Congress is Ignoring the Wisdom of the Investing Crowd

Why is it you make it sound so understandable and simple. I couldn't agree with you more. If the government bails them out, what prevents them from doing and AIG and coming back for more? Who is going to keep on eye on them and see how they spend our money? Let them declare bankruptcy, renegotiate all of their contracts, let the workers join in the fight to keep their company afloat. Much like the airline pilots, baggage handlers, stewards and stewardesses,etc.

Great article. I grew up with GM, Ford, and Chrysler for 30 years. Switched to Acura because of the quality and price of their automobiles. Drove my first Acura for 10 years and had over 205,000 miles. I am on my second Acura and it should be good for another 10+ years. For over 15 years, I have been driving an Acura which gets 35-40 mpg. Why have the BIG 3 waited until NOW to start to develop a car that consumers would want to buy? They have been out of touch with the consumer for way too long! As a consumer, I can't support American made. The labor unions are causing too high a price tag for an automobile that is not quality. We have had several gasoline crises and management for the BIG 3 didn't get on board. Consumers are too savvy for the BIG 3. Now it will take the BIG 3 years (if they even listen to what consumers want) to make a profit. Let them shut down and learn from Acura, Honda, and Toyota brands. Why should the taxpayers have to bailout another financial problem created by mismanagement at these companies? M Abbott

This is becoming the biggest Joke played on us. The problem is the only folks laughing are the leaders sitting at tables deciding what do do with hard working peoples tax money. I'm so sick of the incompetence and lies that come from their mouths as they smile and MUG for the cameras.

Bankruptcy would be the best thing to happen to any one or all of the big 3. Would it represent a great deal of pain for the American worker, taxpayer, and economy? Absolutely! However, there is a big difference between bankruptcy and insolvence. A bankrupt GM would be able to sell of manufacturing plants and office buildings to companies that are base overseas, but build here, and a portion of these workers would be hired back, albeit at a lower salary. The simple fact is that when the unions were proudly granstanding at the podium in the mid-late 20th century, today's insolvency was all that they accomplished. Pension plans funded by the company for the worker just cannot work. It is one of the biggest reasons that the big 3 are in trouble today, and it is one of the biggest reasons that the Gov't has deficit spending year after year. This removal of personal responsibility from the worker is the greatest defeat in the history of business.

The first automaker in trouble was Chrysler. Lee Iacoca (sp?) took charge, had a simple design, union concessions, and Chrysler received a LOAN from the US Government. He demanded that they cut where it was necessary, make money, *and* paid it back early: Management. I've heard it said that GM is a "benefits and retirement company that makes cars on the side" and I can't disagree. The wages and union dues are high, as are their political contributions. Is this what's known as "Payback time"? No matter, the US CAN make good cars: The '93 Olds minivan that I had lasted for 263,000 miles, the '99 Chrysler lasted for 252,000. Whats wrong with that? It's the management that's always been the problem! Now I drive a "foreign" car that should last for 300,000+ miles. Giving companies $B means they will not appreciate it (AIG, GM, etc.), make them EARN it and then they have some skin in the game!!

Brian just mentioned something about a change in the dividends process as part of the Bailout Package but he did not finish his thought and I have not hear/read anything about it. Can someone let me know what he was refering to? Let the Big three fail and restructure without unions, then we will see a healthier US auto industry.

Excuse me, but it isn't the labor unions that tell the CEOs what kind of cars to build or how to structure their service plans after the sale. It was also the CEOs and executives that signed the contracts. Given their (CEOs and mgmt) lucrative salaries and bonuses they should have known that gas was going to go up and restructure their production lines to accommodate the change in demand by the consumer. That is why they earn those huge bonuses! Now the unions get blamed for management's inability to compete. Amazing. What hypocrisy, be outraged at excessive CEO pay then blame the unions for the company's woes.

I can't agree with all the comments about the big 3 not making good cars. Just traded in a 95 Jeep with 280k miles on it. The car before that was a Dodge Caravan, 185k miles, before that a Chevy with 175k miles on it. You just can't argue with that. I now drive a Ford Fusion that has a 4 cyl engine and gets 30 mpg. Beautiful car, lots of room, plenty of power for a 4 cyl and 30 mpg. I would compare it to any rice rocket. You are American, you live in America, buy American. Just a question, when was the last Oriental you saw driving an American car? I can't remember one. Let's learn a lesson. As I stated earlier, I don't believe we should bail them out. Let them renegotiate their contracts and lose some of the management fat in the middle.

