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I don't believe Ford was either 'healthy' or 'able to get loans' - it just wasn't as immediately sick as GM.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.
I never claimed 100% of GMs former capacity would be replaced (or if I did it was an accident). What I said is that the other companies would pick up the slack. That may be 50% of GMs capacity, it may be 95%. It's hard to know how much over capacity they were. The most likely result is that GM would shut down a couple unprofitable divisions/plants, sell a couple of others, and try to keep a couple running. But if they really did go completely doors-closed bankrupt, then the other companies just pick and choose what makes sense.Unless you believe that everything GM and Chrysler produced was pure waste, that capacity would continue one way or another.
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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.
This sounds like you are saying that there is excess capacity devoted to building cars that was about to be diverted by market forces, but luckily the government stepped in to make sure that GM continued producing cars. Right?
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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.
Ah, yes, the old "this is the first time in history anything like this has happened" excuse. Except it wasn't.
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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.
I don't disagree that the collapse of GM or Ford would probably have been good for Toyota, BMW, or Fiat. But it would have been bad for Michigan, Ohio, Tennessee, etc. The issue isn't about the availability of cars, it's about the loss of jobs in the US. I think that's what you're missing.The job market was extremely vulnerable (to say the least) and the collapse of those companies would have made it much worse. That's the argument. I think everyone agrees that cars would still exist in the US.
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.
It's a 40% reduction over a decade. It's a large shift, but it came about due to industrialization and machinery making farming more efficient, and because better city jobs were becoming available. GM wasn't at risk of losing a million jobs because robots were making cars more efficiently. Apples to Oranges.
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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.
Well agriculture as an industry was increasing production and the prodcutive capacity was increasing it's just that the new technology was replacing labour so that isn't really the same at all.Please just admit when you come up with a bad comparison and say "you know what that isn't the same thing, my bad."
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This sounds like you are saying that there is excess capacity devoted to building cars that was about to be diverted by market forces, but luckily the government stepped in to make sure that GM continued producing cars. Right?
Yes, exactly, although to be honest I was hoping for a less succinct response so I could make a joke...
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Well agriculture as an industry was increasing production and the prodcutive capacity was increasing it's just that the new technology was replacing labour so that isn't really the same at all.Please just admit when you come up with a bad comparison and say "you know what that isn't the same thing, my bad."
I think all he was going for is a comparable loss of jobs and the effect on the economy as a whole. You're not worried about having enough cars, right? The whole rescue is a supply-side argument.But while we're trying to find a parallel, how about the aircraft industry at the end of WWII? That would be a huge decrease in demand (much larger than the auto industry was facing). I think it would be fair to say that it was a rough transition, like the auto bailout was meant to avoid, but not ultimately a disaster to the US economy as a whole.
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I think all he was going for is a comparable loss of jobs and the effect on the economy as a whole. You're not worried about having enough cars, right? The whole rescue is a supply-side argument.But while we're trying to find a parallel, how about the aircraft industry at the end of WWII? That would be a huge decrease in demand (much larger than the auto industry was facing). I think it would be fair to say that it was a rough transition, like the auto bailout was meant to avoid, but not ultimately a disaster to the US economy as a whole.
I understand what he was going for but it just isn't even remotely the same thing. A gradual shift of labour from farming to more urban jobs in an expanding economy helped to grow the economy it wasn't a drag on the economy.At the end of WWII the US economy was able take up all the dislocated labour to civilian production for a few reasons that make it a totally different time than during a recession.There was a massive pent up demand for consumer goods within the US because of rationing during the war.A lot of the military production took place at converted civilian plants that just converted back after the war.The productive capacity of Europe and Asia had been totally devasted by the War and the US had little competition to supply goods for the rebuilding.http://www.infoplease.com/ipa/A0104719.htmlAccording to that link the Unemployment rate in the US in 1946 was 3.9% and in 1948 it was 3.8%
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I don't disagree that the collapse of GM or Ford would probably have been good for Toyota, BMW, or Fiat. But it would have been bad for Michigan, Ohio, Tennessee, etc. The issue isn't about the availability of cars, it's about the loss of jobs in the US. I think that's what you're missing.The job market was extremely vulnerable (to say the least) and the collapse of those companies would have made it much worse. That's the argument. I think everyone agrees that cars would still exist in the US.
