Obama Wins! - So What's Next?

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Okay, well, I agree with you on this point then. I believe, unfortunately, that things are going to get worse yet before they get better. How much worse, I'm not sure, but so far this issue has managed to exceed pretty much everyone's expectations (in a negative way) time and time again. I hope this is streak that is soon to be broken.

 

How so? Saying that "no amount of money can save a company" is not common sense. Your grasp of history isn't strong enough in this area. America has been through this before. The US steel industry was allowed to fail, while the auto industry has never been allowed to fail in the past. Most industrialized nations protect their large, important industries. In the 1970's industrialized nations competing with the US steel makers invested government money to create their own steel industries, while the US did very little to aid it's own steel manufactures. The result is that they failed. Most industrialized nations support their large industries; it is the US that is the exception to this.

At the same time that the steel industry was failing, Chrysler did get a govenment bailout, and did not fail, as is widely known. So historically a govenment bailout CAN work. The real question is if they should be allowed to fail. Obama does not believe that they should and is willing to invest into the industry. This makes sense, common sense, since we are about to undergo the conversion to new fuels during the next several years. The projections are that the conversion to green technology will create about 3.5 million new jobs here in the US. The retooling of the American auto industry is also a matter of national security in regards to the importation of foreign oil.

Then you should stop dealing in them. Saying that the "American middle class will disappear" IS a projection. It's your projection and it is based neither on "common sense," or on hard data. Of course, you started this by saying that it would be "Obama's fault," then it changed to mismanagment in the auto industry and I suppose it will be something different in the next few posts.

You said:

You were of course wrong about Obama raising taxes on business, and so you resorted to a new line of argument, blaming the auto industry. So which is it now?

Which ones?

For whom? It depends on your income level. While they are high, as a middle class American, I have no problem with any of these, and most middle Americans don't. You keep missing the real issues (like healthcare, that a lot people really can't afford). Of course you started out saying that Obama should nationlize healthcare and not have any tax cuts. Now you are saying that Americans can't afford the "necessities of life." I'm not sure where you are going with this, since you can't maintain the same line of argument for very long. First you blamed Obama's tax program, but now what? What really is your point about Obama that you fear most?

Which ones? Maybe you can be clear on that.

 

What really is your point about Obama that you fear most?


I don't know about Gnarff, but I'll weigh in on this question. While I myself would likely have voted for Obama were I an American, I still worry about some elements of his platform, just as I also worried about some elements of Mccain's.

I know what he says he'll do, but I fear the Democratic policies of taxing the middle class and giving handouts to lazy, undeserving slobs. Of course, the end result to my pocketbook wouldn't be any different than the Republican policies of taxing the middle class and then giving handouts to vicious buggers like Blackwater and Halliburton.

With any luck, there will be some tax cuts for the middle class, in particular small business owners, allowing them the freedom to use their income as they see fit. But I don't see that as likely.

Because the debt is huge, and many industries are suffering. Now, were I a middle class American, I would be thinking along these lines "when the auto industry makes a record profit, they give ungodly bonuses to their executives and say 'WE made this money and now we want to keep it. Hoooray for free enterprise!. But when they LOSE money, the executives still get some pretty hefty bonuses and say 'we ALL need to pull together!' Where was all this 'let's share the responsibility' talk when times were good?"

I understand that the little guy working on the auto line needs to keep his job, and that if he loses it there could be some effects on my life, but dangit, the executives making obscene profits should be held accountable for their mistakes and the money their stupidity costs taxpayers. I am also not talking only about the automobile industry.

I fear that the legacy Obama inherits will be quite difficult to solve, and that no matter what steps he takes, shortsighted people will lash out at him for not being able to fix the problem in 4 short years.

 

True, Obama will have to juggle a lot of expenses and find a way to make them work, and he doesn't have all that many things he could tap into. I personally wonder if his plan to scale down operations in Iraq (presuming he can actually carry through with it) ould make a noticeable difference in the budget. Sure, it probably isn't all that much in the grand scheme of things, but perhaps a 40% decrease in costs might free some money for programs at home.

 

Well, there's no two ways about it, he just walked into a real mess of a job. He'll either get crucified for not fixing GWB's mess, or, prove a lot of folks wrong and help bring about some meaningful change and improvements. Either way, it's not going to be an easy road to recovery. He's really got his work cut out for him.

