An Auto Bailout Alternative

Linda,

I so agree. Its too bad that the bank bailout didn't do the same thing. Give the money to the people instead of to the institutions. PNC bank took the $$ and bought another bank---did that really help the economy?? If the money were given to the people then they would have spent it or put it in the bank and the banks still would have gotten it but in a way that would have fueled the economy.

Terri David

www.natural-cure-alternatives.com

This won't be a popular answer because Americans don't want to hear this. CAFE (corporate average fuel economy) standards are not the answer...although we are way too late for that now. CAFE standards were put in place to change the behavior of the "manufacturer" (the Big 3).

In Europe and elsewhere, gas/diesel fuel is taxed much heavier with the revenue going towards infrastructure maintenance (roads, bridges, etc....the things that president elect Obama is now looking at spending Billions on to stimulate the economy). This European model has driven "consumer" behavior towards smaller, more fuel efficient cars, mass transit and lots of bicycles. The consumer is what drives and has always driven marketplaces. I like Linda's idea but it is our 11th hour reaction to  "emergency-crisis mode". If we had simply created a consumer driven market vs. a manufacturer driven mandate called CAFE standards, it would have driven the Big 3 to look much harder at getting on the smaller car bandwagon, much earlier.   Anyone that has been to England, Germany, Holland or France and put $150 in the tank knows what I'm talking about.

Linda is right though. Let the consumer drive the market. It would take much longer to get something like this through Congress though. The philosophical debate on this would be intensely laborious I'm sure.  

Well, I agree that a market driven solution would definitely be more help, but there were 131 million taxpayers (non-corporations) in 2005 (latest number I have handy).  For each to get $10K, the auto bailout would cost $1.3 trillion.  The current $25 billion would be only $191 voucher for each.

I think the govt should buy $25 billion in vehicles and bury them in Texas.  May not be environmentally friendly, but at least it keep the plants cranking out cars. 

Actually, I think the govt should be doing something to guarantee vehicle loans for consumers (perhaps even offering guaranteed loans at 0% interest).  If we believe the hype from the Big 3, the problem is a lack of credit.  This would guarantee that as people walk into the showroom they've got a loan already secured.  Granted, as fast as GM & Chrysler are burning through cash, this alone won't solve the problem.  They will likely still need some bailout cash, but perhaps not as much.

Dave!

www.hurst-associates.com

Wrong, Wrong, Wrong, and WRONG.  Giving money to people to buy cars is just as insane as the "government" bailing out the auto companies.  Remember the "government" does not have any money.  They only redirect YOUR (and My) money.

These bailout/charity plans create NO NEW MONEY!  It's redistribution - (i.e. socialism) plain and simple.  Don't agree?  Okay sometimes it's easy to see a philosophy when taken to an extreme.  Please play along...

How about you skip paying your taxes and just buy me a new car.  Think of all the overhead and adminstrative costs you would save !  Not very fun now is it?

What works = TAX CUTS.  Tax cuts create incentive for business owners to take risks - which creates businesses - that create jobs - where people transform raw materials into something of greater value - which creates wealth ---> crisis solved.

The dems will never go for this though.  Robs them of the power they so desperately crave.  Here's what they hope you never find out:  Power cannot be taken it must be given away.  You gave them the power to tax you without representation.  Sound familiar?

I sell to the "big Three".  If I were a little bit selfish I would be praying that congress is stupid enough to go for the bailout beg-a-thon that is happening tomorrow.  But I'm not. I'm EXTREMELY selfish.  I want the whole system to heal itself and what is needed is a major purging from the top and the bottom.

Management = GONE.  UAW - GONE.  One of the 3 (maybe) = GONE.

What's left are realistic wage and benefit levels and "mad-scientist" type innovation. Then all we need is someone is Washington to grow a spine and some 'clock-weights' and level playing field by immediately eliminating that phony NAFTA bullcrap.

...next

One thing I love about MCC is the variety of responses we get to posts like this.

It will be interesting to see what happens on the Hill this week.

Dave, I like you idea about the gov't buying and burying cars in Texas... there is a ranch in Crawford that would be the perfect burial ground.

Thank you all for your comments - keep 'em coming!

