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Harry Reid: Auto Bailout Probably Saved Ford

obvious Child said:
Forgetting your profit=liquidity line eh?

I see you never answered my question.
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So, you don't have clue one how an oil well works, therefore, you're not going to grace us with your knowledge. Right? Didn't think so!!!
 
randel said:
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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I know that more people would lose their jobs directly from the bailout. My assertion was that the industry would survive without GM and Chrysler.
 
Lord Tammerlain said:
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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I know how it works. Most of it goes out of business. That's never been the issue of contention. Even Ford is still negatively affected, but to say that every auto parts manufacturer will go under when there is still demand from Ford, the Japanese, and still demand for cars from the public. There will be survivors of the contraction.
 
DrunkenAsparagus said:
I know that more people would lose their jobs directly from the bailout. My assertion was that the industry would survive without GM and Chrysler.
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They might. But the jobs loss when they fell would be painful. And no president would survive that. Not many congress critters either. That's why they keep getting bailed out.
 
Boo Radley said:
They might. But the jobs loss when they fell would be painful. And no president would survive that. Not many congress critters either. That's why they keep getting bailed out.
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The bailout was only a band-aid. The pain was going to come sooner or later.
 
DrunkenAsparagus said:
The bailout was only a band-aid. The pain was going to come sooner or later.
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And not the first bandiad. Nor will it be the last. Again, until we understand why they keep bailing them out, it won't stop no matter who you elect.
 
Boo Radley said:
And not the first bandiad. Nor will it be the last. Again, until we understand why they keep bailing them out, it won't stop no matter who you elect.
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We keep bailing them out, because they get big and take too many risks and make too many stupid decisions so we have to bail them out again.
 
DrunkenAsparagus said:
We keep bailing them out, because they get big and take too many risks and make too many stupid decisions so we have to bail them out again.
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That's part of it. But we won't allow the cost to be paid for those mistakes. That's the other part. As long as too many will lose jobs, and those people vote, we will keep bailing them out. At least Obama tried to make some accountability, more than done in the past. But we need to realize all the reasons for this.
 
Harry Reid is just an old moron. Good thing he'll be fired in November. The Democrats lie all the time about the stimulus and bail outs, this just shows they spew empty rhetoric and nothing factual.
 
digsbe said:
Harry Reid is just an old moron. Good thing he'll be fired in November. The Democrats lie all the time about the stimulus and bail outs, this just shows they spew empty rhetoric and nothing factual.
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:lamo Maybe. But are you saying republicans never lie? Seriously? :lamo
 
Boo Radley said:
That's part of it. But we won't allow the cost to be paid for those mistakes. That's the other part. As long as too many will lose jobs, and those people vote, we will keep bailing them out.
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I completely agree on the politics of it.

Boo Radley said:
At least Obama tried to make some accountability, more than done in the past. But we need to realize all the reasons for this.
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The reason is that they're resistant toward necessary change, because they think Uncle Sam will just clean up their mess.
 
Lord Tammerlain said:
Wrong, I did not argue it was important to save the parts suppliers to save the parts suppliers job. It is meaningless if one parts supplier shuts down.

I was argueing that

Should GM and Chrysler have shut down in the middle of the economic crisis, the cascading effect would have been drastic. Not only would GM and Chrysler have been shut down, but the parts suppliers as well. The closures of the parts suppliers would have caused Fords production to tank as they would not have been able to get parts for many months untill the problems were worked out. Many Japanese plants would have been shut down as well due to the lack of parts.

Overall the number of permanent and temporary layoffs just in the auto sector (parts, contractors, truckers, those directly working for GM, Chrysler, those that receive pensions from the above would have seen incomes either go away in full or drop off drastically. In the middle of an economic crisis like the one the US had in late 2008, having the above occur would be catastrophic. If it occured in 2005 or possibly in 2014, it would not be so bad.

Personally I would have provided a bridge loan (with primary rights during bankruptcty) that would have taken them untill 2011. If GM and Chrysler at that time were not capable of being ongoing concerns shut them down through normal bankruptcy rules, with the government getting first dibs on their assets untill the bridge loan was covered
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Why not just let it fail and let it come back in a manner that is more sustainable?
 
obvious Child said:
Because....

