"Obama took GM and Chrysler into bankruptcy" WTF - Obama bailed them out so they wouldn't go bankrupt.
Most people were against it but he helped them out anyway to keep them afloat and their workers employed. So how does this attack make any sense?

>> ^jimnms:

...Jeep removed weight not added. They worded it strange, but read it again, it says "Jeep-Chrysler loaded the car with 470 kilos (1 036 lbs), 132 kilos (291 lbs) under the official maximum payload." The previous tests were performed at the maximum official payload the car can carry.
It looks like Jeep could fix it with a suspension upgrade. The Jeep compared to the other two vehicles rolls farther into the turn and bounces where the other two roll into the turn without the bounce.


I was quite confident that you were wrong ...and then I actually read the documentation from the link in the description. It does seem that the initial tests were performed with the vehicle at maximum payload and then they (Jeep engineers or the testing company? both?) removed weight (100kg) for followup tests. So, thanks for setting me straight! In particular, it makes me more impressed with the other vehicles that apparently can handle the increased stress on the tires even at full payload.

That being said, some of this just doesn't seem to add up to me. It seems that after they subtracted weight, they blew the tire in a great majority of the tests (7 in 10?). That kind of failure rate, at or even below the "maximum payload" suggests that the official load ratings are screwed up. The information from the testing team says that there was some discrepancy between Jeep's listed curb weight and the actual curb weight of their test vehicle, and other weird stuff. Suffice it to say that I'm much more confused about their test procedure, the actual sequence of events, and why they were hoping to improve the results from the first (?) test by removing weight.

Interesting comments thread here all around.

@Stu If a kid runs out in front of your Jeep, are you going to "pink mist" it too? It should be renamed to the high speed avoidance test. We have lots of deer down here and they say the same thing about deer too, to just hit the breaks and take the hit. Of course that never happens as you instinctively want to avoid the crash, so we get a lot of good 'ole boys rolling their trucks over swerving to avoid hitting a deer.

@charliem and @MilkmanDan Jeep removed weight not added. They worded it strange, but read it again, it says "Jeep-Chrysler loaded the car with 470 kilos (1 036 lbs), 132 kilos (291 lbs) under the official maximum payload." The previous tests were performed at the maximum official payload the car can carry.

It looks like Jeep could fix it with a suspension upgrade. The Jeep compared to the other two vehicles rolls farther into the turn and bounces where the other two roll into the turn without the bounce.

Ah Chrysler...you ruin everything.

Some sort of spending policy was needed, but the bailout as it was put forth was pretty dismal in it's results. The companies that received it were the ones who created the mess for the most part (banks), and we really still haven't addressed punishing them OR putting laws in place to either:
A) Punish them if it happens again, really the laws now should be sufficient.
B) Make it impossible to happen again....all those acts, they repealed over the last 20-30 years.
C) Prevent some of the more insanity driven investing, such as over abundant speculation and similar cost creating but non-value creating (Call it a Private Tax, if you will) things.

Really the more I look back on the bailout, and look at the attitudes of most of the politicians at that time...they were saying let the auto industry fail. But the bailouts to the auto industries have at least halfway been paid back. Chrysler is likely going to short the government 1.3 billion last I read. GM gave the government stock and 22 billion. Stock is worth about 13.5 billion. They borrowed 50 billion. So 28 billion is what we have to get out of that stock to recover fully. And as far as I know there is no interest accumulated, so losing money in those deals is a kick to the crotch considering.

I think the auto industries might have been able to enter bankruptcy and come back out of it with some lessons learned. But vehicles like the "Volt" show that......they don't really know who they are selling to. Chrysler ended up being taken over by Fiat. And Ford handled it's own business. The one in the worst shape was GM, and I can't say that they probably didn't have it coming. And they still ended up pretty much killing the economy dead in my area despite the bailout when they shut their plants down that they really hadn't "kept up" in DECADES...place was really dumpy looking. No one would take it over because it was just utter trash when they left. I'm more against than for the bailout of the auto industries, but I can see that they were probably beneficial there although GM seemingly learned nothing of note from it.

Banks on the other hand......they took in 1.2 trillion. And a bunch of the borrowed money went to European firms. Along with other financial institutions. And many kept taking loans into 2010.

http://www.americanthinker.com/2011/08/that_federal_bank_bailout_in_2008_was_bigger_than_we_knew_a_lot_bigger.html

Has lots of info on it. I haven't taken the time to confirm every last portion of it, but we know the bailout/loans of 2008 that were announced ended up being MUCH larger than they told us. So the information is kind of hit and miss since they kept it hush hush for awhile.

