what most other companies do in situations such as this, merge. The banks just did it, buying the weakest to become stronger. The stronger better buy the weaker before the Japanese do it.
Maybe, but by bailing them out we are just staving off the inevitable. The big three have been on the decline for the last 15 years and will fail, it's just a matter of time. Reorganization now, while the full brunt of the recession isn't realized, is much better than in the next year or so when we are attempting to claw our way out of this whole mess.
Yes. The loss of any of the "Big 3" could very well be the tipping point that leads to a depression. However, we need to remember that the foreign automakers don't have the legacy costs we have because their healthcare and retirement schemes are government subsidized, their governments have negotiated sweetheart trade agreements, and subsidize their sales (or dumping) of product on our shores so they don't take a loss. Our automakers are competing on an uneven playing field. Loan guarantees (this isn't a bailout) can help. The charge that we're putting good money after bad is just bogus.
Noel Siksai
Bloomfield Hills, MI
Not really, Jack. Even though I feel sorry about the people who will lose their jobs when the Big 3 don't get their bailout, I believe other countries will try to fill the gap.
Yes.
These are loans, aren't they? Loans get paid back, don't they?
Didn't we get paid back when we bailed out Chrysler years ago?
If they go bankrupt doesn't that also put additional strain on credit markets for consumers?
Jack,
No dont think so.they need to restructer.They had time to change but greed got the best of them.
I dont think that the failure of one or more auto companies will cause a depression. Though the depression may cause 1 or more auto companies to fail.
I don't think that not bailing the big three will lead to a depression, but it will eventually lead to nothing being made in the USA. I think we need not sell ourselves short and depend on others for what we need to provide for ourselves.
Absolutely, a depression. The loss of 5 million jobs would be catastrophic to an already beleagured economy.
Cure the legacy cost problems, and we have an automotive industry that can compete. Did you realize that all G7 economic powers- except the US- have supportive policies for their automotive industies including import restrictions and currency manipulation to make them competititve. As well, all G7 economic countries- except the US- have government supported healthcare. Instead of blaming the auto industry, fix the core problem, which is healthcare benefits, not only for the current workforce, but for all of the retirees that total up to $2,000/car disadvantage, and a large cash flow problem ($21 billion needed to fund VEBA- the UAW healthcare fund).
I think it will and it should. We are a making a big deal about giving money to the big 3's, for one reason. We are trying to fix the bad of giving all that money to Wall Street financial Firm. If we are talking about creating jobs, how can we let any of these automakers fail. If any of them close the ripple effect will be felt at the lowest level of a bodega in small town. Dock workers, Boat workers, Gas station employees, everyone. Why can't we give the money with certain conditions. The union have already made some serious concession. One last point, although the labor cost of the big 3's is 10% of the cost of the cars, their cars are still cheaper than Toyota, Honda and others that are made much cheaper in the US. That really mean that these non-US companies are making a killer profit, by paying their workers less and selling their cars for higher than american made cars. Stop blaiming labor cost or workers benefits. I have a saturn with 225000 and a very good engine. American cars are great.
No! Other industries have passed on and we still survived. Perhaps if the auto exec's did what they did back in 1979 and 1980, –Start selling their inventory at 1/2 price. They won't lose too much since there is reportedly about a 100 to 150 percent markup. That could be the ticket to survival. They are over priced anyway.
Clarence, Kingsland, Georgia
I don't believe that if the auto industry go bankrupt there will be a depression, the airlines bounced back so can they. they need to re-do there contracts with the UAW and build better cars first.
Jack: What is wrong here? I thought that fellow American's would want to try and save jobs in America. Have not we seen to many jobs lost already. Where do people who buy car'sfrom over seas, think the proffit money goe's? It doesn't stay in the U.S. America get smart drive U.S. car's
One thing I've learned about politics and government is that, if someone makes promises, it's never as good as they say it will be.
If they warn about impending doom, it's never as bad as they say it will be.