Do you think we would have more jobs in the US if the government had bailed out farmers during the 50s so that no farmer needed to lose a job?
It's a 40% reduction over a decade. It's a large shift, but it came about due to industrialization and machinery making farming more efficient, and because better city jobs were becoming available. GM wasn't at risk of losing a million jobs because robots were making cars more efficiently. Apples to Oranges.
Yes, GM was losing because they couldn't make cars efficiently. There we the company time left behind. If we had created a massive subsidy program to give family farms each a million dollars per year, we could probably still have family farms. (Instead, we do just the opposite). The fact that massive corporate welfare can allow a particular corporation to not fail for a brief time is not evidence that this would create a net increase in jobs.Here's another more recent example. In the 80s, the US had an industry that employed at least a million people between creating and supporting the product. The largest employers had hundreds of thousands of employers. It was in an industry that was changing the world, yet the industry was threatening to lose at least half a million jobs in the blink of an eye. Should the government have propped up the mainframe computer industry?Would we be better off if the government had propped up Digital Equipment, Wang, and Burroughs in the early 80s? What would the computer industry look like now? Would Apple exist if the government refused to let these other companies fail? In the first half of the 80s, the industry lost at least half a million jobs -- far more than the auto industry would've lost.
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Well agriculture as an industry was increasing production and the prodcutive capacity was increasing it's just that the new technology was replacing labour so that isn't really the same at all.Please just admit when you come up with a bad comparison and say "you know what that isn't the same thing, my bad."
Your point proves me right: the auto industry was increasing production and the productive capacity was increasing, and new technology was replacing labor. It is EXACTLY the same. Are you sure you thought about that sentence at all.There are more cars in the US each year, and the overall trend is still upward (with occasional variation).It takes fewer people to produce a car each year due to better technology and robotics.You are proving my point.
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I understand what he was going for but it just isn't even remotely the same thing. A gradual shift of labour from farming to more urban jobs in an expanding economy helped to grow the economy it wasn't a drag on the economy.
This is the exact point: allowing the shift to more efficient means of production is good for the economy. Always. The GM bailout prevented that shift for another decade. The shift in the auto industry is every bit as gradual as the shift in agriculture. Particular companies failed to recognize that, just as particular farming companies failed to recognize the change and went out of business. Propping up failure is ALWAYS bad economic policy.
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Your point proves me right: the auto industry was increasing production and the productive capacity was increasing, and new technology was replacing labor. It is EXACTLY the same. Are you sure you thought about that sentence at all.There are more cars in the US each year, and the overall trend is still upward (with occasional variation).It takes fewer people to produce a car each year due to better technology and robotics.You are proving my point.
Sigh, the farming industry was thriving not going out of business. It was a gradual transition over many years.The auto companies were going bankrupt and the demand for their product was in the toilet due to the recession.Your example is just not relevent at all.This is the last I'm going to post on the farming industry in this context most likely. You aren't going to change your view that it's a valuable comparison and it'll just be a waste of time to go back and forth.
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To follow up Bob, the whole context of the argument is the financial crisis of 2008. I don't think GM should have been bailed out if it went under in 2004. If your argument against a bail-out doesn't consider the context of the time, then your argument is not relevant.

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Sigh, the farming industry was thriving not going out of business. It was a gradual transition over many years.
The same is true for the auto industries.
The auto companies were going bankrupt and the demand for their product was in the toilet due to the recession.
And during the farming contraction, a number of agriculture companies went out of business during economic downturns. That's how technology and innovation work.
Your example is just not relevent at all.
Except for it being the EXACT same conditions and issues.Growing industry, technological innovation, fewer providers necessary, economic downturns shaking out the weaklings that couldn't adjust quickly enough. The only difference is that the agricultural adjustment was much, much bigger as a percentage of the economy, and they didn't have the political pull to ghet corporate welfare.
