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I am anxiously waiting to see how long either one of them make it (and pay back the loan)!!!
How's that? :P
You again miss the point that they were signalling collapse under their current sales with a Chrysler still in business. You fail to understand that that scenario totally changes if Chrysler collapsed in one of the following days. Just as when C4C was passed and then "refilled", the plan from the week before is irrelevant.
Also remember that when the D3 showed up in DC they thought they would get the $$ with no strings attached, and therefore rolled out their glass-1/2-empty story, while meanwhile putting out glass-1/2-full stories of their wonderful, rosy future products with no bankruptcy in sight. I remember reading stories on the same day from various GM executives, and not believing these guys worked for the same company!
I'm also not sure how the "natural market" is automatically privileged as a concept to be granted any wisdom---the jungle is "natural" and so are viruses but they don't always produce pleasant or beneficial results.
Who said that? I'm saying that in natural systems the strong survive and the weak perish. By allowing the weak to fail the stronger then have more resources to thrive. Some lose and some win. In business those that lose move on to some other career or industry.
The failure of anyone business or an industry becoming obsolete is common. It is efficient for the economy to quickly rid itself of excess or unneeeded capacity and apply those resources to something needed. In this situation the U.S. does not need factories and workers and the number of brands of autos that supported a market of 16M-17M. The market only wants 10M for the foreseeable future. Because the auto industry has such high fixed costs, each company needs to sell a certain volume to be profitable. So you can keep a bunch of auto manufacturers in business by throing money at them, or you can let natural-competitive factors determine the best and right-size the auto industry. Instead of splitting the pie 3 ways; you split it 2-ways, and you have 2 healthy companies.
Ford GM Chrysler, all dominos in a row. One gets knocked one down, watch out. There's not going to be some neat and tidy realignment, not in an uncontrolled collapse at any rate. What is far more likely is brutal meat-cleaver attrition, and really, no "last man standing" at all.
The British auto industry didn't downsize and get efficient. It left planet earth, probably forever. Why? Lotsa reasons, among them poor management, bad products----but also, it blindsided everyone---happened too fast.
Case in point---the British motorcycle industry---completely gone from world's major supplier of road motorcycles to a wasteland in 3 short years
****
In short, Mexico?
Note - not trying to offend anyone, but it really *is* like that in much of Mexico lately. Millions of poor and working poor and the few at the top who own and run literally everything.
While the "immenent" in your writing is part of a factual statement, the "sudden" part of that statement is 100% fallacious.
There was nothing even remotely SUDDEN about GM and Chrysler being on the brink of bankruptcy. Heck, even in these Edmunds/Carspace forums people have been saying GM and Chrysler are close to being bankrupt for years and YEARS now!
Yeah, but they were talking about styling.
It would be interesting to commission a poll and see how many Americans even knew that GM and Chrysler went through a Chapter 11 reorganization this year. I bet the number would be surprisingly high, at least to us posters here.
Chrysler was on a downward spiral since their first bailout avoided bankruptcy more than 3 decades ago. Sure, there were a few positive blips, but nothing sustained, it's like falling to your death during a sky dive gone wrong, and flapping your arms all about as fast as you can like a bird's wings trying to reduce the speed of the fall. It might just slow you down 1 MPH, but it probably won't keep you alive.
Maybe we can get Leno to ask the question on one of his walkabouts.
In clunker news, Fords Top Clunker Trades (AutoObserver)
"Ford vehicles topped the most recent list of clunkers traded in and models bought to replace those clunkers as the Cash for Clunker frenzy slowed some from its end-of-July peak, Edmunds.com finds."
I agree with you 100%
Funny, Chrysler ads in the 90's were saying basically the same thing, that we "are not the same car company of the past," after which of course, they sold everyone lemons throughout the 90's and 2000's to this day, which has led to their self destruction.
I think nowadays with the internet and such, things like rumors of impending bankruptcy and such tend to spread like wildfire. If anything, I'd say there's TOO much information out there. For instance, with the whole cash for clunkers thing, I've found that most people I know know about it, but they just don't know the details, which vehicles qualify (that it really targets guzzlers rather than clunkers), etc.
People knew that Chrysler was in deep trouble in the late 1970's, before the internet. And that kept them away in droves. Heck, 20 years before that, everybody knew in 1959 that DeSoto's days were numbered, and it hurt their sales. I don't know when it was officially decided to can the brand, but its lineup was severely reduced for 1960, and for 1961 only a 2- and 4-door hardtop showed up briefly for about two months...Chrysler didn't even bother to give them model names. They were just "DeSotos".
So, if news could spread that rapidly, even back then, I'm sure it's going to be even quicker nowadays.