Somebody is going to need a bailout. The question is, should we bail out the automakers by giving them loans to pay back, or should we give the money to the unemployed and homeless, which we will never get back? I'd rather give it to the automakers and prevent unemployment.
loss of Auto maker can lead us to great disaster, I am not sure if it is appropriate to call it "great depression". Before taking any harsh decision, congress should give thought about the millions of pople who might will sink with this great titanics (GM, Chrysler, Ford)
Jack – I don't know that the failure of any of the Big Three will lead to a national depression, but I do know that the failure of GM will drive our family into a DEPRESSION. I will loss my pension, life insurance and health care. My 93 year old mother will lose her pension (from my deceased father) and healthcare supplement to Medicare. These additional costs will drive my family into a personal depression. Should enough Americans share the same predicament and stop purchasing, we as a nation are facing a real depression.
Signed,
A Retired Automotive Worker in Kansas City
I do not believe that if one or more of the big three go down will lead us into a depression. If they do go down we will survive and rebuild the economy and maybe bring our inflation down to a level that might keep jobs in America.
The UAW along with bad management from the CEO's put them in this situation but I don't feel that the American people should bail them out just because they have a big impact on the economy. I have had hard times with my business but could not get help when I needed it so I had to do it on my own so I think they should also and come what may.
We will survive! it may not be pretty but we will survive
I work for Ford, Yes this will lead to a depression in india. because in the past few years I lost my job many times becuase they shipped it to inda. I suggest if they decide to baill them out to add a condition that they can not spend it in India
Jack, We are in a depression the question should be how far into a depression we want to go? Can we afford to let 3,000,000 jobs go overseas and what is there to say that the other auto makers don't go under also. Americans are just going to learn to walk or ride a bus or other form of transportation. Any way you want to look at it this contry is in for a big shock. You have to have a job to buy anything and cars are a big expence.
To say that the collapse of any of the Big 3 will lead to a depression is overestimating the auto industry's economic dominance. While such a situation would undoubtedly result in massive unemployment and would wreak havoc on our economy it would not, as the Big 3 would like us to think, result in a sort of doomsday scenario. What is really needed is investment in job training programs and other social programs as well as investment in renewable energy sources to make sure that we can grow from this experience and better help those who will be laid off to find new jobs.
No, I don’t believe so. What I don’t understand after listening to the loan or bailout hearings is even if they give the car makers the money that are asking for, is how they are going to get individuals to buy cars! If they don’t come up with sale incentives or the Government bringing back the tax deductible to increase the sale of cars, I don’t see these companies surviving, if they can't sale cars.
Why didn't anyone question the bankers when they wanted what , twenty times as much? At least the autoworkers produce something, even if they need to rethink what it is they produce. I say, call in the loan to the banks, who haven't done a darn thing for the credit system and give the loan to the auto makers, who at least help the economy. Did any bank executives volunteer to take a $1 salary? They insisted on getting their millions.
this will be just another nail in the depression coffin. before world war 2 japan had companies contributing to the war industry against the us and germany the same. at the end of the war the us taxpayers bailed these countries out. thel companies honda, toyota, volkswagon, mercedes, etc. while this was going on gm, ford and chrysler changed their iindustries from making autos to making the us weapons of war to defend the american people from japan and german industrial produeced arms. now these same companies are screaming unfair, at the idea of bailing out the us companies. i say if we can bail our enemies out then we should be able to bail out our own. danny from flint michigan
If even one of the big three fail there will be such a loss of confidence in American auto companies the fall out will be terrible. The others will fall like a domino effect and we will be left with no manufacturing capablity in case of need to supply our armed forces with vehicles in war time plus the loss of jobs already mentioned. Every one of us will be effected one way or the other.
Jack, I'm already in a great depression about how our top government "experts" are handling this whole crisis. Everybody in control seems to be "flinging themselves upon their horses and dashing madly off in all directions" and nobody seems to know what to do with all the money they're throwing up against the wall to see what sticks. Here's an idea about how to bail out the auto industry. Ask the oil companies to put up the cash! After all, they've made huge profits from their collusion with the car companies to keep us pumping gas into our low mileage per gallon gas guzzlers. What did Exxon make last quarter, 84 Billion dollars? Get the oil companies to pony up.
George – Orlando, Florida
If Congress gives the big three a bailout loan, are there guarantees the money will not go to plants out of our country??? Also, should concessions include a cut-back on outsourcing of jobs???
