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Charles Wheelan, Ph.D. The Naked Economist

Charles Wheelan, Ph.D., The Naked Economist

Why a Big Three Bailout Is Driven to Fail

by Charles Wheelan, Ph.D.

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Posted on Monday, November 17, 2008, 12:00AM

Congress is contemplating a bailout of the American auto companies. My advice: Don't do it!

Yes, this is a time for government to act aggressively to stop the negative feedback loops that have infected the economy. But giving money to the dysfunctional Big Three is not a good way to do it.

Here's why:

1. Because a bailout won't help.

Sending loans to Detroit will not stop the slow rot that has been going on for 40 years. Management has presided over decades of poorly designed cars that have less and less appeal in the global marketplace; labor has been inflexible and unrealistic, making it harder and harder for the American firms to make a good car at a competitive price.

Traffic safety experts don't like the word "accident" because it implies that nothing could have been done to prevent it; they use the term "crash" instead because it leaves room for culpability. What's happening in Detroit is a crash, not an accident, and it's been unfolding for a long time. The current economic crisis has merely sped up the impact.

2. Because bankruptcy isn't a bad option.

The Big Three will not disappear if they run out of cash. They'll declare bankruptcy, like the airlines do every six or eight weeks. A working bankruptcy would enable the automakers to ditch the labor contracts and pension obligations that have made them uncompetitive.

The Big Three could emerge as leaner and more competitive. Or they could emerge as the Big One. Or they could end up as Toyota. Each of these is a reasonable outcome, and bankruptcy would speed it along.

3. Because there's no economic justification for a bailout.

How does sending cash to Detroit make the rest of us better off? Obviously it helps autoworkers and executives; indirectly it slows the bleeding in the Detroit area, which will continue to suffer as the automakers sink further. But there's suffering involved with any business failure -- when crops fail in Iowa or my drycleaner loses his lease in Chicago. (The latter actually happened; his name was Hugh and it was sad.)

We should inject government money in places where failure would otherwise spill over to the rest of the economy in pernicious ways, such as bank failures precipitating a credit crunch. Saving the automakers won't quicken the recovery, nor will leaving them alone cause pain above and beyond what we've got coming. The money could be better spent elsewhere.

4. Because the Big Three have been horrible corporate citizens.

As a policy person who works on transportation issues, I've watched this for years. The industry lobbied against transit funding; they fought higher fuel efficiency standards and green taxes (such as a higher gas tax); they fought Japanese competition by limiting imports rather than building a better small car. The industry made tons of money by making increasingly irresponsible cars at the same time that we were becoming more aware of global warming. And now we're supposed to bail them out? No thanks.

(By way of disclosure, I do have a dog in this fight. The last American car I owned was a Ford Explorer. It rolled over on Interstate 80 with the whole family inside, shortly after Ford CEO Jacques Nasser began appearing on television commercials to assure consumers that the Explorer was safe.)

5. Because a bailout would be a terrible start to the Obama administration.

Democrats have a well-earned reputation for throwing money at problems. Many of us hope that Barack will be a pragmatic leader who's willing to do battle with the left wing of his own party. The Big Three bailout may take place in the waning days of the Bush administration, but it's a Democratic initiative at a time when the Democrats ought to be planning a future under their new leader. Government cash for Detroit sends all the wrong messages.

How the Government Could Help

But wait -- didn't I argue that we ought to spend a lot of taxpayer money to intervene in the financial crisis? Yes. That was different. Any government intervention should fit three criteria:

  1. Its primary focus should be keeping otherwise healthy institutions healthy (even at the risk propping up some businesses that should disappear). The ongoing Treasury Department intervention is rightfully designed to provide capital to viable firms that might otherwise get dashed against the rocks by this unique financial storm.
  2. It should make the rest of us better off in the long run. One doesn't have to be a Wall Street investor to benefit from the Wall Street stabilization. We all need stable, healthy credit markets. Without that, this crisis will continue to spread like a plague.
  3. It should be obvious how the intervention will restore a firm or industry to better health, rather than merely prolonging an inevitable decline.

Use the Money Elsewhere

The Detroit bailout fails on all three counts. Government money can be better spent. My first two (not mutually exclusive) choices would be a major infrastructure investment -- everything from fixing decrepit bridges to building high-speed rail links. Such a program would boost economic activity and leave us a more productive nation when it was done.

