[Al_U_Card]

Back in the early 60's, (I had lost a tooth to the back of the front seat of one of our american cars....you know, the ones with a "cord" across the back of the front seat for rear passengers to hold onto...) our family took the grandparents to the port as they were off on a cruise.

Volkswagon beetle, Mom and Dad in the front, Grandparents and oldest brother in the back seat and my other brother and I in the "cubby hole" behind the back seat under the rear window. With all the luggage on the roof rack, we must have looked like a clown car when we got out at the boat dock.

[eros2]

Although I belong to the Austrian school of economics, I would argue that if nothing else were to be changed, the auto industry must be bailed out. Simply, you cannot solve a Rubik's cube by completing one face.

There are no free markets in America, and certainly not the labour market. A generation of young adults would be marginalised by competition from laid off workers. Therefore, to allow the big 3 to go under would not solve anything. The problems are systemic in every market, and the problem is intervention.

This is a lose-lose situation. Which do you prefer? Accountability at the cost of the economy, or wealth for a few and relative security at the cost of taxation? Both will lead to disaster, but the latter is more gradual and sensible people will have time to get out of the dollar.

[JoAnneM]

Back in the 50's I went on a church camping trip to Yosemite and all of us kids rode in the back of the pickups on top of our sleeping bags. What a great time that was! Could you see that happening now?

On the other hand, when we were living near Ft. Meade in Maryland many years ago ten kids were joy riding in a pickup truck at night and eight of them ended up in trees, the field, and the ditch - all dead. Two sets of siblings in that group, very tragic. Of course in my case adults were driving.

[kenberg]

eros2, on Dec 20 2008, 10:45 PM, said:

Although I belong to the Austrian school of economics, I would argue that if nothing else were to be changed, the auto industry must be bailed out. Simply, you cannot solve a Rubik's cube by completing one face.

There are no free markets in America, and certainly not the labour market. A generation of young adults would be marginalised by competition from laid off workers. Therefore, to allow the big 3 to go under would not solve anything. The problems are systemic in every market, and the problem is intervention.

This is a lose-lose situation. Which do you prefer? Accountability at the cost of the economy, or wealth for a few and relative security at the cost of taxation? Both will lead to disaster, but the latter is more gradual and sensible people will have time to get out of the dollar.

I pretty much agree with this, at least in theory. I am of the general view that I am OK with this costing me some tax dollars, but then it had better work. I can't say I much trust these CEOs. They are used to playing hardball as are the unions who were on the other side of so many negotiations. I would like to see a healthy auto industry, I would like to see well paid workers, I very much don't want to be played for a chump.

The auto industry reached this dismal condition, at least partly, because those in charge had trouble accepting the reality of changed tastes, needs and competition. The much criticized arrival of auto bigwigs in their private jets to tell Congress we should give them some money because they want it indicates to me that they haven't learned much. Since then they have changed their PR, but I doubt they have changed their fundamental views.

It occurs to me that taxpayers and shareholders could be natural allies here in that we both see an advantage in a successful restructuring. The problem is the management. Their incompetence is plain to see, and the first act in a successful restructuring might well be to fire their asses.

[Al_U_Card]

The auto industry has only been coerced (legislatively) into better safety and more economical vehicles etc. Where they were allowed to do what they wanted, they always opted for the fast buck.

Government should impose restraints and guidelines that must be followed. Gee, we will have a nation of small cars that save our money and the environment....how ever will we live with that????

[Winstonm]

Quote

Government should impose restraints and guidelines that must be followed

Regulation!?!? You said REGULATION!?!? Help!!! I'm melting...melting...

Phil Gramm

[Al_U_Card]

Well, we certainly saw what the reduction of regulation accomplished.

We are talking objectives and targets, not how to get there (so much)

[eros2]

Al_U_Card, on Dec 21 2008, 07:41 PM, said:

Well, we certainly saw what the reduction of regulation accomplished.

We are talking objectives and targets, not how to get there (so much)

Repainting the fence =/= no more fence.

Regulation in any guise has failed.

[mike777]

Al_U_Card, on Dec 21 2008, 12:05 PM, said:

The auto industry has only been coerced (legislatively) into better safety and more economical vehicles etc.  Where they were allowed to do what they wanted, they always opted for the fast buck.

Government should impose restraints and guidelines that must be followed. Gee, we will have a nation of small cars that save our money and the environment....how ever will we live with that????

As I have suggested before it just may be eaiser for the government to buy the car companies, say you can only buy from us and no one else including individuals and you must buy what we make.

This is basically what you are saying.

I think this goes back to the fundamental issue, is the government smarter than the free markets. Keynes suggests it may be.

[blackshoe]

Keynes was wrong.

[han]

I think that there are companies that may be suitable for government ownership but I don't think a car company (are any kind of company that produces physical consumer products) is one of those. I'm thinking more about companies that sell electricity or even banks.

[Winstonm]

Quote

As I have suggested before it just may be eaiser for the government to buy the car companies, say you can only buy from us and no one else including individuals and you must buy what we make.

I think this was tried in East Germany some years back with less than spectacular success.

[mike777]

Having banks be owned by the Central Government is a good idea if it is smarter than free capital markets in allocating credit. Credit is the lifeblood of modern economies.

