Topic: Every GM Car Subsadised by Taxpayers for $12,200

[Patate]

The Canadian bailout for Chrysler alone works out to $340,000 PER employee.  Would have been cheaper to send them to university for 4 years.......

You do know that for that $3.2 billion paid to Chrysler, we only got 2% and only one member on the board, right?  Terrible "investment"....

So you want to become a service-based economy? It doesn't work

We need workers like the GM assembly line workers.  With automatisation, those jobs will likely become more skilled but we need them anyway.  Service-based economies import everything that they consume.  The result is that their money loses its value over time.  The US is different because the USD is the one used to trade oil barrels, and certain countries use this dollar for their tresaury.  This will not always be the case, and we are at the point where the BRIC (Brasil, Russia, India and China.. and you can also add Korea and Japan) can decide to do without the USD.  Guess what will happen then? The USD will be worthless.

The US (and Canada) needs to keep exporting to stabilize its economy.  Saying GM and Ford is useless to the economy is simply ignorant.  It's not companies like Tesla or Fisker that will take the slack.

[rrocket]

The Canadian bailout for Chrysler alone works out to $340,000 PER employee.  Would have been cheaper to send them to university for 4 years.......

You do know that for that $3.2 billion paid to Chrysler, we only got 2% and only one member on the board, right?  Terrible "investment"....

So you want to become a service-based economy? It doesn't work

Not at all.  But for the money spent for a company that is unlikely to survives, or at the very least repay the loans, it's a waste.  That same $3.2 billion could have went a looong way to lure other manufacturers to do business here.

And while you are correct that exports ARE very important to our economy...Chrysler is a net IMPORTER of vehicles in Canada, not an net exporter. 

And the devaluing of the US dollar currently has more to do with crushing budget deficit, national debt and out-of-control spending (firing up the money printing presses de-values the dollar too).  And in the worlds eye's when you seem unable to pay of your debt (USA) and can't keep spending in check,  people lose faith in that currency. 

[articsteve]

Viewed from today’s vantage point, the auto bailout is troublesome in a number of respects. As already noted, the bailout has become a taxpayer quagmire, escape from which will be a major public policy challenge. The recommendations offered by the GAO have much merit, especially those focused on developing an exit plan and on ensuring during the interim that management of the three firms is insulated from political pressures. Sound business practices, not special interest advocacy, should prevail. Both require that a qualified, objective and independent team be given full access to current information about the firms’ operating and financial conditions.

Greater transparency should be achieved so that taxpayers will be better able to understand both issues and outcomes. In particular, taxpayers as part-owners of each of the three firms should be given the same information, on the same timely basis, that public corporations routinely would be required to provide shareholders.

More generally, the bailout has been a sobering experience whose adverse consequences cannot be corrected easily. Auto producers whose products American consumers find most appealing have been notably missing from the roster of bailout recipients. Our subsidies instead have gone to the poor performers, firms whose past management decisions proved faulty. As a result the bailout has created moral hazard problems, inadvertently handicapping the progress of stronger, non-subsidized producers. The problems extend beyond just the auto industry, as favored status for one financial company and its bank necessarily complicates prospects for non-subsidized rivals. The time has come to stop such bailouts, and in an orderly way, to seek at least some recovery for taxpayers.

[Erik]

Not at all.  But for the money spent for a company that is unlikely to survives, or at the very least repay the loans, it's a waste.  That same $3.2 billion could have went a looong way to lure other manufacturers to do business here.

And while you are correct that exports ARE very important to our economy...Chrysler is a net IMPORTER of vehicles in Canada, not an net exporter. 

And the devaluing of the US dollar currently has more to do with crushing budget deficit, national debt and out-of-control spending (firing up the money printing presses de-values the dollar too).  And in the worlds eye's when you seem unable to pay of your debt (USA) and can't keep spending in check,  people lose faith in that currency. 

Where did that debt come from? HUGE, unsupportable trade deficits. A trade deficit is a loss of wealth in a country. It is just money that leaves and never comes back. No economy can afford trade deficits moving towards a trillion dollars. Wealth, as the Japanese and Chinese know very well, and the Americans and the British USED to know very well, comes from exports. It is the trade deficits that have devalued the US currency. Knocked it off the gold standard almost 40 years ago, and it has basically been down hill from there.