And/or I would use government resources to restructure mortgages at risk of default (with a significant penalty built in for both the bank that made the loan and the homeowner who can't make the payments). The key is to slow or stop the vicious cycle of foreclosure and falling housing prices: foreclosed properties are thrown on the market, which drives prices down, which puts more mortgages "underwater," and so on. Stopping that cycle is crucial to ending the crisis.

The federal government needs to act quickly and boldly. That's not synonymous with throwing money at unhealthy, irresponsible automakers.

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1323 Comments

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  • Jeff - Monday, December 29, 2008, 4:33PM ET  Report Abuse

    • Overall: 2/5

    I am very much a free market advocate, but the naked truth is that the big three did not get to this point in a free market system, and we won’t get out of this problem with a free market solution. They got to this point because of huge barriers to entry (massive design complexity, huge government regulations, monstrous tooling requirements, and cumbersome distribution), which the executive side leveraged for comparably large wages, and the unions leveraged for even more off base wages and benefits. If the government wanted to prevent this scenario, they should have attacked the barriers to entry, promoting competition, not whining that the unions and management took every dime they could—that is what every business and worker does. For those chanting bankruptcy, I would like someone to actually provide details on how to handle the bankruptcy of the highly leveraged supply base along with the big three. Remember that a stop ship of just one component during that time will shut down an entire plant. You’re going to have to sort out about 1200 bankruptcies at once, and, if you screw up just one part per plant, you’re shipping no vehicles and over time you have 2,000 dealerships declaring bankruptcy as well. With the trickle down effect into other areas, a 30-40% state unemployment is easily within reach. An airline bankruptcy isn’t even in the same league as the line of dominos ready to fall with the auto industry. The big three need to get real with wages, compensation, and benefits at all levels, but the public needs to get real with the true consequences and complexity involved in this situation.

  • Yahoo! Finance User - Saturday, December 20, 2008, 2:41PM ET  Report Abuse

    • Overall: 5/5

    Viewpoints like the ones expressed below by the one star reviews are what make me worry about this nation's future. Mr. Wheelan's points about workers in the car industry receiving a freeride for years could not be more true. While I certainly sympathize with the inconvience that is created through the loss of one's job, adjustment costs are a crucial aspect of the free market system. Giving more money to firms that have been generating losses for years is only going to extend the losses and make it harder to restructure down the road. Those at the top all the way to the bottom of the the automobile companies have been taking a protectionist stance for years, a stance that is virtually impossible to stand upon for very long in a global economy. If left to file for bankruptcy the big 3 will have to face reality right now. Their way of doing business is flawed and hopefully the humility of bankruptcy will cause then to take a careful look in the mirror, as well as allow them to clear out the unnecessary spending. I find it hard to generate too much sympathy for union workers when I consider the fact that for years they have earned wages higher than other well educated professionals in our society, most notably teachers. They've earned these wages for jobs that I am confident at least 80% of the world's adult population could complete with a month of training. The credit markets are a different beast, but a bailout of the car industry will only push America even closer to a socialist state. Those at the top and the American public need to step back and take a look at the path we are sending ourselves down. If we are so petrified of some adjustment costs and some free market competition, then maybe we should go back to an agrarian society in which each family should live as a self sufficient entity. The U.S. automakers need to learn how to compete or dedicate their resources to other causes, by pushing more money into a broken system we are simply worsening the problem and creating an inevitable collapse that will produce even larger adjustment costs in the future. The lobbying, lending, and union negotiations need to stop, and the cost cutting, research and development spending, and quality control measures need to increase. The Big 3 will not just evaporate after filing bankruptcy. Their infrastructure including: dealerships, factories, and inventory is too vast for them to just disappear. If Americans are educated through marketing campains by both the car industry and the government then their confidence will not be swayed in the automakers, and the result may be a creation of national pride that generates increased purchases and devotion to the U.S. automobile industry.

  • Yahoo! Finance User - Friday, December 19, 2008, 11:15AM ET  Report Abuse

    • Overall: 1/5

    I find this article stupid and very irresponsible.This "expert" doesn't have an idea about the dimension of this problem.I can't explain how is that a moron like this have a column here.