But, the money was to help keep the banks off people's backs about foreclosures. It hasn't, in fact they took the money and foreclosed anyway to get both the cash to make it possible to allow the person to keep the house AND the house. That should be criminal.

The bailout of those institutions probably did stop a economic meltdown, but I think that bailout still should be criticized. The people who caused it suffered no punishment by law, financially, or by failure. And they have been fighting have regulations and such put in place to stop it from happening again and from practices like speculation being allowed in such quantities. It's affecting the oil prices and they are using it as a argument for "foreign oil" ALL the time.

Sure the bailout saved us from financial meltdown, but we aren't safe from it happening again. In fact we're probably even more precariously perched at the edge than we were before, and people are making money off that instability. If they could have made money during the total collapse, I don't think they would have gotten bailout to all those institutions.

So, we should criticize the bailout, simply because it has made it possible for the people who control the money to continue making money, and no one has corrected the conditions that caused the collapse in the first place. The people who caused it keep on keeping on, the politicians get some money stuffed in their pockets, and the people who got hurt most by the crash whether you lost your house, job, savings, pension, etc are just lined up to be knocked down again and no one is trying to fix it. The people who had money to weather the crash, are recovering and the people who didn't are still hurt by the crash they had no way of avoiding.

Too big to fail institutions are still too big to fail. Now they know that they can leech all the money from the government whenever they start to lean a little as a collective. Nothing was learned by anyone there, because nothing ended up happening to them besides some bad press...when they should have gotten a major investigation that was more like a full cavity search to determine wrongdoing.

LOL! So if you get google hits, that makes it true?

Hmm...

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http://www.lmgtfy.com/?q=George+W+Bush+Satan

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Rock me, Sexy Jesus!

Dude, seriously, nobody is buying your BS. How in the hell can Obamacare cost millions of jobs when it's not in effect fully, and unemployment is decreasing? *DECREASING!!!* You have no evidence. You have dubious claims based of crackpot analysis that are there to reinforce your delusions about reality. You WANT to believe that's true, and a quick google search where a bunch of rightwing think tanks and media outlets threw up a bunch of crap reinforced it. I could try to google stuff to show it's helped CREATE jobs if I wanted to on liberal think tank pages, but I'm not going to, because I don't have a preconceived outcome I want to be true. If Obamacare works, great. If it doesn't, it doesn't. For the record, I'm not even saying it won't cost jobs. I'm saying it's ridonculous to describe the impacts of a program that's not even fully implemented yet on a complex economic system!

So I guess Reagan was a dirty commie for bailing out Chrysler?! You're arguments are absurd! Your solution to our economic problems was to let Chrysler and GM go bankrupt and balloon unemployment beyond the 10% that it was?!?! Do you have any idea how macroeconomics actually work?! There's a reason why Reagan and Obama both bailed out Chrysler. Had Reagan been president, he would have bailed GM out, too. You know why? Because thankfully, both men when push comes to shove threw ideology out the window on the really big things and did what was best for the country. Lord knows I objected on principle that the banks got bailed out, but it had to be done for the good of everyone. Here we are, several years from those decisions, and unemployment is declining, and the economy is rebounding. You can link as many right wing articles as you want as snarky as you wish to be, but guess what - the policies worked. And I'd say the same thing to liberals who objected to the bank bailouts, too. But the bottom line is the policies are working.

http://data.bls.gov/timeseries/LNS14000000

Sorry, but you're wrong.

>> ^quantumushroom:

Call an ace an ace - this worked. Obama continued a working policy.
Taxpayers on the hook for billions they'll never see recouped: NOT success. These same companies expecting the same bailouts again down the road? NOT success. While we're on the subject: Medicare fraud to the tune of 60 billion EVERY year? NOT success.
Bush was wrong and His Earness was wrong. These corporations should have filed for bankruptcy.
And stop with the Obamacare costing millions of jobs. You don't have any evidence to back it up.

SIGH.
These weak sauce "success" stories are nothing more than obamedia shills defending their king.

P.S. LIBERALS run Detroit and have for decades. Until that changes, it has NO chance.

I also wanted to point out Ronald Reagan bailed out Chrysler. This is what kills me about conservatives. It was the right policy. It doesn't matter what party the person who does it is.