 

So you can just write a check and make up for decades of misguided and lazy research? The Big three have lagged behind in terms of fuel efficiency and hybrids--things that are very popular now. That's reflected in their sluggish sales figures. I believe that the damage is done, and that at least one of the big three is going under because of that. Not even the bail out can prevent that.

If he plans to tax rich people and continue to throw money at problems that are beyond what money can fix, then he will take his share of the blame, and make GWB look like a genius.

Not just the auto industry. Look at the financial crisis. That was mismanaged as well. Look at how many mortgages went out that shouldn't have, and how many mortgages were bigger than they needed to be? The piper must be paid, and Obama can't just throw money at the problem or else it will never go away. Perhaps keeping the industries on life-support while they figure out how to solve their problems could work, but if they get too generous, then they have a new income stream--government handouts.

Ask me new questions and I'll discover new problems, likely also beyond Obama's control. Obama's questionable taxation policies (I'm not sold on his income tax policies to begin with) added to the mismanaged automotive industry and financial sector spell disaster. The new problems that get exposed will simply pile on to the ultimate collapse.

For starters, the over-reliance on credit. You've pointed out that housing, education, vehicles, business investment do require credit, and I don't challenge that, but it has to be used intelligently. Look at what you need and try to get the best deal you can, and make sure that you can and do pay it off. Don't leave these debts haning over your head, sapping your resources with interest any longer than you need to.

Second, Ignoring customer demand. This one is killing the automotive industry. Yes, the big pickup trucks, Minivans and SUV's are nice and handy, but can you make them more fuel efficient? Can you make them in a Hybrid? If these things are neglected by domestic manufacturers, foreign manufacturers who have thought about these things will swoop in and take those sales.

Third: Price gouging. If you price the important things out of the range of the people that need it, either they go without, or they go into debt to get them, only to default when they can't pay for it. Also oppressive interest ultimately deters consumer spending on luxury goods. Once the customer is at their limits, the interest drains their resources to the point where they are not able to spend like the economy needs them to.

I'm sure there are many other things that need to stop, and as we continue these discussions, they'll be exposed...

But if they could be made cheaper, you, and others in your financial situation would have more money available for consumer spending (even after increasing your savings), and that would benefit the economy. But there are many out there that are not as well off, and have to settle for lower paying jobs. Keep these costs down, and there is more money to save for emergency and to buy a few little extras. If these people can live without needing credit just for the basics, the economy will ultimately be healthier.

If you go back a couple pages, you'll see a post I wrote with 8 things that Obama has to do to succeed as president. Nationalized healthcare was at the top of the list. That should be government funded. Even with negligible income for the last several months and little to no savings left, a period of hospitalization would not be a financial disaster for me because the government will pay for my medical care. To save the US economy, that level of security is important...

Perhaps the tax system itself is flawed. By replacing a degree of income tax with a sales tax, which would exclude the basic necessities, but tax most other goods and services, like we have in canada would solve that problem. It would reduce the base cost of living by making the cost of housing, utilities and groceries cheaper, but still make money off the consumer spending on other goods that are "luxury goods". It will probably result in more money than the income tax would have generated. This could go towards Healthcare...

Iraq, Afghanistan and the rest of the Middle East. He can't pull enough troops out of Iraq. That's a hornet's nest that will only be a lasting danger without some foreign stabilizing force. Then there's the talk of finding Bin Laden. If Osama was in Afghanistan, you'd think he'd have been found by now. He's hiding in another country, and just waiting for the Americans to give up, go home and then they strike again, trying to pull them into another war. Meanwhile, Obama is still promising support for Israel. While yes, it's the right thing to do, it pisses off the more extreme Islamic factions and nations that have beefs with Israel. Obama is over his head in the middle east.

Moral issues. You see the protests in California after the people have spoken on Proposition 8. That's an issue that is not completely resolved on several states. No matter what side Obama takes, a large portion of his support base will be offended. Does he push for Gay marriage and risk losing California and it's 54 votes in the Electoral College? Florida also voted to protect traditional marriage, would such a move cost the Democrats Florida? But if he goes with the majority, has he betrayed the Liberal Democrats he is one of? Then you have other politically contentious issues. If Obama's not careful, he'll spurn enough of his support base to give the whitehouse back to the Repubilcans. There may well be answers there, but you'll forgive me if I lack the sympathy for the gay community to delve into that in light of their recent actions in California.

I guess it's the fact that he will try to change things, make a mess that will compound the same old bulls*** that you and others have been *****ing about since I've been here. I just believe that fixing the problems are ultimately beyond his power, but his attempts to fix them will make matters worse instead of better.