  • Yahoo! Finance User - Friday, December 19, 2008, 1:41AM ET  Report Abuse

    • Overall: 1/5

    Ph.D. obviously stands for puny headed dope in this case. I love your comment "A working bankruptcy would enable the automakers to ditch the labor contracts and pension obligations that have made them uncompetitive." Spoken like a true Nazi. Who cares about the people that worked their entire lives trying to better themselves and have a decent retirement? Not you I guess. It's too bad that rollover incident didn't leave you in a state in which you couldn't work and had to live off public assitance. You might feel a little different.

  • Hotblack - Thursday, December 18, 2008, 10:40PM ET  Report Abuse

    • Overall: 5/5

    Thank you for pointing out the oft overlooked truth that for big corporations filing for bankruptcy does not equal going out of business. There won't be millions of unemployed autoworkers the next day, although many overpaid lazy union employees might end up with a real wake-up call. Bankruptcy restructuring could bring about real change. A bailout certainly won't. But the Big 3 have already launched their post-bailout advertising. Have a look at http://farm4.static.flickr.com/3084/3097157920_d7c983aa6b_o.jpg

  • OfficialCraigslistKiller - Thursday, December 18, 2008, 1:03PM ET  Report Abuse

    • Overall: 5/5

    Well, my REIT stocks already up almost $10k after a news of Bush's might decide to let big-3 bankrupt. I guess all those comments about market and economy collapse are just a bunch of lies by share holders.

  • Dolores - Wednesday, December 17, 2008, 3:52PM ET  Report Abuse

    • Overall: 1/5

    Geez, this guy is clueless. Re point #2...the reason they can't declare bankrupcty is that people will not buy their cars regardless of how good they are. Who is going to plunk down $15/$40,000 for a product whose co is in bankruptcy? This will only scare off customers. Re point # 3 - we are talking about 1 million people being out of work if the Big 3 (or even 2 go under). Why? Because it's not just the workers of the co's that will be hit, but the hundreds of thousands of other businesses that are virtually dependent on them (ie, suppliers). Unlike most other companies and industries, a widespread layoff of the auto industry will have widespread ramifications for the entire economy. Even when Lehman went under, the effects of the layoffs on the economy was neglible (this in no way demeans the hardship of those laid off employees). So yes, sending money to Detroit DOES benefit everyone. I ask Mr. Wheelan what he would propose to do with the 1 million (or even if it's "just" half a million) auto workers who lose their jobs all at once? Does he realize the public is going support them anyway, in the form of unemployment, state health insurance, possibly food stamps and other forms of welfare, more home foreclosures (which affect everyone) until these people get back on their feet, which could take years, given they'll need to be retrained (most likely at public expense).

  • JTurn - Monday, December 15, 2008, 5:13PM ET  Report Abuse

    • Overall: 4/5

    I think the solution to the problem is obvious. Let the oil companies, who have been making barrels of money thanks to the gas-guzzlers built in Detroit, bail out the auto industry. The amount of money Detroit is asking for is less that Exxon-Mobil's 2008 Q1 profits.

  • Yahoo! Finance User - Monday, December 15, 2008, 4:44PM ET  Report Abuse

    • Overall: 5/5

    No bailout for Detroit. Great article!

  • Yahoo! Finance User - Friday, December 12, 2008, 8:52AM ET  Report Abuse

    • Overall: 1/5

    You are a complete idiot. The areas that the Big 3 have business in are astounding. This is not just a midwest problem, there are plants and suppliers from the West and East coast and the Southern states. You're talking about how Toyota would be the savior of these companiesby taking them over. Toyota is not doing well either. There is nobody out there to buy the liquid assets of these huge companies if bankruptcy is declared. The banks deserve nothing, and surely not 700 billion dollars. They are the ones that caused this entire mess. Screw you pal and keep your vendettas out of the public spot light, you're not Linsay Lohan.

  • Gary B - Thursday, December 11, 2008, 8:33AM ET  Report Abuse

    • Overall: 1/5

    Free market buffoons are going to take this country straight to H*ll. Ever since the Turbo-Capitalists, Ayn Rand freaky Objectivists, Libertarians, and Neo-Con morons have taken over, everything has gone straight into the toilet.

