GM facts and fiction

[wheel interested]

Where does the $700 Billion that the government is spending to rescue financial institutions come from? Is it printed and will it cause inflation?
The bailout money is sort of printed. The money is created by the Federal Reserve/Treasury and lent to the institutions needing a rescue. The Fed/Treasury gets back IOUs from the institutions. The collateral for these IOUs is everything the institution has. Repaying the Fed comes ahead of all other debt holders. Senior debt holders even come behind the Fed so it is very unlikely the U.S. government will lose any money on these bailouts. And since the government charges interest (and gets equity in AIG) they (we the taxpayer) might even make a little money, as happened with the Chrysler bailout. (The bailout in 1979 paid back in 1983 netted the U.S. Treasury $350 million.)

[mutcth]

Originally Posted by purman

Look,,, Reliability aside.... There all just plastic on the inside. and now my Toyota is too.... I think Toyota and Honda said "boy those americans will buy crap so we can lower our standards and still sell cars....

Yeah, the new Tundra and Sequoia have pretty cheap looking interiors. (New Expeditions and Suburbans have rather nice interiors.) All car companies are trying to control costs, but they're not all equal at what they priortize. Toyota has also publically stated that they rushed development on some platforms - the current Camry interior is a disappointment compared to a Malibu. (Newer Toyota models look a lot better.)

My 1989 Jaguar is 100 times nicer on the inside than a new Cadillac.. For one there is no fake plastic wood.... REAL... Power everything and I mean everything... And this is a 1989 remember... what were Cadillac in 1989 (BOATS) Rides nicer and can go around a conner without putting you in the ditch... It has handling...

Depends which Cadillac you're talking about. The 1992 STS was quite a nice handling car. Had real Zebrano wood on the dash too. The new CTS has a lovely interior - it is better finished in some ways than a new Jag XF.

It is way too easy to paint American cars with a broad stroke. One of the most reliable cars you can buy now is a Ford Fusion. That CTS is as enjoyable to drive as an Audi, Mercedes, or BMW. A Buick Enclave is as quiet and soft-riding as a Lexus RX. (And yeah, I've driven all of them.)

The problem was is that for too long, buoyed by SUV sales and profits, not much attention was paid to the car side of things. The Taurus, Focus, Cavalier, Impala - all left to wither on the vine. Daimler starved Chrysler's development process with a big focus on cost-cutting. Once attention and sales moved from SUVs to cars, there was a product gap. And cars aren't as profitable as trucks, a problem if your cost structure is based on them.

I'm not a domestic apologist - I own a Honda minivan (after an unreliable VW Passat.) I suggest Accords or Elantras to a lot of people. I'd buy a last-gen Tundra as a tow vehicle, if I get a bigger trailer. And there have been (and still are) some bad domestic cars. But there are clear signs of a product turnaround. Should of happened sooner, but....

[85MH325]

Two days, nine pages, 122 posts, a myriad of well thought out and well written perspectives on a very controversial topic, and still not a single angry, accusatory, or retaliatory post.

You folks are the best.

Roger

[Gene]

Originally Posted by wheel interested

Where does the $700 Billion that the government is spending to rescue financial institutions come from? Is it printed and will it cause inflation?

Well, if too much is printed it will cause inflation, but right now we face the potential of deflation. Japan didn't acknowledge they had weak banks and a cratering real estate market in the 1990's and went into deflation and didn't deal with their problems for years. So printing money may be a good thing to balance de- and in-flation.

Gene

[wheel interested]

I could use a press of my own. C'mon whaddaya mean you don't care to buy some high risk debt from me.

[66Overlander]

Thanks to all who responded positively to my post, especially the private "thanks".

I knew my comments would never sway some of you, and that's OK, but some of the responses continue to surprise me. I find it hard to believe that some of you are clinging to your beliefs that this is all self imposed by the domestic auto makers and that they are EVIL. It is almost as if you revel in their potential demise. But how interesting the automakers all over the world are now requesting the same protections from their goverments. I guess they're all bad and all to blame for the credit crisis.

There was a time that there was American Spirit. There was a time that people pulled for the underdog. It didn't matter of they were your team or not, you wanted then to win against the odds. Now it seems many just like to "pile on" and kick someone when they're down. I feel sorry for you. That is no way to go thru life.

The domestic auto makers certainly aren't perfect, but they don't deserve the hatred I see many clinging too. Buy whichever vehicle you choose, that's your perogitive, and if you've personally had recent bad experiences with domestic vehicles, I can't blame you for your personal shopping choices. But please just stop it there. There is no real value in continuing to bash the domestic automakers in this thread that many seem to be clinging tightly to. It is serving no useful purpose but to perpetuate myths.

Ok, that's it. I am done. No use replying directly to me as I won't be participating further. I just hope you remember your positions when the inevitable depression hits your neck of the woods if the big 3 go under.

[overlander63]

Originally Posted by mrmossyone

Not true. We have been building very fuel efficeint motorcycles for a long time. It's just in this land of the free most people don't want to use them for personal transportation.

