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Sfox:
Unemployment #s were posted yesterday (I read it this morning). New claims hit a high of 517,000 in October -- highest since 911.

Listened this morning to CSPAN regarding a congressional hearing over the banking industry, and the way the money, foreclosure mess, etc is being handled.

It became very, very clear to me that NO-ONE HAS A CLUE HOW TO FIX THIS, NOR CAN THEY AGREE ON WHICH WAY TO EVEN ATTEMPT TO DO IT. There is not long term, logical solution, at least at the present time, that appears to be in the works.

Several members of the panel appearing this morning stressed that the banking industry, inspite of what you read, can restructure mortgages, and can lower interest rates -- however, they can't do 300,000 restructurings overnight!! It will take some time to work thru this, and the rules of how it is to work are still being written.

there was considerable discussion of how we got in this mortgage mess. One point was very clear -- used to be that you could only have a mortgage payment that was about 25% of your monthly income (net, after taxes). Then that ratio rose to 30% -- then 38% and now in 2005-2006 & 2008, has approached 50% !!

Shameful to me that people were allowed to borrow themselves into that much of a hole. Shameful that people have somehow, along the way, in just a generation or two, forgot the lessons of our fathers & grandfathers -- we need to save for a rainy day.

The auto industry, and its mess does and will affect many, many businesses -- mine included. Today, USX announced 657 layoffs, a number of them in our area. A decline in product was sited.

Personally, christmas parties are being cancelled left and right. Howe can you hold a party and lay people off the next week? Some people are using their heads, and choosing to do the prudent thing.

The thing is that the Auto makers have refused to do the prudent things for so many, many years.

Many industries have gone thru what the automakers are now facing. The biggest of which was the airline industry. All of these types of industries have a very large affect on us, because they are Ologolopies (large market share & few companies participating in the industry).

I hope that what wil happen, company by company, is that the management and the unions sit down together -- have some very hones and straight forward dialogue -- and together, offer concrete solutions to fix their problems.

Once I hear what they are willing to do to right their own house, I may then be a little more encouraged -- and would then support a GOVERNMENT LOAN GUARANTEE, like was done in 1979 for Chrysler. This means that there is no "free lunch" -- money would be loaned from the US TREASury, and paid back.

Regards,

Cheryl
 
Cheryl, I agree there should be no free lunch on the taxpayers dollar. But at the same time, losing that many jobs at a time like this, either in backruptcy or not, is not what is needed at this time.

It's nice to place blame and the US automakers have enough to go around. It's nice to hammer the excesses of the unions and how their greed played into all of this. It's nice to praise the foreign automakers, but truth be told, let the US automakers go into bankruptcy and the Great Depression will seem like a small bump in the economic road.

The only thing that has changed is that we should not see the bread lines of the 30's. Now with reloadable welfare debit cards, we solved the problems of bread lines. The only thing we didn't solve is what caused those lines. And just like Herbert Hoover, we don't want to lend a helping hand to businesses because it's their fault we're in this mess.
 
Sfox,
you miss my point.

At this point, I want to see what the US auto makers and the unions, together, can concieve as a solution to their problems. And throwing more government money at "it" without a long term solution -- in my book -- is not the industry solution.

Show me a concrete, work together, plan for: cost reduction, plant retooling, lowering future legacy costs, and limiting present retiree costs, and I'll buy in.

Describe to me, in detail, how you will use my hard-earned money, and why I should invest in your business instead of my own, and I'll buy in.

The bankruptcy court & provisions of said law could force this to happen. The Chyrsler loan guarantee program caused the same thing to happen without bankruptcy....but with stringent government oversight.

It will mean that instead of steak, people may have to eat hamburger. They may have to live within their means, instead of far above their means. Instead of $60,00+ per year, maybe they earn $40,000.


I am not saying that we should kill the goose that laid the golden egg. But maybe the goose needs to go on a very strict & monitored diet.

Cheryl
 
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Cheryl, another excellent post. I strongly agree.