Has anyone reviewed these "Bail Outs" for effectiveness? AIG got bailed out with $85 BILLION; then goes on a high end "Company training meeting" to the tune of $440,000 AFTER they get bailed out.... Sounds like a good use of bailout money to me. How many times has the UAW threatened each of the Big 3 car makers that if they don't get their way they will STRIKE and COST the companies MILLIONS if not BILLIONS in lost revenue. These are the same UNIONS that now do not want ANY cuts and ONLY want BAIL OUT money. So, what are WE (the new investors) going to get in return? Still a bunch of whiny Union Execs that only want to come to the table AGAIN and AGAIN to demand MORE AND MORE! We cannot afford this! IF the Unions make NO concessions prior to any LOANS then LET THEM GO UNDER and file for BK. Then we can see how much the UAW will balk if there are NO jobs to be had at ANY price. The airlines did it successfully in most cases; then so can the UAW. I believe that if GM, Ford and Chrysler all file BK; lets see how the UAW wants to handle even having a job for SOME of their members. If we simply BAIL them out AGAIN, what stops them from coming back again after they have their HUGE company party and want millions more? Let them loose a few jobs, cut the UNION bonuses, cut pay on the line workers or some benefits and let them FEEL the pain of Management continually capitulating to the Union Demands to the point of becoming uncompetitive with foreign competition; then we can discuss any cash needs -- ONLY AFTER the UAW makes some UPFRONT concessions -- NOT before. BEFORE we throw money at this; what will be the fundamental shift in the current paradigm so that those of us who are unwilling participants in the rescue effort for poor management decisions are now on the hook to help pay for it all? Where are MY stock shares in these companies? What benefit is it to the average "Joe" out here for us to be responsible to PAY for their poor performance and arrogance? Money alone will NOT solve this problem; it will create an even worse problem down the road. What will change in the current time? If nothing but "business as usual"; then send NO money until something drastic changes. If you give a credit card to a teenager with a $5,000 limit and they can't pay it off and you come to the table and pay it off for them; they will go run it up again; but they have just spent another $5,000 and learned NOTHING. What is the difference in this situation and GM just looking for a HANDOUT? They are doing NOTHING to correct the problem -- A bailout will only make it worse later on and will only delay the actions; not prevent them. Let's get them over with NOW. If they are worth saving; Private investors will step up to do so; if not; then let the markets correct themselves. Other future companies will learn from their lessons. There used to be numerous Buggy whip companies until the cars came along; I don't see many of them around any more either. All these programs are doing are contributing to the exact same situations that lead to the Fall of the Roman Empire. Read up on that history. It was not the enemies at the gates that did them in... it was all the internal social programs and government handouts that contributed to their demise. We are heading down that same path!

Adolf Coors once said "Unions grew out of the gross mismanagement of corporate America." Well, now we have the 'best' of both worlds. The unions have gotten so large and 'corupt', that they follow in the same steps as the corporations. Both are entrenched in their old ways. Neither has the flexibility that the world economy or technology requires. Keep thowing money down that 'black hole' and the money you do have will be worthless.

As someone who has lived in Europe and can compare what I see here in the states, America is very behind the 8-ball. Slow to move, slow to react, slow to figure out problems. The big 3 as well as other foreign car makers have been producing gas efficient cars for the european market for years. Here on the other hand, they build boats. So who is to blame? You people. Here you are buying the biggest SUV you can find, knowing it takes 10-15 mpg, then complain when global demand for oil sparks the huge run up on gas prices. Of course they weren't going to change their business model, because you were making them money. Now, when there is outcry for fuel efficiency and smaller cars, they come to YOU again to bail them out with your tax money. How about some legislation on fuel efficiency like the rest of the world has been doing? Too much money going into senators and congressman pockets? Let them go under, reorganize and get rid of those unions. Uniosn were OK in the beginning of the century when people were forced to risk life and limb, don't need unions now.

I am so glad someone from Europe mentioned the better cars in Europe. My husband and I have wished for years that we could get some of the big three cars European models here in the states. Americans love their big dumb cars. I just don't get it. I think there is plenty of blame to go around, executives, unions, the American people. I believe unions were important but when the average skilled GM union worker makes $90/h something does not add up. There is very little profit margin and they can't stay competitve. I don't want to give my tax money to a company that has a bad business model and has no desire to change it, plain and simple.

Interesting that people only look on half the picture, having a irrational hate for Detroit when they want to target the UAW, not the management that's had their role. Personally, I'll buy from a "Detroit/UAW company" until it is no longer possible to do so. They make the affordable muscle that is desired by more than just an ignorable few. Bail them out until the transplant manufacturers can make more than just 4cyl compacts for the same price that the Big Three make of 5/6/8 cylinder cars with some room and power to them. This isn't Europe, nor is it Japan. Don't let the irrational hate of the UAW give us an near-oligopoly of Far Eastern manufacturers (save a couple of high-end German ones). Keep choice, by keeping GM/Ford/Chrysler away from bankruptcy.