Why bailout Automakers?

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sox63

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http://www.livemint.com/2008/11/18100430/Democrats-push-for-25-bn-US-a.html?h=B


I just watched the Ford Group CEO putting forward their case for the bailout request made on the US goverment.

I understand bailing out the banks from bankruptcy, with a view that if they go bust, people can't get their money that have banked/invested with them. But I fail to understand why the Detroit 3 should get help. They have been in trouble long before the current economic crisis, and IMO, their reasons for not making money is more around their inability to compete with the Japanese and the European Car makers.

Things are tough globally, BMW AG reported a 63% drop in profits, however they still made 298 million Euros profit, and I think Daimler also made 200 Million Euro plus profit. And that is just the Germans, I think you will find the Japanese on the same level, if not a bit more.

http://edition.cnn.com/2008/BUSINESS/11/04/bmw.earnings.ap/index.html

So why not just let these Carmakers just fade away? I love some of their products, but based on their sales, I'm part of a minority.
 
The entire bailout is ludicrous, I still feel that way. The free-market system would have rooted out the bad apples. It's an absolute farce IMO...
 
In business and economics I'm a hardcore Darwinist.
If they can't cope, leave 'em to die. But under no circumstances should one cent of American taxpayers' money be used to bail out dinosaur firms past their die-by date.
 
Arthur said:
In business and economics I'm a hardcore Darwinist.
If they can't cope, leave 'em to die. But under no circumstances should one cent of American taxpayers' money be used to bail out dinosaur firms past their die-by date.
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Exactly - if you can't handle the heat then get out of the kitchen.
 
I would hope they would let them crash and burn but imagine the already fragile American mental ego taking a blow like that.

If they are going to bail them out - take ownership, don't just give them cash - ie a controlling stake...and force them to start producing energy and pollution efficient cars.
 
DJK said:
That ship has sailed and could easily have been blamed on the Bush administration...
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Well I added the voters bit. But it was on BBC this morning and the reason for the bailout was stated as "...to save jobs".
 
someone was saying this morning on the wireless that the american auto makers have been & are making the wrong cars.
they stuck to the gas guzzlers even when the writing's been on the wall for a few years now - they only just woke up recently to find the japs rule the us auto landscape.
 
They make cars for the American market, and try to sell it to the rest of the world based on how Americans view their product. They should not be bailed out. Rather let a new company raise from the ashes to fill the void. Hopefully that company will build cars with more than just the US market in mind.
 
Its to save jobs. Basically all auto makers are suffering. I know that Toyota will be bailed out then again they do have the money not to need that, but if necessary Toyota domestic will get bailed out, Toyota US has shut down numerous plants. The thing is done to save jobs.
 
But what I don't get is that Ford also has a very European bracnh wihtout gas guzzlers. I don't want Bantam or Fiesta to die :(. Doesn't GM own Opel? So if they die we all have to drive VWs or Toyotas :(
 
supersunbird said:
But what I don't get is that Ford also has a very European bracnh wihtout gas guzzlers. I don't want Bantam or Fiesta to die :(. Doesn't GM own Opel? So if they die we all have to drive VWs or Toyotas :(
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Cheri's or Manhindras.... come on, they're good cars too :)
 
The banks were all at fault. The US should make sure that such a huge, excuse th term, cok up doesn't happen again.

banks should have had safty behind them, they can't all make such a big mess, this is the goverments failer with regulation and standards they were supposed to impose on the banks.

so a car manufacturer bailout this time only won't be such a bad thing, it may actually be the only fair thing to do.
 
They should let these companies go bankrupt. Sell off their assets. There are plenty of smaller companies and people with good ideas to take their place. Even the banks. The government should guarantee the public's deposited money, no more.
 
noxibox said:
They should let these companies go bankrupt. Sell off their assets. There are plenty of smaller companies and people with good ideas to take their place. Even the banks. The government should guarantee the public's deposited money, no more.
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Exactly my sentiments - allow the free market to work it's magic - it has proven to successfully do so in the past. However there are far too many vested interests in high powers to allow that to happen, let alone the pension funds...
 
Surely letting the banks collapse would plunge America into major problems, i doubt letting the bank go bust would be a highly intelligent move in all honesty. Imagine all the americans who would suffer with the banks collapsing. Depression here we come.
 
supersunbird said:
But what I don't get is that Ford also has a very European bracnh wihtout gas guzzlers. I don't want Bantam or Fiesta to die :(. Doesn't GM own Opel? So if they die we all have to drive VWs or Toyotas :(
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Moenie worry nie - if Ford goes bust they'll have to sell off the assets, and viable profitable divisions like Opel will be free to soar without being weighed down by corporate head office bureaucrats. Like with any conglomerate's bankruptcy, salvagable divisions will be unbundled and sold to people who can make a real go of it.
 
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