Automakers have to make concessions before getting a bailout
Dear editor
I am writing to you regarding your support of a “bail out” for the American auto industry.
My research shows that there will be 6 million cars and 5.5 million light vehicle trucks sold in the U.S. in 2008. Approximately 2 million cars are from domestic and 4 million from foreign auto makers. Of light trucks, 3.4 million are from domestic makers and 2.1 million from foreign makers. Thus of the 11.5 million vehicles sold in the U.S., 49% are from domestic vehicle makers and 51% are from foreign makers. Capitalism and the free-market have spoken. Foreign vehicles are more reliable and have a better value.
I propose that rather than a “bail-out” to the American auto industry that has consistently produced a more expensive and inferior product that two changes need to be implemented. First, the American auto industry and its workers need to be held accountable for producing an inferior product. Incentives for line-workers could increase quality and productivity and disincentives could be applied for producing an inferior product. Second, rather than a “bail-out” to the auto industry, I suggest there be a $5000 to $10, 000 U.S. rebate to the consumer for buying a domestically produced vehicle.
With 11million vehicles sold per year, and 6 million of these from foreign auto makers, if there were a 100% conversion rate from foreign to domestic sales this would amount to a maximum 30-60 billion dollar “bail-out” in the first year. This is consistent with current financial outlay proposals for the auto industry. This would reduce loan-burden and allow Banks to free-up credit which is felt to be essential for resolution of the financial crisis. This would benefit the average consumer immensely and be palatable. It would rescue the American auto industry in a way that would be appreciated and understood by all of America. It is in direct contradistinction to “bailing out” Wall Street which the vast majority of Americans cannot understand, will not appreciate, and will not tolerate.
Our family has bought foreign-made vehicles for the past 13 years after our Chrysler minivan stopped inexplicably 13-years ago stranding by wife and 4 children in west county St. Louis. Since then, we have bought 4 reliable Toyotas and one Mazda. My current Toyota 2000 Camry has 115,000 miles. I will purchase a new vehicle soon. I love America. A $5,000-10,000 rebate for a domestic vehicle would make me consider changing from a foreign to a domestic brand and make me feel good about rescuing the American auto industry.
Daniel Brennan
St. Louis
Daniel Brennan:
“I love America. A $5,000-10,000 rebate for a domestic vehicle would make me consider changing from a foreign to a domestic brand and make me feel good about rescuing the American auto industry.”
I hate to be the excrement in your punchbowl, unless the Big 3 are re-organized under bankruptcy laws, they will just add that $5000-10000 rebate to the MSRP sticker and continue ripping off the public for their playpen expenses.
A turn on that thought. Instead of providing financial institutions and others with a staggering $7 trillion dollar bail-out to loosen available credit to consumers, let’s divide that federal money by 150 million American households. This gives approximately $50,000 to every houshold to deposit in their local banks. We can charge the banks 23% interest for borrowing our money and if we need to take out a loan from our local bank, they must not exceed a 4% finance charge…..
Garrison:
“A turn on that thought. Instead of providing financial institutions and others with a staggering $7 trillion dollar bail-out to loosen available credit to consumers, let’s divide that federal money by 150 million American households. This gives approximately $50,000 to every houshold to deposit in their local banks.”
That’s a brilliant solution Garrison, except for one thing, the government doesn’t have $7 trillion to loan unless it takes it from taxpayers. It offers $7 trillion of assurances that the taxpayers will eventually cough up that amount plus a handling fee. Has all reason left you?
Let me get this right Sage….The Federal Researve doesn’t have $7 trillion dollars to give to taxpayers because it’s only an assurance that taxpayers will cough it up to Wall-Street bankers (with fees) who in turn will lend the non-existent money to taxpayers (which the Federal Researve didn’t have in the first place to give to taxpayers) but the Federal Researve does have the non-existent money to give to banks who can then give the non-existent money back to taxpayers in the form of high interest loans….
In other words: The Federal Researve can’t lend money to taxpayers because the money doesn’t actually exist….unless the taxpayer owns a bank, a mortage company, an insurance company, or hedge fund.
Why didn’t I see such brilliant reasoning?
Does this make my federally insured government bonds worthless? Damn!
Garrison:
“In other words: The Federal Researve can’t lend money to taxpayers because the money doesn’t actually exist….unless the taxpayer owns a bank, a mortage company, an insurance company, or hedge fund.
Why didn’t I see such brilliant reasoning?
Does this make my federally insured government bonds worthless? Damn!”
I know you’ll be crushed to learn that I didn’t make the banking rules. A bank may currently loan up to ten times the assets it holds so a paltry $700 billion bail out to banks equals $7 trillion of loans possible from lending institutions. That blows a hole in your $50 thousand per household plan the size of the one in your head.
Your plan was doomed to failure anyway, too many union households would use the $5 thousand from your plan to support controlled substance distributors in a glitzy and extravagant lifestyle.
Sage, I want the same amount of leverage under current banking laws that was given to Bear Stearns …Believe it or not, I’m worth more than a half mil….where’s my $50 G’s? The banking laws also allow troubled banks to merge in order to meet liabilities and mazimize profit margins. All union members will do this in order to establish a covert drug cartel identified as the “AFL-CIO War on Drugs”. We’ll make even more illegal profits just like Wall-Street does under Bush’s “War on Drugs” by selling to the well established Republican country-club set…Rush Limbaugh will represent one of our biggest drug markets. No pun intended.
Garrison:
“Sage, I want the same amount of leverage under current banking laws that was given to Bear Stearns …Believe it or not, I’m worth more than a half mil….where’s my $50 G’s? The banking laws also allow troubled banks to merge in order to meet liabilities and mazimize profit margins.”
I have repeatedly urged those who feel ripped off by corporations, including banks, to use union funds to form your own or charter banks to treat all your customers like you want to be treated. It shouldn’t be that hard to compete with crooks. Maybe you could even make a case for a bail out because that kind of business plan is destined to fail.