DawgTalkers.net Forums DawgTalk Tailgate Forum Bail-Outrage: Misuse of Funds, Lack of Transparency a National Disgrace

Working in the Auto buisness for the last 25 years, I hope were able to keep going, heck I need the job, but on the other hand, I hope the big wigs & union people are seeing just how close greed & the gimmy more & more attidute has done to the car industry, Maybe hitting rock bottom is a good thing, the car industry has been in shambles for a long time, the way things are structured & the things required to make parts is crazy. It's not just make 'em & ship'em anymore, there special softwear to buy, maintenance of that program, special books & training class you have to have to make parts or do quality on those parts, there's special skid or boxs you have to have spically made to send the parts, all these things add up into the price of the parts with goes directly into your overhead and with all things required, you need to hire more and more people or like us have one person do multiple things, I do atleast 5 peoples work from HR to Quality, just to save money so we can stay competetive. Auto industry needs to start form scatch and make everything streamline & stright and all agree on one way to do things, we do a PPAP and it's diffrent for this customer & diffrent for that customer, which in turn we all have to buy 4-5 diffrent books at $ 200.00 each, and take classes which cost $ 150.00 each, so handing money out is gonna help in the short run by thier are alot more inner problems which need corrected way before anything will get better.

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f they are foriegn manufactures they have as much a chance to build cars here as the American makes, especially since a lot of American cars are made outside the US.

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Ok, so let's take GM, Ford and Chrysler and throw them out with the bath water... Who needs them,, hell with them and all the folks that receive pension benefits from them...

Let's create a new class of poor...

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Yeah, that exactly what I was saying...

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Well geez P,, that's what it sounded like to me,,

If I got you wrong, then please accept my apology,, But if we let the Big Three go down, it's like committing suicide.. we just can't let them go,

What we can do is demand a plan that makes sense and doesn't just follow the same line of thinking that they've always followed.. and for me, that means the Union better get on board or it's NEVER gonna work.

The various components that need to fit together to make this workable aren't simple. In fact they are very complex. Anyone who thinks that it's as easy as writing them a check and all will be dandy is smoking some bad weed man...

If we are going to loan them money, strings need to be attached.. it's imparitive they are attached and then monitored to see they are carried out.

I'll never ever in a million years be willing to just hand over money.. not me,, no sir.. Not without strings and not without knowing how I'm getting it back + a little for my trouble as well. and yes, there is always some risk.

This is where we need to look at what caused this meltdown in the first place.. not to lay blame, but to assign importance to changing those things.

Making a comprehensive list of things that caused this meltdown is way beyond my pay grade... But I can list a couple of things that would start us off.

Quality of Product: it's not as good as Toyota, Nissan and Honda..

Unions: If they aren't on board with the changes that are needed,, then this will NEVER work.

Greed: Time to hang up the greed bug.. No more Big Bonuses for the top dogs.. they don't deserve them,, they didn't earn them.. they weren't forward thinking enough to see this coming and take actions to avoid or address them..., In other words, they flat out weren't good enough at thier jobs to earn a bonus...

If they have contracts that say they are to be paid bonues, then that will need revisited. Those contracts need voided and reworked.. You can't have one guy taking 20 million out in bonus money..

That's a little more than my 2 cents,,, but it's what I got for now.

The law of business is the same as the law of the wild....the strong survive.

I know this hurts some people....but it hurts more to keep a flim flam outfit in operation.

This is the ugly end to a auto industry that has put out crappy product with overpriced labor for 40 years.

The mgt. and unions have worked that business into a business that won't work any longer.

And as usual, the regular Joe is the one left with the corn cob....but that is the way it goes unless artificial means are put in to place.

I don't like saying that......but it is what it is.

I don't really disagree with much of what your saying.. But I'll ask again, what's the alternative?

The problem is,, while an alternative can be found and most likely will be found, by the time it's in place, America will be lost again. I suspect that the pain of living with the aftermath is worse than the pain loaning them the money..

So again,, time for blaming everybody is over.. time to fix the problem is at hand....

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So maddog,, what's the alternative?

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Sorry for the late reply....miss a day....miss a lot


I wish I knew the alternative Damonshot. Like many, I am the "Joe The Plumber" of the auto industry (sans any talk show host paying my bills ).....just a high school grad (with a crappy GPA ) that tries to use a bit of intelligence with some semblance of common sense and apply a decent work ethic to find some financial success in our great country. Imho some variation of that is the backbone of our middle class.

