Welcome to City-Data.com Forum!
U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > U.S. Forums > Alabama > Huntsville-Madison-Decatur area
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 10-31-2012, 11:19 AM
 
1,134 posts, read 2,853,167 times
Reputation: 490

Advertisements

Sorry for writing a book here... I like to write and I love a good soapbox.

Quote:
Originally Posted by phantomplan View Post
No. Not true. There's a heck of a lot more businesses that have filed for straight bankruptcy rather than having received a Gov't bailout to try and keep them afloat. I wasn't a fan of it initially, and hate the idea of it now.
I stand by what I said. GM is not the first company to get a bailout. Obviously more businesses are allowed to go bankrupt. By no means am I saying the gov should bailout every failing company, and you're welcome to be opposed to the practice, but its nothing new. Heck, most of them even happen during Republican administrations. History of U.S. Gov’t Bailouts - ProPublica

One of the companies that might not exist today if not for such a bailout is actually a major employer locally: Lockheed.

Quote:
Originally Posted by phantomplan View Post
No, not really. You're saying that the bailout was overall a good idea because...it was a big corporation--in a nutshell. That doesn't make sense to me! We used taxpayer dollars to sustain GM, who is now focusing on shifting more manufacturing over to China to stay competitive. Don't get me wrong, I can't fault them for investing in China in today's global economy. But that's where those taxpayer dollars are going.
That's overly simplistic. I'm saying that if you agree that the government should spend to stimulate demand in a recession, then proping up a major employer that got caught with its pants down when the bottom fell out is easy stimulus. Its sort of a question of "would GM have failed if not for the economy reaping the results of the gimmicky practices of the financial industry?" I'm inclined to say no, at least not yet anyway. And remember the hunt for "shovel-ready" stimulus projects? In GM you had hundreds of thousands of people who would have otherwise been unemployed. That's a hell of a shovel-ready project so to speak - and one that isn't necessarily just burning money depending on what happens with GM. If you're against spending to create demand, then it ends there for you. However, using public demand to pick up the slack from private demand in order to shorten/mitigate a recession has been an important tool of economic policy for the past 70+ years. The average pre-Keynesian recession lasted substantially longer than modern recessions thanks to these sorts of policy tools.

GM itself has at least 46 plants in the United States right now. Add in domestic suppliers to those plants, then add in the service industry all of those jobs support... no matter how fast GM wants to go to China (which honestly, I don't know), the overwhelming majority of those jobs will still be right here at home in 5 years. Assuming it happens at all, given that its not always better to make something in China, it still takes time... and hopefully in the meantime the economy has picked up from its crisis point sufficiently to absorb those unemployed. Even better, if you're going to lose those jobs anyway, better that it happen steadily and slowly than having a major dump of hundreds of thousands of people at once.

Quote:
Originally Posted by phantomplan View Post
Again, totally false and that metaphor makes no sense in this case. The world is not going to end just because we didn't throw $50 billion in taxpayer dollars to an automaker when we have a ton of them already. There's plenty of others, and those other businesses will grow as a result of being managed responsibly. Instead, Obama has made sure that all those responsible businesses receive some Government-subsidized competition. What would have happened if we didn't intervene? I can't tell the future, but if it's like others in the past, it would have been a shutdown of GM, which would have led to an open auction of assets to the surviving automakers, and car buyers would have shifted to surviving companies’ products and auto-making jobs would have migrated to those same survivors. And we could have spent the taxpayer money on so many other infrastructure improvements instead.
Everything I said is true and anyone who has taken a single Macro Econ course should know it. No, the world will not end... it will simply suffer a longer slump. But also, the bailout did not grant GM any competitive advantage over other companies.

If we didn't intervene, GM would have shutdown, hundreds of thousands of people would have lost their jobs (I recall reading estimates over a million once you figure the trickle down effect in service industries) at a time when the economy was already bleeding jobs. This glut of unemployment and added fear would have suppressed private demand further as people put off buying a new car or what have you until safer times. Most of those unemployed people wouldn't be able to find jobs elsewhere given the state of the economy at the time and they would have gone on to collect unemployment benefits for an extensive period of time. How many would have lost their homes? Cars? So they're not paying taxes anymore and they're adding to the deficit. It would take YEARS for the remnants of GM to be recycled.

In the long-run you're absolutely right, eventually those people would find employment and other companies would simply pick up the marketshare. But as they say, in the long run we're all dead. You make it sound like its a short and sweet process... its not. These are real people we're talking about having to undergo severe hardship at the worst possible time - an economy unable to absorb them elsewhere. It would be YEARS in the making. Why is Ford going to build a new domestic plant while its having a tough time moving the cars it already produces because unemployment is so high? This is the chicken and the egg situation that justifies stimulus, and a major reason recessions don't last as long as they used to. A job saved is the same as a job created in this context. I doubt that many jobs could even be absorbed in "infrastructure projects" for the same "price". GM is still profitable. Its revenues of 150 Billion a year bear its employment. Its suppliers are profitable... etc etc. What is the net gain or overall value to the economy of all of that remaining in place even just a few more years versus the government possibly losing 25-50 Billion? We as taxpayers made marginal contributions to the 50 billion, and diluted through its impact on the economy, we receive marginal benefits for several years.