  • Frank - Wednesday, December 10, 2008, 9:58PM ET  Report Abuse

    • Overall: 2/5

    You flipped your Explorer so you want to let the entire U.S auto industry fail and take the entire supply chain foreign and domestic with it? Get Real! Imagine the dramatic impact if we redo The Sopranos HBO series and Tony trades the Cadillac for a Honda CR-V and weilds a plastic baseball bat while being mocked by Paulie "Carmela buying your cars for you now Tony?" "Get outta here!". They could redo the classic movie Bullitt only this time Steve McQueen's character drives a Civic with a fart pipe instead the iconic 1968 Mustang. Seriously, where was the outrage from you when some corrupt Texas politicians lured Toyota to their state with taxpayer dollars to build a plant for the V-8 Tundra which never met sales targets and is considered a drug on the pickup truck market because of its poor fuel economy and low towing capacity? Where are the jobs from that deal gone bad? Are we to consider these Texas politicians not as faithful public servants but as lobbyists for Toyota? The hottest selling cars in China right now are made by Buick and Cadillac. GM's future is promising in China with the new Buick plant in Shanghai as part of that strategy. J.D. Power rated the Buick product line in first place as having the fewest problems of any manufacturer in the world for the 2007-2008 model year. The Chinese assembled Buick seems to be as solid as the ones built in North America with zero rattles and a whisper quiet ride on Shanghai's city streets. I just read that a Chevy truck owned by a midwestern salesman achieved a documented 1,000,000 miles on its original engine. What is there not to like? The 2009 Cadillac CTS-V is the world's new halo 4 door car with 556 hp and 550 ft/lb of torque and documented world record time for a production four door sedan on Germany's Nurburging. If people will do the research they will almost certainly find a U.S. built car to suit their needs be they touring the Autobahn at record speed or just dropping the top for a ride over to the Tastee-Freez.. It sounds as if you are hoping the U.S. auto industry will fail outright beause you had a bad experience with Ford. I don't hope any of these manufacturers foreign or domestic fail because they all help create jobs and wealth; some more than others. You seem to be waxing ecstatic over Japanese grocery getters but a friend of mine had a timing belt snap in his Honda and it took the entire motor with it. A Honda, like many Japanese cars, has a belt driven interference engine. When the timing belt breaks, catastophic engine failure occurs. I talked my aunt out of buying a Toyota; she instead bought a brand new Cadillac DTS (Deville). Two months into the ownership of the new Cadillac, a full sized domestic pickup truck drove into the side of the Cadillac at about 50-55 mph. There were no skid marks because the drunk never hit the brakes. Both vehicles were totalled beyond recognition. Aside from a cracked rib and facial cuts, my aunt is fine. Now I ask you...what more could you ask of a car or a car company other than to have it faithfully save your life? Incidentally, the Cadillac DTS is equipped with a Northstar V-8 engine which uses a timing chain made of you guessed it...steel.

  • Your CFO, on Call - Wednesday, December 10, 2008, 5:37PM ET  Report Abuse

    • Overall: 4/5

    Bernard Joseph Rosa, Jr., J.D. (Unemployed) Box 1122Sebastopol, CA 95472 707-824-6902 Bjrosajr@yahoo.com November 30, 2008 Subject: Oil Sector bails out Auto Sector Dear Senator: Clearly the US Auto industry is a significant factor in the economy. An approach offered to remedy that sector of our economy must consider the following: Oil, as the major beneficiary of the Auto/Transportation industry, is best equipped To provide the funding of a revitalization, or re-birth of the Auto industry, because of the enormous profits extracted from the consumers of oil over the past 10 years. The taxpayers have already provided the funds necessary and they are in the Oil sectors Coffers, past or future earnings. Consider that only 4 of the Oil Giants have over $130Billion in Cash/investments as of last year, they can well afford to give something back to help America. And, the same group has paid in excess of $30 Billion in Dividends. More to the point, is the auto industries stifling of battery technology for electric vehicles, see more on Chevron’s ownership of battery patents acquired from GM in 2001, see this link for more http://www.evworld.com/blogs/index.cfm?page=blogentry&authorid=51&blogid=104 Oil industry is should be considered in the same light of public utility. Another worthy link: http://www.thisisreality.org/#/?p=facility An Auto oversight board is necessary to help guide the Auto industry into modern fuel efficiencies, as well as alternative fuel sources. In other words, the industry must delivery vehicles that are applicable to the needs of the consumer. Oil must pay! Sincerely, B. Joe Rosa Joe’s Resume: http://hotjobs.yahoo.com/resumes/bjrosajr/cfocontroller http://blog.360.yahoo.com/blog-2grG_MgzcbTcf0UnXy5JPA--?cq=1