If you truly believe that, please PM me your address. I've got a few hundred thousand dollars worth of bills I got as a direct result of riding a motorcycle to save fuel I want to send you. So how much did I save? I'd have to get 140,000 miles per gallon to break even, show me any motorcycle that will do that, and I MIGHT consider another one.

[Larry in MO]

Originally Posted by hampstead38

There is a saying in economics, "People respond to incentives, all else is commentary."

I think that might work in elections, too.

[ROBERT CROSS]

It's really kind'a sad that you all will spend all this time spout'n off to each other and not somewhere where it will do some good.

That's why they call it a democracy, right?

[mrmossyone]

Originally Posted by overlander63

If you truly believe that, please PM me your address. I've got a few hundred thousand dollars worth of bills I got as a direct result of riding a motorcycle to save fuel I want to send you. So how much did I save? I'd have to get 140,000 miles per gallon to break even, show me any motorcycle that will do that, and I MIGHT consider another one.

You must have had a bad wreck. Sorry about that but the same thing happens with people driving cars. I know that riding a motorcycle here in the states is much more dangerous than driving a car but that doesn't change the fact that it is much more economical. Motorcycles are used extensively in Europe where gas is much more expensive and because of that drivers are much more aware of the motorcycles resulting in less crashes. You can easily buy a new motorcycle that will ride two (which is typically more than you find riding in most cars these days) for about 8,000 dollars that gets 50 miles to the gallon. My main point however was that the majority of American consumers don't want them just as they don't want certain other vehicles produced by vehicle manufacturers and the ones that don't sell will eventually be done away with if the market is allowed to work.

[mrmossyone]

Originally Posted by ROBERT CROSS

It's really kind'a sad that you all will spend all this time spout'n off to each other and not somewhere where it will do some good.

That's why they call it a democracy, right?

Just because we spend time spouting off here on this forum doesn't mean we're not running our mouths elsewhere. Rest assured that I run my mouth all over the place.

Oh, here in the states we call it a constitutional federal republic or a representative republic but it's really become a Kleptocracy among other things..

[ROBERT CROSS]

Spout away.....I'm outta here.

[mrmossyone]

Originally Posted by 85MH325

We have? The only domestic motorcycle company that I know of remains Harley-Davidson. Correct me if I'm wrong. I don't think any of their models get significantly over 40mpg, and there are a dozen cars on the market now that get a solid 32mpg or better. In the days of 10mpg cars, 40mpg looked pretty stingy, but why would I want to ride a motorcycle for daily transportation when I can be out of the weather, heated and/or cooled and relatively safe from road-rash in a sedan?

Further, motorcycles don't work for the elderly, the very young, or for families. They're OK when it's sunny, scary on wet pavement, downright uncomfortable when it's cold out, and useless on ice or snow. They're difficult to carry groceries on, and frankly, unless you're very skilled, even on the best of roads they're not all that safe. I just can't see motorcycles as the panacea to the dilemma of mass personal transportation in the U.S.

To give my remarks some perspective, you need to understand that I rode motorcycles for twenty-five years. I rode a lot of miles on bikes. I commuted, traveled, shopped, and vacationed on bikes. I put 60,000 miles on my '82 BMW R100RT from '83 to '86, so take my comments as those of a rider, not merely a car driver.

What I was talking about were viable nation-wide mass-transit systems... high-speed trains, commuter trains, bus systems, subways, elevated railways, bike/pedestrian trails or paths... in other words, transportation that is more efficient per person moved, and systems that don't require a personal motor vehicle moving down a street dedicated to personal motor vehicles.

Roger

Well even though Harley isn't the only domestic producer of motorcycles I wasn't just referring to domestic motorcycles even though 40-50 mpg is pretty darn economical. You might also find that some of those you excluded do use them across the pond and they do use them all of the time, rain or snow.

However my point was that the American consumer such as yourself doesn't want them for primary transportation just like they don't want mass transit and just like a majority also don't want a little wind up car. You might also find that mass transit only really works in urban areas not in the rural areas. Not to mention the cost of completely rebuilding our infrastructure to make nationwide mass transit a reality.

If the government wants to build mass transit systems all over this country I'm fine with it as long as they leave me the freedom to choose an alternative if I so desire. I do however believe that mass transit is a better answer than all these little "green" death traps.

I don't like the goverment making decisions for me, I'm a big boy and can take my lumps as they come. I know, I know that's just crazy talk.

[mrmossyone]

Originally Posted by ROBERT CROSS

Spout away.....I'm outta here.

Catch ya on the flip.

[mistral blue]

Originally Posted by hampstead38

The simple answer to most problems in a market economy is simply to let the economy work. Unlike at NASA... in a capitalist society failure is always an option.

For a nice piece on the bailout, try this.

Oh, and to Gene, the government really is responsible for the Great Depression. If you want to hear a thoughtful but very digestable piece, try this FRB speech by Ben Bernanke on the auspicious event of Milton Friedman's 90th birthday. Contrary to Nixon, Gene, we are all not Keynesian's now.