Quote:
Originally Posted by phantomplan View Post
So to paraphrase what you're saying: "Worst case, our Government was already flushing taxpayer dollars down the toilet on policies that had no/litle impact on our economy, so what's another 50 billion going to hurt?"50

I respect your opinion on most things and think you're very eloquent with your responses, but I just don't get it on this one. We probably won't see eye to eye. I just wish your last response ended with "Oh, and I have a crap ton of stock invested in GM". I could at least then go, "Aaaah, okay."
Actually, I'm saying the 50 billion to GM was better stimulus than most of the rest. Instantaneously you had hundreds of thousands of jobs, maybe over a million, that continued to exist for several years that otherwise wouldnt have. I understand you're not behind the concept of stimulus spending in the first place though. I could make more of a case for it, but its not numbers that keep you in your camp. I've found in my conversations with conservatives its a psuedo-moralistic thing: "Well, GM messed up, my money shouldn't go to help them. I don't get anything from it and they still might fail. The market will work this out itself. Now you justify them taking excessive risk etc." Its the same argument made against stimulus spending. Its mostly a fine case, but too limited for my taste. I don't worry too much about the guy who messed up paying for his mistakes as I worry about what is best for the economy right now. If a bailout means significantly less economic and personal pain (ie, get us out of a recession sooner) than no bailout, I'm all for it and we'll sort the rest out later. A mostly free market with rules and occassional nudges to advance the common good. I think there's a balance between practical intervention and rigid principle, and it just happens that the crisis justified a heavy swing to government intervention for a little while.

Oh and I do have a crap ton of stock invested in GM. Just kidding.

Last edited by DvlsAdvc8; 10-31-2012 at 11:29 AM..
Reply With Quote Quick reply to this message

 
Old 10-31-2012, 04:04 PM
 
159 posts, read 381,063 times
Reputation: 102
Quote:
Originally Posted by DvlsAdvc8 View Post
Oh and I do have a crap ton of stock invested in GM. Just kidding.
Haha, I knew it!

In all seriousness, I get your point and respect it, we just absolutely, totally, fundamentally disagree in opinion on the social and economic impacts and pros/cons of the bailout versus bankruptcy.

The only thing that left a bad taste in my mouth from your response was:
Quote:
Originally Posted by DvlsAdvc8 View Post
Everything I said is true and anyone who has taken a single Macro Econ course should know it.
I wouldn't use that as justification to your opinions, it has a conceited undertone to it and doesn't give an opinion any extra credibility. (I'm sure you didn't mean it to come off that way though) My philosophy major friend does that all the time to try and make his opinion sound more...right. lol
Reply With Quote Quick reply to this message
 
Old 11-01-2012, 10:06 AM
 
1,134 posts, read 2,853,167 times
Reputation: 490
Quote:
Originally Posted by phantomplan View Post
I wouldn't use that as justification to your opinions, it has a conceited undertone to it and doesn't give an opinion any extra credibility. (I'm sure you didn't mean it to come off that way though) My philosophy major friend does that all the time to try and make his opinion sound more...right. lol
Yeah that might have been over the top. I wasn't trying to come off that way but re-reading it now I would have said something different. Much respect to you for not blowing up over it. I was trying to say that the use of public spending (public demand) to hold up the economy when private demand is suppressed (unemployment reality or fear, uncertainty, over-extended credit, lack of lending etc etc etc) is well proven. It helps put the brakes on the downward spiral that happens when an economy starts shedding jobs and contracting. In a contraction, a large share of jobs lost are lost unnecessarily as a result of potential consumer spending being withheld out of uncertainty (ie even people who keep their jobs cut back, and that cut back ends up costing more jobs). Increases in public demand pick up that excess slack, slowing the downturn and restoring confidence sooner than would otherwise occur. The sooner you return to a stable, growth-ready situation the better... and while its obviously bad in terms of budget deficits, its mitigated by the impact to overall GDP and growth in coming years. In those terms, a worst case scenario of $50 billion spent to keep hundreds of thousands, maybe a million jobs, even if only for a few years... is quite a bargain. The economy could not absorb that many people at the time, or even right now, so also consider that we would have been spending on unemployment benefits anyway.