[rrocket]

Not at all.  But for the money spent for a company that is unlikely to survives, or at the very least repay the loans, it's a waste.  That same $3.2 billion could have went a looong way to lure other manufacturers to do business here.

And while you are correct that exports ARE very important to our economy...Chrysler is a net IMPORTER of vehicles in Canada, not an net exporter. 

And the devaluing of the US dollar currently has more to do with crushing budget deficit, national debt and out-of-control spending (firing up the money printing presses de-values the dollar too).  And in the worlds eye's when you seem unable to pay of your debt (USA) and can't keep spending in check,  people lose faith in that currency. 

Where did that debt come from? HUGE, unsupportable trade deficits. A trade deficit is a loss of wealth in a country. It is just money that leaves and never comes back. No economy can afford trade deficits moving towards a trillion dollars. Wealth, as the Japanese and Chinese know very well, and the Americans and the British USED to know very well, comes from exports. It is the trade deficits that have devalued the US currency. Knocked it off the gold standard almost 40 years ago, and it has basically been down hill from there.

Well the Iraq/Afghan wars are ringing in and around a Trillion dollars thus far (in the USA)....That hasn't helped matters any to be sure...

[toolatecrew]

One can argue that 12,000 number until they are blue in the face. Does it really amtter if its 12,000 per car or $2000 per car. What comes out of this report that cannot be disputed is this quote:

More generally, the bailout has been a sobering experience whose adverse consequences cannot be corrected easily. Auto producers whose products American consumers find most appealing have been notably missing from the roster of bailout recipients. Our subsidies instead have gone to the poor performers, firms whose past management decisions proved faulty. As a result the bailout has created moral hazard problems, inadvertently handicapping the progress of stronger, non-subsidized producers. The problems extend beyond just the auto industry, as favored status for one financial company and its bank necessarily complicates prospects for non-subsidized rivals. The time has come to stop such bailouts, and in an orderly way, to seek at least some recovery for taxpayers.

[tpl]

One can argue that 12,000 number until they are blue in the face. Does it really amtter if its 12,000 per car or $2000 per car. What comes out of this report that cannot be disputed is this quote:

More generally, the bailout has been a sobering experience whose adverse consequences cannot be corrected easily. Auto producers whose products American consumers find most appealing have been notably missing from the roster of bailout recipients. Our subsidies instead have gone to the poor performers, firms whose past management decisions proved faulty. As a result the bailout has created moral hazard problems, inadvertently handicapping the progress of stronger, non-subsidized producers. The problems extend beyond just the auto industry, as favored status for one financial company and its bank necessarily complicates prospects for non-subsidized rivals. The time has come to stop such bailouts, and in an orderly way, to seek at least some recovery for taxpayers.

In my experience, governments always manage to subsidize the losers whether they are failing industries, individual companies, groups of people or individuals.   I don't know why this is so but in the palces I have lived ( UK and Canada) it just seems to be so.   Subsidies are not always monetary but usually there is money involved. Often they are disguised as social programs for the disadvantaged ( I'd count the GM/Chrysler bailouts in this group with my tongue firmly in my cheek)

I don't see it all changing unfortunately.

[Honda Owner]

tpl makes a good point. The UK spent billions of pounds trying to prop up the UK car industry to no effect except raising people's taxes. The arguments in support of doing it were, at the time, exactly the same as we are hearing on this board now. After years of such madness the UK car industry finally collapsed on its own incompetence. The same will happen here.

As for the "keep jobs in Canada" line, Canada does not have a native car industry but it does have a good work force. Factory space made vacant by the moribund GM and Chrysler will be utilised by successful operations such as Honda and Toyota. Enticing Hyundai into Canada would be an excellent policy and I can see a place for VW, too. All these companies will be around in the distant future and our tax dollars would be much better spent giving them incentives to make cars here rather than companies that are going to die anyway.

[toolatecrew]

tpl makes a good point. The UK spent billions of pounds trying to prop up the UK car industry to no effect except raising people's taxes. The arguments in support of doing it were, at the time, exactly the same as we are hearing on this board now. After years of such madness the UK car industry finally collapsed on its own incompetence. The same will happen here.

