Here's an excerpt from a recent blog post of mine where I take a side:

"Many have argued that bankruptcy is just the medicine Detroit needs to cure its financial woes. Others feel the painful restructuring process will do more damage to the local and national economies and related industries than is worth suffering, including the auto executives requesting the assistance.

I think the correct response lies somewhere in between. Now that the government has significant leverage over the auto companies, let’s use this bargaining position to our advantage. The EPA has always butted heads with auto industry lobbyists over fuel economy standards. Now the government can write the standards on its own terms. For example, we could model new standards after those in Europe with regulated CO2 emissions.

I’d like to avoid bankruptcies, if only for consumer psychological reasons. Consumers will avoid purchasing cars from bankrupt companies, and this will only exacerbate market share losses to foreign competitors.

But if Congress needs to send Detroit back home a couple more times (driving in their hybrids!) until they return with appropriately detailed and significant plans for their use of the loans, so be it."

http://www.chriszach.com/2008/12/05/should-the-government-save-tesla-from-a-short-funding-circuit/

1) long ago invested time and expense into hybrid development

Sure, Japanese did this. But the only reason is they, like Europe, have very high fuel tax at home, which make gas prices very high and essentially forces people to buy fuel-efficient cars.

While the hybrid is very hot when gas price is high in the summer, now the sales of hybrids is down significantly, even Toyota's Prius.

Most people, like you and me, are very short sighted. Without a long-term energy policy that includes high fuel tax, few people will buy expensive hybrids.

2) responded to "Buy American" and changing workforce conditions by employing thousands of U.S. auto workers in places such as Mississippi and Ohio

The only reason they did this is to win support of politicians such as Alabama's senator Richard Shelby. Did they have a considerable design and engineering footprint here in the U.S.? No. All they do is assemble different parts into a car. If the Big Three are down, they will happily shift their manufacturing plant to Mexico once they think it's more cost-effective. And we will lose all auto technology just like other consumer goods like LCD TVs, digital cameras, etc. Do you think it is sustainable to buy imported goods with borrowed money? And who will give you the money if you cannot export enough goods?

3) never asked our government or Tokyo for a bailout, even as they are suffering wrenching U.S. sales declines this very instant.

Can you give me the proof? While all we care about is Wall Street or financial service, the Japanese, German, and even French governments are all very supportive of their auto industry and provide D&R funding to them through a variety of ways.

This whole bailout thing is a scandal. The reason GM and Ford are in trouble is because of UAW contracts. You cannot pay high school graduates (or less) $75 per hour in wages and benefits and stay in business. It is impossible. But the current bailout does not give management the ability to kill the $75 deal. The UAW keeps feeding the public misinformation about how the new contract fixes the problem in a few years. This is smoke. The union is getting $100 billion for a health care fund before the new hires get lower wages. Now, this $100 billion giveaway will be paid by your tax money so UAW members can retire at 48 years old with gold plated health care while the rest of America works until they die. This is the Democratic party giving the UAW a $25 billion dollar kickback for the $400 million unions kicked in to the Democratic campaign. Obama told us no more special interest groups under him. What is this? Special interest of the worst kind. Shame on the Democratic party. When the public figures out this scam, the Democrats will be out in the next election cycle.

jt, the gold plated compensation for UAW is certainly a reason for the problem in the big three. That's why I think pre-packaged bankruptcy would be a better choice. Without it, it would be very hard to win enough concession from different groups, including UAW and dealers. But I don't think it's a good idea to let them just disappear. One reason Chrysler is the worst among the big three is that when it was bought by Daimler, it shifted most design and engineering for new products to Germany, so that they could stamp "Designed and Engineered by Germany" on Chryslers's cars. Now see what happens: They don't have any new products. One additional comment on Roben's third remark: Toyota and Honda might ask for bailing-out from the U.S. government when they burn out of cash. But right now, they are sitting on the top of their cash mountains and do not want to get any cash with a lot of constraints from our government.

If the Big 3 go bankrupt, that might leave a whole generation of retirees without health care, etc. It will also reduce the value of pension funds of all those people who have some money in shares of the Big 3. So, some controlled Chapter 11 process is preferable.

On the other hand, the question is how to fund the restructuring that is needed. As a European, I advocate a significantly higher petrol tax. The money it generates can be reinvested in cleaner technology, both by funding car makers as well as car buyers who purchase hybrids and electric vehicles.

Well, Chrysler got strip-mined by its 10 years of Daimler ownership and should pretty much be forced to liquidate.

Ford has some fairly competent management and looks like it could potentially survive on its own. They have a few nice small cars and a great truck line. Time will tell if they can be profitable with a North American small car presence.

GM is a tough story. There is a lot of value and some very interesting technology in their fleet. But they have way too much debt and and too many long term obligations from a bygone era of market dominance; that they are pretty much screwed. They alone are going to need $75 billion to even survive another three years, and that debt will have to be forgiven for them to survive beyond that. Total scam.

Make taxpayer capital for GM and Ford conditional upon Chapter 11 and let Cerberus finance or liquidate Chrysler.

JT and Ray, what do you know that the New Republic does not. Aren't a major part of those $75 per hour labor costs for 100 years of workers? The worm will turn as the Mississippi workers of 25 years start get older. As the NR author says, hourly wages are much closer than you advertise in your blog. Check it out.

These companies should be forced to reorganize under the existing structure of the bankruptcy courts. This is why this mechanism exists. The government can play the role of DIP and even guarantee auto warranties, but the bankruptcy proceedings should roll. The federal loan proposals do nothing to address their systemic problems, and only prolong the inevitable. One such example is the federal board that will monitor these companies. This means non-bankrupt companies will not be subject to federal management. That is surely a competitive edge.

