The Real Reason the Government Doesn’t Want to Bail out the Auto Makers.

It at first struck me as odd that the U.S. Government was opposed to bailing out the U.S. Auto Makers. It is about the only major industry left in the country that is not defense or aerospace related. Economists contend the base of a nation’s wealth and prosperity lies in manufacturing. It makes little sense to let what had been a profitable industry prior to the lending crisis and the economic meltdown end up having to completely fold as a result of it. It makes even less sense when you consider the millions of jobs that are attached to automotive manufacturing in service, shipping and transportation, parts out sourcing and manufacturing, electronics and advertising just to name a few of the major industries that are suffering as a result of the faltering car manufacturers. Those are all jobs that can’t be easily replaced in a nation where unemployment might easily top 10% before the end of the year.

Propping up the banks, insurers and financial service industries that employ far less people, and produce nothing of real value at a cost of several times what the Auto Makers were hoping for makes little sense on the surface either. Unless you are inclined to suspect it’s the organized theft of the treasury as I do by the powers that be.

I also suspect the final stage and last preparations for World War III are close to complete. It’s not hard to imagine how much easier it might be to get unemployed and bankrupt angry people to fight in a major war as opposed to employed, financially well off happy people. So at first I was inclined to believe that’s the reason behind denying the Auto Makers. Though it makes bad economic sense, surveys conclude most Americans would choose going to the dentist for a root canal than a car dealership to buy a new car. The average citizen would hardly bemoan the government’s refusal on that basis alone.

Yet the average American has little idea that car dealers are in fact the most charitable of all businesses and allocate a huge portion of their profits to advertising and a huge portion of the advertising for community outreach. Want to start a little league team or get your church group to Jerusalem, help some battered women, higher educate a few underprivileged gifted scholars? Chances are your local car dealer up until about a year ago would have happily cut that check. Unlike Bankers car dealers really spread their wealth around. It’s a self serving thought and action of course, the expectation is if your son’s little league team had their jerseys paid for by the local car dealer you will at least browse their inventory before perhaps making a choice to purchase elsewhere. Despite its self serving nature many schools, non-profits and churches are hurting because of the state automotive franchises are now in. They are their biggest source of funding.

Yet there is one more overlooked benefit for the powers that be of letting the big three auto manufactures go belly up. A benefit likewise of the orchestrated real estate melt down of driving up the market bubble through excess demand brought on by risky lending.

The automotive dealers are selling 30 to 50% of their numbers because would be purchasers are finding it impossible to get loans from the banks in many cases. The realtors are down up to 90% in some markets and are unable to sell those houses people still do want to buy, likewise because most of their clients can’t obtain loans from the banks now.

Car Dealers and Realtors happen to be independent News Papers bread and butter. These two industries typically make upwards to 80% of most of the advertising local news papers take in. Circulation and sales of news papers does not make them profitable. Advertising makes them profitable. Car Dealers and Realtors make them profitable.

Could it be that the or one of the main reasons for allowing the impending bankruptcy of the Auto Makers is to force the sale or closure of the nation’s last few remaining respected and independent sources of news?

I wonder, what are your thoughts on this?

It's the NWO

They're always trying to destroy us regular people. Send us to the poor house.

reply to post by Hellish-D

It's the NWO

They're always trying to destroy us regular people. Send us to the poor house.

You know the very sad truth might be they don't even care enough about us to intentionally conspire to make us poor. I think to them we are just ignorant pawns and slaves to move about the board and manipulate in competitions amongst themselves.

When money and wealth is no longer an object it becomes all about ego, power and the thrill of indulging vanity and competing on a level where the other players can provide some competition. I like to imagine in many ways the New World Order is as much about which one of them (group or individual) can win the game of taking over the world.

I think they have as much empathy for us mere common folk as we might for a playing piece on a 2.99 cent made in China Chess Board Game.

We really must do something about such convoluted personalities!

