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Thread: Harry Reid: Auto Bailout Probably Saved Ford

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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by Lord Tammerlain View Post
    Given Ford's overhead costs it means bankruptcy
    For many yes. However there is still demand for their product. Nobody said that it would be the smoothest transition, but their would be plenty of demand from remaining car manufacturers to keep some of them in business. If breweries could survive prohibition, at least some parts manufacturers can survive losing GM and Chrysler (who would be absorbed by other companies anyway).
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by DrunkenAsparagus View Post
    For many yes. However there is still demand for their product. Nobody said that it would be the smoothest transition, but their would be plenty of demand from remaining car manufacturers to keep some of them in business. If breweries could survive prohibition, at least some parts manufacturers can survive losing GM and Chrysler (who would be absorbed by other companies anyway).
    In normal markets yes, but the time at which GM and Chrysler got the bailout, it was not a normal market or normal economy. A collapsing economy would have collapsed further with those two shutting their doors, along with plenty of parts suppliers
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by Lord Tammerlain View Post
    In normal markets yes, but the time at which GM and Chrysler got the bailout, it was not a normal market or normal economy. A collapsing economy would have collapsed further with those two shutting their doors, along with plenty of parts suppliers
    Even the collapsing economy had demand for auto parts.
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by Lord Tammerlain View Post
    In normal markets yes, but the time at which GM and Chrysler got the bailout, it was not a normal market or normal economy. A collapsing economy would have collapsed further with those two shutting their doors, along with plenty of parts suppliers
    You seem to be focusing in very much so on the impact the parts suppliers would undergo should one of these companies collapse. So rethink of it in a different industry. If drilling for oil suddenly becomes not profitable, should the government bail out oil companies and artificially produce demand just to keep oil field service workers employed?

    I think you would find most people arguing in favor of saving GM, would argue against that in the oil industry... why?

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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by DrunkenAsparagus View Post
    It does not mean that they go broke. It means that they have to downsize.
    and the term 'downsize' means?....MORE PEOPLE WOULD HAVE LOST JOBS...and it would not have stopped at the automotive suppliers...that would have had and effect on everyone.....think of how many jobs in communities that are home to the suppliers, would have been lost.

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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by NolaMan View Post
    You seem to be focusing in very much so on the impact the parts suppliers would undergo should one of these companies collapse. So rethink of it in a different industry. If drilling for oil suddenly becomes not profitable, should the government bail out oil companies and artificially produce demand just to keep oil field service workers employed?

    I think you would find most people arguing in favor of saving GM, would argue against that in the oil industry... why?
    Only during the economic crisis of 2008-2009 would I suggest the saving of GM and Chrysler would have been a reasonable thing to do, not for the unions or the parts suppliers but for the wider effects that would have occurred in the economy at the time. GM and Chyrsler directly employe somewhere around 1 million, provide pensions for at least the same. Indirectly through parts suppliers or contractors, along with spin off jobs they would be responsible for a few million people primary sources of income. Should one go bankrupt in a normal economy, not a problem, the economy will rebound fairly easily as the remains could be picked up by various companies getting loans from banks. In the economic crisis, such loans were not avaliable, the economic fallout would have put the US economy down another massive amount over what the banks did.

    As for the oil industry, I have worked in it before here in Alberta, the government is extremely dependant on oil and gas revenues, and I have been at the Suncor Oil Sands plant a few times ( 8 years ago god does time fly). I have no problem with the oil and gas industry, and have seen the effects of the boom and bust cycle in the oil industry right here, once in the early 80's and again the early 90's. Provided the workers are intelligent, they wont need bailouts as the bonus's they get during the boom years are very significant, if they are not intelligent with their money well they can get unemployement like other people untill the boom comes again
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by DrunkenAsparagus View Post
    Even the collapsing economy had demand for auto parts.

    Do you have any understanding of corporate finances?

    What do you think would happen to an autoparts supplier whose profit margin is 2% and is deeply in debt, when 50% of that companies orders/revenue dry up? It cant pay back its debt, cover the wages and salaries, rent etc. It might have some customers but the loss of business means it cant cover its debts and it goes broke. Remember the US auto sales dropped from 15 million or so to less then 10 million, even very profitable car companies like Toyota had massive loss's during the crisis
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by NolaMan View Post
    You seem to be focusing in very much so on the impact the parts suppliers would undergo should one of these companies collapse. So rethink of it in a different industry.
    Did you really suggest that? Why would we compare vastly different industries as if they were the same? What's the point of doing that?

    If drilling for oil suddenly becomes not profitable, should the government bail out oil companies and artificially produce demand just to keep oil field service workers employed?
    The oil industry is hardly the same as car companies. Furthermore, what you are talking about isn't relevant to Lord T's post.

    I think you would find most people arguing in favor of saving GM, would argue against that in the oil industry... why?
    You are comparing a cyclical event to a structural paradigm shift in the economy. Please spend some time thinking about why that is a poor argument.
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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by obvious Child View Post
    Did you really suggest that? Why would we compare vastly different industries as if they were the same? What's the point of doing that?
    To make a point...

    The oil industry is hardly the same as car companies. Furthermore, what you are talking about isn't relevant to Lord T's post.
    Yes it is... he argued more or less that we needed to bail out car companies to save the jobs of the suppliers...My point is that every industry will have multiple companies, people etc that rely on it, but that is no reason to keep a company in business that is not profitable.

    You are comparing a cyclical event to a structural paradigm shift in the economy. Please spend some time thinking about why that is a poor argument.
    I made a comparison to make a point. "Jobs" are not a good reason to maintain an industry that cannot compete.

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    Re: Harry Reid: Auto Bailout Probably Saved Ford

    Quote Originally Posted by NolaMan View Post
    To make a point.
    Which would be....? To make a point, the two points of comparison must share some basic characteristics. Your argument does not.

    Yes it is... he argued more or less that we needed to bail out car companies to save the jobs of the suppliers.
    Yes...

    My point is that every industry will have multiple companies, people etc that rely on it, but that is no reason to keep a company in business that is not profitable.
    Except that your point is wrong. The oil industry uses much of the same practices and equipment. Furthermore, the number of large oil companies is quite numerous so one going under does not pose a significant threat. Car companies however, design cars specifically and with their suppliers. And because of the consolidation of power from buyers and the integration with specific models, suppliers cannot quickly turn around and find new buyers for model specific parts. Letting GM and Chrysler go down would remove a huge amount of demand as the models being supplied would no longer need supplies. Unlike relatively standard oil equipment, you can't take a part designed specifically for one model and slap it on another. Your analogy fails because you are comparing two very different industries.

    I made a comparison to make a point. "Jobs" are not a good reason to maintain an industry that cannot compete.
    Your comparison sucks. Comparing cyclic problems to structural is not a good foundation for this thread.
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