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2005 Apr 11, 5:00pm 189,846 views 117,730 comments
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Why do we allow some businesses to fail? Put the politics aside? Just end the discussion, its purely political
Because this was all about money. LOTS and lots of money. The simple question is:
Would you rather have paid more or less?
Its really that simple. Sure- had GM and Chrysler been allowed to fail maybe some right-wingers would have felt all warm and fuzzy inside... until the costs of having allowed that to happen would have been recognized.
All automakers have what are known as "platforms", which is to say a basic chassis or vehicular configuration that is used for the underlying structure of sometimes multiple models. On top of that those models might undergo several model redesigns but still use the same generation of platform. Some platforms are used for decades. For example, Chrysler was using some platforms that had been developed by AMC ( American Motor Corporation) in the 70's and early 80's right up until not too long ago.
Thank you for the gratuitous lecture on car platforms. I have no idea what you mean by "not too long ago." The change over was in the mid-1990's. How long have you been hiding under a rock? two decades? Platforms updates are becoming more frequent in the last decade and half. Platform engineering is gradually giving way to modular engineering that can be updated much quicker. Including for engines, even each cylinder as a module. If a supplier is still stuck in the platform business model, it is indeed a good time to go bankrupt, as the tooling would be quite obsolete already.
How was I making a "guess"? If you had made the choice then millions of people would have immediately been out of work and what would have definitely happened would be a huge cost in the form of unemployment insurance.
Or get rid of "unemployment insurance" altogether. It's just a system that attract people gaming the system and take 6mo to a year vacations.
As far as leaner operations, higher productivity, and better products, both GM and Ford had been doing exactly that leading up to the recession. Most of the products GM currently sells- of which many are selling very well- were developed well before the recession. That the recession came along was poor timing on a well-orchestrated turnaround in the works.
LOL, I suppose you would consider farmers who failed to harvest quickly enough and lost crop to the arrival of winter just a case of bad timing for the earth's tilted axis.
10B is nothing! We burn though that in 10/85th of a month (or less than 4 days). What the hell is everyone complaining about. The Fed could buy GM every 3 weeks (market cap of 56B). Geez
Good point. But the fed and their actions are just the boogeyman. No effect on anything, whatsoever
Hehehe.
tatupu70
2013 Dec 10, 1:28am
LOL, I suppose you would consider farmers who failed to harvest quickly enough and lost crop to the arrival of winter just a case of bad timing for the earth's tilted axis.
Yes, because the timing of recessions is just as well known as the seasons.
I'll give you this--at least you are consistent with your poor analogies.
Why do we allow some businesses to fail? Put the politics aside? Just end the discussion, its purely political
Because this was all about money. LOTS and lots of money. The simple question is:
Would you rather have paid more or less?
Its really that simple. Sure- had GM and Chrysler been allowed to fail maybe some right-wingers would have felt all warm and fuzzy inside... until the costs of having allowed that to happen would have been recognized.
Addressed this issue already: the bailout was merely a kick of the can down the road. It will come up soon enough again, given the industrial over-capacity and channel stuffing.
LOL, I suppose you would consider farmers who failed to harvest quickly enough and lost crop to the arrival of winter just a case of bad timing for the earth's tilted axis.
Yes, because the timing of recessions is just as well know as the seasons.
Longer seasonal cycles. GM financing arm was on the frontline of making car loans and home loans to uncreditworthy borrowers. What do you think would come next? If the practitioner could not expect what was bound to come next as consequence of those uncreditworthy loans, they deserved to go bankrupt.
Why do we allow some businesses to fail? Put the politics aside? Just end the discussion, its purely political
Because this was all about money. LOTS and lots of money. The simple question is:
Would you rather have paid more or less?
Its really that simple. Sure- had GM and Chrysler been allowed to fail maybe some right-wingers would have felt all warm and fuzzy inside... until the costs of having allowed that to happen would have been recognized.