As for the "keep jobs in Canada" line, Canada does not have a native car industry but it does have a good work force. Factory space made vacant by the moribund GM and Chrysler will be utilised by successful operations such as Honda and Toyota. Enticing Hyundai into Canada would be an excellent policy and I can see a place for VW, too. All these companies will be around in the distant future and our tax dollars would be much better spent giving them incentives to make cars here rather than companies that are going to die anyway.

Actually its quite unlikley that most if any GM/Chryco factories would ever be used by another manufacturer. Why? The CAW gets a lifetime claim on the factory or even a future factor built on that land.

Even if the government repossed a factory say for back taxes and offered it to VW for $1 they probaly would not take it becuase they would be forced to have a CAW workforce.

Although the absolute amounts are much lower the neagtive effects of this subsidization are much worse in Canada. Since we don't have any Canadian car compaines.

In terms of effects on Canadian economy all manufacturers are essentially equal. A job is a job whether toyota pays you or GM pays you. GM and Crhyco are US companies and decsions are made in the US that control the Canadian operations. Most Canadian produced cars (regardless of make) are exported to the US anyways. It makes little difference if we export GMs or Honda's. It makes little difference if we import Chevy Cobalts or VW Beetles.

The concern should be spending money on companies that will put sustainable production in Canada regardless of where their head office might be .

[Sir Osis of Liver]

Viewed from today’s vantage point, the auto bailout is troublesome in a number of respects. As already noted, the bailout has become a taxpayer quagmire, escape from which will be a major public policy challenge. The recommendations offered by the GAO have much merit, especially those focused on developing an exit plan and on ensuring during the interim that management of the three firms is insulated from political pressures. Sound business practices, not special interest advocacy, should prevail. Both require that a qualified, objective and independent team be given full access to current information about the firms’ operating and financial conditions.

Greater transparency should be achieved so that taxpayers will be better able to understand both issues and outcomes. In particular, taxpayers as part-owners of each of the three firms should be given the same information, on the same timely basis, that public corporations routinely would be required to provide shareholders.

More generally, the bailout has been a sobering experience whose adverse consequences cannot be corrected easily. Auto producers whose products American consumers find most appealing have been notably missing from the roster of bailout recipients. Our subsidies instead have gone to the poor performers, firms whose past management decisions proved faulty. As a result the bailout has created moral hazard problems, inadvertently handicapping the progress of stronger, non-subsidized producers. The problems extend beyond just the auto industry, as favored status for one financial company and its bank necessarily complicates prospects for non-subsidized rivals. The time has come to stop such bailouts, and in an orderly way, to seek at least some recovery for taxpayers.

Link? Sounds like the zombie Ayn Rand has found the interweb.

Not exactly sure why people are getting so uptight over this particular event. When it comes to subsidies, it's a drop in the bucket. The oil and gas industry gets, on average $1.4B a year in subsidies, and will likely be getting more in the next few years.

[articsteve]

Link? Sounds like the zombie Ayn Rand has found the interweb.

Normally I would, but in this instance I think it best I don't.  Simply put, I don't think you can handle the truth and your not alone, Sir!   

[Sir Osis of Liver]

Link? Sounds like the zombie Ayn Rand has found the interweb.

Normally I would, but in this instance I think it best I don't.  Simply put, I don't think you can handle the truth and your not alone, Sir!   

Now that made me chuckle!

[Erik]

Well the Iraq/Afghan wars are ringing in and around a Trillion dollars thus far (in the USA)....That hasn't helped matters any to be sure...

Drop in the bucket, actually. (large drop in a large bucket, admittedly!)

The US sends more money out of the country every year in trade deficits than the total cost of the Iraq war to date. The last year of a trade surplus in the US was 1991.

 The Iraq war is at 702 billion. Equivalent to two years of trade deficits with China. Afghanistan is 232 billion.

The difference is, that the US could stop the bleeding of cash in these areas almost immediately by pulling out. No immediate solution to the trade deficit.