I find it humorous that that this has been compartmentalized to a union problem. While unions certainly put the Big 3 at a competitive disadvantage the real issue here is the lack of foresight of their executive leadership. As a German citizen, I almost laugh at the demonization of union workers. How is it that a "socialized" country like Germany is the largest exporter of industrialized good in the world? Because they have engineers that lead their companies and not bean counters, and their "unionized" workers are among the most efficient in the world. In addition, labor has corporate governance board seats that provide checks on the salaries of CEOs. So in bad times, the unions are more likely to agree to concessions. Remember when Daimler and Chrysler merged? The CEO of Daimler made 10 times less than the CEO of Chrysler. Go figure. In the 1990s labor even agreed to shorter work weeks to match the current economic cycle. I do agree that fuel economy standards might have mitigated the current problem to some extent, but the problem probably stems deeper.

If we do give them billions in loans with "strings attached," I just don't see how they are going to make it work in the long term. If this is the option Washington decides on, I would rather see a new American auto industry emerge. Let the Big 3 fail and give the loans to the new startups that are focusing on green technologies. These companies are starting to run into problems due to low oil prices. These are the companies that we can't let fail. They have the best designs and ideas, and they have the ability to deliver on their promises. We need these companies to be able to get their vehicles on the market before oil jumps back up to the $100 to $150 a barrel range.

If we do want to save the Big 3, some things definitely need to change. I may be way off base because I don't work in the manufacturing industry, but I think the unions need to go. Don't get me wrong. Unions have been great for this country, and there may be instances where they are still needed, but they are a thing of the past. We have factories around here that aren't unionized and when the layoffs come, the people go to the next factory down the road. They don't get paid for the next two years for doing nothing. It may suck, but that is the life you have chosen. If you don't like it, do something else.

I find it kind of ironic that you can almost compare the auto union executives to the executives on Wall Street. Both were living high on the hog and were able to get whatever they wanted. Now that their jobs are in jeopardy, their little scams are coming back to haunt them. There is nothing I want more than to see the executives of the auto unions go down in flames--just like the CEOs on Wall Street. It's what they deserve for years of making millions off of the auto workers by bullying the Big 3 and putting the workers' jobs in jeopardy.

Actually, Chapter 11 Bankruptcy may be the best solution. It would allow the Big 3 to renegotiate these obscene labor contracts. It will remove bad CEOs from running their respective companies into the ground, and bring new fresh leadership that is not tied to the past. Then get rid of all these Michigan Senators and representatives who have effectively killed any legislation that would have forced the car companies to spend money on R&D.

That is why I am opposed to any bailout for these fat, arrogant companies who now lie in a bed of their own dirty mud they themselves created.

Unfortunately, we the taxpayers will end up bailing out these turkey necks.

No denying the Japanese automakers are excellent companies; however, Mr. Farzad conveniently overlooks the facts that Japan's MITI played a crucial funding role in the development of the Prius; that Japan is one of the most closed auto markets in the world; that the Asian and German automakers have received billions in subsidies from state governments to build plants in the U.S. (interestingly, two of the most vehement foes of bailing out the Detroit 3--Shelby of Alabama and Corker of Tennessee--are among the most generous.); and that the Asian and German automakers all benefit greatly from having health care and retirement costs socialized to one degree or another in their home markets. Maybe that's one reason Toyota is able to absorb blunders like building a brand-new assembly plant in San Antonio, Tex., to build its biggest, most powerful ever Toyota Tundra pickup truck--just in time for the truck market to collapse. Let's get off the kick that the Japanese automakers are always far-sighted, virtuous, innovative, and green.

In sports they teach you to never quit even when you are losing. Although the odds are long, quitters never win. Now is not the time to quit on the auto industry, but to help them achieve victory.

If the Big 3 want to survive on more than continuous loans, they need to improve their products and bring some of the cars they sell only in Europe to the U.S., which they apparently think isn't worthy of good cars.

I recently got a European car after driving Fords and Pontiacs for the last eight years. My new car is just plain better. It handles better, it's built more solidly, it grips the road, and I need to do far less and much cheaper maintenance on it than I would for a comparable American car. Frankly, I can't think of why I should buy a car that runs great for a month or two, then starts creaking, rattling, and needs five or six trips back to the dealership to get its screws tightened.

There are ads out there that say Ford and GM are now tied with Toyota in quality. What they don't tell you is that the tie is in initial quality. Not long term quality. When it comes to long term quality, European and Japanese car makers reign supreme. This matches up very well with my American car experience. They start out very nice, but then slowly proceed to fall apart. The G6 is probably the best built American car I've driven, but its glass roof is a source of constant and very annoying rattling on rough roads after about two years.

So seriously Big 3, start building better cars. Get some new designs. Bring some of those cool concepts to life. Update and reinvent yourself. Until you do that to better compete with other car makers, any loan is pretty much being wasted on more of the same.

Certainly, if GM, Chrysler and/or Ford file for chapter 11 the effects will be felt by us all. And yes, over time wage agreements will be scrapped, jobs lost, plants closed and brands such as Buick, Pontiac, GMC, Saturn, Chrysler and Mercury will likely disappear. But in all probability, Chevrolet, Cadillac, Ford, Jeep and Dodge will remain.

The immediate effect will not be the millions of jobs lost and all the other scare tactics supporters of the bailout throw out there. Left alone, the market will adjust quite quickly as circumstances change. Most car part manufacturers will still be in business as the millions of GM, Chrysler and Ford cars on our roads still need servicing. Already Sears has announced that it will be partnering with the Whitney Automotive Group and adding 130,000 automotive parts and accessories for purchase on its Web site.

As for the remaining car manufacturers, they will step in to fill the vacuum left by the departure of GMC, et al. Distributors will need to downsize, but those that remain will see sales stabilize.

If we go down the route of bailing out the Big 3 with taxpayer dollars, it will do nothing but add debt that our children will have to repay and delay the day of reckoning. This is our problem. If we believe in market economics then it is time to bite the bullet and let them swim or sink. There are no good options, but Chapter 11 is the best one available to ensure the continuation of the auto industry.

