Scary bit of news

[forno]

F1 News > The next earthquake in the automobile world?

[macrich]

Good! It's about time these companies learn how to become self-sufficient by listening to what their customers want. GM, Ford & Chrysler haven't done that for a long time. Even as the fuel crisis was hitting the US, they continued to make gas guzzlers. It's just been a stream of mismanagement for decades with those three.
I (for once) agree with the republicans. Let them fail.

[forno]

In principal I agree, in practice it will deepen the "downturn" considerably, and most likely in Australia too through GMH and also in Europe

[iTy]

Originally Posted by macrich

Good! It's about time these companies learn how to become self-sufficient by listening to what their customers want. GM, Ford & Chrysler haven't done that for a long time. Even as the fuel crisis was hitting the US, they continued to make gas guzzlers. It's just been a stream of mismanagement for decades with those three.
I (for once) agree with the republicans. Let them fail.

Agreed.

Its the entrenched style of management (mis) that has led them to create cars like the 'Persephone' and the 'Homer'.

I suspect that the "old boys" attitudes in corporations has stifled innovation in the US car industry.

I don't know about you but trying to get funding/support to get a business off the ground is difficult. These guys, going to the gov for bail out money, whilst stuffing their pockets with cash and patting themselves on a job well done, sickens me.

I'm with you, let the dying business die. Give the support directly to the workers who will inevitably become retrenched and help them find new work.

[Phase]

Thank Christ.

With any luck they get swallowed up into the abyss.

Forgive me if I think it's a little bullshit when you turn up at congress, with a tin cup asking for $30billion dollars, with a business plan that is purely 'hope Americans for no reason suddenly start buying your cars again'.

The world changes, trends change, vehicles get more efficient, if you choose to fight that trend, than you do so by yourself.

[crunchysteve]

This is the first horseman of the peak oil apocalypse.

One day soon we'll be riding our bicycles on 8 lane cycleways and the only cars we'll have to dodge will be the rusting, abandoned hulks of a bygone age - a random blip on the radar of human history.

[macrich]

Originally Posted by forno

In principal I agree, in practice it will deepen the "downturn" considerably, and most likely in Australia too through GMH and also in Europe

I tend to disagree with that myself. Many large companies have gone bankrupt over the centuries, yet the world continues on without them. Look at HIH. It's bankruptcy (while it hurt many (myself included) didn't kill our country and didn't send us spiralling into a dark fiscal period.

What shits me is that the US government is handing out money to companies like it's candy to babies. Why not let AIG fail? Why not let them all fail. At the end of the day, it's corporate survival of the fittest.

[crunchysteve]

It's funny how those who trumpet loudest, "Free market!!!!" are the ones most likely to hold out the tin cup when the free market bites them.

[Geoff3DMN]

Originally Posted by macrich

Why not let AIG fail? Why not let them all fail. At the end of the day, it's corporate survival of the fittest.

It doesn't matter much if one company fails (say Pyramid building society or HIH or OneTell), but if too many fail at the same time we'll end up with a deck of cards situation where otherwise sound companies fall because the support structure has collapsed and the whole economy implodes.

That sort of situation would mean an almost complete collapse as in the great depression. Unemployment rates of 30 to 50%, almost all work that remains being casualized. Job conditions that take no account of regulations. Safety regulations non-existent.

How'd you like 3rd world wages and conditions because that's all the work that's left?

Not a pretty picture and It's not about corporate survival, it's about economic survival.

[Phase]

Originally Posted by macrich

Why not let AIG fail?

I'm with you on almost everything except this.

AIG has the bad debt of thousands of companies, totally over 60 trillion dollars. If you'd like to see a dark ages again in your life time, that's a fast way to do it.

Not to say AIG can't be divided, sold off, and the hit slowed.

But right now, AIG is like a Dying elephant in a toilet cubicle. We all know it's going to fall over, but we're running around desperately trying to get pillows and rugs so it doesn't drop through the floor and kill everyone.