I obviously have a subjective viewpoint, particularly since my company has purposely positioned itself as an automaker that invests in and manufacturers fuel efficient vehicles and attempts to execute this plan with both profit and value to the customer in mind (those two are not mutually exclusive). I know that sounds like a company line, but I base that on my own experience. I have a 10 year old Accord whose book value is substantially better than others in it's class. Relative to profit, Honda can ill afford to sell at a loss and you will seldom, if ever, see anything more than a 3 yr / 30,000 mile warranty on it's automobiles. Extending a warranty for the sake of sales is very expensive to the manufacturer. This is why reliability is crucial to the existence of Honda.

So how do American owned automobile manufacturers profit in what is a much smaller market? It is my understanding that Ford has made significant progress in the quality of all or the majority of their product line. As I alluded to this can be positive both because customer satisfaction equates to successful sales and warranty does not take such a bite out of the bottom line. The other side of profiting is production costs and among other things that includes not just the hourly workers' wage, but all those compensated. I think many have already touched upon such compensation not being commensurate with the financial standing of a company, much the same as we see Washington continue to spend money we do not have. Didn't that type of "funny math" lead us to the economic distress that we have now? I think so. I also believe that allowances given towards a free market have benefited us in the past and I think the 401K program is a good example. Despite the losses that so many have taken we must understand that we are complicit by accepting past gains.

So what do we ("the people") do about it? That is a tough one. The word socialism has been bandied about quite a bit lately. We have provided billions to banks. Are there strings attached and if so, is that not the state mandating how they must do business? I would think that not only oversight is in order, but regulation is needed, however I do fear that legislation towards that cause may blur the line between what we have known as capitalism and what could be socialism. This can lend itself to our government, "we the people", conducting an unproductive and, in my opinion, immoral redistribution of wealth.

Like I said......I don't know. Is our middle class diminishing despite it's value to not only our economy, but the world economy? Do we give money to failed businesses? Do we legislate expectations to such subsidies and to what extent? These questions are the few of many and others have already expressed the same or similar concerns on this board and all around this country. My plan, as feeble as it may appear, is this.....

Barack Obama will soon President for all of us. I will grant him the the trust that he rightfully deserves given that he is willing to lead, especially during times such as these. He stated in his post election " Yes We Can" speech in Chicago that

...to those Americans whose support I have yet to earn, I may not have won your vote tonight, but I hear your voices. I need your help. And I will be your president, too.

I am one of many that he speaks of. I will listen and I will speak. I will support when I agree and I will stand on my principles when I don't. I will attempt to understand the details of proposed ideas and the ramifications to free market ideals, particularly while attempting to consider both short term need and long term results. I will continue to be a fiscal conservative not in spite of opposing majority viewpoint, but because I still strongly believe that it is the most prosperous path for our Country to take. In that...

I will continue to live by the work ethic that has served my family well.

I will continue to offer compassion tempered by expectation.

That is all I do know.

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The alternative is to let the market take it's course.

We have been living on a bubble for decades.

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It's a really good thing that past generations didn't take that approach.

What happened to the "CAN DO" attitude of the American people..

To me, your plan os a worse alternative than propping them up. To me, your plan says,,, "I give up"

But that's JMO

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Yes, I have an alternative. Challenge the GM associates and past associates to buy out the car maker. These UAW workers have been claiming that the leadership of GM is to blame for the poor sales...let's see how the new UAW line of vehicles fair against the Toyota line of cars.

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Now,, I like that idea.. I like it alot. The union has been saying for years how unfair management is at the Big Three..

Let's put the shoe on the other foot.. let's see how they deal with the market. Let's see how they deal with Toyota, Honda and Nissan.

Any bets that they won't take up the challenge?

By the way, if they screw thier heads on right, they may well be the only entity that could succeed. JMO however..

But they would still need loan money in order to buy it out.. Actually, that might just be a safer bet.. I gotta think on that a bit.

Nice alternative.. Might work

I'm not sure why you call it "giving up" when really it's as simple as not bailing companies out that don't run efficiently in the first place. Guess what happens if we bail them out...a few years down the road, the same exact thing.

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I will continue to live by the work ethic that has served my family well.

I will continue to offer compassion tempered by expectation.

That is all I do know.

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In the end, that's pretty much all any of us "middle class" folks know.

Thoughtful post... thanks

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It would be a huge blow to the economy in the short term but we will be able to survive it.


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Not this we. I'll be in major trouble if GM goes down

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I guess I can't seem to get that across to people GM.. I think some people feel as if we can get by with out the Big Three... I don't understand that thinking..

I'm not sure I ever will.....

I was thinking of a saying that an old boss of mine used when we experienced a real downturn in business in the late 90's.. He said, it's big job.. it's gonna be tough to turn the company around.. then he said, you have to use the same thinking as you might if you tried to eat an elephant..