Jack,
These three companies are not viable entities. Whether we throw money at them now or not, they will either fail within the next 12 months or be back with their hands out once again. Do we go ahead and bite the bullet now or when we are 35 billion further in debt? Do we bare the weight of whatever happens economically or pass it on to our children to deal with? I think it’s time we all face up to our own responsibilities instead of passing them along to the next generation.
Yes I am a Canadian but I have always made it my policy to always buy Canadian first, North American second. We have always purchased Ford 150 pick-up trucks and they are the best bar none. Maybe you should add some more tariffs to the foreign car makers (i.e. Toyoto, Honda, Nissan, etc.) to make the North American vehicles more competitive. G.M., Ford and Chrysler have good products people, but you have got to convince yourselves about "buying American" first. My husband and I are both over 65 and yes we still buy the Ford 150 4 by 4s.
Audrey
Depression is already in the air. Look at the faces of the three CEOs: they show signs of several sleepless nights. It is what the American people will be getting on top of the current difficulties they are enduring if we bail out these "failures.".
Two words Jack:: "comparative advantage." Let them drown and let the fittest world car companies provide the market with energy sufficient and affordable cars..
NO! In fact, I would pick one out of three and deliberately sink it. For example, Chrysler had its chance in early 80, now it is time to go under. In my opinion, if US people are going to bail out all tree of them, the inefficiency will be further subsidized, and most likely, after month or two the steel industry will be next beggar in the Capitol Hill.
Dalius G.
It might hurt mexico that's where most parts for the big three are made anyhow. I drive a real american made toyota tundra
Absolutely Jack! It will lead to the extreme depression of the CEO who will lose their cushy jobs, and hopefully awake the sleeping giant of innovation once again here in America and help us become competitive again in the worlds markets! If not we are just prolonging the inevitable!
Rod Davis
Venice FL.
Reminds me of the fall of the Roman empire. Greed has gotten us to the point where almost nothing is made in the US, now not even cars.
Depression needs to happen for our economy. The focus of jobs is one element to engage the quality of the American way.I am a Honda owner and you do not hear that company crying for help????America only hears big over paid sports crying about shooting themselves.Where is their education not promoting American cars.Recovery comes when everyone comes down to reality. Life is rough for the over paid CEOS and there under paid pawns.
The Big Three Ceo's created by neglect and perhaps ego and arrogance the present situation of their companys. Let them fend for themselves, and if they don't make it, it will offer an opportunity for a new manufacturer to build a worthy product that will meet the needs of people here in America and other countries. This is Capitalism, isn't it! It's time for a Real Change, and it appears to be public consensus that the Bailout will only be a temporary band-aid.
Doug
This could be an unparalled opportunity to make a massive, nationwide, positive shift in our use of energy & to align our values toward a sustainable future.
When fate throws a knife at you, you can catch it one of two ways, by the blade or by the handle.
A depression, indeed. All the CEOs and their families will be quite depressed having to sell their private jets. Unless, of course, the bailout money will be used to retain said jets, in which case the U.S. will become a utopia, which is likely what the Big 3 are aiming for. Three cheers for capitalism!
Tommy
Bedford, Indiana
The roots of the auto industry are deep into the economy. Not only would it put thousands on unemployment, but there would be a huge loss of tax revenue at both the state and national level, including, the loss of SS and Medicare payments, the effect on Medicaid for those who would loose their healthcare, and the pension plans that would be taken by the PGBC.
The loss of the American auto industry, would be catastrophic to the whole country, and would be felt in all 50 states. So, the answer to your question is a resounding YES!
I don't think it will lead to a depression, but it will be an extreme hardship for a lot of people. Here's a thought:
Why not have "Big Oil" bail out the "Big Three" The oil companies have made billions in profits over the years and they owe a lot of thanks to the to the US Auto industry...their products are their biggest customers......
Yes ,i do believe that if the automakers are not saved , then we will be on the brink of experiencing if not a depression or the next thing to it.
If we do not prop up “the big three” our economy will certainly get worse in 2009. However, it is time to rid ourselves of this “bail out” philosophy and get enthusiastic about our future.
We should consider an investment instead of a bail out. A project involving key players in our government and private industry would be a good start. The Departments of Energy, Transportation, and Agriculture along with the Automotive, Aerospace, and Railroad Industries could develop green technologies, generate new jobs and bring us economic success.