But the reason I think the government read the situation correctly is that they saw the unusual set of circumstances which beset the "patients".
Poor product spread (true)
worse MPG than their competitors (true)
the 2008 "gas hike" (painfully true)
AND...the worst economy in 30 years.
Even the Japanese took a bad hit.
I'd like to see how many large corporations would endure THIS:
US AUTO SALES 2006-2009
So what's the argument here? That American cars suddenly got WORSE as of August 2008? That quality suddenly dropped starting in January 2008?
Of course not---the economy is primarily to blame for bringing the D3 to their knees.
And so, economic measures will bring them back.
The irony of Social Darwinism is that even Darwin didn't believe in it. He states quite clearly that species that COOPERATE survive. The "fittest" (he didn't use that word either) are usually not the Alphas.
Cerberus had the financial horsepower to save Chrysler, many times over to last for years and years more, perhaps a decade more. They had plenty of financial horsepower, only they were not too stupid to throw money down a bottomless drain.
The government, however, was plenty stupid enough to throw billions down this bottomless hole, and I don't think the gov't has enough financial horsepower to continue this charade much more than a decade anyway.
"Ford Motor Co. confirmed Wednesday it boosted output of its Focus car in response to declining product availability on dealer lots.
"We are taking appropriate actions," Ford spokeswoman Angie Kozleski said. She declined to provide further details.
However, two people in the United Auto Workers union said the plant, in Wayne, Mich., began working 10-hour weekday shifts Monday and will also work a series of Saturdays starting this week."
Wall St. Journal
If that were true, then it woudl not just be GM and Chrysler that were brought to their knees. Don't say D3, say D2, Ford might be struggling mightily, but they aren't down to their knees just yet.
But how come it's just the D2 out of all of the car companies in the world that required our tax money to stay afloat? Why were these the only 2 companies in the auto world that were on their knees so fast?
How come Honda, Toyota, Hyundai, VW, Audi, MB, BMW, Nissan, Mazda, Honda, Acura, Lexus, Infiniti, & Mini didn't require bailouts from my tax money too?
If what you say is true, shouldn't all of the auto companies require US taxpayer bailouts, and not just the Incompetent 2?
At the very least, if what you said was true, MOST Of the auto companies would have been at their knees, but the truth is far from that.
And I keep hearing of horrific stories of problems with Chrysler's for the idiots that didn't know any better or weren't warned of the "problems" previously.
somehow, i think it was something else.
They also tend to have other common traits, such as unethical behaviour, immoral standards, poor customer service, a willingness to trade long term viability for short term gains, a penchant for planned obsolescence as a method of doing business.
Companies like this tend to end up in bankruptcy sooner or later, these include:
Circuit City (good riddens x 5)
Chrysler (good riddens X 10)
GM (good riddens)
Auto Insurance Companies like Bristol West/Coast National Insurance
Agents of Auto Insurance like Eastwood Insurance
AT&T (not yet, but inevitable)
I think Cerberus wasn't willing to pump any more liquidity (or sell any hard assets to gain more liquidity) to put into Chrysler because they knew they had a dead company walking, and I don't think even $1 TRILLION will change that.
You're ignoring the fact that GM's day to day operations were being funded by the government. No one was interested in investing in GM which is why a government-backed bankruptcy was their only chance for survival. GM had been trying for a year to find investors and were unsuccessful. If President Bush had not went against Congress and gave GM (and Chrysler) the money back in late December, both Gm and chrysler would have been gone by mid-january. Neither company had enough cash to pay their bills for the month; neither company could borrow money because their credit ratings were junk; and quite frankly, there was no credit available since banks didn't know if they would survive this crisis. Ask the salesmen on this board how bad credit was 4-8 months ago.
Everyone has very short memories. People forget how our banking system came within a knat's hair of failing last fall. Peopel forget how much money was pulled out of the stock market in the past year. Do you really believe if Chrysler failed in March that investor's would somehow look at GM, a company that was on life support, and invest their money?
BTW, if GM failed first, it would have taken Ford and Chrysler with it because the suppliers would have failed. The D3 may be separate companies but they share many of the same suppliers. The industry is very complex and interconnected.
Exactly, the rich get richer, and the poor get poorer. C4C uses the poor man's tax dollars, to help the rich guy get his new car cheaper. Corrupt government is helping that happen. Mexico here we.......are?
Here's a chart to help you figure out "your class". Just about everyone on this board will score in the middle class range I suspect, and everyone they know will, too. And probably 90% of all C4C buyers, too.
WHAT'S YOUR CLASS?
America has a very broad middle class.
