Auto Industry Video: The Scope of the Problem & Why Trickle Down Economics Suddenly Matters

Heaping a greater burden on the taxpayer to prop up a failing business model is perhaps one of the most foolish decisions a government could make. Reduce taxes and allow the free market to reward sound business practices and punish waste. That's the formula for long-term growth and prosperity. It has nothing to do with short-term stability and security. Those concepts are myths, and government efforts to offer them through bailouts paid for by increased taxes or increased national debt is a recipe for long-term suffering and decline.

I agree Peter. But who's going to convince the voters of that? Common sense has no place in Washington DC. A government big enough to give you everything is big enough to take away everything.

I think it is obvious what is happening. We have gotten to the breaking point of what people can afford with what they make. Here is my point: After so many years of exporting manufacturing to cheap labor countries, the manufacturers got what they wanted, lower manufacturing costs. But every time a job leaves this country without being replaced, wages are driven down as well. This started with items that people bought as luxury. Plastic novelty items, kitchen gadgets, video games, you know, wal-mart crap. Now it has slowly happened with all of the stuff that people absolutely have to own. Cars are made in Mexico, Farm labor wages have been driven down by migrant workers, as has housing labor wages. IT jobs have been largly exported to India, Russia, and China. In fact, anything that can be done over the phone is largely exported now, including customer service, collections, billing, product or service ordering. In fact, as I look around here at work, I only see 5 or 6 out of 40 people that I couldn't replace with a call to an Indian "business solutions" company. Once you export the "workers", there is little need for middle, and most upper managers. Now, in a healthy market, what we are seeing is normal. Jobs leave to cheaper labor, prices go down, and wages go down with the prices. Eventually, we hit an "evening out" point with foreign competition, and things stabilize. Healthy Capitalism. But, there is a problem. People have made long term investments in things that they don't want to see lose value. Things like: - 401(k)s that are invested heavily in these failing US companies that are profiting less, because their prices are being driven down. - Homes that they have spent 30% of their income on for 20 years that are worth less than when they bought them if inflation is considered. So now, people won't sell their homes for a price that people can afford, because it is less than what they need to justify selling it. This drives home prices up (or at least keeps them flat). And as the wage to cost ratio has gotten worse, investments in things like 401(k)s has fallen, leaving those US companies with less money to work with. We have struggled through this for years by going from primarily one income earner homes to primarily two income earner homes. Unfortunately, there isn't a third income earner to help put out the fire. We have reached the breaking point. For us to return to normalcy, we need to accept the fact that home/land prices need to fall. This will give people more income to invest in savings, and keep their homes. I really think that the answer is in the Loan Modification program that the head of the FDIC is proposing.

Is youthdriver a marxist or what? Enough with your BS. The US government has done to the Automakers what it did to the steel companies it regulated them out of business. Enough said I can imagine buying a car from a government ownes GM and pay 3 million for a car that wont run.

we should limit the comments to 100 words... pay attention... Barney Frank, Chris Dodd, Obama... big recipients of the mortgage industry created this global mess by forcing lenders to "lower the bar" and allow people with poor credit to get loans. This ignited all the problems we are seeing in ALL the industries. Social handouts have wiped out a decade of growth. anyone who thinks people will pay more for a car that is smaller, slower and ugly has not thought the situation thru. I love my V-8... and hope Detroit brings back the styling that set American cars apart in the 60's!!! Retro, but with power and better fuel efficiency.

Noticed that big time... Chrysler CEO ready to work for a salary... not so with Ford and GM... I can afford, and have always purchased my cars outright CASH every two years. I own three, we buy one every year in rotation. This year included as well as next. I will NOT be buying a FORD or a GM... Chrysler bank on it. File chapert 11, and get down to business. I remember when Lee took Chrysler and a government loan and looked me square in the eye and said find a better car... buy it. Nobody saying that now...Ford and GM why did you not learn in the 70's most of america did... you listening? You lost HUGE market share then and are in no position to respond now 20 years later. Perhaps you need to structure your long term CEO pay over decades not 1-2- years of results. American families plan for a life time...American companies largely don't. -Jeff

All of this is just another way of grabing onto the golden ring. The companies and the UNIONS all just sit back and say if you don't you are going to be sorry but if you do well just believe us we will make it better. I for one say NO, Pelosi and her crowd in DC need to wake up. What does any of thos idiots in the house and senate know about making car or anything else for that matter other than a HUGE MESS. I would like to see the BIG three and the HUGE UAW have to come in with a corporate shake out plan and have someone with a REAL BUSINESS sense review and comment on it. Then let's go from there. All I can see is endless CORPORATE WELFARE coming.

My best answer for the big three auto giant CEO's, will be to come back for the next meeting for a bailout from the govt, would be wise to drive cross country in their competors automobiles,like toyotas,accords,etc and by the time they get back maybe they will have learned how to build a real car...