The principle is so well established that even the Congressional Budget Office typically assumes a multiplier effect of 1.4 for most stimulus spending. The multiplier will vary by where the money goes, the greatest multiplier to the economy coming from those with the highest marginal propensity to consume: the poor. Give them another dollar, it almost certainly gets spent rather than saved. So while you might think of libs like me as just being a bunch of wasteful bleeding hearts, in reality helping needy people is really just a nice side effect of an effort to kick the economy back into growth by propping up demand. On the other side, the multiplier effect of an across the board tax cut according to the CBO is more like 1.1 becasue most of that money goes to the people who pay the most in taxes, wealthy people with the lowest marginal propensity to consume. These people have already met most of their wants/needs and more money typically doesn't change their spending habits much at all - an increased portion of it is saved. I always loved what they called it in economics classes: "helicopter money" ... the point was made that it was better to drop money on poor people from helicopters during deflationary periods than do nothing. The reason being that they will spend it all and employers will need to hire to meet that demand... voila, economic growth. The only risk is inflation, but in an economy suffering from excess private debt burden, high unemployment, AND the prime rate near zero... you won't get significant inflation without growth. In all honesty, a higher inflation target would be great for the economy right now in that it would lessen the burden of debt that is a main constraint on consumer spending. Sucks for the lenders and savers in the short run, but the faster return to good growth is better for both in the long run, and lending and saving are mostly longer run activities... and the people engaging in them aren't feeling even remotely the same pain as someone unemployed. One's approach mostly depends on which side of moralistic vs pragmatic thing one falls.

Last edited by DvlsAdvc8; 11-01-2012 at 10:39 AM..
Reply With Quote Quick reply to this message
 
Old 11-07-2012, 10:49 AM
 
65 posts, read 90,160 times
Reputation: 56
Interesting and pessimistic comment about the upcoming fiscal cliff....

"One factor is that Speaker of the House John Boehner will have to appeal to the right-wing of his party in order to win re-election to his post when the new Congress meets in January, Collender said. This means no compromises during the lame duck session."
Reply With Quote Quick reply to this message
 
Old 11-07-2012, 11:04 AM
 
Location: Madison, AL
3,297 posts, read 6,225,556 times
Reputation: 2678
People need to STOP blaming Republicans....and Democrats. BOTH are at fault. NEITHER will compromise. It is BOTH SIDES.

Obama set a very bad tone in the beginning of his first term when stating "elections have consequences". The Democrats have been just as bad at being stubborn as the Republicans have.

That is Obama's problem....a good President has the ability to bring the parties together, but all Obama has accomplished is driving them further and further apart.
Reply With Quote Quick reply to this message
 
Old 11-07-2012, 11:38 AM
 
130 posts, read 250,640 times
Reputation: 180
Its obvious this radically liberal party will cut Defense spending so will that lead to lay offs in Huntsville at Redstone? Isnt it sad when Defense of the nation takes a backseat to growing peoples dependancy on the government. These social and hand out programs will grow over the next yr and if i were a Redstone employee i would have my resume ready.
Reply With Quote Quick reply to this message
 
Old 11-07-2012, 03:03 PM
 
1,134 posts, read 2,853,167 times
Reputation: 490
Quote:
Originally Posted by LCTMadison View Post
People need to STOP blaming Republicans....and Democrats. BOTH are at fault. NEITHER will compromise. It is BOTH SIDES.

Obama set a very bad tone in the beginning of his first term when stating "elections have consequences". The Democrats have been just as bad at being stubborn as the Republicans have.

That is Obama's problem....a good President has the ability to bring the parties together, but all Obama has accomplished is driving them further and further apart.
Elections do have consequences. The party in power gets to pass its agenda. Democrats go out of their way to compromise so much they often give up the store as far as I'm concerned. Heck, even "Obamacare" is missing the public option, and the concept is based on Republican ideas from the 80s. Liberals wanted a single payer system. Obamacare IS a compromise.

As far as the budget goes, Democrats want more revenue. Republicans want less spending. Obama offered a 2.5:1 ratio of spending cuts to tax increases, with every program on the table - the so called "grand bargain". What is compromise if that is not it? Republicans turned it down because they refused ANY tax increase.

You can't bring sides together if one side refuses to budge from its original position.

Last edited by DvlsAdvc8; 11-07-2012 at 04:14 PM..
Reply With Quote Quick reply to this message
 
Old 11-07-2012, 03:28 PM
 
159 posts, read 381,063 times
Reputation: 102
Quote:
Originally Posted by DvlsAdvc8 View Post
I was trying to say that the use of public spending (public demand) to hold up the economy when private demand is suppressed (unemployment reality or fear, uncertainty, over-extended credit, lack of lending etc etc etc) is well proven.
What does that have to do with the GM bailout? In the past four years we've seen a $5 trillion national debt increase. At the same time, we've seen crazy high unemployment rates. If Government could spend its way to happiness for everyone...we'd have been very happy the past four years

Quote:
Originally Posted by DvlsAdvc8 View Post
It helps put the brakes on the downward spiral that happens when an economy starts shedding jobs and contracting. In a contraction, a large share of jobs lost are lost unnecessarily as a result of potential consumer spending being withheld out of uncertainty (ie even people who keep their jobs cut back, and that cut back ends up costing more jobs). Increases in public demand pick up that excess slack, slowing the downturn and restoring confidence sooner than would otherwise occur.
Throwing money at anything always helps short-term, you're making an obvious point. That doesn't mean it is a good long-term ROI.