Random, you make it sound easy, but it is not. GM and Ford pay unskilled labor $75.00 per hour in wages and benefits. This overpayment in wages and benefits results in under-engineered cars because they don't have enough money left for design, engineering, and product. This is why GM and Ford cars are poor products. There is not enough money left after the UAW bill. There is no way to fix this unless the UAW wages and benefits are reduced to normal levels.

No mention at all here about the high cost of health care in the U.S., which is a big part of the problem. In France, for example, its 62 million citizens are healthier than the U.S. population, but per capita spending on health care is also roughly half as much. Pay structure in medicine in the rest of the industrialized world is much different than it is here. In Europe a doctor may make slightly more than what a nurse makes here. Why not start reforms here?

Break the unions. They have been killing the Big 3. We cannot let them send more jobs oversea. Then give them the loans and the Big 3 will be the best carmakers anywhere

Jt,
Great design comes from great designers. Surely if they can afford to pay superstar artists today, they could look for fresh talent elsewhere. It's not that the money isn't in the budget. On top of that, high labor costs are a poor excuse for bad design and mediocre quality. GM and Ford apparently have the cash for fresh designs and decent quality cars in Europe but not in the U.S. (Just for your information, European unions make the UAW seem like college protesters by comparison.)

The problem with their product isn't that they're spending too much on them. That's a given. They simply don't do a good job building the product in the first place.

I wish there was more analysis and less hyperbole. The Michigan politicians seem the worst. I am from Michigan. That said, however, if Chapter 11 is going to be the end of the world, why doesn't the State of Michigan sell bonds and give the money to GM? On the other side, I find the opposition to government loans on the part of politicians from states with the non-union auto plants equally bad. Today most people even in the conservative southern states feel health care is almost a right. Prior to some long and very nasty strikes, the middle class did not have any insurance. Today it is largely the legacy health care costs that are draining cash from the Detroit 3.

Save GM, with management change, save Ford, and let Chrysler sink or absorb with GM. Drastically cut brands and dealers. With all the competitors from Asia and Europe, the U.S. could manage two lean, tough companies that made cars Americans want to buy.

Unions bad, capitalism good. It's really that simple. Let the auto manufacturers go into Chapter 11 as has been suggested by folks far brighter than I (Welch ring a bell?). Everyone is missing the real point here, so indulge me. My father worked for Ford corporate for 20-plus years. After college (20 years ago), my first job allowed me to buy a car, I chose a Honda. Reason was they built a better product and still do today. I don't care about the rhetoric coming from the Big 3, saying we are as good as the other guys. No, we aren't. Isn't that the discussion we should be having?

I would like to take this opportunity to remind everyone who advocates letting the market decide the fate of the Big Three to remind them of the Chrysler bailout (which was a bankruptcy in everything but name really) of the late 1970s. Had the government not intervened, the company surely would have died then. But the government did, Chrysler prospered for awhile, and between it and its employees paid billions in tax revenues over almost the next 30 years.

If the government can effectively intervene now, I truly believe another turnaround is possible. GM is not a broken company. GM produces some great products, but they are simply burdened by their legacy costs, union agreement, franchise agreements, etc. If the government can provide assistance in reducing or eliminating some of these issues, I know it can succeed again. Sadly though, I believe Chrysler's time may have come and it should be forced to merge with GM or Ford.

I would suggest the government look to what it did right with the Chrysler bailout as a starting point and work from there instead of trying to reinvent the wheel. My fear is any aid package from Congress will be so burdened with strings, that even taking their chances with a bankruptcy filing may be preferable in the long run.

This is really easy folks: All executive level get paid $15 an hour until the company is profitable again, all other staff take a 25% pay cut, unions cut back on demands, and immediately stop paying "laid off" workers 95% of wage, which should be reserved for injured or retired workers; otherwise there is no incentive to go to work. Cut all model lines by at least 6 to 8 models. Discontinue Pontiac and Buick. Done deal.

Words of the year: "Change," "Bailout," and the most fitting,"bloated."

Whether we like it or not, something has to give and a lot of people are going to have to learn to live a lower lifestyle. All these years of artificial economic boom have been built on borrowed money, aka credit/subprime lending.

Even if GM and Ford are successful in making good cars that people want, they won't sell enough of them at a profit for the next two to three years, because auto sales are going to continue to drop. Consumer confidence is plummeting and it will only go up briefly if Obama gets his trillion dollar stimulus package (which will also be borrowed and added to our already ridiculous national debt). An "economic stimulus package" is an idea shared by socialist utopian dreamers. This idea is similar to the auto bailout and the Wall Street bailout, it does nothing to solve the problem but just gives it a little more fuel to carry on for a while longer. I understand to a point why people would want to back this, because they don’t want to see others suffer and lose their jobs, but the truth is that these jobs are no longer needed, they are literally sucking the life out of every other productive working citizen of the U.S. and it needs to stop.

This is like horrible parenting skills on a national level. It's like a parent saying "I don't want to punish my kids, because they won't be able to play (watch TV) for a while." Send the bad kids to their room (Chapter 11) and let them learn their lesson! It is so stupid, it's funny--but not really.

Story time:

Fred, Dave and 10 Others

Fred owns a car company, and he has been in business for five years and has steadily grown his business with good products for all five years.

Dave owns a car company, and he has been in business for 10 years and has steadily shrunk his business with lower quality products for the last five years. 7 of the 10 others buy cars from Fred while the other 3 buy from Dave. With that information answer these questions:

Would you invest $5,000 of your own money in Dave’s company?

If Dave asked your parents to invest $5,000 of your own money in his company, would you be angry?

Who would you buy your next car from?

What if the bailout money being considered was, instead, spent on rail or other modes of transportation?

I don't think it's smart to stand around with a stick of dynamite in our collective pocket, arguing about whether or not it deserves to blow up. Let's put out the fuse and deal with it later, when it won't kill all of us.

"An 'economic stimulus package' is an idea shared by socialist utopian dreamers."

Like George Bush, Dick Cheney, and Henry Paulson who passed a massive stimulus package last year? Well, I never knew a center right administration was a pack of socialist utopian dreamers. Guess you learn something new every day.

