E-mails From Strategy

[FCP Bob 1,312]

It is, frankly, hilarious and ridiculous how all these implausible, never-before-happened theoretical scenarios are trotted out as an inevitable result of something that has happened thousands and thousands of times in our nation's history.

This is pretty interesting coming from a Libertarian

[mrdannyg 274]

I wish I was a smart businessman like you. Then it would be obvious to me that a start-up in late 2008/2009 would have risen up, grown to the size of GM, and immediately employed the million or so people who would have lost their jobs in the collapse of the big 3 automakers, thus preventing a complete economic collapse. I guess that Rattner guy is just one of those idiots who doesn't understand the basics and for some reason feared the already 10% unemployment rate as the big 3 were collapsing, not to mention the quickly-deteriorating housing markers and insurance bombshells. A smart businessman, like yourself, realizes that all of that would have taken care of itself in a few weeks or so, certainly fast enough to avoid Great Depression 2.0

not within a few weeks, it would happen immediately! thats what my textbook's graph looks like! no time lag! see, just like hblask says...immediately, another company who is also having trouble and could never get financing to grow in a failing industry would pick up all that cheap/free manufacturing capacity, employ millions of people, etc, without delay. time lags and economic shocks are for people that don't understand business. plus, huge companies employing millions go bankrupt all the time and their competitors quickly and easily make up the difference, right? Because huge multinationals engaged in a credit crisis are super nimble and everything. Never has a serious negative shock created a black hole that put economic growth back a decade...well never except in the 30's and 10 years ago which are the only vaguely comparable situations.

[BaseJester 1]

Because huge multinationals engaged in a credit crisis are super nimble and everything.

This is an argument for propping up multinationals?

[Balloon guy 158]

This is an argument for propping up multinationals?

Once an industry becomes large, then their right to exist becomes law. No matter how poorly run, no matter how many stupid labor contracts that prevent them from ever being competitive, no matter what happens, they are too important to fail and must be given massive amounts of money to ensure that their inefficiency run company is the leader for the US markets around the world.However, should they be well run and profitable, then congress must discuss the option of confiscating their profits above what they deem enough.It's a proven method of running a healthy economy, as shown in both the former USSR and Cuba.Luckily we have a super nimble and effective government bureaucratic machine that can make the distinction between greedy bad companies, and good companies too important to allow market forces to correct them

[hblask 1]

This is pretty interesting coming from a Libertarian

??? Are you saying America doesn't exist? That the Index of Economic Freedom doesn't correlate with economic growth?

[hblask 1]

not within a few weeks, it would happen immediately! thats what my textbook's graph looks like! no time lag! see, just like hblask says...immediately, another company who is also having trouble and could never get financing to grow in a failing industry would pick up all that cheap/free manufacturing capacity, employ millions of people, etc, without delay. time lags and economic shocks are for people that don't understand business. plus, huge companies employing millions go bankrupt all the time and their competitors quickly and easily make up the difference, right? Because huge multinationals engaged in a credit crisis are super nimble and everything. Never has a serious negative shock created a black hole that put economic growth back a decade...well never except in the 30's and 10 years ago which are the only vaguely comparable situations.

Bad economists see the seen. Good economists recognize the unseen.First, yes, much of the slack would be picked up. There is no way on earth Ford and Toyota and Honda are going to let their lots go empty. It just wouldn't happen. They would find a way to pick up the slack.Second, every dollar that went to the failed companies came from some other part of the economy -- a part of the economy that was more highly valued than crappy, boring cars made inefficiently. So part of the slack is picked up by the other auto companies, part is picked up by the money is NOT diverted from productive uses to unproductive uses.History is on my side on this one. There is no plausible theory of why moving money from efficient, highly valued uses to inefficient, low value uses could ever provide a net number of jobs, and there is no record in history of a failure in part of an industry killing the rest of the industry.

[hblask 1]

What's funny about this is that the people who supported #OccupyStuff claiming to hate corporate favoritism as the same people who will make up wild, implausible scenarios to support one of the most egregious abuses of corporate welfare in our lifetime.

[FCP Bob 1,312]

It is, frankly, hilarious and ridiculous how all these implausible, never-before-happened theoretical scenarios are trotted out as an inevitable result of something that has happened thousands and thousands of times in our nation's history.

This is pretty interesting coming from a Libertarian

??? Are you saying America doesn't exist? That the Index of Economic Freedom doesn't correlate with economic growth?

I'm saying that your comment is interesting since many Libertarian arguments are based around implausible, never before happened theoretical scenarios.

[hblask 1]

I'm saying that your comment is interesting since many Libertarian strawmen are based around implausible, never before happened theoretical scenarios.