To be valid, we'd first need to strip out at least 80% of the other competitors, consolidate them into a few big buyers and then structure the supply chain to where each supplier was extremely beholden to individual firms on individual equipment pieces. This is why your current and earlier oil comparison doesn't make any sense. Because that's not how the oil equipment market is run.

I agree that propping up individual firms is a bad idea, however, the argument that nothing drastic would have changed doesn't make sense when you look at the integration of the supply chain. Without at least GM, there likely wouldn't be enough demand to support the supply chain. That's what got some of the other suppliers in trouble. They specialized too much.
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I have not argued that nothing drastic would have taken place if there was no auto bailout, but that does not make it a good reason to do so. If a business finds itself in a position where it cannot survive, then tough luck for that business.

Yes, but Lord T and I are talking about an entire industry not just one firm as you are.
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Perhaps that industry needs to rethink how it operates then...
 
Boo Radley said:
:lamo Maybe. But are you saying republicans never lie? Seriously? :lamo
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Did I ever say that? Nope, and I'm not saying Republicans never lie. Do Republican lies justify Dem ones? The fact is that Dems are in control right now, and they are lying on a regular basis to the American people in order to push through an agenda.
 
NolaMan said:
Why not just let it fail and let it come back in a manner that is more sustainable?
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NolaMan said:
I have not argued that nothing drastic would have taken place if there was no auto bailout, but that does not make it a good reason to do so. If a business finds itself in a position where it cannot survive, then tough luck for that business.



Perhaps that industry needs to rethink how it operates then...
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In more normal economic times I would agree with you.

But during a steep and deep economic crisis, it would have been an extra shock to a miserable economy, making the contraction deeper and harder.
 
digsbe said:
Did I ever say that? Nope, and I'm not saying Republicans never lie. Do Republican lies justify Dem ones? The fact is that Dems are in control right now, and they are lying on a regular basis to the American people in order to push through an agenda.
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No, they don't. But let's be clear, politiicans lie. They have to. We can't handle the truth. ;)
 
DrunkenAsparagus said:
I completely agree on the politics of it.



The reason is that they're resistant toward necessary change, because they think Uncle Sam will just clean up their mess.
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And they are right. And we the people will be very upset if the government doesn't. That's why this isn't new.
 
Boo Radley said:
And they are right. And we the people will be very upset if the government doesn't. That's why this isn't new.
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Yet the bailouts are only putting off the inevitable, making the problem worse.
 
Boo Radley said:
No, they don't. But let's be clear, politiicans lie. They have to. We can't handle the truth. ;)
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I think we can handle the truth, we just don't want to hear it ;) This problem stems from both sides of the isle. Regardless, we see Harry Reid clearly lying, and we know Obama has lied about the stimulus. They make these false claims that are borderline propaganda. Their default tone is that the bailouts and stimulus has saved us all, when in reality they don't know what they are talking about.
 
Boo Radley said:
Actually, the bailout did benefit Ford.

At the same time, the Dearborn, Mich. car company is likely to benefit from many of the concessions that General Motors Corp. and Chrysler LLC exact from the suppliers, unions, dealers and debt holders shared by all three companies.

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Still the company needed the Bush Administration to rescue GM and Chrysler because of fears that a failure of one or both of those companies could imperil their shared base of auto-part suppliers. "The U.S. auto industry is highly interdependent, and a failure of one of our competitors would have a ripple effect that could jeopardize millions of jobs and further damage the already weakened U.S. economy," Mr. Mulally said.

Ford Will Likely Benefit From Bailout - WSJ.com
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Ya Ford benefitted by the state aiding its competitor. :roll:
 
Agent Ferris said:
Ya Ford benefitted by the state aiding its competitor. :roll:
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Yes, they did. Their competitor wasn't much of a threat, but they had reason to not want to seem them fail. The case is made in the article.
 
DrunkenAsparagus said:
Because the demand was down, but it was still there. Toyota didn't need a bailout
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Toyota felt similar shocks to demand; for the first time in their existence, they reported a net loss.
 
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