Unemployment insurance is paid by payroll taxes, by people that work, just in case they find themselves out of work. It wouldn't have been so great unthinkable cost an order of magnitude greater than the bailouts.
Don't confuse unemployment insurance as some sort of welfare.
Thank you for the gratuitous lecture on car platforms. I have no idea what you mean by "not too long ago." The change over was in the mid-1990's. How long have you been hiding under a rock? two decades? Platforms updates are becoming more frequent in the last decade and half. Platform engineering is gradually giving way to modular engineering that can be updated much quicker. Including for engines, even each cylinder as a module. If a supplier is still stuck in the platform business model, it is indeed a good time to go bankrupt, as the tooling would be quite obsolete already.
Clearly you don't given that some platforms that Chrysler used in the 70's and 80's were still being used into the 2000's. The Ford Panther platform was used from 1978-2011, a full 30+ years. Not sure what you mean by "platform engineering is giving way to modular engineering" seeing as how every single current product model car on the planet utilizes some sort of platform. The term "platform" is generic. That would be like someone saying: " Oh yeah? Well frames in houses are now giving way to modular design." So exactly what do you think a "module" is anyway? Technically speaking its about making components in advance for a product- so in other words- mass manufacturing akin to an assembly line. I believe Henry Ford had this whole... " Modular design" thing down pat about 100 years ago. So pleased to find that you have discovered this unique concept. Reality says
Or get rid of "unemployment insurance" altogether. It's just a system that attract people gaming the system and take 6mo to a year vacations.
Your argument has now jumped the shark.
How long have you been living under that rock?? Workers don't move to another company when their current company closes?? Really??
Clearly not. You're the one who talks about the worker participation rate. Do you disagree that there are lots of people out there looking for jobs right now?
Do you think if GM went bankrupt, that number would be larger?
First of all, GM did go bankrupt, for the conventional creditors. So the old folks who had savings in GM bonds were shacked without getting anything from the sale of GM plants to would-be buyers. Having lost that principle, along with the loss of interest income thanks to FED ZIRP policy, the oldster savers are having less money to spend . . . therefore less jobs for the youngsters who would otherwise have jobs working for the oldster savers. On top of that, the oldster savers may have to look for Walmart greeter jobs, in direct competition against the youngsters! All this for what? To save the privileged income of banksters and some union members.
whatever happened to that perma-bear theory that rents only go up with income (chart #1)?
wait until the dollar bubble bursts (within 10 years according to my estimate) then watch the rents skyrocket when my mortgage remains the same.
If the dollar bursts, within 10 years, as you say; where will Japan, Europe and China be?
Clearly you don't given that some platforms that Chrysler used in the 70's and 80's were still being used into the 2000's. The Ford Panther platform was used from 1978-2011, a full 30+ years.
These are rare extreme exceptions for special purpose vehicles, like the the Crown Vic taxi car. There are always old tech special purpose vehicles. If a company's business model consistes of living off those extremely aged platforms selling as new cars, it deserves to go bankrupt at any time. The AMC platforms that you were talking about in your previous post were replaced in the mid-1990's, two decades ago.
Not sure what you mean by "platform engineering is giving way to modular engineering" seeing as how every single current product model car on the planet utilizes some sort of platform. The term "platform" is generic. That would be like someone saying: " Oh yeah? Well frames in houses are now giving way to modular design." So exactly what do you think a "module" is anyway? Curious minds want to know.
Modular engineering in carmaking means major components that are interchangeable and independently upgradable, unlike the previous platform engineering approach. BMW's "flexible manufacturing" led the new engineering approach.
Lastly, there is hardly an auto manufacture on earth that has not at one time gotten some sort of government bailout. Auto companies are important because they have an enormous economic impact on the countries the exist in and in each instance of those bailouts the decision was made not because of political ideology, but because of picking the better financial outcome of a bad financial situation.