If this country can't make cars, it may affect national security. What if planes are next? We'll wind up dependent on other countries for everything we need. But any assistance should come with the price tag of some serious government oversight.

Yes, we need to help the Big Three, but I agree with those who voted to block the bailout.

Unions and bad management are the main cause of the problem. Until we can get rid of those bad guys from the Big Three, a bailout is just a waste of money to taxpayers, and delays the demise of the Big Three.

What are the benefits of the government paying off half the debt? If they reduced the interest payments by half a billion dollars a day, in a year it would equal $182.5 billion dollars. In 10 years it would equal $1.8 trillion dollars. It's sad that government wastes $3.65 trillion dollars in 10 years on interest payments. I have e-mailed Barack Obama at change.gov about this. I hope before his term is over we can get results on this. I heard that he wants to get the budget deficit down, but for now it is on the back burner.

The middle of a global economic crisis isn't the time to decide all of a sudden to restructure an industry. Thousands of jobs are being lost daily. And suddenly we need to attack the guy who makes $28 an hour? We have the ability to save a large number of jobs, which will bolster a faltering country's economy. If you want to attack the domestic auto industry, fine. Just do it when other industries are doing well so that our economy can bear it. In the midst of an economic crisis, our government has spent weeks discussing the auto industry. In the end, the Dow is still down, more and more jobs are lost every day, and the auto industry is still struggling; they have accomplished absolutely nothing. A yes vote on the bailout would have fixed one of three, and that may have likely improved the other two.

First of all, the auto industry is about designing, manufacturing, selling and servicing quality automobiles and providing daily transportation to millions of Americans, who would be totally and critically disadvantaged (immediately) if they did not have cars and trucks and SUVs to get to work and school, and for personal and pleasure travel. Just try walking to work tomorrow or finding public transport that would not take hours out of your already too busy life.

That is another issue that goes hand in hand with an efficient transportation plan for America, which includes not only American manufactured fleets of cars for public and government use, but also American designed and manufactured efficient mass transit systems that will create hundreds of thousands of quality jobs for Americans.

Any country that can no longer manufacture their own quality automobiles and trucks and SUVs internally, and depends on imported vehicles to meet their transportation needs cost effectively does not deserve to be considered a modern leading high technology nation, nor will they long be competitive on the global market in any other major technological area.

Give up leadership in automotive technology and manufacturing and you can kiss our economic leadership in the world goodbye forever. The modern world runs on automotive power and is build around automotive technologies, and our whole lifestyle and quality of life depends largely on the flexibility of automotive transportation.
It does not have to depend on autos powered by gasoline nor limited petrochemical reserves. Cars can run very well on many alternative energy sources, and American car manufacturers have advanced engineering in place to make that happen, if they are given the chance to prove it.

Continuing to be dependent for domestic automotive transportation needs on foreign fuel sources and dumping the domestic car manufacturers to make us totally dependent on foreign owned auto companies is incomprehensible if this country is to remain proudly independent and a leader in world economic power and influence. Now is the best time to invest in and reinvent the American auto industry as the global leader in automotive technology and innovation that they can certainly become.

WW11 was largely won by the fact the domestic manufacturers retooled to build military trucks and jeeps and tanks, and many of the spin-offs from those wartime innovations are used on our cars and trucks today. Where is American loyalty to the companies that have provided us with generations of good quality cars and trucks, helped us to win a world war, and who does not have an American car or truck in their lifetime somewhere that served them or their family well somewhere back in the family history, even if they are driving import cars now?

How many million jobs have already been lost, and will continue to be lost if the American auto industry fails to get the support they well deserve? The repercussions in terms of direct job loss, and related work and employment is beyond what our faltering economy can take.

Having gotten well deserved scrutiny and criticism, and admitted shortcomings and shortsightedness in the past, and now showing true readiness and willingness to make the necessary changes if granted the bridge loans they need to reinvent themselves as globally competitive auto companies, our American auto companies need and deserve our financial and emotional support.

Buying and driving a car is very American and very emotional decision and not just a financial one. We happen to love our cars and trucks and they are part of the fabric of our lives and drivers of the independence of our lifestyles. They can be made better right here in America, and we can all work together to make that happen. By manufacturing the quality of cars they have previously sold exclusively into European or Chinese markets and selling them here where Americans have a chance to buy and own and drive their BEST products first, American auto manufacturers can win back American consumer loyalty and long term respect.

Kudos to the Democrats and President Bush for finally recognizing the monumental and critical importance of the auto industry to the American economy, and attempting to structure loans that will help then to regain economic profitability under oversight which focuses on innovation and green technologies to make our auto companies not only competitive, but global leaders in automotive design and engineering and value.

Sour grapes to the shortsighted and disloyal Republicans in the Senate who would rather hand the reins of our second biggest and most important American industry, after housing, to the control of foreign companies and governments; especially the Governor of Alabama, who has gained all kinds of perks from subsidizing (yes subsidizing) the operation of foreign owned auto plants in his state.

Yes our labor unions need to work with the auto manufacturers or there will be no major product manufacturing in this country, and no union jobs at all, and all major manufacturing jobs will be virtually outsourced to foreign competition who have no loyalty to this country but only to their internal profitability.

Japan is also undergoing a recession due to the global financial crisis that hit our big three auto companies very hard, limiting the flow of credit and capital to purchase cars and trucks to buyers, and even high tech electronics companies like Sony are now forced to cut back on costs and jobs. Japanese auto companies are not infallible nor immune to downturns in the financial sectors and mistakes in manufacturing the wrong type of vehicles.

Toyota jumped on the all American bandwagon with the V8 Tundra pickup because they saw the same demand for big powerful trucks to tow expensive trailers and toy haulers as the domestic manufacturers, and now they too are cutting back on production of trucks they cannot sell due to gas prices and other credit related factors in a recessionary economy. The big three domestics are NOT the only ones who provided what they thought the American public wanted and demanded in large vehicles and called it wrong when gas prices got obscenely high.