Unfortunately, our economy is not geared towards people living within their means--and I mean that seriously. Consumer spending, or should I say overspending, is what kept us growing the last several years. If it suddenly stops, we could have even more problems while businesses adjust.
 
Bottom line, "fiat money", is what we are based on now, will not be sustainable for the world. The printing presses have been on full throttle for a long time in this country, printing counterfeit legal tender with nothing to back it up.

Ask yourself what is going to happen when other countries stop loaning us money to pay for our governments spending habits, already happening. Or what will happen when countries that are dollar based switch to another currency, it's already happening.

It matters not if the feds give the car companies 5 trillion dollars today, it's just paper. It just means the feds will own them also. "Fiat money" has never worked, as far back as you can research.

No jobs for the consuming people, no cars will be sold, even if they got 100 m/gal.

The 700 bil will not go towards bad loans NOW, it will go towards getting folks into more credit, more money to borrow. Rack those c/c up some more. These guys are the ultimate SPIN DOCTORS.
 
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ivygreen said:
Ford, Chrysler and GM are a national disgrace but we still need to save them. http://www.slate.com/id/2204582/
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Sorry... I do know the eventual fall out should this happen, but I respectfully disagree, unless of course the Feds are going to bail out every mom and pop too... let the chips fall where they may. You and I have to be fiscally responsible...why not GM...just cuz their bigger?

I do like the term "creative destruction" from the article though...
 
I don't disagree Boss... just showing you a different take on it. I don't really have an educated opinion on it.

Out of my depth. If I had good money answers... I'd have more of my own.;)
 
Just so you all who think I am crazy as well as a tight-wad, this was reported today by the AP wire service.

(and I am paraphrasing here -- full article is available, but I do not know how to link it).
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"In advance of the President's global summit on the world financial crisis, the mayors of Philadelphia, Atlanta and Phoenix signed a letter today that was hand-carried to the Federal government asking for many billions of $$ of bail-out monies for each of their cities.

The reasons cited for these requests were: Increasing Pension costs, Infastructure improvements and cash flow problems."
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I, like Mark, am writing my own letter to Sen. Spector & Casey, as well as the President, asking for a more modest hand-out. Since I am approaching retirement age, my pension costs are getting higher, and I certainly would like to make some structural imporvements, and could certainly use some cash flow assistance.:poke:

Maybe we should start a petition.....or a chain letter??

Who's next to step up to the never-ending loaves & fishes pile?

Cheryl
 
Who could be more in trouble than most retail florist, who will bail us out, most of us are down to working with skeleton crews, and our profit margins are shrinking (or gone). Could we address our president or wire service CEO's for a bailout? Or a stimulis package. How much money do wire service CEO's make anyhow?
P Bird
 
paradise bird said:
Who could be more in trouble than most retail florist, who will bail us out, most of us are down to working with skeleton crews, and our profit margins are shrinking (or gone). Could we address our president or wire service CEO's for a bailout? Or a stimulis package. How much money do wire service CEO's make anyhow?
P Bird
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Your post is exactly what I have been saying. Let GM go into bankruptcy and the fear the average consumer will feel will close their wallets even more. If you think things are bad now, you ain't seen nothing yet.
 
sfox said:
The cost of labor made building small cars unprofitable. It's not a matter that the companies couldn't do it, it's a matter that they couldn't do it and make money.
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I heard Robert Reich speaking a few days ago and he stated that the average UAW member costs the big three $75/hour hour in wages and benefits (vacation, health care, pension, etc....) and that the average worker at a US Honda or Toyota plant costs $48/hr.

That's why Toyota & Honda can sell Scions and Elements and still generate a profit for the company... and Detroit can't produce a decent low-priced car.

The UAW is going to have to make concessions, just like the pilots and flight attendants did when the big-old airlines were imperiled by deregulation and low-cost carriers like SouthWest. They'll have to decide if a lower-paying job is better than no job at all.
Need an example. How about florists not being able to sell flowers at the same price ProFlowers does. Now florists can match ProFlowers prices, it's just that if they do they don't make money.
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If consumers do prefer the PF products unarranged at a lower price, we have to deal with it and adapt or be gone. No one's offering us a bailout.