Governments record of picking better financial outcomes is not what I would call great. The makers of horse drawn wagons had an enormous impact in the countries they existed. Should the ones that failed to make the decision to switch to cars have been bailed out? Companies that make bad business decisions should be in bankruptcy. If they can't work out a plan with the creditors to emerge then they should cease to exist.
You guys are all missing the point anyway. The 10.5 billion didn't save GM, it allowed the gm UAW workers to continue to have higher compensation than at the other automakers. Read up on the bailout and who got what. The UAW as a creditor got a very skewed percentage of the bailout at the expense of other creditors. Had the gm workers been cut to the industry average compensation the government wouldn't have lost a dime. That makes the bailout a calculated political play rather than any kind of altruistic concern for workers's jobs. Follow the money.
Anyone (there are many right here on patnet) who thinks that all the bailouts, auto and financial, were done on some kind of carefully considered basis after large amounts of analysis by industry experts needs to read neil barofsky's book. He was the ig for tarp. The amount of fast and loose playing with huge amounts of taxpayers money under paulson and geitner is pretty shocking. There are many times when word handout is more appropriate than than the word bailout. Want even better reading try Billionaires & Ballot Bandits: How to Steal an Election in 9 Easy Steps. Especially the parts about how romney made millions on the bailouts he condemned. and his hedge fund campaign contriibuters made billions. Follow the money.
tatupu70
2013 Dec 10, 1:52am
First of all, GM did go bankrupt, for the conventional creditors
True--poor choice of words.
Having lost that principle, along with the loss of interest income thanks to FED ZIRP policy, the oldster savers are having less money to spend
The interest income is low but so is the inflation rate. That's what happens during a recession. Oldster savers are not the drivers of an economy anyway.
tatupu70
2013 Dec 10, 1:53am
Companies that make bad business decisions should be in bankruptcy.
No kidding. Why do people keep arguing this as if anyone disagreed???
Companies that make bad business decisions should be in bankruptcy.
No kidding. Why do people keep arguing this as if anyone disagreed???
Because they aren't, and a whole bunch of them.
These are rare extreme exceptions for special purpose vehicles, like the the Crown Vic taxi car. There are always old tech special purpose vehicles. If a company's business model consistes of living off those extremely aged platforms selling as new cars, it deserves to go bankrupt at any time. The AMC platforms that you were talking about in your previous post were replaced in the mid-1990's, two decades ago.
Those were two examples of many others. You are incorrect about some of AMC's platforms as well, with one, for example used in the Dodge Intrepid well into the 2000's. Reality says
Modular engineering in carmaking means major components that are interchangeable and independently upgradable, unlike the previous platform engineering approach. BMW's "flexible manufacturing" led the new engineering approach.
This is nothing new. This in fact has almost always been the case right up to the advent of the auto assembly line. For example, Ford made numerous versions of the "Windsor" family of engines that ranged from V6 and V8 models and in many cases the same components were used. As a classic car owner myself I can attest to this, seeing as how many parts that will fit a 302 also happens to fit the 289, 351, and others.
tatupu70
2013 Dec 10, 2:01am
Companies that make bad business decisions should be in bankruptcy.
No kidding. Why do people keep arguing this as if anyone disagreed???
Because they aren't, and a whole bunch of them.
Not sure what you are trying to say there...
Having lost that principle, along with the loss of interest income thanks to FED ZIRP policy, the oldster savers are having less money to spend
The interest income is low but so is the inflation rate. That's what happens during a recession.
Not the consumer staples, and most certainly not medical expense.
Oldster savers are not the drivers of an economy anyway.
Unemployment takes place on the margins. Oldsters are the biggest net consumers, especially on discretionary spending.
Maybe,soon, we will totally exit both wars on which the Republicans happily enjoyed spending $4-$6 trillion.
Hope you Rep/Con/Teas enjoy dumping this tax burden on your children & grandchildren.