How do you eat an elephant?

One Bite at a time!

I'm still not clear on how bailing out companies that have run themselves into the ground helps anyone long term. Anyone?

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I think some people feel as if we can get by with out the Big Three

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We could get by. Would it be easy? Hell no. But, we could do it. Around here we've seen plenty of auto plants close over the years. It sucks, and it's hurting the local economy, but guess what, we're surviving.

It's a short term "fix" to make everybody feel all warm and cozy. It doesn't fix a thing. In fact, it prolongs the agony and gets government more involved in the day to day operations of the country. It's a perfect setup....and the majority of people have no clue.

Well, some people understand that, but it seems many others don't. I'm not sure which is better...the "big three" going under or our government having ownership in them.

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I'm still not clear on how bailing out companies that have run themselves into the ground helps anyone long term. Anyone?

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First thing you gotta do is understand the difference between Bailout and loans and purchase of assets or ownership.

The Big three aren't asking for Bailout money.., they are asking for a loan. They are offering up assets as collataral for those loans although I don't think it's accurately described as such.

Second,,, and let me be clear about this.. I am generally in favor of loaning them the money,,but with certain strings attached. if they are gonna run the business as they have,, then.. I can't think it will turn out any better in the log haul..

If they can make the necessary changes to thier business and product model, then sure,, it could work out very good..

The other issue to consider is this,, all six of the top car brands in the US (GM, Ford, Chrysler, Toyota, Honda and Nissan) are struggling now.

Fewer cars are being sold for various reasons such as High Unemployment, Fringe borrowers being unable to get credit to purchase etc etc..

Letting them fall only adds to the overall crisis.

As for the Big Three running themselves into the ground,, that's an inaccurate characterazation (sp).

There isn't just one single reason that they are in trouble.. it's a combination of many things... Legacy costs associated with union employees going back a long long way, inability to get the necessary concessions from unions is another reason.. Product Quality is a problem,, not that it's horrible, it's just that it isn't keeping pace with Toyota, Honda and Nissan.

Fuel efficient vehicles... well, that's not that big a problem anymore.. all of the Big Three are producing cars and trucks that are way more fuel efficient. But they were late to the party.. That's hurt thier image.

So, while somethings could have been fixed, some couldn't. but with this crisis, it's the PERFECT time to get those other things worked out..

That's the strings I was speaking of by the way.

Did that help?

jc

It was form 3 years ago but thought this was interesting...

http://www.npr.org/news/specials/gmvstoyota/

GM vs. Toyota: By the Numbers
by Diane Geng
Dec. 19, 2005 -- General Motors has been the world's No. 1 automaker since 1931. But GM's dominant position is eroding rapidly. Last year, Toyota surpassed Ford Motor Co. to become No. 2 in the global vehicle market. Some analysts predict Toyota will catch up to GM in two to three years. In November 2005, GM announced that over the next three years it plans to cut 30,000 jobs and reduce capacity by 30 percent from 2002 levels. We compare the global auto industry's two titans, with an emphasis on the U.S. and North American markets.


Vehicle Production Started in U.S.
Source: GM & Toyota
GM:
1908
Toyota:
1986

Brands Sold in North America
Source: GM & Toyota
GM:
Buick, Cadillac, Chevrolet, GMC, HUMMER, Pontiac, Saab, Saturn
Toyota:
Toyota, Lexus, Scion, Hino

Best-Selling Vehicle in U.S.
Source: GM & Toyota
GM:
Chevrolet Silverado
680,768 sold in 2004
Toyota:
Toyota Camry
426,990 sold in 2004

U.S. Sales in 2005
Source: Autodata
GM:
4,454,386, down 4.3% from 2004
Toyota:
2,260,296, up 10.1% from 2004

U.S. Market Share
Source: First nine months of 2005, Harbour Consulting
GM:
26.8%
Toyota:
13%

Vehicle Production in North America 2005
Source: GM & Toyota
GM:
4,856,000
Toyota:
1,558,828

Profitability per Vehicle
Source: 2005 Harbour Report
GM:
Loses $2,331 per vehicle
Toyota:
Makes $1,488 per vehicle

Net Income in the First 9 Months of 2005
Source: Harbour Consulting
GM:
$4.15 billion loss from North America operations off-set by profits in Europe and Asia for an overall loss of $3.8 billion
Toyota:
$7.89 billion (¥921.7 billion, converted at 116.81 yen to $1)

Number of Plants in North America
Source: GM & Toyota
GM:
77, all unionized. Plans to close 12 facilities by 2008 (see press release).
Toyota:
12, three unionized in Long Beach, Calif., Fremont, Calif., and Tijuana, Mexico.