Many American made cars have the same technologies as their Japanese counterparts, including fuel efficient variable valve timing V6 engines, smooth and efficient transmissions, aerodynamic styling, safety systems, excellent handling and braking, gas mileage in the 30mpg range, and yes, LONGER warranties than the same class of vehicle made by the import owned competition at competitive pricing.

Putting prejudice and popular opinion behind it is time to go out and just test drive a few of the better and newer American manufactured cars and trucks and SUVs and see the tremendous improvements in quality and style and economy that American made cars now have? The technology in American cars is as good, or better than many import brands.

For the millions of people who now own big three cars and trucks just where you think you will get them serviced and repaired with original quality equipment manufacturer parts, by thoroughly factory trained technicians and mechanics if the American manufacturers and dealer bodies, service and parts departments and parts warehouses cease to exist as profitable entities due to forced bankruptcies?

Where are you going to get your original equipment computer control module for your fuel injection and emissions system for your big three made car or truck if the auto manufacturer has been forced into bankruptcy or out of business? The state run auto licensing bureau will not let you drive your vehicle if it does not pass a smog test.
Do you really want to have a $20-$40 thousand dollar paperweight sitting in your driveway that you still owe thousands of dollars in payments on? Do you want to depend on midnight auto supply sourced parts on the black market that would spring up almost immediately?

Do you think that your domestic SUV or car or truck will have any value left at all, or run well and properly if you cannot get factory quality parts for it? JC Whitney will not be able to get them for you, unless they are substandard knockoff parts made in China or somewhere offshore.

Do you want to trust your family transportation to parts of substandard quality for your American made car or truck, or try to source the few parts left at exorbitantly high prices due to limited supply left in parts inventories as the American auto factories and distributors and warehouses and dealer parts departments shut down? How would you like to pay hundreds of dollars for a $14 dollar part for your emissions system, or trying to find one that matches your particular vehicle identification code or model year run or engine type when all the databases of factory American made parts are not even available any more?

If the auto manufacturers go down so do all their parts manufacturing and distribution and sourcing systems. So then when you try to sell or trade your American made car or truck or SUV that is now rendered useless by lack of availability of a formerly affordable factory quality part, who will buy it or loan you any money on it to buy a foreign manufactured car or truck?

Do you think the foreign owned auto manufacturers will give you a special trade in bonus for your American made vehicle you still owe on that will not run? Not likely. Welcome to the new world of foreign manufactured vehicles only, and do you think that they will still be affordable if they have no American made competition? Will they continue to pay
top level wages to American workers if they control the whole auto industry? Will they even continue to employ Americans when labor is less costly in other countries? They are loyal to their corporate profits, not to America nor American workers.

After all, millions of Americans bought the big SUV's and the big pickups and the Fords and Chevys and Dodges and Chryslers that the American manufacturers put on the market, because they wanted them and the demand was there.

To casually say that dumping the entire American auto industry will have no effect on you or the economy, or your well being and future of this country is tunnel vision even if your type of business or industry is now thriving and successful. Forcing the big three automakers into bankruptcy will further damage this economy and country economically very quickly; in the midst of an already destructive global financial crisis.

That crisis happened to impact the auto manufacturers first as they are the ones who manufacture and sell the biggest ticket items, which that depend on global and domestic financial lending systems to make them affordable to the average auto buyer. When those financial systems began to fail, and are yet being bailed out, a large part of the blame fell on the auto manufacturers who had no control over the financial system. Better to now lend them the money to bridge the gaps between manufacturing efficiency, labor and management relations, long term quality and detail, and new green technologies that now exist in some cases between them and the Japanese car makers.

The big three have invested billions in stylish, comfortable, safe, long lasting vehicles with fuel efficient engine designs, hybrids, alternative fuel and electric powered vehicles.
Now they need government backing to manufacture better vehicles, and subsidies for consumers to be able to purchase them and see how good they now really are.

Dump the big three into bankruptcy now and say goodbye to billions of dollars of high tech research and innovation that they are trying to bring to the market despite negative public opinion generated largely by so-called automotive media experts who never even went to a big three dealership to take a test drive, or to take advantage of the extraordinarily low pricing plans that they are now offering to get their cars and trucks into the hands of American drivers; who would find out that they are now very good cars, and just as good or better in many ways than Japanese cars and trucks.

To allow the bankruptcy of the big three domestic automakers and dismantle their operations and hand the car keys to the Japanese carmakers means goodbye to American ingenuity, independence, innovation, profitability, and a legacy of some of the best cars every built, despite the overblown fallacy that Japanese cars are so much better in design and quality. You cannot even get power seats in a Honda Accord unless you buy the most expensive model, the EX. Toyota Camrys are attempts to try to look like BMW's, and have shorter warranties on engine and power trains than newer model GM cars.

Transportation is the foundation of a modern economy. The banking industry is about loans and saving and stability in the financial sector. Our American auto manufacturers can build the cars and trucks we need now, and need the backing of the government and the banking and financial industry which has been bailed out and needs now to make low interest loans available so average Americans can buy new American made autos. The positive effects on the economy will be very beneficial in the short and long run. A rising tide in the domestic auto industry will lift all boats. A failure now would be devastating to the entire economy given the number of jobs and revenue lost.

Yes the big three have problems, yes it is a global and competitive market for automobiles, and they do have to work out solutions with the American buying public (by actually listening for a change), and the Congress and the new Administration coming into office. The Congress and Senate particularly need to work out terms that make it possible for the American big three auto manufacturers to survive and prosper. Their management at the top has labored long and hard in very difficult financial times to turn around their companies, and deserves the respect of their workers and the backing of their corporate boards and stockholders and investors. They are the ones best qualified to run auto companies and should not be replaced nor forced to resign.

The public perception that only Toyota, Honda, Nissan can design and build good cars is a fallacy, and, American auto manufacturers already can and do design and build cars and trucks that are as good or better that the Japanese vehicles now on the market. All they are saying is give us a chance, and they can turn around the American auto industry and make it a world class domestic industry which will be a leader in the green revolution and new technologies that will be developed because of their innovation and foresight. They have learned their lesson and now they deserve the chance to prove it.