I forgot! We don't have to fund anything.
Cypher this. What % of $4 trillion is $10 Billion?
Tenpoundbass
2013 Dec 10, 2:12am
That's the problem with Keynesian economics, what happens next is a black box for them, they have no clue or idea what the end game is. Well they know, but by then those that create the Keynesian policies have already cashed out and living on an island.
While free markets are left to clean up the mess.
Anything is only worth what someone is either willing to pay, or capable of paying. Right now there's just too many "Willing" to pay high prices.
If home prices drop, then there will be many people who had to take their lumps. If home prices drop and it becomes too expensive to build, then the leaches, roaches and rats that have the natural and manufactured resources out of touch with fundamentals, will just have to pull out those investments as well. And the price becomes based on supply and demand.
If you make drywall, either you'll meet the demand at what ever price, or you'll simply fold and let another innovator take over who can meet those demands for that new set price.
Keynesian love to strike fear in everyone, if their standard of living falls, then all hell will break lose. And 90% of the bastards they preach that shit to, stand absolutely nothing to lose. In fact they would stand more to gain by the reality. As a seat at the Keynesian economic structure table is closed club, that takes an act of congress to get a seat at the table, to sell your solar panels, batteries, wind mills and god knows what all else.
Lets be clear they damn sure don't make things more affordable.
Supply and Demand will have its final say.
Those were two examples of many others. You are incorrect about some of AMC's platforms as well, with one, for example used in the Dodge Intrepid well into the 2000's
No not at all true. There were no common parts between the premier platform and the lh platform. Castaing used many idea's from the premier like engines mounted longitudinally, but no parts or tooling.
Those were two examples of many others. You are incorrect about some of AMC's platforms as well, with one, for example used in the Dodge Intrepid well into the 2000's.
If you are referring to Dodge Intrepid (and the LH platform), then you are arguing for me: the buyout of AMC by Chrysler did not end the LH platform.
Modular engineering in carmaking means major components that are interchangeable and independently upgradable, unlike the previous platform engineering approach. BMW's "flexible manufacturing" led the new engineering approach.
This is nothing new. This in fact has almost always been the case right up to the advent of the auto assembly line. For example, Ford made numerous versions of the "Windsor" family of engines that ranged from V6 and V8 models and in many cases the same components were used. As a classic car owner myself I can attest to this, seeing as how many parts that will fit a 302 also happens to fit the 289, 351, and others.
Nothing is ever new if you look back far enough. Even the electric car pre-dated the gasoline engine. The devil is in the details.
tatupu70
2013 Dec 10, 2:19am
Not the consumer staples, and most certainly not medical expense.
Overall inflation rate is low. Some things rise faster than the rate, some slower. That's why it's called a weighted average.
No not at all true. There were no common parts between the premier platform and the lh platform. Castaing used many idea's from the premier like engines mounted longitudinally, but no parts or tooling.
The LH platform was used on the Chrysler Concorde, Chrysler LHS, Chrysler 300M, Dodge Intrepid. The LH was in fact derived from an older AMC/Renault design. But even if we were to entertain the notion that the LH platform shared little with original, the fact is that the LH platform was used for decades in of itself, which then would back up the previous claim I had made previously that platforms and often components are manufactured for decades on end.
Not the consumer staples, and most certainly not medical expense.
Overall inflation rate is low. Some things are higher than the rate, some are lower. That's why it's called an weighted average.
How many new computers can an oldster buy and eat?
That's why "weighted average" is meaningless and prone to fraud when weighted by a bunch of bureaucrats.
Maybe,soon, we will totally exit both wars on which the Republicans happily enjoyed spending $4-$6 trillion.
Hope you Rep/Con/Teas enjoy dumping this tax burden on your children & grandchildren.
I forgot! We don't have to fund anything.
Cypher this. What % of $4 trillion is $10 Billion?