The "poor man" doesn't pay any taxes, so that doesn't make sense to me that they are being "used".
The nice thing about C4C is that it's a give-back to the taxpayer who paid the taxes in the first place. The not so nice thing is that not everyone gets it. The sort of neutral thing is that even though you "got it" you also got the debt of car payments.
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The linked article from the NY Times is good. Thanks for posting it.
To maintain that broad middle class we must keep stretching the boundaries. Per the link, the "lower middle class" are really what is know as the working poor. I don't place much stock in socio-economic titles but the working poor of today were solidly middle class (i.e. had some disposable income) for decades but now are living hand-to-mouth and one paycheck from a homeless shelter. To me that's not what middle class America should be. It just is.
The C4C program IS aimed at the middle class but not just buyers/sellers of vehicles. This relatively inexpensive program provides benefits for millions of Americans and most of these people are not selling cars or using C4C to buy one.
I don't want list all the spin-off jobs this program has helped save and/or created but it's safe to assume we're talking well over 100,000 GOOD jobs and likely 200,000. It's well worth it.
Whether you've bought a car or not, taken advantage of this boondoggle or not, you can rest assured that your taxes are being used to ensure dealers can ask MSRP for their cars, sell a boatload of cars to people thinking they're getting a good deal, when in fact, they'd had been better of buying 3 months ago with no trade in (they could've sold that for gravy, 3 months ago).
This program should be called TFD (Taxdollars For Dealerships). New car dealerships LOVE it.
Another had Explorers end to end. Explorers are being clunked by the GAZILLION out there! Good to see them go.
Someone clunked a perfectly nice-looking '90ish turbo Supra, and as gas-guzzling as those certainly are, I'm surprised it qualified for C4C.
The local Ford dealership has nothing with a curb weight under 4000 pounds left on their lot, except Mustangs. Don't know what they will be able to sell to clunker buyers in the next month, what with the extra $2 billion in the program.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
The Toyota dealer in Westmont, IL has a van with a sign on it: "Clunker headquarters". Now, when other stores say "we're you're furniture headquarters" it means that's where you go to buy furniture. So apparently that dealer sells a lot of clunkers.
It's acknowledged by some that Toyota's quality is slipping a little, but I wouldn't think the dealer would go so far as to call their own products junk.
I don't mind the C4C actually...it is a nugget for us "middle class" folks if we can use it but I still have a slight philosophical edge against it. In my mind, that's not hypocritical because there's nothing I can do about it. It's there and I'll use it if I can to get mine. I have a clunker but it's our people-hauler (van) and we'd simply have to buy a newer, but used van to replace after taking advantage of the deal to get a new subcompact (any Corolla's at less than MSRP left spyder?). Problem is, there would be too many decisions (color being the worst) between my wife and I to make the two transactions.
The aerospace/defense industry went through a major consolidation some 20 years ago as the defense and aerospace budget contracted. Hundreds of thousands of aerospace workers found themselves looking for work. Companies that were household names in many parts of the country do not exist as a separate entity anymore - Ford Aerospace, Martin Marietta, Westinghouse, Hughes, McDonald Douglas, Grumman, to name but a few. All were bought out or merged with other companies.
So yes, large corporation can and do survive such market shakeouts. A major difference between those companies and the D3 is that most of the companies I mentioned were profitable to some extent, or at least they hadn't been losing tens of billions of dollars over the years like GM has been.
Putting in the numbers I come up with 83%, yet my business owner client with 4 times my income and 4 times my net worth comes in at 77% simply because he doesn't have a college education!
I was talking about when the D3 execs went to DC the 1st time asking for money. That was Nov 2008, not 03/09. If Bush and Congress said no life-support, then what would happen is either GM or Chrysler would first fail. They are not going to make the announcement at the exact same second. When one fails that gives hope to the markets and investors for the other 2.
Second and this has been mentioned many times by many people - 1 auto maker failing is not going to put the suppliers out-of-business. The net amount of parts being sold does NOT change; what changes is what auto makers parts are built. If GM fails the GM molds are set aside, and the Chrysler and Ford parts would be made at a much higher rate. The market demand does not change and overall production does not change because a company like GM fails. If you want proof you can look back 15 years and see what happened when Wang and Digital and some other computer manufacturers failed in a short-time. The other manufacturers and the multitude of suppliers did not fail; the computer industry did not crash.
And as general advice you should consider when listening to many of these "all suppliers will crash" "millions of jobs will be lost" ... the source of that information. Almost 100% of the time it will be 1) someone who stands to lose or make a lot of $ by getting people to believe these, or 2) from the gullible who pass along these business fallacies.