Average Plant Capacity Utilization
Source: Harbour Report 2005
GM:
85%
Toyota:
107% using overtime workers

Production Time per Vehicle
Source: 2005 Harbour Report
GM:
34.3 hours, 2.5% improvement since 2003
Toyota:
27.9 hours, 5.5% improvement since 2003

North American Workforce
Source: GM & Toyota, Dec. 2005
GM:
White collar: 36,000 Production: 106,000. Retirees: 460,000
Toyota:
White collar: 17,000 Production: 21,000 Retirees: 1,600

Average Hourly Salary for Non-Skilled, Assembly Line Worker
Source: Center for Automotive Research
GM:
$31.35/hour
NOTE: Includes idle workers still on payroll and those on protected status.
Toyota:
$27/hour
NOTE: Includes year-end bonus.

Health Care Costs per Vehicle in 2004
Source: 2005 Harbour Report & A.T. Kearny Inc.
GM:
$1,525
Toyota:
$201

Average Labor Cost per U.S. Hourly Worker
Source: GM & Toyota
GM:
$73.73
Toyota:
$48

Worldwide Sales in 2005
Source: GM & Toyota
GM:
9.2 million
Toyota:
8.2 million

Global Market Share in 2005
Source: Automotive News, GM & Toyota
GM:
14.2%, down from 14.6% in 2002
Toyota:
12% up from 10.6% in 2002

Worldwide Vehicle Production Projected for 2005
Source: 2005 Harbour Report
GM:
9 million

Manufacturing operations in 32 countries, vehicles sold in 200 countries

Toyota:
8.4 million

Manufacturing operations in 26 countries and regions, vehicles sold in over 170 countries

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When you look at the numbers....It is easy to see whay GM is struggling even though they are starting to put some good cars out on the road again. And it all has to do with COST...They pay FAR too much to put their product on the street...And all that money is not going to JUST the executives as many would claim. look at the medical costs and hourly costs...that alone puts GM out of the competition...The unions have a large part to play in this...and although they have made sacrifices...I don't think they realize that the sacrifices they have made don't look like sacrifices at all when looking at the competition.

OBAMA WANTS AN AUTO CZAR
By Neal Boortz


Barack Obama wants Congress to approve $50 billion for the auto industry. He also wants to appoint a czar or board to "oversee the companies." This would be the person or committee in charge of restructuring the auto industry.

I can't make this any more clear: it is not the government's job to restructure the auto industry. The auto industry got itself into this mess, and it doesn't need government or the tax payers to get it out of this mess. And besides, what makes the auto makers believe that government could do a better job of restructuring their industry? Politicians aren't in the industry ... let the companies that once enjoyed such great success build on the ingenuity that made them great. The only guarantee you will have from government is mediocrity.

With Obama and Democrats it's all about government. What is he going to do, set up a Department of Automobiles? Who will he name to be the Secretary of Cars? Will there be an Undersecretary of Trucks? What's next? How about a homebuilding czar? Is it too late to appoint a steel czar? Come on my friends, get in the game here! Every industry is going to have its own czar in Washington to oversee operations! My God! Could this guy possibly love government any more?

Do you remember the words of one of Obama's transition czars? Obama will be ready to "take power and rule from day one." Rule? I guess we're beginning to see what this person meant.

If you'll notice, the Democrats are suddenly so focused and so worried about this auto industry bailout. That can be explained by two words: unions and votes. If they are the heroes of the auto industry, they can guarantee a win in Michigan, Ohio, Indiana, Illinois for years to come. The line will be "we saved your job at a time when the Republicans wanted to let your employers fail."



THE HERITAGE FOUNDATION PUTS THINGS IN PERSPECTIVE
By Neal Boortz


There is no doubt that this $700 billion bailout is serious money. And by the time all is said and done, and all the pigs have fed from the trough, this is going to cost the taxpayers at least a trillion dollars. In fact, Forbes magazine estimates that the full impact of the financial crisis is going to cost the taxpayers upwards of $5 trillion.

For right now let's stick with an original estimate of $0.84 trillion. Now take that figure and multiply it by 50 and you get over $40 trillion. Now THAT'S a lot of money. So who cares, right? You should care. Because that is how much it is going to cost to pay for government benefits for Medicare and Social Security.

In order to pay for these government entitlement programs, the Heritage Foundation estimates that it will require three things:

Doubling all tax rates.
Eliminating all other federal programs, including defense and education.
Running massive budget deficits that eventually would capsize the economy.

