Why the big three bailout is a BAD idea - Page 3

macpappy · 12-13-2008, 05:52 AM

Bottom line. The problem has always been greed and a battle between factions for the division of profits. The top tier management of the "big 3" all believed that the companies owed them multi-million dollars a year for being in charge. The union leaders have high paying jobs and power because they believe the workers owe it to them for all they do. The union employee believe he should be paid more and given more to compensate him for the all the work he does to help the company turn a profit.

So what happens?

The employee tells the union (years ago), the company is making all these profits and we get none of them. The union says, "Go on strike. We'll force the Big 3 to pay you more and give you more. Just keep me in power and by the way, give me a cut of what you make because you owe it to me and I can use that money to buy influence. The Big 3, recognizing that without workers they have no product to sell says, "Ok. We agree to your demands." And to keep from decreasing their profits, they make cuts in production that reduces quality while raising the cost of the final product to cover the increase in wages and benefits to the employees.

For years it worked like this (IMHO) and the leaders of the Big 3 stayed in power by saying, "Look at the good job we're doing. Our profits are still good." (Like I said, this was years ago.)

Since the company is making all these profits and only the top people are making millions of dollars, the employees decide they need paid more. The unions want to stay in power so they tell the members, we'll get you more money. The business leaders give into union demands and raise prices and decrease quality. The foreign auto industry applauds the moves as they increase the sell of their better quality and often less expensive vehicles.

Bottom line? There is this big wheel and it keeps on turning and turning. But this big wheel has slammed into a freaking mountain and it's being shattered. And all the big heavy pieces are falling on and crushing the rest of the peons in the country.

Now. My oversimplified vision of the banking problems. Politicians forced them to make home loans to people with low incomes who 10 years ago wouldn't have been able to get a loan. The politicians did this to "buy" the votes of the constituents. "Look what I did for you and all the poor people. Vote for me and I will make sure that you get more and we'll make those rich people (anyone making more than you) pay for it."

What happens when they can't make the payments on a $175,000 home on a just above minimum wage salary? They default on the loan. The lender starts losing money and make more loans to temporarily increase their cash flow. Then the new loan recipients can't make their payments.

Another circle. Same results.

12-13-2008, 05:52 AM	#41
macpappy Rider on the storm. Join Date: Oct 2008 Location: Slidell, LA Posts: 851 Trading: (0)	Re: Why the big three bailout is a BAD idea Bottom line. The problem has always been greed and a battle between factions for the division of profits. The top tier management of the "big 3" all believed that the companies owed them multi-million dollars a year for being in charge. The union leaders have high paying jobs and power because they believe the workers owe it to them for all they do. The union employee believe he should be paid more and given more to compensate him for the all the work he does to help the company turn a profit. So what happens? The employee tells the union (years ago), the company is making all these profits and we get none of them. The union says, "Go on strike. We'll force the Big 3 to pay you more and give you more. Just keep me in power and by the way, give me a cut of what you make because you owe it to me and I can use that money to buy influence. The Big 3, recognizing that without workers they have no product to sell says, "Ok. We agree to your demands." And to keep from decreasing their profits, they make cuts in production that reduces quality while raising the cost of the final product to cover the increase in wages and benefits to the employees. For years it worked like this (IMHO) and the leaders of the Big 3 stayed in power by saying, "Look at the good job we're doing. Our profits are still good." (Like I said, this was years ago.) Since the company is making all these profits and only the top people are making millions of dollars, the employees decide they need paid more. The unions want to stay in power so they tell the members, we'll get you more money. The business leaders give into union demands and raise prices and decrease quality. The foreign auto industry applauds the moves as they increase the sell of their better quality and often less expensive vehicles. Bottom line? There is this big wheel and it keeps on turning and turning. But this big wheel has slammed into a freaking mountain and it's being shattered. And all the big heavy pieces are falling on and crushing the rest of the peons in the country. Now. My oversimplified vision of the banking problems. Politicians forced them to make home loans to people with low incomes who 10 years ago wouldn't have been able to get a loan. The politicians did this to "buy" the votes of the constituents. "Look what I did for you and all the poor people. Vote for me and I will make sure that you get more and we'll make those rich people (anyone making more than you) pay for it." What happens when they can't make the payments on a $175,000 home on a just above minimum wage salary? They default on the loan. The lender starts losing money and make more loans to temporarily increase their cash flow. Then the new loan recipients can't make their payments. Another circle. Same results. __________________ WARNING: I am a Southern White Male. I have a brain and I know how to use it.