Oh, and you're probably going to say I'm some sort of a conspiracy nut. Well I can think of 50 billion reasons why auto company executives, their investors and suppliers, the UAW, auto consultant and lobbyists, and dealerships might put these very unlikely scenarios out there.
I feel sorry for many of you being duped into giving your tax money away putting the country deeper and deeper into debt, and then one day you're going to be told that the money you've paid into the various SS and medicare systems is no longer there. And I'm not just picking on the auto industry - you need to realize that all these programs are just siphoning your money away making the wealthy and politically powerful more so.
There are many more Bernie Madoff's (or lite versions) out there in the business and political world. They just haven't been exposed yet, or have angles that are quasi-legal, or plain BS (Al Gore's making a nice fortune off GW and carbon-credits). I'd say wakup and realize that the best thing to do is to keep your money in your pocket, don't give it to DC to empower the system further, and return this country and government to a much simpler, less-invasive government with more individual responsibility and freedom.
Good point. One small flaw though. The poor don't pay federal taxes. The bottom 50% of earners only pay 2.97% of income taxes.
One thing that threw me off, probably, is occupation. The closest thing they had that fit my job description, I guess, was desktop publishing under "office support", which actually ranks somewhat below "mailman" or "secretary". :P
Anyway, I was in the 61% percentile overall using 2001 numbers. If I put in where I'm at now it moves to 75%. But if I was an out of work dishwasher with no education, who inherited $5-10M, I'd only rank in the 27% area overall! And if I was an out of work surgeon with no net worth, I'd be in the 56th percentile!
I think it's a real stretch to call C4C buyers "rich". They are the middle class in America, at which the stimulus was aimed.
This is a good point. The filthy-rich, for the most part, probably aren't going to have a clunker-eligible vehicle to trade in, in the first place, and to them, a $3500 or $4500 is a drop in the bucket. The poor are most likely buying used, taking public transportation, or finding some other way to make do with what they've got. So basically that just leaves everybody in between, broadly defined as "middle class".
Again you're stating this theory as if the entire economic situation last fall was normal. It was not normal. The facts do not support your contention in the least. Hey we all lived through this 9 months ago.
Even if Chrysler did go under on Dec 31st as you would have had them done, GM was right behind them in the Liquidation Office. GM had no money and had no source to obtain money. They had already announced in December that they would not be able to continue past 12-31. No bank on the entire planet was going to lend GM any money to take advantage of Chrysler's death.
Again you're trying to rewrite events to fit your theory.
Second and this has been mentioned many times by many people - 1 auto maker failing is not going to put the suppliers out-of-business. The net amount of parts being sold does NOT change; what changes is what auto makers parts are built. If GM fails the GM molds are set aside, and the Chrysler and Ford parts would be made at a much higher rate. The market demand does not change and overall production does not change because a company like GM fails. If you want proof you can look back 15 years and see what happened when Wang and Digital and some other computer manufacturers failed in a short-time. The other manufacturers and the multitude of suppliers did not fail; the computer industry did not crash
This paragraph simply restates the first with the same flawed theoretical view.
Again, yes in theory and in normal times, the loss of one maker would not crush the supply network. However again, both makers had announced that they were going to be insolvent on 1-1-09. There was no hope to save GM. GM stated as much.
Just as you and other doomsday proponents have the theory that GM and Chrysler failing would somehow destroy the World's auto industry. So why is your theory any more valid than Kernick's? I personally think that was one of Bush's biggest blunders. We would more than likely have automakers contributing taxes right now if we had let the weak ones die. Instead we spend more in bailouts and keep the other automakers from making any profit. So none of them contribute to the tax base.
This paragraph simply restates the first with the same flawed theoretical view.
I happen to think many of your views are flawed. So it would seem we have a Mexican Stand-off. Would you like me to send you a couple million illegal ones? It may give you some perspective of reality beyond the myopic vision of the USA auto industry that you are a part of.
Housing is a far larger failure in this country than the auto industry. What has the billions in stimulus done to get that kick started? Not much as foreclosures set another record in July. Your obsession with the microscopic view of reality is well documented here.
C4C is a carrot to make the masses think that bunch of losers in DC have done something positive.
You have not presented US with any facts, only your opinion of what may have happened if both Chrysler and GM went bankrupt in that order. No one will take your birthday for being incorrect. And your theory is just that. Has little basis in fact.
Our leaders wasting their time trying to prop up the auto industry has just been a cover-up for much more serious issues faced by our Nation. Though you are correct this is an auto thread and C4C - good or bad idea? So I cast my "nay" vote with the Majority of American posters here. Stating a known fact. It was more corporate welfare to satisfy the greed of the auto industry.