That's unless the Congress decides to do anything about massive government growth and entitlement spending. But don't count on it with this new Congress. You can bet that there will be a lot of changes, but entitlement spending isn't going anywhere.




http://boortz.com/nealz_nuze/index.html

Just a general comment.

I don't see why anyone thinks that merely throwing money at GM (or any other bank, company, etc.) is going to cure their ills.

Business is run by people.

Now, I don't know about anyone else ...... but I generally receive 2 types of money over the course of my year .... money I earn .... and "gift" money. (which I include bonuses into) My earned money has to take care of my necessities. It has to pay the bills ..... put food on the table ..... and take care of everything else that life demands. (including fun)

Now ..... let's say I get some "free" money. (Like a birthday present, bonus, hit a lottery ticket, etc) What generally happens to that money?

Ummm .... well .... err ..... often I couldn't tell you. I know it gets spent ..... but nowhere nearly as carefully as the money I earn and depend upon does.

I would suspect that most people are similar in nature. Businesses are run by ... gasp ..... people. So ... we are expecting people to get a boatload of free money ..... and suddenly develop a responsible side not heretofore shown ....... and suddenly figure out how to run their business in a profitable and responsible manner.

Forgive me if i don't see that happening.

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The mgt. and unions have worked that business into a business that won't work any longer.

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Bingo!! You can't throw money at a failed business plan, period.

Another thought....How is giving them a cash cow going to increase auto sales? It's NOT. Increased sales is the ONLY thing that will make them profitable again. It's not going to happen no matter how much money you give them.

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In some ways, it is...if your home foundation is crumbling, you can try to bolster this and that, but in the end, the house is going to fall apart.

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So you are gonna walk away from your home and just let it crumble... ?

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The Auto industry has screwed itself....both the mgt. and the unions. It isn't a viable industry as it stands...the product was inferior for way too long...it is better now, but in my view it was to little to late...for a few decades Detroit was producing crap with labor that was way out of line...add the two and you have a problem.

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You will get no argument on me about that.. but here's the telling part of your comment.

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the product was inferior for way too long...it is better now, but in my view it was to little to late

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It is a better product now and they continue to make strides.. to cut them off now, when if they keep progressing at thier current pace, would be just crazy.. they are moving in the right direction.

I'm firmly convinced that if we weren't hit with the current slowdown of buying and buying power and credit crunch, the Big Three were well on thier way to solving thier problems.

Go give up now seems rather foolish to me..

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As an example...VW just broke ground on a billion and a half dollar plant here in Chattanooga a few weeks back.

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Ask the folks in New Stanton PA what they think of VW and you will get a real interesting take..

I think the year was 1978.. VW opened a huge facility there,, within 10 years, they moved the whole shebang out..leaving thousands unemployed..

It's not just the domestic automakers that make mistakes.. they all do.

But my point is, domestic makers seemed to have learned what to do,, and they, by your own admission have been moving in the right direction..

They need help,, the problem isn't ALL of thier doing. some of it stems from the governent itself...

http://www.msnbc.msn.com/id/27742573/

World leaders holding an emergency meeting to combat the economic crisis agreed Saturday to a far-reaching action plan that, over the next 4 1/2 months, would begin to reshape international financial institutions and reform worldwide regulatory and accounting rules.

The leaders' 11-page statement spoke of broad principles, leaving the details to be worked out by lower-level aides before another summit meeting in April, after Barack Obama assumes the presidency. But the gathering in Washington of the nearly two dozen nations — from every region of the world — reflected the new balance of power emerging in the aftermath of a financial crisis that has devastated even well-run economies, a wrenching process that British Prime Minister Gordon Brown has dubbed "the birth pangs of this new global order."

Under the plans outlined by the leaders, countries such as China, Brazil and India would gain greater roles and responsibilities as part of a restructuring of the international financial system, while European leaders won a commitment to new regulations and controls on banks, rating agencies and exotic financial securities. The leaders also agreed that a dramatic failure of market oversight in "some advanced countries" was among the root causes of the financial crisis, an implicit rebuke of the United States.

"I'm a free market person," President Bush told reporters after the summit ended, "until you're told that if you don't take decisive measures then it's conceivable that our country could go into a depression greater than the Great Depression."

The Europeans got "virtually everything" they sought at the summit, French President Nicholas Sarkozy crowed afterward at a news conference. He said it had been difficult to persuade Bush to hold the summit, but the results were worth it. "America is still the No. 1 power in the world," he noted. "Is it the only one? No, it isn't."