Bridge loans will be investments in the future of American auto companies, and also in the American economy as a whole. Forced bankruptcy and the failure to give the American auto industry the loans and financial assistance they are asking for is taking the shortsighted view and not the in the long term best interest of this country.

By setting realistic goals and requirements for the American auto industry, and extending bridge loans or part of the financial industry bailout money, the government essentially makes the profitability of the American auto industry a national priority, while still allowing the big three to operate as independent and responsible corporate citizens in all aspects of their domestic and global operations.

That would be a good partnership for America and the domestic economy and will return more value for the investment than the original loans would cost us now. We have to trust our automakers ability to turn their companies around despite some past mistakes which are now well documented. To forfeit the chance to make that turnaround happen and lose the heritage and history of our American auto industry would be a disaster for all of us,
and only put us on the path to being a third world economy in a very competitive world.

Americans are the best leaders and innovators in the world, and we cannot let our own auto industry fail now or ever.

I hate that any taxpayer monies will be used to help companies that never would think twice about helping us when we are in need ( like unable to make a payment, see how fast your car would disappear from you). Anyway, unions I agree with if they help the worker and don't strap the business, and maybe the car union should back down a little. Otherwise, how will they survive, not just the automakers? Also, I do think that the products the three three auto makers are putting out on the market suck, and all the same, downsizing should take place if not a merger between two of the automakers. I have owned three cars, all U.S., in the past seven years, and all of them suck and have problems after problem. I also have a Volvo 2001 that never needs more than just its regular services, so you tell me? No more American cars ever for me. Sorry.

A recent New York Times article documented that union workers in Detroit get paid $55 an hour while their counterparts, car manufacturing workers in foreign-owned companies operating within the U.S., make approximately $45 an hour. When all of the compensation benefits are put together, the average worker gets paid $75 an hour. This is the average worker, not including the top executives who are flying around in their personal jets and making approximately $9 million a year with a failing company. A U.S. bailout of these companies would irk me for several reasons: (1) my tax money would be used to support workers whose average salary is almost twice that of mine, (2) small businesses that are affected by the crunch don't receive any sort of tax break while their tax revenue will help prop up an uncompetitive business, and last, plenty of smaller car companies exist in the US.. that have been involved in active R&D could benefit exponentially from a fraction of what that bailout package provided. Example: Tesla motors is an electric car company that produces electric cars with a range of 225 miles. Funnel $500 million dollars into that company in order to streamline manufacturing processes and help fund R&D, and then you end up with the world's No. 1 electric car company right here at home. I hope Washington doesn't fall prey to the irresponsibility of both corporate executives and unions in Detroit.

The arguments are mostly well stated on both sides and well understood, so, what should we as a nation do?

We should do what we have always done--let the old die off and let the young grow. That is the natural course of life and of business. That being said, the economic impact of such a mass die-off would cause a serious blip in the U.S. economy but a blip, nonetheless.

To minimize the impact of that blip, the government should do what only government can do:

1. Make oil obsolete as a means of socio-economic power.

Nationalize the U.S. oil industry as a mater of national security, freeze gasoline prices, say at $2 per gallon, and then add a national energy policy tax of, say, $1.50 for up to 20 years or until oil and gasoline power makes up less than 10% of national power generation/consumption.

2. Develop and implement a national energy policy that effects the goals set forth in item #1.

3. Lower income, property, and capital gains taxes to encourage consumer spending, technological innovation, and investment.

I was born and raised in Detroit and the Big Three were the economic engine behind generations of my family. But it's time to move on.

What just took place in Washington with the auto bailout (loan) sounds like America's second civil war. Southern states versus northern. If you look a little deeper into the situation, it's business as usual in politics. If your primary consideration is to get re-elected, then you do what your constituents expect of you and ignore what's best for the country. I believe there are those who fear that GM is on the verge of breaking the back of the foreign dominance of small fuel-efficient cars. Example, the upcoming Chevy Volt as well as other models. Obviously there are some "Americans" who are heavily vested in making sure the foreign car market survives and the Big Three falter. We have seen one example after another where personal gain far outweighs any concern for the welfare of our great country. (The Illinois Governor comes to mind.) I have never doubted that GM and others will survive, because in spite of what we are hearing, they have always made what people want. It's just that not everyone wants the same thing. The smaller fuel-efficient car is a great commuter, but it has limitations. We have different needs and desires. For instance, try pulling a 12,000 5th wheel with a Honda Civic. The drop in sales of larger units this year was heavily influenced by the cost of gas and diesel fuel. We are beginning to see the interest, once again, for larger units. As long as Congress is only interested in trying to put out fires, we will continue to have fires to put out. Heard anything recently about the cost of fuel, yet we all know another high cycle will catch up to us if we ignore the real problem. We need for gas to stabilize where it is now and drop the diesel fuel to match it. What do you think that would do for the cost of goods and future jobs. We all know what has to happen for that to become reality. Does the word drill sound familiar? There are far too many who have a vested interest in oil markets and will resist changing our dependence on foreign oil. The savings of spendable income with gas going from $4 to $2 puts more cash in the hands of average Americans than any tax stimulus. The current emphasis on "green" as an excuse to place blame on any one manufacturer is a cop out. Get rid of lifetime politicians who want their pockets lined. I'm reminded of the old party platforms that said the Republicans take care of the rich and the Democrats take care of the working person. Since there are so many wealthy on both sides of the aisle, I never put too much stock in it. However, after last week it looks like those platforms still exist.

After blooming, eventually, all things crumble. Are we gonna throw borrowed money at fighting natural laws?

Have GM spin out the volt into a separate company, and let the government fund that.

As for GM, I think it's going down. Of course you can let it burn $50 billion in government money first, so it'll collapse next summer instead of January.