Cheryl, thank you for your posts. They really bring perspective to the challenges faced these days.
 
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Another issue Reich discussed was Bernanke's and Treasury's change in approach with some of the Fed bailout funds. Instead of buying up bad loans, the money is going to be used help with home mortgages.

Reich said some of these bailed-out banks were sitting on funds (instead of lending them) and have had the gall to declare cash dividends and award "performance bonuses" despite their dreadful financial statements.

Incredibly irresponsible and a continuation of the mind-set that got us into this mess in the first place.
 
CHR said:
Another issue Reich discussed was Bernanke's and Treasury's change in approach with some of the Fed bailout funds. Instead of buying up bad loans, the money is going to be used help with home mortgages.

Reich said some of these bailed-out banks were sitting on funds (instead of lending them) and have had the gall to declare cash dividends and award "performance bonuses" despite their dreadful financial statements.

Incredibly irresponsible and a continuation of the mind-set that got us into this mess in the first place.
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Don't get too crazy with Reich's commentary.

He is a teacher not a doer.

This whole mess boils down to consumers' weaknesses.

Anyone who knows what their credit rating is has a problem.

sooner or later you have to pay it back.

Don't buy anything on credit that isn't a necessity.

Vacations? pay cash. spend that time gardening and give the vegetables and fruit away to someone who needs it.

I am making a point. pay off debts, save money and give back to those who need help. forget about putting unnecessary items on the credit card.

use your time to help your family and after that your community.

joe
 
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sfox said:
If you think things are bad now, you ain't seen nothing yet.
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Stop the presses... I've changed my mind.... I forgot that if the Big3 take a dump so will NASCAR....bail them out at all costs!








Kidding....

Sfox...no matter if they get bailed out or not, your quote above will still apply. Things are going to get worse before they get better. There will be another 500,000 jobs lost before March 1 2009, and it will take a minimum of 2-3 years for things to even begin to get better!
 
BOSS said:
Kidding....

Sfox...no matter if they get bailed out or not, your quote above will still apply. Things are going to get worse before they get better. There will be another 500,000 jobs lost before March 1 2009, and it will take a minimum of 2-3 years for things to even begin to get better!
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Boss, I have no love for the Big 3. But their folly is hurting people not connected to their business. Little people.

The part I can't understand is the guys that started this mess, the financial guys on Wall Street, they got a bail-out. NO huge public outcry. They got their bailout with no strings attached. They kept their jobs. They are getting their bonuses. And talk in Washington is how can we do more for them.

So far nothing is being done for Mainstreet. Now saving jobs at the Big 3, even if it's just for now, will help Mainstreet, and not just the autoworkers. Later, once things start to turn around, let them go.
 
sfox said:
The part I can't understand is the guys that started this mess, the financial guys on Wall Street, they got a bail-out. NO huge public outcry.
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I think the reason there was no out-cry then is because at that point the markets were still doing ok, and many people have/had money in the market and saw this bailout as a means to keeping what they had.

But like with so many things, in America... screw me once...shame on you...screw me twice...shame on me...there will NOT be a third time.

People are finally seeing that there is no end to this fiasco if we keep doing the same thing time after time. It's come time to pay the piper and it will be painful. We can not continue to throw good money after bad.

Doing the same thing, and expecting different results... does not work for me, does not work for you and it will not work for this mess.

Sadly, things have progressed to the point that a complete melt-down is perhaps the only way to fix a mess that's been building for decades based on greed and excess.

The bell's are tolling, and the bill has come due. It's time to pay up, and sadly the "little guy" on "main street" like always, will have to bear the burden for the folly of those in power. But that said, we seem to have decided to change the people in power, so maybe we've finally had enough and are willing to suffer some more to finally end up in a place that's better than where we are now.
 
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