FYP

[hblask 1]

So I thought I'd look up some historical data, to see if there was any time in our history when a million people in a single industry lost their jobs and the industry collapsed, causing economic ruin.1950: Total number of Farmers, 25,000,0001960: Total number of farmers, 15,600,000So every year for the entire decade of the 50s, the agriculture industry lost as many jobs as the obviously inflated worst case one-time scenario for the auto industry. Boy, remember that time when the "supply chain" broke down? And no more food was produced? Remember how terrible the 50s were for this country?Oh wait, that didn't happen.History matters.I do remember those times when the government massively intervened to save us from free markets at unprecedented levels. Let's see... early 30s, a decade later things were still horrible; 2008-2009, 3 years later we're worse off than before all that "help" starting raining down on us...History matters.I guess the lesson from this is that the government needs to intervene and pick winners and losers if we are to survive as a country, right? AMIRITE?

[LongLiveYorke 38]

So I thought I'd look up some historical data, to see if there was any time in our history when a million people in a single industry lost their jobs and the industry collapsed, causing economic ruin.

I liked the irrelevant example about vacuum tubes more.

[hblask 1]

I liked the irrelevant example about vacuum tubes more.

Way to keep closing your eyes and ears to actual data. It's the only way to remain a leftist, so stick to it hard!

[JubilantLankyLad 1,957]

Did Ford/Toyota really have available cash to buy all these discarded GM assets? Because as I understand it there was not a lot of credit available for them to get (would you support the government lending Ford the money to buy GM assests?). And were they experiencing a lack of capacity that would mean they'd need the GM assets? Presumably there would be increased demand for Ford products without available GM ones competing for purchasing dollars, but how much of that increased production would Ford have been able to absorb with their existing infrastructure?

[FCP Bob 1,312]

Way to keep closing your eyes and ears to actual data. It's the only way to remain a leftist, so stick to it hard!

Your actual data in no way shape or form is comparable to what is beind discussed.

[FCP Bob 1,312]

Did Ford/Toyota really have available cash to buy all these discarded GM assets? Because as I understand it there was not a lot of credit available for them to get (would you support the government lending Ford the money to buy GM assests?). And were they experiencing a lack of capacity that would mean they'd need the GM assets? Presumably there would be increased demand for Ford products without available GM ones competing for purchasing dollars, but how much of that increased production would Ford have been able to absorb with their existing infrastructure?

Ford would have lost a lot of capacity because most of their suppliers would have gone bankrupt if GM and Chrysler went down in a disorganized bankrupcy so they actually would have been producing fewer vehicles without GM and Chrysler.Ford was losing massive amounts of money just like GM was but the major difference was that before the crisis hit they borrowed every penny that they could so they had enough cash on hand to weather the storm. Ford didn't have any greater ability to borrow new money than did GM.

[mrdannyg 274]

Bad economists see the seen. Good economists recognize the unseen.First, yes, much of the slack would be picked up. There is no way on earth Ford and Toyota and Honda are going to let their lots go empty. It just wouldn't happen. They would find a way to pick up the slack.Second, every dollar that went to the failed companies came from some other part of the economy -- a part of the economy that was more highly valued than crappy, boring cars made inefficiently. So part of the slack is picked up by the other auto companies, part is picked up by the money is NOT diverted from productive uses to unproductive uses.History is on my side on this one. There is no plausible theory of why moving money from efficient, highly valued uses to inefficient, low value uses could ever provide a net number of jobs, and there is no record in history of a failure in part of an industry killing the rest of the industry.

you're right, some economists use actual history and relevant corollaries to base expectations. others base predictions on ideology and a first-year understanding of supply and demand and come up with unrealistic ideas with no basis in reality or practicality. which ones are good and bad we seem to disagree on.

What's funny about this is that the people who supported #OccupyStuff claiming to hate corporate favoritism as the same people who will make up wild, implausible scenarios to support one of the most egregious abuses of corporate welfare in our lifetime.

actually, those groups are pretty much from the opposite spectrum. but you think they're both dumb, so guess they're the same to you.

So I thought I'd look up some historical data, to see if there was any time in our history when a million people in a single industry lost their jobs and the industry collapsed, causing economic ruin.1950: Total number of Farmers, 25,000,0001960: Total number of farmers, 15,600,000So every year for the entire decade of the 50s, the agriculture industry lost as many jobs as the obviously inflated worst case one-time scenario for the auto industry. Boy, remember that time when the "supply chain" broke down? And no more food was produced? Remember how terrible the 50s were for this country?Oh wait, that didn't happen.History matters.I do remember those times when the government massively intervened to save us from free markets at unprecedented levels. Let's see... early 30s, a decade later things were still horrible; 2008-2009, 3 years later we're worse off than before all that "help" starting raining down on us...History matters.I guess the lesson from this is that the government needs to intervene and pick winners and losers if we are to survive as a country, right? AMIRITE?

You seem to barely even know what the words you use mean. i mean, i know you know them, but your arguments imply otherwise.

[mrdannyg 274]

Did Ford/Toyota really have available cash to buy all these discarded GM assets? Because as I understand it there was not a lot of credit available for them to get (would you support the government lending Ford the money to buy GM assests?). And were they experiencing a lack of capacity that would mean they'd need the GM assets? Presumably there would be increased demand for Ford products without available GM ones competing for purchasing dollars, but how much of that increased production would Ford have been able to absorb with their existing infrastructure?