[crunchysteve]

Originally Posted by Phase

AIG is like a Dying elephant in a toilet cubicle. We all know it's going to fall over, but we're running around desperately trying to get pillows and rugs so it doesn't drop through the floor and kill everyone.

Sig quote!

[MissionMan]

I have a friend who worked for GM. He just took a retrenchment because he had another job option. He said the way GM was run was disgusting. No long term plan, building for the now. Toyota directors in contrast have a 50 year plan for the company. I have no sympathy for companies that are run into the ground by overpaid executives who are being paid for a skill they apparently don't have.

If they want to bail out these companies, fire all the existing execs (fire not retrench) and then hand over the reigns to people that have the skills to run them properly.

[macrich]

I think we're being a bit overdramatic here.

For starters, we have laws that protect us against being abused in the workplace. Unlike the Great Depression, we have a social system set up now. We have unemployment benefits, free medical and heavily discounted medicines. During the great depression all we had were food stamps. Where the US is at the moment, they are already getting shanty towns around their big centers, we aren't.

Also the Dark Ages weren't caused by a global recession or the collapse of any major companies, it was caused by religious zealots.

If in fact AIG does have over $60 trillion in bad debt, then it can't survive. It would never have the ability to repay any of that debt. Throwing money at it will not achieve anything at all.

We've had around 12 recessions since 1900, none of which did the world implode and we all die from some massive economic arterial explosion. Most recessions don't last more than 2 years.

I think if we all stop thinking like chicken little (that the sky is falling) we'll all recognize that all of this is not that bad.

Allow me to use an analogy. It's like being stuck in mud. You're driving along you stop the car and realize that you've stopped in thick mud. You panic for a moment, try to get out and only feel like things are getting worse. The you get a push out of this mud and start on your way again. Soon you forget that you were even stuck in mud and are happily traveling along.

That's what this is like. It will be yet another recession that will end, we will all survive and life will go on.

[iTy]

Originally Posted by Geoff3DMN

It doesn't matter much if one company fails (say Pyramid building society or HIH or OneTell), but if too many fail at the same time we'll end up with a deck of cards situation where otherwise sound companies fall because the support structure has collapsed and the whole economy implodes.

That sort of situation would mean an almost complete collapse as in the great depression. Unemployment rates of 30 to 50%, almost all work that remains being casualized. Job conditions that take no account of regulations. Safety regulations non-existent.

How'd you like 3rd world wages and conditions because that's all the work that's left?

Not a pretty picture and It's not about corporate survival, it's about economic survival.

Wasn't the last Australian recession something like 8-9 std deviations from the norm (I recall my stats teacher claiming that, but needs to be verified)? So for a catastrophic collapse to occur, it would have be greater than that?

If the car companies all fail at the same time, are you saying that there is a very high correlation with the rest of the western world's industries that it be the catalyst to a complete collapse?

Generally, in free market economies, when companies fail to meet the market's needs, or in this case become deaf to it, other more innovative people/businesses take up the slack. So, when a gorilla like GM falls, that hole will be filled by enterprising people/businesses pretty quickly.

Just thinking out loud here, but in the case of green cars, sure Toyota got the jump on them re the hybrids, but surely the Prius doesn't meet everybody's needs. I've yet to see a one size fits all solution for anything.

There will be a whole bunch of new businesses dedicated to servicing, parts design etc to the green car phenomenon.

Personally, I'm excited. The status quo (mbas with greedy mindsets) has failed, time for a new way of doing things. We are at a juncture. Best try and help to get the pack to change course

[Rant]

It's a dilemma. We want cars, preferably green cars (frankly electric is the only sensible way to go), but it's clear the major manufacturers just refuse to change, even if they're about to go out of business.

This is not a sudden occurrence. As pointed out above, it's been a deliberate strategy for decades. It's not a lack of planning, but decades of 'wrong' planning.