Thanks for your post.

reply to post by ProtoplasmicTraveler


Hadn't thought of that angle.
It's food for thought.

I really don't get the reluctance to help to automakers either.
Who is going to have the hardware to create the new enviro cars that the global warmists keep pushing for if the local auto makers have shut up shop?

More jobs that will go overseas and the locals won't have a slice of that future pie.
It's madness.

reply to post by ProtoplasmicTraveler


Look, the responsible thing to do is to find a new industry. Otherwise, billion dollar University subsidizations would do just as well. New manufacturing techniques could be developed, new data could be collected and properly analyzed, and all these things could be transferred to the private sector in the form of interested professors and their students creating new businesses. Bailouts don't accomplish anything. If you really want to "bail out" the auto industry, pump money into making a completely new, indistinguishable auto industry, with entirely different players and a totally different labor market. Don't give the money to the same people. Make a new auto industry! Give loans to people that have good business plans. Risk is mitigated because the taxpayers are funding the whole thing. As soon as those businesses start doing successfully, give the taxpayers a share in the profits in the form of a capital warrant, which the government can refund at any time, and return to the people in the form of a national tax rebate. There you go! Problem solved? It seems simple enough.

The U.S. is incapable of admitting that the world is catching up in industrial and technological progress. It's funny how Capitalism is proclaimed as the pinnacle of modern America until there's actually some level of international competition. Then we renege on our values and become Socialists. How hypocritical.

[edit on 6-2-2009 by cognoscente]

The American military desperately needs new soldiers for the next war and with it the subsequent 'reward' for the citizenry in the form of an recovering economy, and what better way than to boost recruitment ranks than to force poverty onto millions of Americans?

Join the Military and do your time for King and Country and get some money, some education, some benefits... Who will resist that?

Just don't die... and you'll get all that

The way the military is plugging those recruitment ads, I just know they are planning for something HUGE.

reply to post by Flighty

More jobs that will go overseas and the locals won't have a slice of that future pie.

I agree it is madness. It is hard to believe law makers don't comprehend all the jobs attached to auto motive manufacturing.

Thanks for the post!

The reason why the government is does not want to bail out the auto industry is because: 1) we do not live in a Corporate Fascist state, 2) the auto makers will be back asking for money again in 6 months when the last amount runs out. The Auto industry has been heading for this problem for a long time, and I know because I used to work contract for one of them. It used to amaze me that they could afford the salaries and overhead that they generated, and still manage to produce any product whatsoever. They have managed to make it up until now by producing utter crap, disposable vehicles, that have to be replaced every 100K miles then overcharging for them. When the economy took a dump, people could no longer afford the convince of a $40k vehicle that would fall apart after 5 years.

It would take tremendous trimming of fat for the auto manufacturers to become profitable, and they are not willing (nor are their employees willing) to do that. In the auto industry, I have seen people with high school educations, who push a broom, make more (salary, benefits, and pensions) then any of the college educated medical, law enforcement, or rescue personnel that I currently work with, which is quite sad and unfair when you think about it. To be honest I am rather tired of hearing the plight of the poor Detroit Autoworker, who pretty much made the bed he is now laying in.

[edit on 2/6/2009 by defcon5]

Amazing ...

You could be onto something here !

reply to post by cognoscente

Bailouts don't accomplish anything. If you really want to "bail out" the auto industry, pump money into making a completely new, indistinguishable auto industry, with entirely different players and a totally different labor market.

I don't disagree with what you are saying entirely but partially based on these points.

They should not have bailed out the banks then based on this logic. I like the logic of not bailing anyone out. I agree that dead or dying industries should be allowed to fold as should poorly run and fraudelenty run businesses.

Toyota's sales are down 30% which is unheard of. Honda sales are down 40%. It's not a dislike of American products or American Manufacturing techniques that have suddenly crippled the big three auto makers. It was basing production on consumers being able to acheive easy credit for purchases after nearly a 20 year long trend where it was becoming easier and easier for a broader range of people to purchase new automobiles and infrequently.