Rick,

I agree with the points you make and after my trip to Europe over the summer it was easy to see how their increased tax on gas has helped their infrastructure.  Most of their cars are much smaller and they utilize mass transit.  We are paying the price after decades of greed and short cuts.  Our last real manufacturing staple is in jeapordary.  We've outsourced our lives, stop producing and didn't realize the long term ramifications.  I think we ALL see the problem clearly now and the 'fix' will be long term.  Peter Schiff tried to warn us...but nobody wanted to listen.

 This is what a parking lot likes like in Europe where gas is about $8 per gallon...

Hmmm. I think their consumers got it...they are also in way better

shape and sucking in less Carbon than we are around here. I took this

picture back in 2005 when gas was only $5.50 a gallon over there...

What, no Hummers????  

Rick,

As an avid cyclist, I'm 115% behind your thoughts.  I used to commute 3 or 4 days a week from Dearborn Heights to Troy by bike - it took me just about two hours each way (32 miles).  I couldn't do it in January and February because the roads were not cleared enough to be safe.  I've more recently commuted from Berkley to Farmington Hills (11 miles), which was more realistic by bike. (I now work from home so bike commuting is much, much, much easier!)

Anyway, my point is, Detroit and most other American cities are just not set up for the bicycle like Europe is.  Saying that we'll raise gas tax and build the infrastructure isn't politically realistic.  I don't see folks who commute in from far-flung suburbs selling off their lifestyle to start biking.  Though more bike lanes and facilities to facilitate bike commuting sure would be nice (and safer)!  To gain political and financial support, it comes down to making our current landscape work (even if it wasn't originally designed correctly).  Public transit is a good start, but I wouldn't count on any politicians offering a $3/gallon increase on gas to pay for it... especially right now!

Here's a good summary of where plans mass transit currently stand from Transit Riders United.

I'm not really on topic at all anymore, am I?  Sorry about that.

Dave!

www.hurst-associates.com

Dave,

I do realize the infrastructe here vs. Europe is vastly different and I don't anticipate any scenes like the picture I posted. Howver, when I go to the grocery store on my bike (vs. firing up 2 tons of steel to go 2 miles) to buy a loaf of bread or a gallon of milk, why can't we just have a few more bike racks and a more bike friendly set up for this type of errand running. It starts with little steps like that and then builds to something bigger....just a few extra thoughts.

Dave, I LOVE your "off topic" post (but don't really think it is off topic...)

So I'm wondering - what road hazards have you encountered in riding your bike from your bedroom to your office room?

Playing the Devil's Advocate for the sake of this discussion, I ask:

If we switch to "for the greater good" thinking, are we better off as a people to hope for a turn-around for the Big 3, or to ditch them altogether and work toward the healthier, earth-friendly concept of biking/hiking to work and higher levels of people working from home instead of corporate centers?

Hi Linda,

Biggest hazard from riding in the house comes in the form of an angry wife when I bring the bike indoors.

So many (most) of my friends and neighbors are tied to the auto industry here, that I can't imagine letting it go away, even if it is for the "greater good".  What I would like to see with some of this money is more incentives for garage mechanic inventor types.  I'd like to see an incentive or access to capital for folks to launch ventures that test the status quo of how we think of vehicles... things like Tesla Motors, Aptera, or the Air Car.  Obviously, not all of these are practical and not all will survive, but it seems like there's a lot of innovation that could be funded by even a portion of the, now, $34 billion dollars.  And what really galls me is that none of these well publicized examples are coming from the Detroit area (or even the Midwest).

Plus!  How many small to midsize plants do we have sitting empty now? Many I'm guessing, already have tools in them too!

Anyway, that's what I'd like to see - a balance of the four: provide some loans to the big three (or 2 of the 3), provide money for repainting bike lanes on roads, provide some incentives for working from home (is that selfish of me??), and provide new funding for inspiring innovation and invention in the automotive sector.

Dave!

Hi Dave,

Your plan should be noticed. Your ideas are great so how do we go about getting the information and ideas where they need to go.

Terri David

www.natural-cure-alternatives.com

Chris, there was some conversation at the Royal Oak MCC lunch yesterday about the Big 3 moving into mass transit development and production. It is an interesting concept that could be great for Detroit, great for the economy, and great for the environment.