>> ^xxovercastxx:

Do you believe that the demand for cars would have decreased if the big 3 went under? If so, please explain how and why.
I think, if the big 3 tanked, people who would have bought those cars would still need cars and would have bought cars from other manufacturers. That means increased business for those other manufacturers which means they place more demand on the material manufacturers, the parts suppliers, etc. Some of that demand would have manifested overseas, but I believe much of it would have gone to the same businesses that Ford, Chrysler and GM use. After all, as I said above, there's lots of other manufacturers that do assembly here and it's easier and cheaper to have your suppliers nearby.
No, like you say it's mostly a supply-driven story, not demand-driven. My point is that dismantling the Detroit-centered auto manufacturing infrastructure would be a huge shock to the American economy.

Like you say, eventually the economy would readjust, but even in a good economy it'd take a long time for it to adjust to a shock of that size. In a time where the financial markets had just gone into a crisis of historic proportions, it might've taken more than a decade.

A decade in which that circular flow is moving more slowly, dragged down by all the human and industrial capital that we leave idle as workers in Detroit look for new jobs, and while we wait for the prices of Toyotas and Hondas and BMW's to rise in response to the decline in supply, then wait for those price increases to build up as excess capital to the point where those companies decide to invest in opening new factories to meet the demand.

In the long run, the circular flow of our economy would eventually get back up to the rate it was at before, but in the long run we are all dead.

Or instead we could spot 'em 50 billion and avoid taking that kind of hit. Unless of course, you think there are inherent insurmountable problems with Chrysler and GM that can't be fixed with new management and some debt forgiveness?
>> ^xxovercastxx:

All the independent analyses that I read back in 2008 concluded that the cost of the bailouts vs letting the big 3 tank was close to a wash.

I'm not sure if the analyses you looked at were talking about the overall macroeconomic effects, but I bet not. I bet they just looked at "will it increase the government's debt load?" That's all most investor analyses do in situations like this.

The analysis I'm talking about would be comparing GDP forecasts with the bailout vs. without.
>> ^xxovercastxx:
There's also a cost to other businesses that comes with these sorts of bailouts that is rarely mentioned. I used to work at a small property insurance company. When the economy got rough, they played things smart. They minimized their risk, invested heavily and were one of the only companies of their kind to maintain a profit through the whole debacle. AIG, on the other hand, bet on high risk business and lost fortunes. They got a government care package and put themselves back together and now, as a result, are destroying the insurance market. My old company is struggling to stay in business (next year is their 100th anniversary) and AIG is swimming in ill gotten money.

The smartass in me wants to say "what's the cost?" After all, both companies made a profit. What's wrong with that?

But seriously, you're talking about "moral hazard". Believe me, that's not some topic nobody talks about, it's what right-wing economists and business journalists scream as loud as they can whenever there's talk about government stepping in to stave off major disruptions in the economy.

The my answer is that bailouts shouldn't be no strings attached, like the bailout of AIG was. The management of the companies that get rescued should lose their jobs, and be stripped of all their personal wealth. Depending on their actions, maybe tossed in jail too.

That way the value of company itself is preserved (and not liquidated), while there's a strong disincentive for the management to make a business plan that centers on expectations of being bailed out if the shit hits the fan.
>> ^xxovercastxx:

So the question I pose (and I know we can only speculate on the answer) is what effect have the bailouts had on Toyota, Honda, etc? Or do we not care because they don't employ as many Americans as the domestics?


Since this comment is approaching an epic length already, I'm just gonna say that it wasn't really about foreign vs. domestic ownership, but about minimizing the number of years we stay below trend in GDP during a severe recession. If you want to view it as a region vs. region dispute, it was also about keeping the perfectly good Detroit manufacturing cluster from being needlessly dismantled and rebuilt elsewhere.

You're right - this is all mostly speculation.

I believe that if the GM and Chrysler had failed, consumer confidence would have collapsed and Americans would have deferred their new vehicle purchases or bought used cars. As it was, auto sales were down 18% in 2008.

The failure of GM and Chrysler would have removed something like 33% of U.S. vehicle production, and 4% of all U.S. manufacturing. Everyone else would have maximized their production to make up for the loss, but it would have taken years to replace that amount of production.

Meanwhile, the 1 in 30 Americans residing in the State of Michigan start living in Mad Max times.

I think it is one of the functions of government to provide a buffer between the people and the wild throes of relentless progress inherent in free-market capitalism. The government bans things like slavery and child labor, not because it makes financial sense, but because it is the right thing to do. I think there is a similar justification for the automotive bailout. The bailout prevented human suffering on a massive scale. That is why we should care about saving those jobs.

IMHO

>> ^xxovercastxx:

>> ^NetRunner:
People also forget that it wasn't just people who work for GM and Chrysler whose jobs were saved. There's a whole supply chain to think about.
Do you believe that the demand for cars would have decreased if the big 3 went under? If so, please explain how and why....
... So the question I pose (and I know we can only speculate on the answer) is what effect have the bailouts had on Toyota, Honda, etc? Or do we not care because they don't employ as many Americans as the domestics?