People who stopped going into American Manufacturers Showrooms in the late 70's and 80's who haven't shopped American Cars since the early nineties have a misconception in part fueled by foreign competitors regarding American quality.

The problem is simply in the predatory lending practices meant to bilk investors out of their hard earned cash.

Many car and real estate loans are bundled in offerings on Wall Street after the borrower makes the first couple of payments. Investors then buy the paper and recapitalize in the process to keep making loans.

As the economy has soured and more and more borrowers have defaulted as a result of lost jobs or sky rocketing fuel and grocery costs, investors have stopped purchasing these bundled loans. Lenders with capital are reluctant to loan, lenders who would like to loan are having trouble finding capital.

You are right about the bailouts being a bad idea. You might though be wrong in your assesment of why you think American Car Manufactures have become unprofitible.

They have become unprofitible because we have exported so many of our manufacturing jobs in favor of much poorer paid service economy based on too many people working for just barely above minimum wage selling foreign goods here in stores like Wal-Mart or performing low paying data and customer service jobs.

It boils down to this. Most Americans are finding it harder and harder to make ends meet. The banks got bailed out for one reason presumably and then reneged on doing what was asked of them to receive the money.
That one thing was that it was deemed that the constant flow of credit to supplement the diminished wage earnings of the average consumer was vital.

The reality is that conditioned Americans are more likely to accept that oh it's because they raised my credit card rate and cut my limit that I am now poor. We need to help the banks so they can up my credit card limit!

No we need to create and not loose jobs. This was a vital industry, Profitable since the turn around in the eighties as the industry confronted the last major market shift brought on by the 70's oil crisis.

Further the auto workers are really the last of the true union workers. Many people complain well the problem is the workers make too much ang get too much.

Once again faulty thinking, they fought for and demanded a living wage from an industry making billions.

Most Americans won't. That is why for most people their living wage has decreased year after year while huge corporations suck out huger and huger profits to keep and pay to investors who did absolutely no work at all except lend money.

The things you are talking about are vital, in the future. Jobs are vital today.

The reality is if people demanded a living wage and refused to work en mass until they recieved one the economy would not be in this mess. We have let the corporations and their government backers manipulate every avenue to maximize their profits at the expense of the nation itself.

The things you are talking about will take years to employ that many people and some food for thought, if these great new green cars that come out...and people still can't borrow money to get them?

They won't sell either.

reply to post by star in a jar

The American military desperately needs new soldiers for the next war and with it the subsequent 'reward' for the citizenry in the form of an recovering economy, and what better way than to boost recruitment ranks than to force poverty onto millions of Americans?

This is my big concern too. My bigger concern is so many Americans are doing the very things that truly aren't in their interest in setting this stage. Shop at Wal-Mart, be happy just to have that job and not demand a raise.

reply to post by visible_villain

Amazing ...
You could be onto something here !

Some people are speculating the most important battle of World War III will be the opening rounds of winning hearts and mind through propoganda.

Controlling all of the media makes for a much more consistent message.

In the early thirties when the Powers that Be tried to lay the ground work for a White House coup and the Marine General they had recruited to this task had a change of heart and informed Roosevelt of the conspiracy the New York Times and the Main Stream Press labeled him simply a disatisfied General with an ax to bear for being passed over for Commadant of the Marine Core.

The real story did eventually become wider and better reported because Major General Butler went on a personal campaign to contact small town news papers across the country one by one.

Destroying the last vestiges of an independent press has a real value in a propoganda war. Bankrupting them, by bankrupting their most profitible customers first is certainly a very detached and sly way of achieving that.

There might be something to that.

For starters, laborers in the big three make good wages- and they should. Many, many laboring jobs in this country should be making much more than they are.