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To follow up Bob, the whole context of the argument is the financial crisis of 2008. I don't think GM should have been bailed out if it went under in 2004. If your argument against a bail-out doesn't consider the context of the time, then your argument is not relevant.
That's how technology works: companies don't go bankrupt during the boom times, they go bankrupt during the downturns. This is a normal, predictable, and useful part of free market economics. It has always worked like this. It takes a pretty short memory to not recognize this.Look at the companies that make up the DJIA each year since its inception. These are among the largest in the country. Look at the year those companies joined the DJIA and when they left it. Look at the years those companies had good years and which years finally pushed them over the brink into bankruptcy.This happens regularly. I mean really, really, regularly. The only difference in the auto bailouts is a president who owed his soul to the unions and had a willing press ready to spin the story the way he wanted to spin it.
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If there was a market for the autos that were made, and the stockpiles of parts that was going to allow them to make, then there might have been a hiccup in the auto industry.There was a severe decline in new car sales. This had the exact same impact on the suppliers of parts as the closing of GM would have had.You guys should look at Boeing, they have a huge history of contracting suppliers to build parts, then backing out resulting in their suppliers failing. The manufacturing sector has an inherent danger to it that is built into the market.As far as a weak labor force having a hard time to absorb the impact of GM laying off its workers, they are a tiny percentage of the labor force, AND their unions had HUGE sums that could have been used to lessen the blow until the gap in manufacturing was re-filled by new factories.But the entire GM 'bailout' was never about either issues, it was a complete payoff to the unions, so its silly to argue these things.

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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.
the wat banking actually works is that large lenders are terrified of industry's that are in trouble and wouldn't even consider growth lending at that time.
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.
this is horrendous strawmanship, even for you. and you were doing such a good job not responding to my posts, which contain no comprehensive arguments and are just angry quick-hits rather than actually fostering conversation.every post i have made in the last month has been while typing one handed, infant in the other. until i start respectfully discussing, i expect no more than sarcastic or insulting quick-hitters from you, since that's all you're getting from me.
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Wtf Danny, you two have a baby now? Time flies.
seriously. i was a single virgin in the sick thread. i've now been married nearly 3.5 years and have a baby. creepy.
it's all he ever fucking talks about anymore. baby this, baby that.
i have a cute sleeping baby in my arms. well, half-asleep. he got woken up when i checked jay and duane's scores a few minutes ago...BABY
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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
funny but you should probably stay with the protons and math questions, i'll stick to business.
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buffett, among all the other topics he hit today, opined that the economy would have collapsed without the auto bailout. I'm probably butchering the quote.always fun to see a day's worth of headlines based on what he says in the span of an hour or so.
Yeah, you'll have to excuse my skepticism if I just assume Warren Buffet is just padding his own pockets with announcements like that. He's got a long history of manipulating policy and using his connections to profit, and I'm sure giving politicians cover for their corporate welfare is just one of the many services he provides in exchange.
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Yeah, you'll have to excuse my skepticism if I just assume Warren Buffet is just padding his own pockets with announcements like that. He's got a long history of manipulating policy and using his connections to profit, and I'm sure giving politicians cover for their corporate welfare is just one of the many services he provides in exchange.
even if you don't believe or like what people like buffett say, it's worth listening because of the way other people react to them. I know I'm gonna try to find the interview in full online... you should as well.the man is disgustingly well-spoken. he is midas, though, and his opinions are skewed heavily because of it.
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So I am wondering if the few people arguing that allowing GM to close and dumping those workers on the labor market all at once and onto the unemployment benefits 99 long vacation lists would be bad for the economy during a fragile time feel the same way about this?First he wants to fire a few hundred thousand soldiers to make his budget look betterThen he cuts the healthcare for soldiers who haven't been thrown out for a political ad to be run later this year. This of course allows them to complain about the president in the future who is forced to send ill-equipped soldiers into harms way after the cuts made by democrats playing politics today.

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