  • Dana - Wednesday, December 10, 2008, 12:21PM ET  Report Abuse

    • Overall: 2/5

    Another foreign car driver. Probably bui;t in Mexico or something. I believe it's called a loan, not a bailout if they have to pay it back. Gas guzzlers? I see as many foreign SUVs and large trucks out there. Credit crunch?, I don't see the banks extending anything but their own empires while they sit on my money. And I'm sorry you flipped your Explorer over with your family in it. Maybe it's just because you were on a cell phone or something. Maybe you just don't know how to drive. Eliminate retiree pensions by filing Chapt. 11 - highr health care for all plus the Govt. picks up the tab. The middle class always has to bail out you rich analysts that have never done nothing but be a talking head, fight your wars, and protect our freedoms. If you rich folks weren't so busy outsourcing all the good paying jobs and keeping prices inflated for your profits, more people could buy cars, appliances, and other needed things.

  • Mr. Bond - Tuesday, December 9, 2008, 3:39PM ET  Report Abuse

    • Overall: 5/5

    Dead on analysis. Would it be painful - absolutely. Is it the right thing to have happen - absolutely. Just as forest fires are actually good for the long term health of a forest by pruning out the dead wood and sucker plants, a restructuring of the big three would cut out the dead wood and create a more healthy company going forward.

  • robertm - Tuesday, December 9, 2008, 2:52PM ET  Report Abuse

    • Overall: 1/5

    YOU MUST BE JOKING.

  • AnthonyS - Monday, December 8, 2008, 10:02PM ET  Report Abuse

    • Overall: 1/5

    I love these comments from people that don't own an American car. If the big three's cars are so bad why for instance does GM sell as many cars as Toyota. Unfortunately US auto manufacturers have never lived down the junk they built in the 80's. As far as product mix, the foreign manufacturers were trying to come up with the same type of products before the economy collapsed. The Japanese were fortunate and were lucky that their hybrids fit the bill when the market called for it.

  • binderzz - Friday, December 5, 2008, 10:00PM ET  Report Abuse

    • Overall: 1/5

    The only rot we've suffered under the last 40 years has been the building influence of Milt Friedman economists like Charles. For people like Charlie, all issues can be reduced down to "money" and what's in it for "me". Unfortunately, life is sometimes bigger than that and someone has to step up and just do what's "right" instead of what's economical. The only real disadvantage the Big 3 suffer under relative to the transplants and imports is what they spend on health insurance/healthcare and their retirees. The Asians spend very little (next to nothing) on either, here or abroad. By forcing the Big 3 into bankrupcty so they can "ditch" all that you're advocating putting American retirees on to the Fed's books (that won't be cheap for the taxpayers to pick up even if the old folks settle for pennies on the dollar) or putting the retirees into the street. While that might be an attractive fate for Charlie to assign to other's parents, it'd be fairly disgusting for the rest of us to deal with. Nationalized, single payer health insurance might be the best thing for business too but Charlie can't see that tree for the Milt Friedman forest either. Washington could save all three Detroiters for what they've dumped into the Wall Street blackhole of only one investment bank. If you want to see a "class war", go ahead and let Detroit fail while you continue to prop up New York/Wall Street. The resulting war won't be the tidy affair Charlie's equations might have predicted and I have a feeling Charlie's few skills will be of little value in it.

  • Yahoo! Finance User - Wednesday, December 3, 2008, 1:24PM ET  Report Abuse

    • Overall: 1/5

    How does Wheelan know what will or will not help the auto industry. Bankruptcy would cause thousands of retirees (real people) to lose the pension benefits that they worked for and rely on. Tough luck suppiers, investors, and creditors. Do you think there might be a ripple effect? The horrible corp. citizens retooled to support the war effort, is Charley too young to remember that? Wheelan sounds proud of thhe fact that he hasn't purchased a U.S. manufactured car since he drove a Ford Explorer with bad tires. Forgot about the tires, did he?