But we had to go into those wars. Can you imagine what the cost of not engaging in those wars would have been??
Those wars provided tons of jobs and economic activity. Had we not gone to war, the world probably would have stopped spinning.
The LH platform was used on the Chrysler Concorde, Chrysler LHS, Chrysler 300M, Dodge Intrepid. The LH was in fact derived from an older AMC/Renault design. But even if we were to entertain the notion that the LH platform shared little with original, the fact is that the LH platform was used for decades in of itself, which then would back up the previous claim I had made previously that platforms and often components are manufactured for decades on end.
The buyout of AMC by Chrysler did not abort the LH development. So what's your objection over some better management team taking over GM? in whole or in parts.
If you are referring to Dodge Intrepid (and the LH platform), then you are arguing for me: the buyout of AMC by Chrysler did not end the LH platform.
Quite the contrary actually, for if you were to read my previous response then you'd see that while yes- the AMC platform was the basis for the LH platform, that platform was itself used for decades, which further reinforces my previous statements.Reality says
Nothing is ever new if you look back far enough. Even the electric car pre-dated the gasoline engine. The devil is in the details.
Way to try to back out of a previous assertion by making bland and generalized comments. You were previously trying to suggest that "Modular engineering" is something totally new and different from platform design. A platform is a platform is a platform. Its the same as today with electronics in that almost every TV, stereo system, computer, and so on use a chassis to mount the surrounding electronic components and outer casing. You could take a radio from the 1920's and it too will also have a chassis, and just like cars, the same chassis design will often be employed across models. So what you were asserting earlier was sort of meaningless to start with.
The buyout of AMC by Chrysler did not abort the LH development. So what's your objection over some better management team taking over GM? in whole or in parts.
Because that option was NOT on the table. At the time of GM's bankruptcy, there were no offers from any other company to buy them. So the option was to either liquidate the company or to keep them from going under.
All I know is that I and probably the majority out there are very pleased that the sort of ideas you seem to be alluding to were not employed. Political ideology makes for very poor economics.
I'll have to invest before I read about anything I'm investing in."
tatupu70
2013 Dec 10, 2:29am
How many new computers can an oldster buy and eat?
That's why "weighted average" is meaningless and prone to fraud when weighted by a bunch of bureaucrats.
No, that's why a computer is weighted much, much less than food.
If you are referring to Dodge Intrepid (and the LH platform), then you are arguing for me: the buyout of AMC by Chrysler did not end the LH platform.
Quite the contrary actually, for if you were to read my previous response then you'd see that while yes- the AMC platform was the basis for the LH platform, that platform was itself used for decades, which further reinforces my previous statements
Either:
1. LH platform Gen1 was used from 1993-1997, Gen2 from 1998-2004, so barely 1 decade. or
2. Change of corporate ownership did not put an end to LH platform development.
Either way, your fear of end of the world if GM went bankrupt was quite unfounded.
Nothing is ever new if you look back far enough. Even the electric car pre-dated the gasoline engine. The devil is in the details.
Way to try to back out of a previous assertion by making bland and generalized comments. You were previously trying to suggest that "Modular engineering" is something totally new and different from chassis design. A platform is a platform is a platform.
I did not try to back out of anything. It's absurd to think just because electric cars were made in 1899, somehow a carmaker today switching from gasoline to electric would not involve tools and engineering approach that are entirely different from what they were doing a few years before the switch.
. For example, Ford made numerous versions of the "Windsor" family of engines that ranged from V6 and V8 models and in many cases the same components were used. As a classic car owner myself I can attest to this, seeing as how many parts that will fit a 302 also happens to fit the 289, 351, and others
Also not true. The windsor engines were 221 to 351 v8's. There was never a v6 windsor. They weren't at all modular. It was just the same block with bigger bores and longer strokes with a higher deck for the 351.
Ford's current "modular" engine series 4.6 v8 to 6.8 v10 doesn't refer to modular engine design, it refers to the manufacturing process.
