Citi Now to get Bailed Out But Auto's Still get the Shaft

[88Mariner]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

^ of course he's going to bash Romney. He can't take responsibility for the consequences of his actions.

[runningman]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

oh but the financial sector is. AIG can have another $500,000 party soon when they get another $80 billion. Hmm Insurance or millions of peoples jobs formerly knows as the mob??

[88Mariner]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

oh but the financial sector is. AIG can have another $500,000 party soon when they get another $80 billion. Hmm Insurance or millions of peoples jobs formerly knows as the mob??

do you have Miroslav on block?

[runningman]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

no I think he finally realized he was wrong and is keeping his head in the sand.

[Miroslav]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

no I think he finally realized he was wrong and is keeping his head in the sand.

First of all, I'm not wrong. And I don't have anything to hide anywhere, anytime.

Second of all, what the AIG execs did at their expensive meeting was stupid and should be grounds for punishment; but it has absolutely nothing to do with the basic argument that key financial institutions cannot be allowed to fail because it freezes liquidity in all important economic markets. This is Economics 101. If you don't understand this point, then you probably have no idea why banks even exist in the first place.

Third, why don't you open your eyes and read what I wrote on page four. I'll go ahead and quote myself here for your convenience:

http://www.mercuryserver.com/forums/showthread.php?t=63130&page=4

Look, here's how this bailout shit should work:

1. As a society, you should structure things in such a way that you never have to bail anything out - ever. Bailouts are a failure of society.

2. If you failed to do that and shit hits the fan, you bail out ONLY bail out organizations that are critical to the structural survival of the market-based system - without whom markets will shut down because capital will not move, borrowers won't be able to find lenders, etc. And yes, that means select major banks, even though you don't understand what they do. You let all your banks fail, you get the Great Depression all over again.

3. You do not bail out any. other. company. It's already a sin that you had to bail out some of the banks. No more. The fucking auto companies get nothing. The airlines - nada. The construction companies don't get dick. You follow?

A bailout is not intended to stop a recession or stop people from being laid off; it is only intended to prevent a recession from becoming a decade-long depression due to the arguments listed above, and it should be used as little as possible. Beyond that, you can only let market forces restructure things as necessary. Bad businesses should fail. Assets that can be better utilized by another party should be sold in the open market. Losses on bad investments should be realized. It hurts for a while, but that's the only way to set things right and lay the foundation for sustained future growth.

If you bail out everyone and his brother, then you end up with a big fucking budget deficit and the same problems for the next generation to bail out again in the next economic cycle.

End of story.

[runningman]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

HAHAHAHA... that was fast

[Miroslav]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

^^ I wrote that big quoted text at like 4 am this morning. I suggest you actually read it, consider it, and perhaps post a response relevant to the logic presented. I know I can't make you read it and get it, but there it is in case you change your mind. That's all I can do.

[ddr]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

so Auto executives had until today to give Congress a laid out plan on how they will come back from the dead.

according to headlines, the only thing they could come up with is selling jets and working for $1. =\ doesnt sound like a detailed plan to me.

[runningman]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

^^^But the banks had a plan right?? No they don't I will answer it for you.

This is me answering your 4 points to success

Point 1. I agree

Point 2. I disagree whole heatedly. You see this is the fundamental difference between us and I thank you for pointing this out. You believe that banks make the society where I believe that the mob makes the society (you should read more about the US history even though I know you are Soviet at heart). I am saying that yes banks are critical but how can you say that banks (even though they just highway robbed you country by faulty lending practices) get Trillions of dollars but the big 3 that employ 10% of your workforce that they shouldn't get $25 Billion??? I mean that wasn't the attitude Washington had when he was fighting the Brits. I mean shit Jefferson warned you guys about this exact moment in history. Also what kind of shape will your banks be in when 30 million people default on their homes and foreclose?

"If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered." -

Thomas Jefferson--

Doesn't that kind of sound like what is happening here?? I mean the Fed has been in action since when 1913!?!?!? So there goes the first line in his quote. The rest is what is happening here.

I strongly urge you to read what I wrote and try (even though I am sure it is hard) to think about the big picture. Think a couple steps down the road not just the immediate.

[Miroslav]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

You see this is the fundamental difference between us and I thank you for pointing this out. You believe that banks make the society where I believe that the mob makes the society (you should read more about the US history even though I know you are Soviet at heart).

Do you mean the mob as in organized crime? They're so small on the scale of relevance when it comes to drivers of the global economic meltdown and recovery that they're not even worth talking about. And I'm so Soviet at heart...except that you're the one who wants to expand the government bailouts to the car companies and God only knows who else. I don't want to expand the bailouts any further. Those whose survival is absolutely essential to the market economy infrastructure are the only ones who should get them. Extending bailouts based on what "the mob" wants or threatens is poor economic policy.

the big 3 that employ 10% of your workforce

Well, I'm no expert on it, but according to this article:

The US auto companies directly employ 355,000 workers, and another 4.5 million Americans are indirectly supported by the industry, according to a letter sent to US Treasury Secretary Henry Paulson by six governors on Friday. Total auto employment amounts to 3.3 percent of the US civilian workforce and more than 36 percent of the US manufacturing workforce.

http://www.csmonitor.com/2008/1103/p01s02-usec.html

[runningman]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

no you just want to hand every penny over to the banks and that is the difference between us.. thinking of hungry babies around Christmas bothers me but it doesn't seem to bother you at all as long as bankers have their money who cares right?? Please don't give me the lending bullshit anymore it is so played out by every media outlet right now. Show me one example in history where money has trickled down when starting at the top with bankers?? They would be better off letting the banks fail and starting over so this doesn't happen again. You are under the impression that if we keep giving the banks money we will avoid a complete systemic meltdown. Remember we aren't in this crisis because of car companies. We are in this crisis because of bankers.

