Congress sends White House auto industry bailout proposal

Don't do it!!!

Rep Barney Frank, a Democrat and the Financial Services Committee chairman, said that he, too, expected a deal by the end of the day and enactment by week’s end."

Barney Frank shouldn't even be allowed to comment....

this is now going to become a political issue. Repubs had the war/Terror Dems have the economy.

The US Auto makers need to bring themselves back into business and that means going broke, closing up and restarting. How many times over the last several decades has the gov help these companies?

The top management need a few BASIC business courses and the workers need to face reality - with all the bennies and the wages they get for doing practically nothing one would think they were civil service workers.

Among the requirements included the draft proposal is one that the carmakers getting federal help get rid of their corporate jets

Translation: Automakers have to become more efficient, except for travel, where they have to be less efficient just to please the ignorant masses.

skip: How many times over the last several decades has the gov help these companies?

Once? With Chrysler, in which case they rebounded, paid off the loans early, and the government made a profit on their investment?

Meanwhile...what's AIG's bailout package up to? $100 billion? And no one seems to care... But by golly loan the auto industry, which employs a lot more people, $15 billion, and people want blood.

It will get worse as people will not be buying any cars, on top of government subsidizing horrible companies that need to fail. Once again the government is interfering with the market, while the short term affects may look great the long term affects will be horrendous.

Once again the government is interfering with the market, while the short term affects may look great the long term affects will be horrendous.

You mean it can get more horrendous than this??? As usual on JT, people making the point that government intervention is bad for a free market economy. Well, the idea that excessive intervention and damaging policies are bad is accepted by everybody, the difference is in how you define excessive. But I fail (as usual) to see how all that is relevant to this issue. The idea that government intervention can damage a free-market economy has nothing to do with the question of what a government should do when companies have screwed themselves all on their own, and the free-market economy itself has been damaged. Not saying the "No" side is wrong, just how about some better reasons for saying no.

superlib: I wasn't referring to a monetary bail out.

It will get worse as people will not be buying any cars, on top of government subsidizing horrible companies that need to fail. Once again the government is interfering with the market, while the short term affects may look great the long term affects will be horrendous.

The problem is the market is in a state of contraction and the private sector is hemmoraging jobs. Earlier this week workers in Chicago refused to vacate their factory after getting pink slips. I can remember Pops, my grandfather, singing a little ditty about how many people it took to cut the grass at Boston Common under FDR's Public Works Progam "Two are sitting, two are coming, two are going and two are mowing." If job losses continue at this pace, we may be forced to put people to work in that way again simply so they can survive.

I'm not really sure people know how to restore economic growth in a way that will create jobs. The post-industrial cheap credit cheap imports model has been exhausted. In the process, China has accumulated some two trillion in US dollar reserves. We will be looking at them to finance our stimulus package, including an auto industry bail-out, in addition to their own, intended to stimulate domestic demand, which they will need in the wake of plummeting demand from the US market.

China has their own problems to worry about, like civil unrest. I can't say I'd want to swap positions with them even for $2 trillion cash, or whatever the real number is today based on the falling US dollar.

Looks like Paul Volcker is getting into the game which a lot of people think is a good thing. He takes the opinion that Americans have overextended themselves and the world has become dependent on the almighty US consumer for their survival:

http://www.latimes.com/news/nationworld/nation/la-na-volcker8-2008dec08,0,1221219.story

Pretty interesting read for what might be the future of America.

Nancy Pelosi and Barney Frank will design the perfect car, and everybody will buy it. Then, all of Detroits problems will be solved.

"car czar"

I could do that job -

Big 3 exec: We need a few billion bucks to tide us over until Americans start buying SUVs again.

Sarge the Car Czar: I understand. The problem is, we've done already spent a couple of trillion dollars that we don't have on the war on terror and the financial companies bailout. Sorry, but no way, Jose.

car czar ....here we go, government taking over private industry.

You mean it can get more horrendous than this??? As usual on JT, people making the point that government intervention is bad for a free market economy. Well, the idea that excessive intervention and damaging policies are bad is accepted by everybody, the difference is in how you define excessive. But I fail (as usual) to see how all that is relevant to this issue. The idea that government intervention can damage a free-market economy has nothing to do with the question of what a government should do when companies have screwed themselves all on their own, and the free-market economy itself has been damaged. Not saying the "No" side is wrong, just how about some better reasons for saying no.

Of course it can get much worse than now, and it will. Any central planning by governments cannot work, period. Government manipulation of currency/monetary policy that creates a bubble, a credit bubble through low interests rates for example(real world example). People consume stuff through credit, buying stuff that they cannot afford(houses, property, cars, etc.). Now you were saying:

The idea that government intervention can damage a free-market economy has nothing to do with the question of what a government should do when companies have screwed themselves all on their own, and the free-market economy itself has been damaged.