Personally, I think if you're pushing a broom and make a comfortable living, kudos! I make more than enough to care for my family in my own home, from my own office, and I wouldn't deign to look down on anyone, let alone someone who makes a nice wage when a college grad struggles. Physical labor shouldn't be looked down or frowned upon.

Second, my father works for GM. and has for thirty + years, and he makes well. Nice enough to have a new vehicle and standard home, a vacation once a year and was able to feed 3 kids and a wife.
He can't buy a boat, sail around the world, or a great many frivilous things. Personally, I believe we all deserve to make such a living where things that we NEED are affordable. Too many people make minimum wage, and work damn hard to get it. Work is work, regardless if you went to college and EXPECT to be paid as such, or if you push a broom.

Third, the bailouts aren't handouts for extorting the country while threatening civil upheaval. Chrysler and GM were given LOANS. And Ford got a nice loan in late 2007 before s*** hit the fan and recession bit a chunk out of it's ass. ( Hmmmm- Ford family do have nice ties to Elite, don't they? Maybe a head's up with inside knowledge ).

Fourth, I think, with what I'm hearing through the breeze, is the big and primary reason the govt. is giving them such a hard time has to do with the unions. The UAW is a b**** to get around, and mandate good working conditions and fair wages.
Unfortunately, these big 3 and the govt. are one the same page- they want the UAW out of the picture. As it is, in the past few years, a lower tier wage is what's at stake.

Essentially, think of it this way- slave wages across the country. If things fall apart, the US will become what it was after the depression- people ready to kill anyone else to get a job. Anyone read the Grapes of Wrath? Remember what people will do for a nickle and a pound of hamburger to feed their family?

IMO, this is over a fight for control- so they can hack away middle class.

reply to post by ProtoplasmicTraveler

One of us is missing something major here. The Government DID bail out the auto industry to the tune of 17.8 Billion dollars on December 19, 2008:

Obama Commends Bush For Auto Bailout

n a statement sent out just now from his communications shop, President-elect Barack Obama announced his agreement with the Bush administration's decision to lend a $17.4 billion loan to troubled automakers.

"Today's actions are a necessary step to help avoid a collapse in our auto industry that would have devastating consequences for our economy and our workers," the statement reads. "With the short-term assistance provided by this package, the auto companies must bring all their stakeholders together -- including labor, dealers, creditors and suppliers -- to make the hard choices necessary to achieve long-term viability. The auto companies must not squander this chance to reform bad management practices and begin the long-term restructuring that is absolutely required to save this critical industry and the millions of American jobs that depend on it," said Obama.

www.huffingtonpost.com...

Originally posted by ProtoplasmicTraveler
They should not have bailed out the banks then based on this logic. I like the logic of not bailing anyone out. I agree that dead or dying industries should be allowed to fold as should poorly run and fraudelenty run businesses.

The banks were not in trouble because of their own abuses, so much as being forced to make loans that the government required or face legal ramifications. Also, the banking system (Federal Reserve) is part of the US economy, and is required for the government to operate. The US government is planning on owning parts of those Banks until the money is paid off with profit to the US citizen. Obviously, that will not happen in the Big Three, because if you give them more money they will continue status quo and want more money again in a few years. The banks hold real property assets that can be sold off, which the Auto Industry does not.

Originally posted by ProtoplasmicTraveler
People who stopped going into American Manufacturers Showrooms in the late 70's and 80's who haven't shopped American Cars since the early nineties have a misconception in part fueled by foreign competitors regarding American quality.

Sorry, I used to work in engineering, and even in the late 90’s they knew they were well behind the foreign manufactures. I drive a Foreign car that is nearly 14 years old, with almost 300K miles on it, and it is showing no signs of stopping any time soon. I have had to replace a couple of pieces of the exhaust system which I knocked off, and ever since I added American after market parts to the car those parts have to be replaced about every 2 years. The exact same part made by the original manufacturer was built with stainless steel, and the US equivalents are made out of scrap iron apparently.