Quote:
Originally Posted by DvlsAdvc8 View Post
and while (public spending) is obviously bad in terms of budget deficits, its mitigated by the impact to overall GDP and growth in coming years.
That is not true, and that isn't how economics work. GDP doesn't matter if debt is increasing faster. The real metric you should be looking at is debt as a percentage of GDP. Over the past several years we've seen a steep worsening trend for debt as a percentage of GDP. 2009-86.4%, 2010-95.1%, 2011-98.7%, 2012-101.7%. Meaning, our debt is growing faster than GDP. So your argument of using GDP as a mitigator to spending isn't valid. It's obvious that the spending over the last several years has left us in worse conditions.

Quote:
Originally Posted by DvlsAdvc8 View Post
The principle is so well established that even the Congressional Budget Office typically assumes a multiplier effect of 1.4 for most stimulus spending. The multiplier will vary by where the money goes, the greatest multiplier to the economy coming from those with the highest marginal propensity to consume: the poor. Give them another dollar, it almost certainly gets spent rather than saved. So while you might think of libs like me as just being a bunch of wasteful bleeding hearts, in reality helping needy people is really just a nice side effect of an effort to kick the economy back into growth by propping up demand. On the other side, the multiplier effect of an across the board tax cut according to the CBO is more like 1.1 becasue most of that money goes to the people who pay the most in taxes, wealthy people with the lowest marginal propensity to consume. These people have already met most of their wants/needs and more money typically doesn't change their spending habits much at all - an increased portion of it is saved. I always loved what they called it in economics classes: "helicopter money" ... the point was made that it was better to drop money on poor people from helicopters during deflationary periods than do nothing. The reason being that they will spend it all and employers will need to hire to meet that demand... voila, economic growth.
I think you're getting off in the weeds on me here with the rich vs. poor blah blah philosophy stuff. It's just fluff. Big stimulus spending during recessions in general isn't a good vs. bad thing---stimulus spending should be applied responsibly on a case by case basis comparing pros/cons of short and long term impacts for each spending area. So I don't plan to debate stimulus spending in general with you--it's a waste of time. We're talking about the GM bailout.

Quote:
Originally Posted by DvlsAdvc8 View Post
In those terms, a worst case scenario of $50 billion spent to keep hundreds of thousands, maybe a million jobs, even if only for a few years... is quite a bargain.
Your numbers regarding jobs aren't accurate. GM North America employed 70,000 in the United States in June of 2009 (the rest were in Canada and Mexico) and 74,500 today. And that doesn't factor in tons of auto dealership closings. That's what our $50 billion (which we won't get back most of) did. Definitely not a bargain.


The GM bailout was a bad idea because we flushed taxpayer dollars down the drain, rewarded a company that failed to succeed in the market, and GM used it to re-structure on increasing manufacturing in China. They could have saved or spent the $50 billion in much smarter ways. And as I stated before, that would lead to GM shutting down with an open auction of assets to the surviving automakers, and car buyers would have shifted to surviving companies’ products and auto-making jobs would have migrated to those same survivors.

Quote:
Originally Posted by DvlsAdvc8 View Post
So while you might think of libs like me as just being a bunch of wasteful bleeding hearts
Nope, not at all, and I'm not judging you at all. I just haven't yet seen a valid argument for the GM bailout. I've seen generalizations that don't actually back it up.
Reply With Quote Quick reply to this message
 
Old 11-07-2012, 03:34 PM
 
159 posts, read 381,063 times
Reputation: 102
Quote:
Originally Posted by DvlsAdvc8 View Post
Elections do have consequences. The party in power gets to pass its agenda. Democrats go out of their way to compromise so much so they often give up the store as far as I'm concerned.
You're slightly biased. Just slightly.
Reply With Quote Quick reply to this message
 
Old 11-07-2012, 07:57 PM
 
340 posts, read 718,345 times
Reputation: 126
Boeing cutting 30% of executives at defense unit - MarketWatch

SRA International gives notice of 222 layoffs in Arlington - Washington Business Journal

Kratos Defense and Security may cut 125 jobs in Lanham - Baltimore Business Journal
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:


Settings
X
Data:
Loading data...
Based on 2000-2020 data
Loading data...

123
Hide US histogram


Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > U.S. Forums > Alabama > Huntsville-Madison-Decatur area
Similar Threads

All times are GMT -6.

© 2005-2024, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top