How about attacking Iran or North Korea? I guess that attacking Iran would be the best way to create jobs in the military and not to forget Halliburton, Blackwater, etc. All the employees of UAW can find a job in any of the above. Iran sounds more promising. First of all, there's strategic interest in Middle East. Of course oil is the best and the safest way to create jobs. There were countless jobs created when Americans were going to war with Iraq for some WMDs, which they didn't find eventually, but the point is jobs were created. Let GM, Ford, and Chrysler be bailed out. I am sure they won't survive, as is the case with American financial dominance. It took the Japanese 50 years to bring the American auto industry to the brink of collapse. Maybe the Chinese would take less than that for bringing America to its knees.

Obviously, what we're doing in the United States is not working. We've been doing the same thing for quite some time and it collapsed on us. What caused it, though? Simple, the Iraqi War. Get our men out of there and we don't have to fund them, and the money that usually goes to the war will support our faulty economy. I'm all for the bailout; we need to try something new. My pen pal from Nottingham keeps laughing at me because I refuse to leave America. He says I'll soon have no money. But I stay with high hopes that our government will realize that what they are doing is wrong. It just isn't working.

No.

Are they going to start making cars America wants to buy, can afford, that will last, that will get 40 to 50 mpg, no.

Will this bailout or any bailout put them back on sound financial ground and secure union jobs, and rebuild a manufacturing-based economy? No.

Do we miss Studebaker, Edsel, or any of the Oldsmobile line? No. This is just a way of the system cleaning itself out. When you have had to swallow something you didn't want and wasn't good for you this long the next logical thing to do is to throw it up, clean up the mess, discard it, and move on. Sick 3, heal thy selves.

America will still have cars being made here by Americans, and we will all be better for it.

No more bailouts for anyone. No one is bailing me out.

What innovation has GM brought to the U.S., other than the bloated union and idiotic huge SUV? I will keep buying foreign, period. Never will I give the UAW the time of the day. They are idiots. Along with the morons in charge of GM, Ford, and Chrysler. No, thanks. The politicians, UAW, and Big 3 management--a bunch of self-serving overpaid little idiots.

This is great. Keep on fighting about the money. Just remember to buy from the next Big 3--Honda, Toyota, and Nissan.

There is no future with unions calling the shots from the back rooms, on Senate seats, health care, and anything else.

Why do we bundle the "Big 3" together, since each company has its own strengths and weaknesses? Ford has said it doesn't need the immediate government money. Chrysler is a private company, and it produced the most "worst cars of 2008" by any auto company.

Let Chrysler go belly up and rescue GM with strings attached. Ask the top guys in GM to put 50% of what they have earned from this company into the stock of GM. Ask all GM workers, blue and white collar, to put 15% of their salary in the stock of GM. Furthermore, in the 1980s, we get tax credit when buying a car. Why can't we bring that policy back? And have we considered the suppliers? They need help, too.

Really? There are pros in bailouts? Saving badly managed companies is a good thing? Saving what jobs when the Big 3 is basically going into restructuring anyway? We are at least two decades too late on saving manufacturing jobs.

As for cons, we are teaching the next generation to be failures because they, too, can run and hide in big daddy's pocket when they screw up. Just be sure you are "too big to fail."

GM, Chrysler, and Ford workers are no worse off than any other employees who got downsized or had their company close. They will lose their jobs, and relocate to work in another state for another company. A company who didn't create a microcosm where unions would threaten to strike because a $35 an hour wage and benefit package wasn't good enough. Which by the way was money that should have gone into their cars. Say, for example, at the billion-dollar VW facility. Same for all the small businesses that are supporting the auto industry--they should be out there right now soliciting VW steering wheel and instrument cluster contracts. At least they won't have to relocate along with the workers. -- Jim

Let me just ask you a simple question:

If the government does bail out the Big Three (well, not so big anymore, are they?), would any of you buy their cars, really really want to buy for your own?

Reply to: Swasey: "What innovation has GM brought to the U.S., other than the bloated union and idiotic huge SUV?"

I love my 2008 Tahoe--love it. There is not a car in the Japanese lineup that will touch it.

"Never will I give the UAW the time of the day. They are idiots."

So you don't think that people should have the ability to "get in life what they negotiate and not what they deserve"? Move to Russia, you socialist.

"The politicians, UAW, and Big 3 management--a bunch of self-serving overpaid little idiots."

It is the Democrats that are making the political payoff here--not the Republicans. Don't lump them in with the political payoff types.

The solution is not simple, as everyone seems to note, and yes the Big 3 do deserve to be supported and saved because:
- They make many good cars. Their quality has dramatically improved over the years.
- They have made cars using an American workforce while keeping to this country's standards (manufacturing in other countries is nowhere near as tight)
- Ford has a good CEO, and the others may or may not make the grade.

I have bought foreign cars most of my life and just bought American and am very pleased with the car. The American cars are competitive with the market.

Finally, SUVs--when are we going to hold ourselves accountable for buying them instead of blaming someone for making them? When did we give our power away that our dollars sway the market?

It is easy to sit on the sidelines and point out the problem, and it is harder to get on the field and be part of the solution.

Think about your own purchases and consider how when you spend you say yes to that product or marketing idea, which creates the viral spread.

I know many good people who work hard, are smart, have great integrity, and are proud of the cars they build in Detroit. The one thing everyone can probably agree on is maybe they are too large and there may be a more effective way of running the companies.

The main reason we have no cash is the wars. The rest is the theft. Madoff losses will change hedge funds. Many are shutting down. The survivors will likely have fewer assets and lower fees. Funds of hedge funds are suffering, too. We had the Katrina theft and then the Society General France theft. We seem to be living in the state of the thugs in the times of the extreme cash shortage. Christopher Cox, the chairman of the Securities and Exchange Commission, admitted late Tuesday that the regulator had failed to act on warnings about the activities of Bernard Madoff stretching back. And to add to this the amount is not peanuts; it is huge.
I thank you.
Firozali A.Mulla

I say, let em rot. Sure. Let's give the whole thing to the Japanese, Germans, and Koreans. Why not? We defeated the first two in a world war, when they were bent on murdering the world. 500,000 U.S. soldiers died. We rebuilt them so the lands would not fall into the commie's hands. 35,000 U.S. servicemen died keeping South Korea from becoming part of the Dear Leader's ball of fun.