Originally posted by ProtoplasmicTraveler
They have become unprofitible because we have exported so many of our manufacturing jobs in favor of much poorer paid service economy based on too many people working for just barely above minimum wage selling foreign goods here in stores like Wal-Mart or performing low paying data and customer service jobs.

Unskilled labor is not the issue at all, it’s the overhead of US workers that causes them to use inferior materials in production. I used to feel embarrassed seeing some of the wasteful spending that went on around me when I was there. It’s the only job I ever worked at were I felt that way, and it was not even me who was wasting stuff.

Originally posted by ProtoplasmicTraveler
It boils down to this. Most Americans are finding it harder and harder to make ends meet.

Yep… and suddenly all the tax dollars that had been spent over the years trying to convince the US public to buy America made vehicles gave over to the reality of the fact that foreign vehicles last longer, don’t break down as much, and use less gas.

Originally posted by ProtoplasmicTraveler
No we need to create and not loose jobs. This was a vital industry, Profitable since the turn around in the eighties as the industry confronted the last major market shift brought on by the 70's oil crisis.

No what needs to happen is the big three need to fold, and new blood needs to enter the buyers market. A new set of companies that are starting out fresh, with new employees who do not feel entitled to excessive income above what their skill level is. The same thing happened in the Airline industry, the old companies like Pan Am, and Eastern, who had excessive overhead in personnel folded and new airlines took over the spots that they left behind.

Originally posted by ProtoplasmicTraveler
Further the auto workers are really the last of the true union workers. Many people complain well the problem is the workers make too much ang get too much.

Once again faulty thinking, they fought for and demanded a living wage from an industry making billions.

Are you kidding me?
Those guys would get those jobs out of high school, often because a relative got them in there, and would be making $80K to $100K almost immediately, plus excessive amounts of time off, full benefits, and vested retirement after 5 years. People who risk their lives saving other peoples lives for a living don’t get those types of benefits.

Maybe some of those guys should sell all their stocks, their fishing boats, their cabins in northern MI, and their time share in FL, and they can live like the rest of us for awhile.

Originally posted by ProtoplasmicTraveler
The things you are talking about will take years to employ that many people and some food for thought, if these great new green cars that come out...and people still can't borrow money to get them?

Detroit should have started making “Green” cars back in about 2003, but they CHOSE not to, and now want the US customer to bail them out.


[edit on 2/7/2009 by defcon5]

reply to post by orderedchaos

IMO, this is over a fight for control- so they can hack away middle class.

Great points and post. I wish more people understood how important living wages are and that the UAW Workers ought to be applauded and not villified.

Dollar for dollar no one builds a better car than General Motors and too many Americans buying Japanese and Korean imports have never shopped, driven, or compared an American car.

Perception drives consumer trends more often than facts.

30 years ago people still believed buy American no matter what. They understood supporting unions and our own economy is what kept the nation prosperous.

Turn on CNN or FOX and chances are unless you are a Zen Budhist they will have you angry about something within five minutes.

A lot of that anger compells people to support ideas and editorials that are actually detrimental to the nation even though the broadcaster will portray it as beneficial. The dose of anger they serve up first unbalances most people into indulging their anger instead of questioning or contemplating the messages that made them angry.

Americans are not making a living wage any more. You are right that a lot of it is about punishing the UAW.

One earlier poster to the thread claims that the Auto Makers have too many uneeded expenses. The reality is that the majority of that overhead is spent right here in the American Economy and not sucked away in the form of huge profits to simply be banked where it does no good or redistributed to share holders who are likely savers and not spenders if they are in to dividend stocks.

Originally posted by ProtoplasmicTraveler
Great points and post. I wish more people understood how important living wages are and that the UAW Workers ought to be applauded and not villified.