The leaders, representing the Group of 20 economic powers, Spain, the Netherlands, the United Nations and other international organizations, met over dinner at the White House on Friday. They then continued their discussions Saturday arrayed in a square in the central hall of the 19th-century National Building Museum, beneath soaring 159-foot high ceilings.

"We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world's financial systems," the leaders declared in their communique.

The leaders agreed to set up a new regulatory body, "a college of supervisors," to examine the books of major financial institutions that operate across national borders, so regulators could begin to have a more complete picture of banks' operations. They demanded greater scrutiny of hedge funds and the completion of a clearinghouse system to help standardize and limit risk on some of the opaque and exotic financial derivatives that helped bring down Wall Street's investment banks.

Leaders also agreed to submit their countries' financial systems to regular, vigorous reviews by the International Monetary Fund — assessments that some countries, including the United States, had long resisted. And they urged new constraints on the pay schemes at financial firms that "reward excessive short-term returns or risk-taking."

Sarkozy was especially pleased by the mention of executive compensation, though the communique noted that action could be voluntary or regulatory in nature. "Have you ever seen in the Anglo-Saxon world even discussion to have rating agencies downgrade the banks where executive compensation has [encouraged] them to take too much risk? I have never seen it," he said.

Senior Bush administration officials played down Sarkozy's comments, arguing that the agreement yesterday did not signify a "pro-regulatory" shift by the administration but rather an acknowledgement that the regulatory system needed to be updated. They spoke on condition of anonymity under ground rules set by the White House.

Obama stayed away from the summit, though the White House extensively briefed one of his senior advisers on the deliberations and two of the president-elect's representatives met with 17 leaders or their top aides on the sidelines. Many sections in the communique may please Obama, but at least one pledge to which Bush agreed — a 12-month hiatus on protectionist measures — could be viewed as limiting his options.

Many leaders frown on Obama's calls to bail out the auto industry as a form of protectionism. The section of the communique on the issue of protectionism prompted fierce debate, with discussions dragging on until 11 p.m. Friday, in a pitched battle between France and the United States, diplomats said.

Sarkozy, diplomats present at the summit said, was the slowest to commit to a moratorium on protectionist measures and a reaffirmation of free trade, flustering some of the developing world leaders whose nations have been badly hit by a drop-off in exports as the global economy slows. Sources said other leaders, including Canadian Prime Minister Stephen Harper, spoke out against Sarkozy's calls for broad global regulation, arguing that even in progressive Canada, the idea would be seen as violating national sovereignty.

"Here you had everyone at the table trying to come together, and Sarkozy was out there trying to write the world according to Sarkozy," said a senior diplomat present at the summit. "It was not helpful."

Obama, in the Democratic Party's weekly radio address, commended Bush yesterday for holding the summit and also called for a new fiscal stimulus package -- which Bush has resisted. On that issue, the communique leaned toward Obama's position, calling for "using fiscal measures to stimulate domestic demand to rapid effect, as appropriate."

"Whereas five or six weeks ago you had coordinated central bank cuts, now it's moving to the fiscal side, and I think the U.S. can speak for its own position . . . but it is my own judgment that you will see a major fiscal expansion under the president-elect's administration," World Bank President Robert Zoellick, who attended the summit, said in an interview.

Dominique Strauss-Kahn, managing director of the IMF, who also attended, called for nations to approve a fiscal stimulus equal to 2 percent of gross domestic product. Such a move, he said, would result in a 2 percent increase in growth. When asked where fiscal stimulus was need, he said, "everywhere, everywhere where it is possible."

During the talks, developing countries demanded a greater role in elite financial institutions, and the conference's communique called for the immediate expansion of the Financial Stability Forum to a "broader membership of emerging economies."

The Swiss-based organization brings together finance ministry officials and central bankers, but while it includes Singapore and Hong Kong, China is not yet a member. In what one diplomat said was a contentious debate, Brazil and China demanded that they should be represented on the FSF.

The communique also said that, over time, the IMF and other global institutions "must be comprehensively reformed so that they can more adequately reflect changing economic weights in the world economy."

Traditionally, global economic shocks would be handled by the Group of Seven — the United States, Britain, France, Germany, Japan, Canada, Italy — or the G-7 and Russia, known as the G-8. The G-20 folds the G-8 into a larger group that includes emerging economies — China, Brazil, Saudi Arabia, Indonesia and South Africa among them.

"We are talking about the G-20 because the G-8 doesn't have anymore reason to exist. In other words, the emerging economies have to be taken into consideration in today's globalized world," Brazilian President Luiz Inácio Lula da Silva said as he headed to the session.