How many new computers can an oldster buy and eat?
That's why "weighted average" is meaningless and prone to fraud when weighted by a bunch of bureaucrats.
No, that's why a computer is weighted much, much less than food.
The ratio is very different for different people. The expense on medicine as percentage of income is much much higher for certain demographics than for others.
Also not true. The windsor engines were 221 to 351 v8's. There was never a v6 windsor. They weren't at all modular. It was just the same block with bigger bores and longer strokes with a higher deck for the 351.
You are correct and that was my mistake in that there was no V6 windsor. But nevertheless, the Windsor engines covered the 221, 260, 289, 302, 255, and 351. Many parts are indeed totally interchangeable with several of these. For example the engine in my car is a 302 and MANY parts on it that I have replaced were also the same specs as those used for the 289, and even further, some parts from these two engines will also 221 and 260 engines.Reality says
1. LH platform Gen1 was used from 1993-1997, Gen2 from 1998-2004, so barely 1 decade. or
Earlier you were claiming that these platforms were gone in the mid 90's. So now you are more or less changing your story. Reality says
2. Change of corporate ownership did not put an end to LH platform development.
Either way, your fear of end of the world if GM went bankrupt was quite unfounded.
As I said before, change of corporate ownership was not on the table at the point of GM's bailout. Its also over simplistic to paint business transactions the same way because the situation with AMC was TOTALLY different than that of GM. Reality says
I did not try to back out of anything. It's absurd to think just because electric cars were made in 1899, somehow a carmaker today switching from gasoline to electric would not involve tools and engineering approach that are entirely different from what they were doing a few years before the switch.
I didn't say you backed out of anything. All you did was simply make some sort of claim that somehow long-established general manufacturing design was this totally new thing and at the same time claiming that something as basic and technically generic like a platform was obsolete. That makes zero sense.
You were previously trying to suggest that "Modular engineering" is something totally new and different from platform design.
It is. Read up on it. Comparing modular engineering to common platforms is absurd. It's totally different. Here's an article from motor trend about vw. http://www.motortrend.com/features/auto_news/2012/1202_explaining_volkswagen_mqb_architecture/
It is. Read up on it. Comparing modular engineering to common platforms is absurd. It's totally different. Here's an article from motor trend about vw.
I think you might want to actually read what modular engineering is about. In general, its about the engineering and design of components, parts, or whatnot on an independent scale in a way so that these components and parts can be used together to make a whole.
So for example, if company "X" makes a certain part in their factory to serve as a component later to be married to say- an air conditioner- which is itself made of 100's of such parts from other suppliers then that is basically an example of " Modular" engineering- aka- parts that are designed independently to work with others to form a design, system, or device.
A classic example is something like a pipe organ. Say that you have a large pipe organ that's made in some shop. Each and every pipe is made separately and if one were to blow air into each one, they each make a tone. But put together in an organ they also work together. These pipes could be used in other organs too ( assuming each manufacture of said pipe were to have them perfectly tuned in advance)
So no- "Modular" engineering is not new, and in the case of auto manufacturing is a well-established practice.
New Renter
2013 Dec 10, 2:55am
That perma bear theory is crap. Rents are determined by demand and supply, and nothing else. No landlord in San Francisco cares if the McDonald burger flippers can afford rent or not.
Your example does not violate the "perma-bear" model. SF has one of the highest rental demand markets in the country and plenty of high wage earners in that rental demand pool. Rents go up with ALL incomes in that pool.
If the pooled finances of five burger flippers can't match the pocket change of a mid level banker who just needs a crash pad, the banker gets the apartment. Now take that same pad and put it in say Podunk, Mississippi. There may not be many highly compensated bankers around but there are plenty of burger flippers. Perhaps a single burger flipper can afford three such apartments in Podunk.
The real question is why do burger flippers bother to stay in SF.
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