 

Language, Gnarff. Language. You don't want to become me, now do you?

I mean, I want you to become me, but that should make you worry.

Anyway, the proper way to bailout the autoindustry is to subsidize the takeover of US automakers by Japanese automakers.

No, not really. There is no proper way to bailout the autoindustry. Aside from maybe mandatory restructuring and chapter 11.

 

But Amaster, you can't restructure the auto industry without pissing off the unions who helped vote him into office in the first place.
obama's biggest problem is he promised so much to so many different groups that he is going to have to alienate some to appease others. I personally can't wait to see it all explode in his face & see how he tries to spin it.

 

Yes, but that's because you hate freedom. Traitor.

 

Oh No!! You found out i was really achmed the dead terrorist!

 

Careful, traitor is a dangerous word to use on these boards.

 

When forced to choose between honesty and decorum, I take honesty. I'm a Redneck*...

* Jeff Foxworthy describes rednecks as posessing a "Glorious Lack of Sophistication"...

1: Get a clue what the people want. Easy enough, look at the foreign models that have been kicking your ass in the market for years and see what you can learn.

2: Develop a plan to deliver what the customers want.

3: Cut the frivolus expenses you can (like private jets for executives, corporate bonuses).

4: Don't touch wages or union benefits. Raises or increasing benefits can wait if it means the workers still have jobs...

5: Figure our just how much you need to keep from going bankrupt.

6: Then AND ONLY THEN, do you go to the government with your hand out. It's about accountability for the money you borrow--that's right, borrow--from the people. The taxpayers do have the right to some interest, but it would likely be less than the creditors that are ready to forclose on the loans that you are struggling to pay were charging you.

I'm not so sure of that. It just means that the fat cat executives need to have their ass on the line too. It means that their bonus is tied to the actual results of their decisions.

I have a feeling that if he's not careful, in four years they'll be saying he's worse tham GWB...

It has to! There is no way around that. If these corporations don't learn to do for themselves, then there will be nobody to buy the goods they flood the market with...

 

I really don’t get this “give the consumers what they want” stuff. For years, the biggest sellers in the US have been gas-guzzling pick-ups and SUV’s. So the Big 3 have been giving American purchasers exactly what they want. It’s only in the last couple of years or so that smaller, more fuel-efficient vehicles have become more popular in the States.

The reason non-US manufacturers have such a head start is that European and Asian markets have wanted smaller cars for a long time, and these manufacturers have been supplying that demand. U.S. automakers, on the other hand, focus on the American market first, where the demand for big vehicles has, until recently, been strong. It takes several years to bring new models on stream, and I think the Big 3 had started shifting attention to smaller vehicles, but they couldn’t react quickly enough when the market unexpectedly collapsed.

I’m not saying that U.S. automakers are completely blameless here. But American consumers have to share some of the responsibility as well for sustaining a demand for big, gas guzzling vehicles that most people who buy them don't really need.

 

Splunge, are you saying the answer is to *gasp* diversify?

 

That's called politics and it happens to all of them. I still remember GWB, during the debates with Al Gore, saying that he would "never engage in nation building," and that he could not understand why anyone would. Or (even better) that he would never send "American forces into combat without a clear exit strategy." We know how that turned out.

But let's look at a few items here regarding the auto industry:

The first item is that Obama is still not prez (and won't be for almost another 60 days). So it will be Bush who will probably (but not for certain) have the first go at the auto bailout; it is still essentially Bush's problem, as well it should be.

Second, it was not just the UAW, but most of the state of Michigan that helped to elect Obama. Thusly, he has quite an incentive to protect all those jobs there. That's something that will be the real "change:" a political party that actually gives a damn about the American worker (a new concept of late). I still remember Mac turning tail and running from Michigan just a short month ago, and Palin commenting that, "she and Todd were ready to go there and campaign," regardless of what Mac thought. And that she was "going to fire off an email" regarding the campaign in Michigan. If she was not serious, she would be comical.

Third: The politcal and economic dimensions of the car business have changed again with gas at 1.86 a gallon. Some American consumers will return to the gas guzzling Detriot monsters once again, since their gas bills won't be higher than their car notes. There may be an about face in the industry once again, but that is still pending....