  • Yahoo! Finance User - Tuesday, December 2, 2008, 11:29PM ET  Report Abuse

    • Overall: 1/5

    Charlie, you are a smart man, but waaaaay off on this one. First, the Big 3 are asking for a loan, not a bail out. That means that taxpayers actually have a shot at seeing this money returned to the government coiffers. Semantics matter. Second, the only reason that the Big 3 seek federal loans is because of the credit crunch - they have been making structural changes for years (witness the shuttering of factories and balance sheet write-downs that have occurred over the past 5 years). The loans, therefore, will not lead to more of the same mis-management characteristic of the 90's. Besides, had it not been for the risk-seeking behavior of banks, the Big 3 would have access to the lines of credit that they have relied on in the past to get through these tough times. Third, bankruptcy is NOT an option. A car is a long-term investment. No one is going to purchase one from a bankrupt company. Fourth, the auto companies have been innovating all along, but demand shifted very suddenly from gas-thirsty vehicles (e.g. your own Ford Explorer) to fuel efficient ones. Unfortunately we live in a world of sticky supply. Fifth, the shock of the Big 3 failure will be felt in other parts of the economy - the industry is the single largest advertiser to name but one example. Sixth, some may call it greed, but the Big 3 actually provided healthcare and retirement benefits for its employees. That is not a bad thing. It is one of the few industries supporting what is left of the middle class. In doing so, they are at a huge competitive disadvantage vis-a-vis foreign manufacturers. Seventh, doing nothing could cost much more, (i.e. bailing Michigan and Ohio out of bankruptcy and inheriting the pensions of hundreds of thousands of employees when they become a federal liability, in addition to more mortgage foreclosures). Finally, though I could go on, when crops fail in Iowa, farmers receive both federal subsidies and insurance money. So far the results of the Wall Street bail out have been less than stellar - maybe a different tactical approach is in order.

  • Patrick - Tuesday, December 2, 2008, 1:12AM ET  Report Abuse

    • Overall: 4/5

    I think they will get a "bail out", unfortunately we, the tax payer will get screwed again, I say this not because a "bail out" will not work ( it probably won't however ) I say this because the big three have said plant closures and lay offs are planned and it will not be at the Mexico or Canadian plants. I would love to see a Senator directly ask them " if we the US government , and tax payer give you 25 billion dollars , will the lay offs and closures you plan occur in Mexico and Canada, down to completely ceasing production there, happen before the first US closure and/or round of lay offs?" Or "How much has the Mexican and Canadian governments committed to keep the plants operating in there respective countries?" Unfortunately, I don't believe they will hold them accountable to the US tax payer. We will be subsidizing Mexican and Canadian factory workers while US workers are booted. Reducing the tax base and indirectly paying to secure for foreign jobs. If we bail them out with out holding them accountable to the people paying to save their A** we will be screwed again. Without commit screw'em; give the money to Toyota, Nissan, Honda and Subaru to open more plants here.

  • Leslie - Monday, December 1, 2008, 8:29PM ET  Report Abuse

    • Overall: 5/5

    Dr. Whalen, Both the Clinton and Bush administrations gave money to Detroit for "research" purposes. The execs used it to hire more lobbyists to fight the lawmakers in Washington D.C. who wanted to raise mpg standards. They succeeded by having SUVs reclassified as trucks so existing mileage standards would not apply to them. Rick Wagoner even said that Americans don't care about the high cost of gasoline. At the very least present management should be retired before any bailout money is even considered.

  • Yahoo! Finance User - Saturday, November 29, 2008, 9:59PM ET  Report Abuse

    • Overall: 4/5

    While I agree with all your points and do not want to see the automakers bailed out. I believe that the collapse of the the auto industry would devistate the midwest. This collapse would set the midwest back so far we could call it the new south. It would probably take 50 to 100 years for the midwest economy to regain a footing in some new industry. It will always be a shadow of it's former self. The probable scenario would be some sort of pre conditioned bankruptcy inorder to give the companies leverage to re-negotiate the contracts. But please above all else get rid of management.

  • Marcel - Thursday, November 27, 2008, 3:19PM ET  Report Abuse

    • Overall: 3/5

    I agree with you on the bad performance exhibited by the 3 for many years. But the fact is that they are part of a value chain and the ripple effect would have a huge negative multiplier effect on Media, Suppliers, Financial Institutions etc.if a bailout is not offered. I would like to see a bail out with a consolidation plan for the industry and a transparent restructuring mechanism in place without any giveaways.