At the meeting, Chinese President Hu Jintao called for "a new international financial order that is fair, just, inclusive and orderly," according to a translation of his remarks. Hu, however, did not address demands from Western countries that China use some of its $2 trillion in reserves to bolster the IMF.

In an interview, British Chancellor Alistair Darling said that it is not appropriate now to talk about changes in the power structure of the IMF, including possible adjustments to voting, or quota, rights. He said that it is most important that countries with surpluses contribute as much as they can. "I think people should be less concerned at the moment about quota and therefore voice than actually making sure the IMF's got money in the till," he said. "What I'd say to them is, I understand that, but there's a bigger prize here."

The communique minced no words in outlining the causes of the crisis, blaming "weak underwriting standards, unsound risk-management practices, increasingly complex and opaque financial products and consequent excessive leverage." While many nations have blamed the United States for failing to monitor excesses in the securities markets, the communique diplomatically did not.

A British official, speaking on condition of anonymity because he was not authorized to speak publicly, said U.S officials privately acknowledged their role in the crisis. "The U.S. threw up their hands and said that our subprime mortgage industry left a lot to be desired," the official said. "But there was determination not to have any finger-pointing."

No decision has been made on where the next summit will be held. Sarkozy publicly recommended London because Britain will chair the G-20 in 2009.

~Lyuokdea

Basically, the banks are all agreeing to a "do over".

Too bad people won't get the same treatment.

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If it costs more than it is worth to save.....yep

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I don't think you would.. Not a home.. some stocks, or a business investment.,, but if your house was crumbling around you,, no,, I think you aren't the type to walk away... don't see it.

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I said that if you look back...I also said it was to late

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I don't agree that it's too late.. but that's just opinion.. one we don't agree on.

There is precident to help the auto industry... but first, let me ask you a dumb question. If I told you that if we propped up the Auto Industry, they would be solid for another 80 years.. would you do it?

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I understand...probably a bad business decision for any number of reasons....as may this one prove in time....but the opinion of those people doesn't really change the reality of today, does it?

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I think it was a bad business decision,, on both VW's part and the workers... but that's history.

As for it changing reality today,,, well Peen, you want to use history to, in part, determine what will happen if we help them,,, so yeah, you must thinik it has something to do with it.. that's my guess..

The one thing that NOBODY has mentioned thus far..... People on Pensions for the Big Three..

There are hundreds of thousands of folks living on a pension from the Big Three.

What do you suppose will happen to them? Let me tell you so you don't have to even think about it.

If the Big Three go Bankrupt, they will turn the entire cost of the pensions over to the PBGC (Pension Benefit Guarantee Commission) That is a federally run program sponsored and funded by the Federal Government..

So, on top of all the unemployment it would cause not only to the folks that work directly for the Big Three, but to it's suppliers and to it's suppliers suppliers.. and so on,, then you have the additional burden of the pensions to cover as well.

Now add in the cost of care for the folks on Pensions and then add in the cost of health care for those on Unemployment... whew.. you are talking major bucks..HUGE BUCKS. And for many years to come...

But I guess we could just walk away and let them all die!

The effect on the economy is much much worse if you let them fall as opposed to loaning them money under the right set of circumstances..

25 to 50 billion is a drop in the bucket to what the net effect of them going under will do to the economy.

I'm not sure why it's so hard for some to understand that.. I think it's coming from the fact we are facing tough times and all some see is money going out with little faith we will get it back. I understand that.. and it scares me also.. scares me to death..

The thought of maybe being in a soup line,,,, no thank you..

But we have a chance to make many things right.. if we put our heads in the sand and hide,, we are going to lose in the long run.. count on it.

But again, that's just my opinion....

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Obama, in the Democratic Party's weekly radio address, commended Bush yesterday for holding the summit and also called for a new fiscal stimulus package -- which Bush has resisted.

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Who wants to bet that if this doesn't work we will be blaming Bush and the Republicans for raising the deficit even more....We will see more "Gothca" politics. I am not talking about Obama.

Financial Crisis Tab Already In The Trillions

| BanksCNBC.com | 18 Nov 2008 | 04:38 PM




Given the speed at which the federal government is throwing money at the financial crisis, the average taxpayer, never mind member of Congress, might not be faulted for losing track.

CNBC, however, has been paying very close attention and keeping a running tally of actual spending as well as the commitments involved.

Try $4.28 trillion dollars. That's $4,284,500,000,000 and more than what was spent on WW II, if adjusted for inflation, based on our computations from a variety of estimates and sources*.