You are absolutely correct Splunge and the consumer data supports your claim. Here's a forum link from a few short years ago, with all the big sales news of 2006 (check out of the bottom of the link).

http://forums.motortrend.com/70/1031284/the-general-forum/gm-sales-up-enormously/index.html


But don't confuse Gnarff with the facts of an issue....

 

But the writing was on the wall long before that. With the growing interest in the environment and the slowly rising cost of gasoline, these companies should have been prepared for such changes in the market, but were ill prepared when the changes did happen. A disaster that could have been averted had the Big 3 shown a modicum of foresight.

Ignoring the potential for an export market? Especially when your competitors have shown that it is feasible and profitable to export cars into the US? That's just stupid...

Agreed, but I just don't think he can do that. It is just beyond the scope of what politicians can do.

Possibly, but that demand may not return to what it once was. I believe that some will take the struggles with high fuel prices and the potential for that to happen again as a warning, and will still look for better fuel economy in their vehicles. If foreign automakers make their vehicles to more demanding standards yet still do what the consumers want, they could still edge out the big 3...

 

Thanks for the stats, Chandos. I knew I was right, but I was too lazy to back it up. That's why I generally don't do so well in these types of agruements.

Well, I agree to an extent (that's why I said the Big 3 aren't blameless). But really, if your best-selling products are gas-guzzlers (with the best profit margins), that's where you're going to direct most of your resources to. They were also expanding into more fuel-efficient models, but not quickly enough.

I don't believe that I said it was the smart approach, but it's also not particularly surprizing. Also, it should be noted that the Big 3 do make cars not available in the U.S. Here's a few (this time I'll provide a link ):

gm + ford vehicles not available in the us

 

The largest foreign makers don't "export" many of their products here: they build them and sell them here, which is why most Americans are not that concerned about Detroit. BMW, Toyota, Honda, etc, all have large plants here in the US and employ thousands of US workers. And many of those workers are UAW members. But this brings up the other side of your rant about the big 3 auto makers and that is that they are not alone in what's happening to the economy.

Will Obama have to bail out Toyota or Honda next? Didn't someone once remark, "It's the economy, stupid?"

http://www.bloggingstocks.com/2008/11/19/unsold-foreign-cars-piling-up-at-u-s-ports/

This is where your ignorance of business is so painful to read. The price of gas did not rise slowly, but quickly and dramatically. It caught most of the world's economies by surprise, just as the recent dramatic decline in prices has.

The whole "the handwriting on the wall" comment is exactly what those of us on the left have been arguing for years, as not only a matter of good business but also regarding the issues of the environment and personal responsibility as well. And a part of the Bush, Republican culture of the last 8 years was that it was every American's right to own a gas guzzling pickup or an SUV and someone better build them for us. The War in Iraq is, in part, exactly about that. If anyone should be bailing them out, it should be Bush and his Republican cronies. The big 3 were just giving that market what it demanded - You know, supply and demand, the free market, and all that good stuff...

Your entire argument is flawed because, again, you are trying to narrow the scope of your point to just the price of gas. There are many factors that are playing into the Big 3's problems - and some of it IS of their own making - but a large part of the problem is still the economy. "It's the economy,...." And no matter how hard you guys try, Bush still owns it.

 

But fuel consumption was NOT the reason these vehicles sold as well as they did. It's comfort, function and utility. The Big 3 could have put more emphasis on delivering these vehicles but a little more fuel efficient. They didn't do that, and they are paying the price now.

Maybe not in Texas, but here in Canada the price has gradually risen over the last several years, then it took the sharp rise, which did catch us by surprise. My comment stands.

And how's a handout from the government supposed to fix the problem?

You're really stretching to blame Bush for this one. The prevailing opinion was that big trucks and SUV's were cool. The big three neglected their research and did not make these vehicles more fuel efficient, and when the gas price shot up, they weren't prepared for the gravy train to dry up. It's fat cat executives that take the blame, not Bush.

And neglect the misuse of the profits from previous years. I've been saying that they've been neglecting research. Okay, I didn't get to the private jets and other executive perks that the companies waste money on. And when the automakers need to borrow money, the lenders are also begging for money too. Further, with job losses coming, there's going to be fewer people with money to buy new cars. People buying too much **** that they didn't have money for is what got the banks into trouble that will get worse before it gets better. I didn't say it was strictly the gas prices, that's just one thing I talked about more than other things.

No, Bush was in the office when the piper demanded to be paid. Like many things, the groundwork for these problems was laid long before Bush's old man took office. And in January, the piper's still there waiting got Barrack to shell out...