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ewu

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Re: America: Officially in recession
« Reply #20 on: December 26, 2008, 01:20:45 AM »

It sucks for the people who lost their job, but not allowing companies to fire employees would be even worse.

Something about unions and the auto industry?

It's just a careful balance between rights and profitability.
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astroboy

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Re: America: Officially in recession
« Reply #21 on: December 26, 2008, 01:29:46 AM »

In general, it seems like companies a lot of times cut two jobs and replace them with 1 job that pays less and shuffling some extra work around to other employees. You can't really blame them - if they're not making a profit, then they need to get more work for their buck, so that's how it goes. It sucks for the people who lost their job, but not allowing companies to fire employees would be even worse.
yeah I totally agree.
Companies HAVE to make a profit.
The word "profit" might carry a negative connotation for some people but....
without profit - government cannot collect taxes
without profit - a company cannot expand to create new jobs
without profit - it gets a "little" difficult for an owner to pay his employees   8)

The Ferengi side of me says profit is good.
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astroboy

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Re: America: Officially in recession
« Reply #22 on: December 26, 2008, 01:41:31 AM »

It sucks for the people who lost their job, but not allowing companies to fire employees would be even worse.

Something about unions and the auto industry?

It's just a careful balance between rights and profitability.
That's NOT how the market works.

If the competition is producing widgets at a lower cost then there are two options:
1) go out of business and shut down the widget factory
2) find ways to cut expenses and if it means workers wages then so be it

You can sit here and argue all you want about workers "rights" but that's not going to change the cold hard truth, customers aren't going to buy your product if it costs more than the competition.






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ewu

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Re: America: Officially in recession
« Reply #23 on: December 26, 2008, 01:48:15 AM »

and one of the issues with the auto industry is that the unions are very resistant to cost cutting. To the point that they are driving their own livelihood into the ground. I am not certain of the details, but i know that union bosses can easily lose sight of the big picture and only see what harms the workers in the short run. They want the union dues to continue to flow in to pay their union boss salary....faced with a strike and a shut down vs. a long run loss, as an auto exec I would opt for the latter.
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Re: America: Officially in recession
« Reply #24 on: December 26, 2008, 11:39:45 PM »

At one point, it looked like the UAW was cooperating with the auto execs in their plea for government support. Desperate times call for desperate measures. But then, the drama really came out in the details.

Alan Reuther's comments about Senator Corker's proposal earlier this month pretty much summed up the UAW attitude. Reuther "said labor leaders back in Detroit were astonished at what Mr. Corker was attempting to accomplish — a virtual rewriting of the U.A.W. contract, which typically takes the better part of a year to negotiate. 'That’s one thing that our folks in Detroit were just amazed at,' Mr. Reuther said. 'Does Senator Corker really think he can do a restructuring of the industry in six hours?"

Considering they were trying to save an entire industry and didn't have "the better part of a year" before imminent collapse, they probably should have been a little more open to compromise. Now, Gettelfinger and UAW is hoping that Obama's administration will be open to change some of the requirements/conditions of the loans.

Any predictions?

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Steve.Young

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Re: America: Officially in recession
« Reply #25 on: December 27, 2008, 12:41:35 AM »

Personally, I think the UAW is being greedy during a very unreasonable time, as they seem to be even very uncooperative even now.
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ewu

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Re: America: Officially in recession
« Reply #26 on: December 27, 2008, 09:49:18 AM »

again, it is the union bosses that are making the decisions and sitting at the negotiations. These people are not auto workers, they are professional politicians. Their motivation is to protect their members. Their motivation is to keep the union dues rolling in and their personal paychecks padded. I think unions are great to protect the rights of the people, but when the union is abused and no longer operates in the interests of the members and the greater industry, then it no longer serves it's purpose.
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Re: America: Officially in recession
« Reply #27 on: December 27, 2008, 12:30:03 PM »

It sucks for the people who lost their job, but not allowing companies to fire employees would be even worse.

Something about unions and the auto industry?

It's just a careful balance between rights and profitability.
That's NOT how the market works.

If the competition is producing widgets at a lower cost then there are two options:
1) go out of business and shut down the widget factory
2) find ways to cut expenses and if it means workers wages tall the time hen so be it

You can sit here and argue all you want about workers "rights" but that's not going to change the cold hard truth, customers aren't going to buy your product if it costs more than the competition.