Well you are forgetting one MAJOR piece of the puzzle which is security. When millions of US families are broke, out of a job and bored they usually turn to crime (human instinct).

Again you haven't answered my question about what do we do with the banks when the unemployment rises and foreclosures go up?? I know why you don't want to answer it. Probably because your answer will be "Well lets just keep giving the banks more money so we can get through this economic crisis." Where does it stop.

[Cj Tari]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

i think banks are way more important than what you point out man, lets just remind ourselves that banks practically control the flow of money, lets say you owe your house, have a shit load of credit cards(wich is the state in wich 90% of american are) if the banks are not bailed out i could see a shit storm that would just bring the US to its knees, i would bet that more than 60% of americans are in debt one way or the other.

I really doubt the automakers would go out of business, they might cut down on jobs, and produce less shitty cars, but i hightly doubt they would just dissapear.

I really dont agree with bailing out anybody, but shit, this is something that needs to be done.

[toasty]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

I'll preface this by saying that I don't know the answer and that this is an actual question, not a point disguised as a question:

For those of you that are against the bailout, what becomes of the large number -- I don't know what the number is, but it has to be well into the hundreds of thousands -- of workers employed by US automakers? That's an enormous number of suddenly unemployed people, and I have to imagine that that would have larger economic consequences.

Were it not for them, I wouldn't hesitate to just let the automakers fail. That's a significant enough number of people, though, that I would expect a ripple effect that we're all going to feel.

Thoughts?

[Miroslav]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

Please don't give me the lending bullshit anymore it is so played out by every media outlet right now. Show me one example in history where money has trickled down when starting at the top with bankers??

It's funny you say that, because I guess you didn't realize that virtually all money that's out there trickles down starting at the top with bankers. I know we've been through this at least half a dozen times, so for the last time:

No banks = no businesses get financing and nobody gets a paycheck
= a ton of businesses go bankrupt (including the Big 3)
= a ton of people lose their jobs
= a ton of people stop spending
= more businesses go bankrupt
= we all lose our savings
= WE'RE FUCKED.

And the reason you hear so much about lending and borrowing is because it just happens to be the essential function of banks, and also the lifeblood of our economic systemthat enables our modern way of life. Here's the parallel version to the one up above:

No investing/lending and no consuming/borrowing = no economic growth
= WE'RE FUCKED.

There. Can't put it any simpler than that. If you still think I just made it all up, then...I guess that's that.

They would be better off letting the banks fail and starting over so this doesn't happen again.

Not really. See above.

Well you are forgetting one MAJOR piece of the puzzle which is security. When millions of US families are broke, out of a job and bored they usually turn to crime (human instinct).

No one is forgetting crime; it's perfectly obvious. Crime is going to skyrocket no matter what we do. Even if we bail out the automakers, what do you think is going to happen to all the other companies in this nation? They're all doing poorly and they will lay off millions in 2009. There's no way to avoid it.

Again you haven't answered my question about what do we do with the banks when the unemployment rises and foreclosures go up??

I'll answer it now. It is a very concerning scenario, and it's very bad for banks and more importantly for the broader economy. And it's already happening. Obviously, economic recovery does not rest solely with the banks. That's why I don't disagree with other fiscal policy and job creation measures that are being proposed. And by the way, not all banks should survive. I only want the core system to survive, not every participant in the system.

[Miroslav]

Re: Citi Now to get Bailed Out But Auto's Still get the Shaft

I'll preface this by saying that I don't know the answer and that this is an actual question, not a point disguised as a question:

For those of you that are against the bailout, what becomes of the large number -- I don't know what the number is, but it has to be well into the hundreds of thousands -- of workers employed by US automakers? That's an enormous number of suddenly unemployed people, and I have to imagine that that would have larger economic consequences.

Were it not for them, I wouldn't hesitate to just let the automakers fail. That's a significant enough number of people, though, that I would expect a ripple effect that we're all going to feel.

Thoughts?

You're right, the failure of the automakers will create a big ripple effect that we will feel. It will be painful. I looked it up, and apparently the direct and indirect employees for the auto industry number over 4.5 million - about 3.3% of civilian work force. I would simply argue that:

1. There already exists a forum to restructure insolvent companies: it's called bankruptcy. And bankruptcy does not mean that the company has to cease operations - many companies have emerged out of bankruptcy in much stronger shape. The Big 3 are acting as if everything going on right now is just a flesh wound due to the economy and that bankruptcy would unfairly brand them as an unreliable and failed company in the eyes of consumers. In fact, the companies are already failed in the eyes of consumers and are already being viewed by the market as de facto bankrupt companies. You can see it in their low equity (probably would be lower w/out the bailout talk) and in their near-term and long-term bond yields. Avoiding bankruptcy for these companies is to just avoid the responsibility associated with the fact that they have essentially failed now for decades.

2. Whether bankruptcy or bailout, the auto industry is going to shed a TON of jobs anyways as it restructures to become competitive. It's going to suck no matter what.

3. If we directly bail out Big 3 instead of making it go for bankruptcy protection like we do other defunct businesses, then we will probably also be bailing out the next big industry in 2009 to run into major trouble (and it will likely happen)...and the next...and the next...and so on. It's bad enough that we had to do the banks; we can't bail out the entire nation. At some point asset prices have to be allowed to return to normal, as they've been ridiculously inflated for the last decade.