The other big trend we need to be aware of is business using the current economic difficulties to move ALL manufacturing to third world countries. Again - this has been planned for decades. Initially it was an 'embarrassment' to be using third world exploitation in manufacture, but over the decades, we've been conditioned to accept the 'fact' that if we want lower prices, everything needs to be manufactured in countries that allow exploitation of their labour market. Unsurprisingly, prices have still gone up and profits gone up, but neither the producer nor the consumer have benefited from this 'theory'.

Watch, as the US car companies move their 'wrong' manufacturing to 'cheap' countries. US cars prices will drop to half of what they are now and everyone will just buy them because they're cheap and forget about the environment.

This is what happened after the 'oil shock' in the 70s - once 'the public' started talking about alternative fuels, oil exporters opened the taps, the price went down again and 'the public' forgot about alternative fuels.

You saw the same thing late last year - fuel prices went up, filmmakers started talking about making a 'Revenge of the Electirc Car' film - it looked like alternative cars were going to get a 'go'. Oil prices suddenly dropped, and everyone forgot about electric cars again. And now the price of oil is climbing back to record highs again.

The focus should be on creating new green economies, but governments are dependent on 'kickbacks' from the old economy. There is nothing 'serious' the Australian government is doing to create a new economy (a few token millions to 'alternate' power generation), meanwhile Germany is the leader in solar and wind power generation (they don't even have sun in Germany!)

I read the Government's green paper on Carbon Emissions. There is no vision of a future green economy, it (apparently) punishes current carbon emitters and that's it. Overseas experience tells us what happens when these policies are enacted - the big polluters 'somehow' get around the 'intent' of the policy and make huge short term profits - and nothing gets greener.

Rudd removed subsidies for private citizens to build their own solar power just long enough to kill the local solar power industry, then "realised their mistake" and brought the subsidies back in. Too late, damage done. Don't vote for either party - vote independent & green.

These are some of the tricks you need to be aware of when examining such 'news'.

The only power you have is how you spend your money. That's the only thing business listens to - buy green, let them fail.

[Geoff3DMN]

Originally Posted by iTy

Wasn't the last Australian recession something like 8-9 std deviations from the norm (I recall my stats teacher claiming that, but needs to be verified)? So for a catastrophic collapse to occur, it would have be greater than that?

I suspect that your stats teacher is a neoclassisist

If you believe that school of thought then yes... there is little to worry about.

I prefer the Austrian School

[iTy]

Originally Posted by Geoff3DMN

I suspect that your stats teacher is a neoclassisist

If you believe that school of thought then yes... there is little to worry about.

I prefer the Austrian School

I must admit its seems odd, but then again its probably my memory playing up again. I was hoping someone here actually knew what it was.

Either way, point is, if the recession was out of the ordinary, then a full catastrophic failure is even more extraordinary.

I do agree that the GEF/GFC is helping the big companies condition the public to their bad plans.

As an example, my previous employer did not hesitate to announce that due to economic conditions, there would be no annual bonuses/pay rises etc. This was announced mid-late 2007. That was because of the US house prices crashing. Whilst at the same time, offshore alot of design work to Jakarta. Just found out that they cut 10% recently with another looming cut next qtr.

By the way, the company does large Defence contracts and major infrastructure projects and of course oil & gas.

[Vapours]

Originally Posted by crunchysteve

It's funny how those who trumpet loudest, "Free market!!!!" are the ones most likely to hold out the tin cup when the free market bites them.

Corporate socialism. AKA, blatant hypocrisy.

[Rant]

Originally Posted by Vapours

Corporate socialism. AKA, blatant hypocrisy.

- corporate welfare - and it happens every day, corporations blackmailing governments into giving them a handout to start/keep their business in the state/country

this discussion is prescient

- Holden and Ford have not made a profit in Australia (inconceivable as that might sound) , for years now, losing millions each year in fact (even more inconceivable, do I hear you say??)

- watch what happens, whether or not the parent companies go under, what pressure is applied to the Australian government, for the sake of Australian jobs (and foreign corporations' profits, but that's secondary, naturally)

- our government might be better putting that money into Australian companies to make them leaders in the new green economy

what are the chances?