Henry covered this:

First, yes, much of the slack would be picked up. There is no way on earth Ford and Toyota and Honda are going to let their lots go empty. It just wouldn't happen. They would find a way to pick up the slack.

foolproof!

[hblask 1]

Did Ford/Toyota really have available cash to buy all these discarded GM assets? Because as I understand it there was not a lot of credit available for them to get (would you support the government lending Ford the money to buy GM assests?). And were they experiencing a lack of capacity that would mean they'd need the GM assets? Presumably there would be increased demand for Ford products without available GM ones competing for purchasing dollars, but how much of that increased production would Ford have been able to absorb with their existing infrastructure?

The other auto companies were healthy and still able to get loans. And if GM and Chrysler went away, the remaining companies could've easily demonstrated the need for extra capacity to investors in order to snap up the assets of the others at bargain prices. This is just how business works -- if there are too many competitors, it's hard to make a profit and hard to get funding. Once the excess shakes out, the remaining companies have an easier time.

[hblask 1]

Your actual data in no way shape or form is comparable to what is beind discussed.

Showing an industry that was losing a million per year for a decade is unrelated to an industry that was maybe possibly going to take a one-time hit of a million (if you believe the people begging for money). And the million per year for a decade was at a time when the population was much smaller than it is now, so as a percentage, it was much larger and therefore had a *larger* impact.So you are right -- I am showing that a much *worse* condition without intervention provided a much better result.

[hblask 1]

Ford would have lost a lot of capacity because most of their suppliers would have gone bankrupt

Just repeating this nonsense doesn't make it true. The demand to the suppliers is based on total demand for cars; total demand for cars is unrelated to the existence of GM.

if GM and Chrysler went down in a disorganized bankrupcy so they actually would have been producing fewer vehicles without GM and Chrysler.

Again, if you can provide a single example from history of remaining companies having declining sales due to the failure of a competitor, please provide it. You can't, because it can never happen, ever.

[FCP Bob 1,312]

Showing an industry that was losing a million per year for a decade is unrelated to an industry that was maybe possibly going to take a one-time hit of a million (if you believe the people begging for money). And the million per year for a decade was at a time when the population was much smaller than it is now, so as a percentage, it was much larger and therefore had a *larger* impact.So you are right -- I am showing that a much *worse* condition without intervention provided a much better result.

Yes comparing a gradual change over a decade in an industry to a massive shock in a short time that would dislocate a far higher percentage of that industry is really faulty and not worth thinking about.

[JubilantLankyLad 1,957]

The other auto companies were healthy and still able to get loans.

I don't believe Ford was either 'healthy' or 'able to get loans' - it just wasn't as immediately sick as GM.

And if GM and Chrysler went away, the remaining companies could've easily demonstrated the need for extra capacity to investors in order to snap up the assets of the others at bargain prices. This is just how business works -- if there are too many competitors, it's hard to make a profit and hard to get funding. Once the excess shakes out, the remaining companies have an easier time.

But there was obviously too much production if GM was unable to find enough demand for their cars and Ford was not operating at 100%+ capacity. Sure, some GM car buyers are going to go to Ford now, but much of that would have been absorbed by ramping up Ford production. If Ford needed all of GM's bargain priced assets, GM's assets wouldn't have been available as they'd have been producing sellable cars.

[hblask 1]

you're right, some economists use actual history and relevant corollaries to base expectations. others base predictions on ideology and a first-year understanding of supply and demand and come up with unrealistic ideas with no basis in reality or practicality. which ones are good and bad we seem to disagree on.

Still waiting on those real world examples......I've provided some to support my side. Where are yours? Show me data where at least one of the following is true:1. An entire supply chain broke down because a minority of the companies in an industry went bankrupt.2. An entire industry disappeared due to the failure of one or two companies in that industry.3. Sales for the remaining companies declined after a competitor went out of business.Until you guys can start providing some meaningful examples, you are just drinking the corporate kool-aid.

[hblask 1]

Yes comparing a gradual change over a decade in an industry to a massive shock in a short time that would dislocate a far higher percentage of that industry is really faulty and not worth thinking about.

WTF? EACH YEAR was worse than the worst case scenario from the auto industry, during a time when the population was much worse.The decline in farmers continued for decades, and continues today. I picked the 50s because it was a time of extra steep declines and exceptional economic performance.Face it, industries adjust to market conditions all the time, and a million people is not that big of a deal in our economy.

[FCP Bob 1,312]

Just repeating this nonsense doesn't make it true. The demand to the suppliers is based on total demand for cars; total demand for cars is unrelated to the existence of GM.Again, if you can provide a single example from history of remaining companies having declining sales due to the failure of a competitor, please provide it. You can't, because it can never happen, ever.

Ford's capacity to fill that demand would have been reduced. Nobody with any knowledge of the auto sector doubts this at all. They would not have been able to get the parts and supplies to produce at even their current rate because their suppliers who also supplied GM and Chrysler would not have been able to stay in business without GM and Chrysler. This was a unique situation of market failure in a massive industry.