The free market, is non existent. There are many regulations and laws that interfere with the market, on top of government interference for example like bailing out banks! You think people want to invest in failing companies, then why should the taxpayer have to pay for a company that needs to fail. It is simple, do not rob Toyota/taxpayers(through taxes/regulation) to pay for GM/Washington Mutual. And it has everything to do with what a government should do when a company screws itself, which is NOTHING, let it fail!

The fact that you think the free market has damaged itself is ludicrous! The market is correcting itself from all the insane government laws, regulations, taxation, and manipulation(loans/credit to people who cannot afford them, companies that have alot of debt). Central planning again always fails! Let the Big 3 autos die.

"government taking over private industry"

And Obama is lovin' it!

I'm not really sure people know how to restore economic growth in a way that will create jobs. The post-industrial cheap credit cheap imports model has been exhausted. In the process, China has accumulated some two trillion in US dollar reserves. We will be looking at them to finance our stimulus package, including an auto industry bail-out, in addition to their own, intended to stimulate domestic demand, which they will need in the wake of plummeting demand from the US market.

The government should reduce laws/taxes/spending/size drastically and get out of the market. Let the collapse happen, get out of the way. Instead the government will continue trying to prop up companies that the market is trying to flush out, so all those workers in the auto plants can continue making products that no one wants to purchase.

The government was and is the cause of all of these problems, what makes anyone think that the government can fix the mess it created?

The government was and is the cause of all of these problems

And you have nothing to back that up except your ideology. But hey, it is your country, too bad you are not in charge. Having the US government do nothing would be a fun experiment.

The government was and is the cause of all of these problems, what makes anyone think that the government can fix the mess it created?

Not true. The problem started when "creditworthiness" was despensed with as the basis upon which to extend credit, principally mortgages, since that debt could be securitized and resold. In the past if an applicant defaulted it hurt the bank and no doubt the career of the person who authorized the loan. Once sub-prime mortgages were introduced, nobody cared if you could repay or not since the bank had sold the mortgage to an investment bank.

In 2000 a national banking law, sponsored by Phil Gramm but backed by Larry Summers and Robert Rubin, deregulated derivatives which spread financial losses from reckless lending throughout the global banking system. That law, still on the books, reinforced the false notion that markets would self-regulate and government could get out of the way.

This opened the door for the financial sector to take on portfolios that consisted mainly of debt, something regulation would have prevented in the past. Mortgage defaults were historically low, but once they started mounting it was clear something had gone amok. The only way to change that was to pump public money into the financial sector (which we have been doing), giving the banks money they can lend (to vetted applicants). Had the feds not done so, modern life as we know it would come to a grinding halt. No bank would have been able to extend any type of loan, which businesses need to expand.

The difference in bailing out business like the Big Three is that if they went under, it would not affect everyone in the same way as Wall Street being shuttered. Is it fair? No, but that's the reality.

Moderator: Please stay on topic.

Ever since his acclaimed service as Treasury secretary in the Clinton administration, Rubin has labored as a senior adviser and director at Citigroup, now being bailed out by taxpayers to the potential tune of some $300 billion. Somehow the all-seeing Rubin didn’t notice the toxic mortgage-derivatives on Citi’s books until it was too late. The Citi may never sleep, but he snored.

That a Hydra-headed banking monster like Citigroup came to be in the first place was a direct byproduct of deregulation championed by Rubin and Summers in Clinton’s Treasury Department (where Geithner also served). The New Deal reform they helped repeal, the Glass-Steagall Act, had been enacted in 1933 in part because Citigroup’s ancestor, National City Bank, had imploded after repackaging bad loans as toxic securities in the go-go 1920s.

Well, nobody’s perfect. Given that John McCain’s economic team was headlined by Carly Fiorina and Joe the Plumber, the country would be dodging a fiscal bullet even if Obama had picked Suze Orman. But I keep wondering why the honeymoon hagiography about the best and the brightest has been so over the top.

What we need is for these people to acknowledge their errors. Phil Gramm hasn't; according to him the problems are not the fault of the legislation he wrote which Summers and Rubin backed. But he's not returning to public office. Those who are need to restore confidence in their abilities.

The expansion of credit/debt was enormous, and it leads to the government inducing the boom in the supply of credit that led to increased car sales (from the big 3) that would vanish when all the phony wealth vanished when the credit bubble started collapsing.

HeathenCabin- you may be surprised that I agree with your last comment, but don't quite get how you think the US government was to blame. Clearly it was the management of the financial and mortgage companies (ie. Countrywide) who were taking advantage of the credit expansion to cook their books and boost their stock prices, and then cash in their shares and stock options. Relevance to this topic being that the Big3 were also in on the game, their business model becoming based on financing car sales rather than making and selling cars, and when the bubble burst they had to go begging for handouts. The government allowed and/or, as you say, induced the bubble in order to create the illusion that all was well with the economy. If you are right and it was induced, seems you should be arguing for better government not less government. Just because government is bad, it doesn't logically follow that having no government is good.