  • Stephen M - Thursday, November 27, 2008, 10:48AM ET  Report Abuse

    • Overall: 5/5

    I like your linking of auto/airline industries. We have to know when to let go and let Detroit clean up the mess it created for itself. I hope the new administration listens.

  • Yahoo! Finance User - Wednesday, November 26, 2008, 12:51PM ET  Report Abuse

    • Overall: 1/5

    We can afford to throw trillions to the financial institutions, but can't afford a paltry $25 billion for the automakers? Let's dump the pecking order and start bailing out everyone. You better get your place at the trough before all the slop is gone!

  • Chris - Tuesday, November 25, 2008, 10:36AM ET  Report Abuse

    • Overall: 4/5

    barion586, the problem with your reasoning is that you think that the people who lose their jobs if Big Three collapse will never find new ones. What do you think will happen if they go bankrupt? No one will ever buy cars again? Demand for cars will stay the same, but the companies' assets will be sold to other companies like Toyota, or new companies will be started in the United States, a good idea after a century without change. Do not fear that factories and so on will fly to China or something: it is very expensive to ship cars, and Americans already have the expertise in manufacturing them. So when new car companies and experienced employees meet, it will be another opportunity for all the people hurt by the inevitable collapse of these big companies--except, of course, for the poor leaders at the top.

  • HomerN - Monday, November 24, 2008, 1:08PM ET  Report Abuse

    • Overall: 2/5

    My dad worked 60 to 65 hours a week for over twenty years to pull our family out of poverty. He went from sweeping, cleaning the bathroom, and mowing the lawn on weekends to operating three CNC machines. Through hard work, he pulled our family out from living in peoples basements as war refugees to putting his kids through college. He died two years ago after battling cancer but not before I realized how much of an impact he had on his company and the people he helped train. And in his hour of need, they did what they could. He could not have done it without one thing, the opportunity. The US has been considered the land of opportunity and has been the protector of life, liberty, and the pursuit of happiness. It has always offered the hope that if you work hard; you can get ahead in life. Throughout its history, there has been no other segment offering a better opportunity to pull themselves from poverty to the middle class than the automotive industry. I would like to still think that if you work hard, you can still get ahead in life. When we bail out the automotive industry, we are not just bailing out the million or so people who have sweat to help build this country. We are bailing out opportunity and the pursuit of happiness.

  • __A_YAHOO_USER__ - Saturday, November 22, 2008, 1:13PM ET  Report Abuse

    • Overall: 3/5

    On your Explorer, Charles: “It” didn’t roll over—“You” caused a crash. Public works projects do not boost economic activity. If I take a $20 bill from my left pocket and put into my right pocket, my right pocket is $20 “richer,” but the net to me is ZERO. Taking money from point A in the economy (the owner-taxpayer) and moving it to point B in the economy (the public works project) boosts nada. Such a program will not boost economic activity because nothing has been produced and productivity hasn’t been increased. Let’s NOT bail out the Big Three. The disfunctional socialist republic called the U.S. automobile industry has been dying for decades, a marriage made in hell of Big Government, Big Labor, and weak absentee equity holders. The only part of the U.S auto industry that is hiring is non-union and non-American, and they provide good jobs with good pay and benefits. Americans will continue buy cars made by Americans, but they will probably be brands like Nissan, BMW and Mercedes Benz. Too bad, UAW! But, uh, let’s keep Corvette and get Warren Buffett to fill the top management slots.

  • Yahoo! Finance User - Saturday, November 22, 2008, 8:35AM ET  Report Abuse

    • Overall: 1/5

    Phd? Of what? Basket weaving? It is distressing but not surprising that such uniformed, less than intelligent, diatribe finds itself on the web. The domestic automakers are making great strides in their business and are very competitive in the market both in quality, durability, and function of their vehicles. One key fact, amongst many, that you fail to point out in your 'diatribe' is that it is the credit crisis that has been the major contributor toward the dire straights of the domestic (and yes, even some of the foreign) auto manufacturers today. Providing some assistance to the domestic automakers, and protecting 100's of thousands (perhaps even millions) of jobs certainly makes more sense that handing $25 Billion to CitiBank, and numerous other banks, with "no strings attached". Prior to writing another one of your diatribes, please try to get your facts straight.

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