5 ms·

You can't just juggle the variables like that because there are discontinuities and nonlinear effects. Industries interact with each other. What is happening t

You can't just juggle the variables like that because there are discontinuities and nonlinear effects. Industries interact with each other. What is happening to auto is mostly caused by 1) the financial crisis making credit scarce and 2) a huge drop in demand (30-40%) that no industry could sustain For a "elderly and weak" patient such as auto, this is too much. Fine. But what happens if auto goes down, which the OP is celibrating? What other weak or newly weakened sectors does it take down with it? Btw, chapter 11 is the best case, it could go chapter 7. We don't know.

mattmaroon 18y ago
Well, it wasn't caused by those factors, only accelerated. They've been struggling for a very long time. Toyota is sustaining the drop just fine. If GM had Toyota's good will, brand image, and cost basis, they would be too. They need that to compete in the long run. And they've done a good job of working on lowering their cost basis over the last 5 years, along with the Unions, but they've still got a long way to go and are progressing slowly. Without serious oversight in the bailout it's just throwing money down a well. Or so goes the theory. You can choose to believe it's wrong (and you may be correct, it's a complex issue) but it's disingenuous and mean-spirited to say that the people against it are happy about job losses. They're happy that a bill that they believe is throwing money down a well and only delaying job losses didn't pass.
- programnature 18y ago
  haha. Well, I think its mean-spirited to celebrate the demise of an industry that employs 3 million people, with no mention of the human toll involved in these transitions. And I think its disingenuous to claim that I said others are "happy" about job losses, when I said no such thing. My two points were 1) this is bad for the economy short term, potentially leading to further trickle down effects, and 2) the response of "meh, its just optimization" to the human suffering is not indicative of a society I am proud to live in.
  - jamiequint 18y ago
    You can't artificially prevent "human suffering" through economic ignorance. I appreciate the point, but don't see the bailout and human suffering as the only two choices. One other possible option is for the government to spend a fraction of this money to help people suffering by the collapse of the US auto industry as a buffer until (likely foreign) competition moves in and takes its place. If you see this as simply the acceleration of the inevitable (as I do) the argument you are making for a bailout is akin to saying we should support any industry that is no longer economically viable just to keep the people from having to suffer job loss. This is not a sustainable long term strategy. At some point people must move on. If this means acquisition of new skills in order to most efficiently re-integrate into the economy than society should help people who unfortunately lost their jobs in attaining these skills, but it is the wrong decision to prop up failing companies in order to help their employees, because at some point this ceases to work. There are more efficient uses for capital that help more people in the long term.
    - jimbokun 18y ago
      "One other possible option is for the government to spend a fraction of this money to help people suffering by the collapse of the US auto industry as a buffer until (likely foreign) competition moves in and takes its place." I think this is the relevant question. Is government money more efficiently spent propping up the auto companies a little bit longer, or giving it directly to all of the people laid off after the auto companies go under? As others have described in this discussion there is a real possibility of damage quickly spreading to other parts of the economy in a downward spiral if the automakers go down. So there might be a lot of people in need of that "fraction" of the money needed to keep the auto companies going a little bit longer. The decision rests on how we weigh the specific costs and risks involved for each option.
  - mattmaroon 18y ago
    Most are not celebrating the demise of the industry, except maybe Toyota shareholders. They're celebrating the non-passage of a bill that wouldn't do anything but slightly delay the demise of the industry, while costing a lot of money. They're not dancing on the grave of an industry, they're dancing on the grave of a bill. It's two very different things. I guess maybe you're not mean-spirited and are just not understanding the difference.
lacker 18y ago
What is happening to auto is mostly caused by 1) the financial crisis making credit scarce and 2) a huge drop in demand (30-40%) that no industry could sustain If this were true, all auto makers would be going bankrupt. But, it's only GM and Chrysler. The well-run auto makers need to expand, the badly-run ones need to contract, and we need new entrants into the market. I don't want the industry to be destroyed, but change is inevitable.

mattmaroon 18y ago

Well, it wasn't caused by those factors, only accelerated. They've been struggling for a very long time. Toyota is sustaining the drop just fine. If GM had Toyota's good will, brand image, and cost basis, they would be too. They need that to compete in the long run. And they've done a good job of working on lowering their cost basis over the last 5 years, along with the Unions, but they've still got a long way to go and are progressing slowly. Without serious oversight in the bailout it's just throwing money down a well. Or so goes the theory. You can choose to believe it's wrong (and you may be correct, it's a complex issue) but it's disingenuous and mean-spirited to say that the people against it are happy about job losses. They're happy that a bill that they believe is throwing money down a well and only delaying job losses didn't pass.

programnature 18y ago
haha. Well, I think its mean-spirited to celebrate the demise of an industry that employs 3 million people, with no mention of the human toll involved in these transitions. And I think its disingenuous to claim that I said others are "happy" about job losses, when I said no such thing. My two points were 1) this is bad for the economy short term, potentially leading to further trickle down effects, and 2) the response of "meh, its just optimization" to the human suffering is not indicative of a society I am proud to live in.
- jamiequint 18y ago
  You can't artificially prevent "human suffering" through economic ignorance. I appreciate the point, but don't see the bailout and human suffering as the only two choices. One other possible option is for the government to spend a fraction of this money to help people suffering by the collapse of the US auto industry as a buffer until (likely foreign) competition moves in and takes its place. If you see this as simply the acceleration of the inevitable (as I do) the argument you are making for a bailout is akin to saying we should support any industry that is no longer economically viable just to keep the people from having to suffer job loss. This is not a sustainable long term strategy. At some point people must move on. If this means acquisition of new skills in order to most efficiently re-integrate into the economy than society should help people who unfortunately lost their jobs in attaining these skills, but it is the wrong decision to prop up failing companies in order to help their employees, because at some point this ceases to work. There are more efficient uses for capital that help more people in the long term.
  - jimbokun 18y ago
    "One other possible option is for the government to spend a fraction of this money to help people suffering by the collapse of the US auto industry as a buffer until (likely foreign) competition moves in and takes its place." I think this is the relevant question. Is government money more efficiently spent propping up the auto companies a little bit longer, or giving it directly to all of the people laid off after the auto companies go under? As others have described in this discussion there is a real possibility of damage quickly spreading to other parts of the economy in a downward spiral if the automakers go down. So there might be a lot of people in need of that "fraction" of the money needed to keep the auto companies going a little bit longer. The decision rests on how we weigh the specific costs and risks involved for each option.
- mattmaroon 18y ago
  Most are not celebrating the demise of the industry, except maybe Toyota shareholders. They're celebrating the non-passage of a bill that wouldn't do anything but slightly delay the demise of the industry, while costing a lot of money. They're not dancing on the grave of an industry, they're dancing on the grave of a bill. It's two very different things. I guess maybe you're not mean-spirited and are just not understanding the difference.

lacker 18y ago

What is happening to auto is mostly caused by 1) the financial crisis making credit scarce and 2) a huge drop in demand (30-40%) that no industry could sustain If this were true, all auto makers would be going bankrupt. But, it's only GM and Chrysler. The well-run auto makers need to expand, the badly-run ones need to contract, and we need new entrants into the market. I don't want the industry to be destroyed, but change is inevitable.