We are talking about the same guys who would play cards about 90% of the day, right? The ones who would flag perfectly good equipment INOP simply because someone who was non-UAW touched it in the course of performing their job? The guys who would require that a Union Electrician be called out to move a PC when we had an IS department full of college educated Hard/Software Engineers? The guys who when you would call for that Union Electrician, might show up sometime within the week, and if they found that you went ahead and moved that PC on your own, flagged it INOP? The guys who used to have cubbyholes set up in the storage rooms where they could go sleep during their shift?

These are the guys who should be applauded?
Yes, lets give them a BIG hand…

Originally posted by ProtoplasmicTraveler
Dollar for dollar no one builds a better car than General Motors and too many Americans buying Japanese and Korean imports have never shopped, driven, or compared an American car.

You show me one GM car that can go for 300K with pretty much no problems.

Originally posted by ProtoplasmicTraveler
Perception drives consumer trends more often than facts.

Which is why the US government has had put hundreds of thousands of dollars into securing the US consumers confidence in buying US built vehicles.

Originally posted by ProtoplasmicTraveler
They understood supporting unions and our own economy is what kept the nation prosperous.

Is there any non-UAW person out there in webland buying this BS?

Lorenzo was the only person I knew who properly dealt with a greedy Union. When Eastern was in trouble and he asked them to cut back, they wanted MORE. So he dumped all his debt in Eastern Airlines, and filed bankruptcy on them. He was able to run Continental and Texas Air more efficiently because he did not have the amount of union overhead generated by those airlines.

I'm guessing that is why Continental is still in business, you think?

Maybe because they could manage to work an aircraft with 5 employees making a reasonable amount of around 40 to 50K, as opposed to the 10 employees at Eastern making 80 to 120K required to work the same aircraft. The only difference between the two airlines was the guys at Eastern did not want to have to break a sweat.

Originally posted by ProtoplasmicTraveler
One earlier poster to the thread claims that the Auto Makers have too many uneeded expenses. The reality is

…That what I said is the reality!

Originally posted by ProtoplasmicTraveler
redistributed to share holders who are likely savers and not spenders if they are in to dividend stocks.

The majority of the share holders are the employees of the Auto Companies themselves, who take stock options since they make more then enough to survive quite comfortably.

[edit on 2/7/2009 by defcon5]

reply to post by defcon5

The banks were not in trouble because of their own abuses

The banks really are in trouble because of their own abuses. They far and away exceeded any and all prerequisites for meeting minority and low income housing quotas. They did it for one reason; closing fees, costs and administration fees that led to immediate profits on high risk loans they could often resell to investors to divest themselves of the risk.

I have worked in lending and am very familiar with the criteria and process and the underwriting guidelines were frankly just flat out being ignored.

reply to post by defcon5

The US government is planning on owning parts of those Banks until the money is paid off with profit to the US citizen.

The US government hasn’t planned anything too successfully since the day Kennedy was assassinated. The banks are extorting the government with legal theft and if you looked at who sits on the board of directors of the banks that have received the most bailout money, those individuals have higher net worth than our entire country does, one in particular has a higher net worth than half the citizens of the world combined. So we the tax payer have to go on hook for the loan, to loan it to them?

Obviously the banks have not made a real profit except for commissions and salaries paid off the bubbles they were creating in markets with predatory lending practices.

reply to post by defcon5

Obviously, that will not happen in the Big Three, because if you give them more money they will continue status quo and want more money again in a few years. The banks hold real property assets that can be sold off, which the Auto Industry does not.

Well let’s see the last time they were in trouble they all rebounded and enjoyed a couple decades of robust profits that employs millions of Americans. So I have to disagree with your assumption they will end back up in the hole. My favorite restaurant is going out of business too because of lackluster sales in a terrible economy. I don’t believe they sell bad meals! Or that we should just buy foreign made Chinese Take Out directly from China!

The reason the banks demanded the bailout is they don’t want to sell their assets at a loss to cover their depositors after they made their bad choices. They want us to borrow it and loan it to them, pretty much no strings attached and no questions asked or answered.