The US sends more money out of the country every year in trade deficits than the total cost of the Iraq war to date. The last year of a trade surplus in the US was 1991.

[Honda Owner]

The last year of a trade surplus in the US was 1991.

Good points. All dying empires in history have descended to reverse imperialism.

[Sival]

One can argue that 12,000 number until they are blue in the face. Does it really amtter if its 12,000 per car or $2000 per car. What comes out of this report that cannot be disputed is this quote:

More generally, the bailout has been a sobering experience whose adverse consequences cannot be corrected easily. Auto producers whose products American consumers find most appealing have been notably missing from the roster of bailout recipients. Our subsidies instead have gone to the poor performers, firms whose past management decisions proved faulty. As a result the bailout has created moral hazard problems, inadvertently handicapping the progress of stronger, non-subsidized producers. The problems extend beyond just the auto industry, as favored status for one financial company and its bank necessarily complicates prospects for non-subsidized rivals. The time has come to stop such bailouts, and in an orderly way, to seek at least some recovery for taxpayers.

In my experience, governments always manage to subsidize the losers whether they are failing industries, individual companies, groups of people or individuals.   I don't know why this is so but in the palces I have lived ( UK and Canada) it just seems to be so.   Subsidies are not always monetary but usually there is money involved. Often they are disguised as social programs for the disadvantaged ( I'd count the GM/Chrysler bailouts in this group with my tongue firmly in my cheek)

I don't see it all changing unfortunately.

The "winners" don't need assistance, why would the government subsidize profitable businesses? The idea of subsidies for what you call "losers" is often to help those "losers" become "winners" and keep alive competition, the one regulating mechanism of a free market. One example is in Japan, following WWII, the car industry was a joke compared to cars made in America, they were uncompetitive on nearly every front, but the Japanese government supported its industry and deployed protectionnist measures to help the "losers". Now, decades later, the Japanese car industry is considered by many as the benchmark all other national industries aspire to. Chrysler in the 70s was near bankruptcy, but it got a loan and became an extremely competitive car company in the 80s and early 90s, inventing the minivan segment by itself and making some of the most competitive cars ever designed and made in the US (the Neon, the Cloud Cars and the Intrepid/Concord, they had reliability problems but they were still very competitive for the time, check contemporary reviews), unfortunately Daimler screwed them but that's another story.

Subsidies and protectionnism have their place in a sensible national economic policy. They are neither good nor bad inherently, it is how and when they are used that make them beneficial to society or not. Subsidies that allow an industry to stop innovating and become lazy are bad ones, but subsidies that give a struggling industry the capital to rebuild itself and go back into the fray refreshed and confident are good for everyone.

[Honda Owner]

Subsidies and protectionnism have their place in a sensible national economic policy

I agree if they lead to a sustained and profitable enterprise that maintains a stable work force and tax base. So, for example, I would support our tax dollars being used to entice a company like Hyundai to expand into Canada since Hyundai is a profitable and dynamic company. Same for Honda, which could use the vacant factory space in Southern Ontario to produce even more cars here than it does.

I am somewhat leery of throwing my tax dollars at organisations that are so obviously failures.

[blur911]

Subsidies and protectionnism have their place in a sensible national economic policy

I agree if they lead to a sustained and profitable enterprise that maintains a stable work force and tax base. So, for example, I would support our tax dollars being used to entice a company like Hyundai to expand into Canada since Hyundai is a profitable and dynamic company. Same for Honda, which could use the vacant factory space in Southern Ontario to produce even more cars here than it does.

I am somewhat leery of throwing my tax dollars at organisations that are so obviously failures.

Maybe they could use the abandoned Hyundai plant in Bromont, Quebec that taxpayer dollars already basically payed for .  It's barely used, they shut it down after only 4 years of production.

We've BTDT 20 years ago, do we want to try it again, only cost about $320 million Canadian taxpayer dollars the first time.

[Juke1]

Excellent

http://www.reuters.com/article/companyNews/idUSN2536123620091125?pageNumber=1&virtualBrandChannel=11617

[safristi]

..Aaaahhh if it were all so simple...................as an aside  ....are all the REGAL employees ....OV'R 65 .....s'cuse me i'm gonna LaCrosse maself....................