>> ^NetRunner:

People also forget that it wasn't just people who work for GM and Chrysler whose jobs were saved. There's a whole supply chain to think about.

Do you believe that the demand for cars would have decreased if the big 3 went under? If so, please explain how and why.

I think, if the big 3 tanked, people who would have bought those cars would still need cars and would have bought cars from other manufacturers. That means increased business for those other manufacturers which means they place more demand on the material manufacturers, the parts suppliers, etc. Some of that demand would have manifested overseas, but I believe much of it would have gone to the same businesses that Ford, Chrysler and GM use. After all, as I said above, there's lots of other manufacturers that do assembly here and it's easier and cheaper to have your suppliers nearby.

All the independent analyses that I read back in 2008 concluded that the cost of the bailouts vs letting the big 3 tank was close to a wash. That, at least, made me feel a little bit better about the horrible message that we sent by going forward with them.

There's also a cost to other businesses that comes with these sorts of bailouts that is rarely mentioned. I used to work at a small property insurance company. When the economy got rough, they played things smart. They minimized their risk, invested heavily and were one of the only companies of their kind to maintain a profit through the whole debacle. AIG, on the other hand, bet on high risk business and lost fortunes. They got a government care package and put themselves back together and now, as a result, are destroying the insurance market. My old company is struggling to stay in business (next year is their 100th anniversary) and AIG is swimming in ill gotten money.

So the question I pose (and I know we can only speculate on the answer) is what effect have the bailouts had on Toyota, Honda, etc? Or do we not care because they don't employ as many Americans as the domestics?

People also forget that it wasn't just people who work for GM and Chrysler whose jobs were saved. There's a whole supply chain to think about. Ohio's job market was helped out a lot by the auto bailout because we have a lot of companies who supply parts to GM and Chrysler here.

And of course those effects just keep rippling out, because people who kept their job at the parts supplier also spend their paycheck in the local economy. They buy houses here, eat in our restaurants, shop in our stores, etc.

People seem to have this notion that economic growth is all about profits, but really, it has more to do with making sure money keeps turning over in the economy. You want people to spend money on things, so people selling things have money to hire people to make more things, which gives those people money they can use to spend on things. You want money to flow in a circle, so everyone's kept employed making more stuff which over time makes us more prosperous.

Something like the liquidation of Chrysler or GM would've been a major disruption to that flow, right at a time when the financial crisis was creating a giant disruption of its own.

The bailouts prevented those disruptions, and the amount of money it saved us versus the alternative is much, much greater than the costs of lending the money to GM and Chrysler would be, even if we never got a dime back from either one.

The argument that we should let massive faltering corporations fail so that they can be rebuilt or replaced with more effective and efficient competitors is appealing.

However, the devil is in the details, and in the case of GM and Chrysler, there would be a tremendous human cost in the short term (directly from unemployment and indirectly through the impact to the domestic economy already mired in a recession). The purist argument of letting them fail has an idealistic value but there are times where a compromise, a managed recovery, will get most of the benefit with a fraction of the cost.

The perfect is the enemy of the good. I think the bailouts were an imperfect and distasteful solution that worked without destroying the livelihood of thousands.

Since the bailouts did happen, I'm glad they worked, because the worst case scenario obviously would have been that we dumped millions of dollars into these companies and they still tanked.

But I still would have preferred we let these companies fail, or they pick themselves up and turn things around like Ford did.

American cars have sucked for 20+ years now. They couldn't compete on a level playing field so we put tariffs on foreign cars to artificially raise their prices. On a slanted playing field, American cars still can't compete. Why? Because, overall, they're garbage; that's why.

We already voted to let them go out of business by not buying their cars. Anyone who steps in and says, "No, I'm sure you all really want the exact opposite of what you said, so we're going to loan them your money." is totally out of line. No means no.

Would it have hurt the job market to let them die? Yes, unquestionably. But the demand for cars does not decrease because companies go out of business. If GM and Chrysler sank, it would have been a huge opportunity for Ford to grow to fill the gap. Toyota, Honda, Kia, Mazda, Hyundai, Mitsubishi, and Nissan all have American plants as well, so jobs lost to foreign manufacturers aren't necessarily lost to foreign workers.

JeeSuss Chrysler drives a Dodge

More generally, I think it's funny that they show all these complicated, inefficient, impractical biological systems and then claim that these crappy designs must have been God's doing. You'd think an omniscient, omnipotent God could have done a better job than your average Chrysler engineer.