"Dave" wrote in message
...
On Mon, 17 Nov 2008 11:10:45 -0800, "Capt. JG"
said:

"Dave" wrote in message
. ..
troll sh*t removed

And now Harry and Nancy want to use it to bail out the UAW.


Do you believe that we should allow the Big Three to fail? I'm kinda on
the
fence about this... on the one hand, I think we should, because they got
themselves into this mess. On the other hand, this would displace millions
of people.... not exactly the best thing to do in the current economy.

Absolutely. The big three will never be competitive with the built in
costs
of what they've given away in the past, including bloated wages,
unsustainable pensions, ongoing payments to former workers not to work,
capital costs of non-operating plants...you name it. Throwing more money
at
them just postpones the reckoning and increases its ultimate cost. When
the
Japanese have a $30 an hour advantage in the amount they pay their U.S.
workers, the big 3 are never going to compete.

Yes, the stockholders would get wiped out, or more likely squeezed down to
a
very small percentage of ownership, with creditors becoming the equity
owners. And management would likely be tossed our. But companies in
Chapter
11 don't generally go out of business (though some do). They continue in
business under new owners. If the car companies could shed nonproductive
assets, get rid of legacy costs and costs of paying people not to work,
reduce their debt service costs and costs of capital, and relocate
operations to right to work states there's no reason they couldn't become
competitive, and without a taxpayer bailout.


Well, I agree that companies don't necessarily go completely under, but my
main concern, which was voiced by both conservative and liberal economists,
is that people would likely not want to buy such a big-ticket item from
companies with uncertain futures. For example, I was considering a
big-screen tv... couple of grand, from Circuit City. But, they're in Chap.
11, so the question is should I be concerned, even though the warranty is
thru the manufacturer. Probably not. But, with autos it's a bit different.
If consumers decided not to risk it, then the sales would go to zero or
close to zero (not that they're going gangbusters now). Then, we would have
massive layoffs, not just the UAW, but throughout the stream of suppliers,
dealers, etc. It run into the millions. If this were to happen in good
economic times, then I would be less concerned. But, this isn't the
situation.

I think the Big Three could be competitive, which is what they're trying to
do, for example, by removing the benefits part to a separate trust (I
believe that's what they're calling it). The UAW and other unions would
clearly need to be willing (and they seem willing) to recognize the problems
and renegotiate their packages.

Do you think that this is the time to throw an even greater number into the
unemployment lines?

--
"j" ganz @@
www.sailnow.com