I believe its time the American people receive a more optimistic vision for the taxpayer’s money. It will not only mark a milestone in our history for the change of our nation, but will also ensure our economic future and national security.
Plain and simple the Big 3 is connected to many stores from parts to dealerships. Its like a food chain Jack. You take the source that created life away the rest will die.
While I can understand some of the sentiments of Americans against this bailout/loan, and while I consider the Senators' questions reasonable, to fail to provide a rescue for our auto industry is absolutely insane. The lack of comprehension of the consequences, if we fail in this, is breathtaking, and clearly smacks of a bias against blue collar industries.
Yes, maybe even worse! A total loss of our ability to produce our defence needs!! Wall street gets a blank check, and blue collar workers get the boot!! How can anyone buy a car, when they can't get a loan? The banks are too busy using our money to buy up assets!! Whose money will they use when we all go broke?
Yes. People don't understand how much more they can PERSONALLY suffer from an even worse economy if one of the big 3 goes under. It far out weighs any taxpayer cost of a loan. It's time to stop having an emotional reaction to a small amount of money compared to what's already been distributed to the financial industry. The loan is in all of our best interests.
And by the way, I have no interest, financial or otherwise, in the auto industry!
No. Chrysler was so bad that the Germans [almost] gave it back to us. The USA will continue to manufacture cars in American owned companies, but without substantial changes, they might drag us into a depression. If losing one or more companies is the cost, we will survive. What I wanted to hear was about these neat new cars that were on there way and how they were going to shake up the industry. Instead I heard a bunch of accountants talk about managing the same old thing.
Jim, Craig, CO
NO, we are allready in a recession/depression-
DECLARE CHAPTER 11 AND
Starting, with no legacy burdens ... will be good for the future of the workers, AND THE COUNTRY.
I don't understand why anyone thinks we should not keep the auto manufacturers alive. The lost of the loans they are requesting is far less that the cost of letting them go under. How much will it cost for unemployment pay for all affected plus food stamps. They will be added to those without health care insurance. Then there will be bankrupticies and all those affected by that and more mortgage foreclosures and the financial institutions affected as well as neighbors of the foreclosed homes. There will be the cost of retraining them for jobs although what jobs there will be in a depression is questionable. The stock market and the 401ks will take a beating and state and local government tax losses will further bring us deep into a depression. Don't blame just the companies, how about congress that failed to force them to produce more fuel efficient cars and the buyers who bought the gas guzzlers. Wake up and get the companies a loan.
Jack – This really isn't rocket science. The Big-3 have made poor decisions for years resulting in inferior products with excessive costs (see union agreements). Nobody wants 3 million folks added to the unemployment tally, but blame should be with Big-3 management, not Congress. Last time I checked, banks review business plans and make loans if they see a solid road map. If the Big-3 need cash to survive, they should seek bank assistance or file for bankruptcy. Congress is Not more qualified than banks at reviewing business plans – which is likely why the Big-3 are at their doorstep.
Well Jack, they ( CEO's) already look pretty "depressed " on your Blog page!!!
even if we were in one the government won't admit it until we're in it for a year.Why is it that people know more whats going on than they do ? with all the power and money comes a lot of stupidity
No. If GM goes under then we will buy more Chryslers and Fords. Those two companies will have to increase production, acquire assembly plants, and hire workers to meet their increased demand. I'm sure the UAW has room in the Job Bank for the rest of the displaced workers.
There was no talk of depression last year when they were still going broke. If there had been no financial crisis, GM would still have been blowing through billions of dollars with nothing but HUMV thinking to stop it. The same people who would be unemployed with their bankruptcy would still have been unemployed. Let the marketplace make it work.
If you think the economy is bad now, then let's just say "you ain't seen nothin yet". Think of it as a long line of dominoes, with GM, Chrysler and Ford being the first 3 dominoes in the line. When you knock down the first one, the whole line will go.
I believe so, and if $35 billion will save the automakers from going under, then they should be given the soft bailout loan. The taxpayers can see this amount as the 5% sales tax on the $700 billion bailout for the banks. I am confident we will all be happy to keep the american pride alive.
These companies effect countless number of businesses. if they fail this country will fall into a depression of the likes we have never seen and may not recover from for more than a decade.