"Monetary forces, particularly if unleashed in a destabilizing direction, can be extremely powerful. The best thing that central bankers can do for the world is to avoid such crises by providing the economy with, in Milton Friedman's words, a "stable monetary background"--for example as reflected in low and stable inflation."

I agree that "monetary forces" played a central role not just in the U.S. depression but in the world as a whole 80 years ago. But what should the incoming administration do in 2009 that would be akin to Roosevelt declaring a national bank holiday, cutting the link between the dollar and gold and working towards the devaluation of the dollar?

How can we best achieve low and stable inflation in these times? Is ch. 11 re-org the only way?

[hampstead38]

I realize you are no longer participating, Joe, but I'm going to respond "for the record," if you will. Free markets do not make "value judgments." This is not about "good" or "evil." It's about profitable or unprofitable. Capitalism is about individual participants making economic choices that shape markets... not about the government putting its very large finger on the economic scales.

There isn't anything "special" about automakers... any more than there anything special about farmers, steel mills or freight delivery companies. Of course, every business argues for special treatment... pretty much as Adam Smith observed in the Wealth of Nations in 1776. And, regrettably, Congress and the American people routinely fall for specious arguments. The bulk of agricultural subsidies do not go to family farms... they go to large corporations. The net effect of tariffs is to lower the American standard of living to the benefit of select industries. Inevitably, government interventions in markets do not help the economy as a whole, they only help a select few... a select few that are chosen on a political basis rather than a profitability basis.

The appeal to emotion may work with some, but I simply can't see a company that generated $178 billion in revenues in 2007 (and $38.7 billion in losses) as an "underdog." An underdog is a small, Main Street family business struggling to make ends meet. Underdogs, Joe, live in the world of thousands, not billions.

I can't speak for others, but I don't hate American auto makers any more than I "hate" drinking Coors beer or shopping at Home Depot. I simply prefer an icy Fat Tire Ale and buying hardware at Lowe's or the local store. Now, I think we can agree beer is simply a matter of taste. Hardware (like automobiles) is a bit more complex. It really doesn't matter if I go to Lowe's because I'm the most rational hardware buyer on the planet or if I simply hate the color orange. The real judgment of American car makers is not done by you or me, it is the cumulative judgment of hundreds of thousands of consumers. While individuals can be nonrational, the marketplace is generally very rational in rewarding well-managed businesses and not rewarding poorly-managed businesses. Only where government interferes or sponsors a monopoly or oligopoly do we find poorly-run businesses (like cable television firms) surviving for years.

At the end of the day, the market will decide what happens with GM... no matter how much the government attempt to intervene. The federal cannot save GM any more than it can save Amtrak or the US Postal Service. The only question is, how much damage will the government do to the U.S. economy before the light bulb goes on?

[hampstead38]

I'll get back to your monetary question tomorrow, MB. It's sleepy time here.

[Journalist]

Here's a statistic that I'd like to see... I wonder how many of those people who stand to lose their jobs if the automakers go bust have a Toyota or Honda in their driveway.

[RedSHED]

Originally Posted by mrmossyone

... I know that riding a motorcycle here in the states is much more dangerous than driving a car but that doesn't change the fact that it is much more economical. Motorcycles are used extensively in Europe where gas is much more expensive and because of that drivers are much more aware of the motorcycles resulting in less crashes. ...

and herein lies another bit of the puzzle.
A recent segment on my favorite program featured a bit on a guy entering a rally in Finland. The host showed some clips of Finnish driver's ed, and pointed out that while Finland has produced more rally champions than any other country and more F1 per capita, it takes 3 years to get a license. While he was showing this, there was footage of a teenager getting firsthand experience with hydroplaning on a prepared skidpad.

In short, they were taught not how to parallel park and arrive at a 4 way stop, but how to deal with the unexpected. And if you have an adequate public transit system, you can make the driver's license require some skill. If you have no public transit, you are giving tacit approval for a percentage of the population to have no training, no insurance, and no license.

In short, I'd think riding a motorcycle (or bike) in Europe might be a slightly different experience than in a comparable US city (Italy excepted maybe? )

[Edit: for the record, my first vehicle - with which I commuted to my job at a grocery - was a 750 Suzuki. I've also commuted extensively on foot, by bicycle, and one time only by canoe. Mostly though, I've been a cager.]

[RoadKingMoe]

We've owned two Harley-Davidson 883 Sportsters that got at least 50 mpg, one even after I bored it to 1200 ccs. But you can do even better with true motorcycles that will run 75+ mph and easily keep up with auto traffic.

There was a time in my life when my only transportation was a 75 mpg dual-sport Honda XL250 (lived in Florida). That was back when someone with a 28" inseam had a chance of straddling a dual-sport. Yamaha's brought that back for $4,690.

My wife also had a 75 mpg (with my lard ass on it) Yamaha Virago 250 (which got 85 mpg with her on it) with something like a 25" seat height. It's now the Star 250 for $3,920.

I wish we still had the latter. It was a cool-looking, nimble little bike that was a lot of fun to ride. Our current bike is a 40 mpg Road King but I don't ride it for daily transportation.