So let's give it all to them. The foreign companies get all their health care covered by their governments. The governments invest in them. They then get major tax breaks here to set up in such states as Alabama and South Carolina. Let's put 3 million in the street so we can "show them damn union slugs." Brilliant.

Oh, Mr. Bush, when do I get help? You bail out all the banks and now the car makers. Come on, middle class, let's get something going and stop all this B.S. posseman96@yahoo.com

With respect to all on both (or more) sides, Jeff, Kando, Random, Vern and a few others have it mostly right:

The Big Three mostly did this to themselves with some help from:

a) The unions who pushed far too much and helped their own industry reach the brink of failure instead of ensuring its success.

b) Very short-sighted management which did not put enough energy and R&D resources into making the best cars available. That is mostly why Americans do not buy them as a "first/best choice" anymore. Engineering and R&D give the best products their life. Without the former, the latter will be a poor competitor. The German and Japanese products prove that in the marketplace every day.

c) Us, Americans, we the people. We were (and probably still are) part of the short-sightedness that has lead us to these problems. We all hold too much debt. We all do not save or plan well enough for retirement. We all do not invest enough in our children's or our own education.

I hate bailouts as much as everyone else, but facts are facts. We need large industrial giants like GM and Ford to design and build the transportation of the next generation whether it's biofuels (my choice), wind/solar, etc.

Here's what I'd like to see happen:

1) Banks. There are some parts of our economy that are "Utility" in behavior; Banks take in money and lend it out. They fuel the economy by making money movements safe and available (well, barring the stupidity of credit default swaps). So we bailed out the banks. However, they have stopped being the utility we wanted them to be. They cleaned up their books but are not lending money. For small businesses, this is the most important "economic fuel" they must make available. Call the bank loans back if they do not start lending into the retail markets. That must include anyone holding a mortgage they can no longer afford. Don't make it ridiculous, but something like 4-7% fixed for 30% with a penalty for rolling over on an agreed contract (the original mortgage). Only one to a customer. This should prevent the speculators from over-reaping.

2) Use the bank bailout money (again, the sums we have already given them) and force them to offer a special investment product called "Industrial Innovation Trust" bonds. These bonds would be Government backed (principle guaranteed) with very low interest (because of the safety). GM, Ford, and anyone else would have access to these bonds as long as people (yes, you and I) buy them. To be eligible to receive money from this fund companies would have to be:

a) Active in new energy or transportation innovation for at least 3 years prior to the original request for this trusts funds. That should keep out carpet braggers and fraud.

b) An existing, large cap industry retooling with product designs and plans for market introduction within the next 12-24 months. This is where the auto companies would come for money. An advisory panel of industry analysts would review and approve any access to this part of the trust fund. These are normal activities of any business loan activity (i.e. show the business plans, show that you have products or services that people would want to buy, etc,).

What will probably happen is that GM will try but more than likely fail to survive with 1-2 rounds of additional financing. The company is just too far gone without a major structural change. However, there are many small start-ups that are really pushing the edge of auto innovation and they should thrive with this trust money. Perhaps GM could purchase one or two of those, capitalize them, and survive on the new products that come from that investment.

If the UAW wants to survive, they have to start taking ownership of their industry. What if their pay was based in part on how well the company does? What if they were required to sit on the board and make the tough calls about health care and retirement benefits. I did not vote on those contracts. Most Americans did not either. Most of us don't have nearly what those contract guarantee for the UAW members. Our taxes should not go to support them.

The health care argument is a faint. U.S. health care is the best in the world. It just costs too much. It's a big and complex problem and it's totally ridiculous for Michigan's politicians to blame the US health care system for Detroit's failure to make good products competitively.

If we really want to solve that problem (a whole other debate really) make the "Blues" (BC/BS units) a Coop or utility just like the banks. They will handle the payments and costs. Members can still choose their own physicians and para-professionals.

-- Everyone belongs to one with no pre-existing conditions or genetic screening. It's required. No one can be uninsured, that's just irresponsible.

-- Bulk-buying of the best drugs and services (labs, diags, etc,). Centralizing records, forms, AR, AP, and reporting.

-- An emphasis on prevention, not emergency care, plenty of available and lower cost para-professionals like RDs, LPNs, etc,.

-- No major law suits for anyone. "We are the company" just like any other coop. Physicians and other providers accepted into the plan must pass review and are dismissed if found to be too careless or costly. The coop would self-insure against malpractice which would keep the lawyers at bay.

If employers want to keep their existing plans, no problem, otherwise, everyone has access to the "Blues."

If physicians and other providers choose not join the Blues as "accepted providers" they are free to do so and deal with their own insurance, clerical, and management requirements.

Health care costs did not sink the auto makers by themselves. No one (well, perhaps the UAW came close) forced those companies to sign those contracts. What is clear is that American labor is building great cars for Toyota, Honda, etc,. They can build great cars again if they have a union and a management team that help them do it. If it's a quality product, Americans will buy it. We have shown that with the rise of Honda and Toyota.

My last purchase, August 2008, was a Hyundai. Mostly because of the warranty:

Basic 5 year / 60,000 mi.
Drivetrain 10 year / 100,000 mi.
Roadside 5 year / Unlimited mi.
Rust 7 year / Unlimited mi.

Does anyone come close to that?
If so, I didn't find it at any dealership I looked at.
--Roy Spivey

Great Depression II is coming soon. More job loss, more credit card default, more bankruptcy.

Farzad is incorrect. Toyota has asked the Japanese government for money. He also thinks that Toyota and Honda make cars here in the U.S. They only assemble cars here with parts made in Japan. Then all the profits go to Asia. The U.S. has already given the foreign automakers millions of dollars in tax breaks to locate here. E-mail me, Roben, and we'll talk some more.