Not only is it a astronomical amount of money, its' a complicated cocktail of budgeted dollars, actual spending, guarantees, loans, swaps and other market mechanisms by the Federal Reserve, the Treasury and other offices of government taken over roughly the last year, based on government data and news releases. Strictly speaking, not every cent is a direct result of what's called the financial crisis, but it is arguably related to it.

Some 68-percent of the sum falls under the Federal Reserve's umbrella, while another 16 percent is the under the Troubled Asset Relief Program, TARP, as defined under the Emergency Economic Stabilization Act, signed into law in early October.



http://www.cnbc.com/id/27719011

I don't think they really know how to fix the problem, and to be honest, don't think they are going to be able to buy their way out.

This country is so, so screwed. Hang onto your hats, folks.

I agree.

Over the next 4-5 years, we are going to see things we never thought we would see in this country.

I'm not quite ready to cling to my guns and religion just yet (well, not the religion anyway ), but the future's not looking too swell.

Obama Hears a Giant Sucking Sound
His legacy is spent before he gets his hands on it.
By HOLMAN W. JENKINS, JR.



His friends advise Barack Obama to launch a "New" New Deal. Maybe that's because the old New Deal is sinking fast.

Mr. Obama's one deeply false note during the campaign was his harping on "deregulation" as if that were the source of current troubles. His real problem is the crack-up of the world FDR built.

Fannie Mae was a New Deal creation, subsidizing the securitization of mortgage debt. FDR's successors piled on the subsidies for housing debt and incentives directed at low-income borrowers. Kaboom.

Then there's the UAW, born in 1935. For decades the UAW steadily traded away domestic auto market-share to imports and transplants to keep its aging membership toiling away toward their golden pensions and collecting wages and benefits twice those of their competitors. It worked for a while . . .

Mr. Obama must be looking around and beginning to suspect he will be pouring his political capital, along with considerable taxpayer capital, down bottomless holes for the next four years. He won't be building a legacy as the new FDR, but cleaning up after the last one.

Fannie and its twin, Freddie Mac, have already come back for a second helping of taxpayer money as their once-profitable business model devolves into a politically directed subsidy machine for propping up home prices and delaying foreclosures. Their next meltdown, in government hands, is all but written in the cards.

AIG, an otherwise healthy insurance company that went bust betting on housing debt, has already consumed taxpayer loans and capital injections nearly as big as AIG's $200 billion market cap when it was one of the world's most admired firms. AIG still has a valuable insurance business, but ignoramuses in Congress and the press are busy destroying it. The company sells many of its products through busy independent agents. It uses lush "seminars" to encourage them to sit still for pitches about why AIG should still be trusted despite AIG's purgatory in the headlines. But these seminars only produce more outraged grandstanding from the political commentariat.

It will take years for the government to get AIG off its hands, and there likely won't be much value left for taxpayers when it finally does.

But the really giant sucking sound is the auto sector, getting ready to gobble up whatever hopes Mr. Obama might have had for an ambitious, forward-looking presidency.

He and Nancy Pelosi naturally insist that any "bailout" must hit multiple bogies. They want UAW jobs to be preserved. They want the shibboleth of energy independence advanced. They want "green" cars to please the Tom Friedmans of the world. They want to tell taxpayers they're getting more for their money than just a bailout of Detroit.

All this makes sense to a politician, but not to any practical person, who knows that multiple bogies are bound to be conflicting bogies. You could just barely envision a bailout that wouldn't necessarily be a disastrous waste of money, one that would help Detroit create a competitive cost structure in pursuit of building products that are competitive in the marketplace. But this is just the opposite of what Mr. Obama and his Democrats have in mind.

Prepare to witness, then, the awesome capacity of an unreformed Detroit to consume taxpayer billions with nothing to show for it.

That Mr. Obama had been sent by history to assuage the insecurities of the middle class with a "New" New Deal was always a tad detached from reality anyway. The reason is those giant legacies of existing New Dealism known as Social Security and Medicare, about which he was careful to say nothing intelligible during the campaign. These programs worked for a while too, but now their expected revenues are (in present value) about $99.2 trillion short of the expected outlays required to assure present and future workers their promised comfort in retirement.

Then again, Mr. Obama did say something in his campaign about tax rebates for all these payroll taxpayers. He also said something about government matching contributions to incentivize today's low- and middle-income workers to save for their own retirement.

Voilà, personal accounts funded by payroll-tax givebacks -- strangely similar to the solution our current president promoted to help workers escape the impending insolvency of the government retirement programs. Mr. Obama envisioned himself extending FDR's work. He may end up finishing George Bush's.




http://online.wsj.com/article/SB122705663771939523.html

Good read......and right on point.