Picking winners over losers in this fast paced modern economy is tough, if central governments can do a better job in allocating credit, we should let them.

It is at least worth a discussion given that Citigroup has been bailed out of bankruptcy by taxpayer bucks at least 3 times since 1980.

I thought I read somewhere(no citations) that Krugman advocates at least a tempory takeover of the banks by the Washington.

edit:
http://www.democrats.com/the-krugman-plan-...e-failing-banks

http://krugman.blogs...1/24/citigroup/

[mike777]

Winstonm, on Dec 21 2008, 05:27 PM, said:

Quote

As I have suggested before it just may be eaiser for the government to buy the car companies, say you can only buy from us and no one else including individuals and you must buy what we make.

I think this was tried in East Germany some years back with less than spectacular success.

Granted, thank God we are doing so much better this way .

We have a nat of car companies it seems all but in name, yes? Only the current owners and creditors get to be friends with benefits?

[JoAnneM]

Just talked to my brother-in-law in Tuscon. He said at one new car dealer it's buy one new car and get another new car - free!

[helene_t]

I think they should just let them go bust. I can't believe Americans will stop buying cars, so someone else will take over the plants and do something with them. So most of the workers will keep in business, I think. Too bad that the shareholders lose their money but the government has bigger problems to think about (and to spend its non-existing money on).

[Al_U_Card]

mike777, on Dec 21 2008, 04:11 PM, said:

Al_U_Card, on Dec 21 2008, 12:05 PM, said:

The auto industry has only been coerced (legislatively) into better safety and more economical vehicles etc.  Where they were allowed to do what they wanted, they always opted for the fast buck.

Government should impose restraints and guidelines that must be followed. Gee, we will have a nation of small cars that save our money and the environment....how ever will we live with that????

As I have suggested before it just may be eaiser for the government to buy the car companies, say you can only buy from us and no one else including individuals and you must buy what we make.

This is basically what you are saying.

I think this goes back to the fundamental issue, is the government smarter than the free markets. Keynes suggests it may be.

Not even close, Mike.

The government decrees that all cars must achieve 100 miles per gallon and have 0 nitrate and particulate emissions.

Then the free market races to get the appropriate product onto the market.

Everyone wins.

[mike777]

Al_U_Card, on Dec 22 2008, 09:15 AM, said:

mike777, on Dec 21 2008, 04:11 PM, said:

Al_U_Card, on Dec 21 2008, 12:05 PM, said:

The auto industry has only been coerced (legislatively) into better safety and more economical vehicles etc.  Where they were allowed to do what they wanted, they always opted for the fast buck.

Government should impose restraints and guidelines that must be followed. Gee, we will have a nation of small cars that save our money and the environment....how ever will we live with that????

As I have suggested before it just may be eaiser for the government to buy the car companies, say you can only buy from us and no one else including individuals and you must buy what we make.

This is basically what you are saying.

I think this goes back to the fundamental issue, is the government smarter than the free markets. Keynes suggests it may be.

Not even close, Mike.

The government decrees that all cars must achieve 100 miles per gallon and have 0 nitrate and particulate emissions.

Then the free market races to get the appropriate product onto the market.

Everyone wins.

1)Or the free market says here are the keys to the front door, you make whatever you want. You miss your own point. You have the Central government tell them what to make, and if they do not, what happens?
2) The government says make cars that do 100 mpg and zero pollution. Not the customer, not the owners of the company.
3) You offer zero proof that these cars can be sold for a profit.
4) If you have such proof, then you make the cars...you seem to want to tell people what to do, but not put up your own money and make these cars. That is my point. Please put your own money up and if you fail, you lose your money, not the taxpayers.

[helene_t]

If all cars have to go 100 mpg then they can be made with profits, since people need cars and will be willing to pay whatever it costs. But of course there will be a long transition period when car makers are having excess capacity while adjusting to people having fewer cars and old wrecks that presumably don't have to comply.

Anyway, I think it's an insane idea. Gas taxes are much more targeted and easier to implement.

[mike777]

helene_t, on Dec 22 2008, 01:13 PM, said:

If all cars have to go 100 mpg then they can be made with profits, since people need cars and will be willing to pay whatever it costs. But of course there will be a long transition period when car makers are having excess capacity while adjusting to people having fewer cars and old wrecks that presumably don't have to comply.

Anyway, I think it's an insane idea. Gas taxes are much more targeted and easier to implement.

I assume Al meant only new cars, new cars built in his country, not all cars have to go 100 mpg..only new cars built in his country with his central government.

I just do not see any proof that people will race to put their family's life savings into this scheme.

For instance I can still buy a used car or I can buy a truck or a motorcycle or simple not buy any car and keep my old one in good repair. In fact in the USA you can buy 3 wheel transport, that look like cars on the outside but are in fact legally motorcycles. Note how in a few seconds I found several other ways to get around town without buying this new expensive "car".

The free markets, assuming they are free, can simply say, we will put our limited amount of capital into other investments. If the government wants to sell this car, they can build it. The current owners of GM, F, and C can simply hand over the keys to the front door and say you build it.

OTOH if there is a profit in it. Al can put his money into it and own the company.