This is a gross simplification made in very basic (high-school level) economics that fails to take into account a lot of truths about the real world.

Take a look around you at real products. People buy Chevron gas for as much as 12 cents more than at the gas station across the street. People pay more for Seagate hard drives than Western Digital. People purchase Cheerios for about twice the cost of Oaty-O's. It's called "Product Differentiation". In other words, there's a third option you've neglected to mention, which is, "Give consumers a reason to pay more money for your widgets."

Sometimes, "friendlier' business practices (better benefits for your workers, ecological responsibility, etc.) can - if publicized properly - make up for the additional cost. More often, a brand that's associated with less obvious benefits like reliability, customer service, and consistent quality (e.g. you don't have to shop around because you know Nike shoes will be good enough for you) are the factors. Sometimes it's little benefits that are tangential to the product: like how Apple makes its computers aesthetically pleasing in addition to fast and useful.

The auto industry has been trying to do this, but they haven't been doing a good job of it. In fact, I'd say that the main reason the auto industry is in trouble is because of their poor methods of product differentiation. Japanese car brands have stronger reputations for reliability and gas-efficiency, especially among passenger cars, than American cars, and thus people will pay more for a Toyota than a similar Chrysler.

The American auto industry has been sucking for a while now, and this recession is the wake-up call that should force them to get their act together.
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astroboy

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Re: America: Officially in recession
« Reply #28 on: December 27, 2008, 02:30:05 PM »

This is a gross simplification made in very basic (high-school level) economics that fails to take into account a lot of truths about the real world.
Take a look around you at real products. People buy Chevron gas for as much as 12 cents more than at the gas station across the street. People pay more for Seagate hard drives than Western Digital. People purchase Cheerios for about twice the cost of Oaty-O's. It's called "Product Differentiation". In other words, there's a third option you've neglected to mention, which is, "Give consumers a reason to pay more money for your widgets."
I'm quite familiar with "Product Differentiation" thank you very much.

Sometimes, "friendlier' business practices (better benefits for your workers, ecological responsibility, etc.) can - if publicized properly - make up for the additional cost. More often, a brand that's associated with less obvious benefits like reliability, customer service, and consistent quality (e.g. you don't have to shop around because you know Nike shoes will be good enough for you) are the factors. Sometimes it's little benefits that are tangential to the product: like how Apple makes its computers aesthetically pleasing in addition to fast and useful.
Again I do not doubt the points you've made but not every situation applies.
You seem to have a ridiculously happy "Pollyanna" attitude towards the market.
It's as if you believe there is ALWAYS a solution that can be used to avoid loss and pain. ---> I disagree.
I believe that sometimes in life there is this thing called "NO solution".

The auto industry has been trying to do this, but they haven't been doing a good job of it. In fact, I'd say that the main reason the auto industry is in trouble is because of their poor methods of product differentiation. Japanese car brands have stronger reputations for reliability and gas-efficiency, especially among passenger cars, than American cars, and thus people will pay more for a Toyota than a similar Chrysler.
The American auto industry has been sucking for a while now, and this recession is the wake-up call that should force them to get their act together.
Totally disagree.
You've introduced an economic concept, so I guess it's my turn now.
The reason why the auto makers are in trouble is because of this concept called "Over Capacity"
When you have more widget factories producing more widgets then society can ever need then you're in trouble.
Cars and real estate are good examples.

It's pretty damn easy to determine if there's an over Over Capacity in restaurants, just walk inside and ask yourself is the restaurant full or empty?
Now walk along the entire street and do the same for all the other restaurants.
Furthermore try doing the same thing for gas stations, shopping malls, grocery stores, etc...
IMHO there is "Over Capacity" in just about everything under the sun.
There is simply too many businesses out there who want to sell something that society can't afford to all buy.
That's the main reason why the auto industry is in trouble........my 2 cents.
Personally I think the media / the debate is giving too much attention to the unions.

What can be done? ---> nothing
I believe that in life sometimes you'll get stuck with a bad situation and there is "NO solution".
« Last Edit: December 27, 2008, 02:39:34 PM by astroboy »
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astroboy

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Re: America: Officially in recession
« Reply #29 on: December 27, 2008, 05:58:36 PM »

I think my previous post may have a been too abrasive so perhaps this one will smooth things out.

The auto industry's business model works on the assumption that you and I are going to replace our cars every 7 years.
I don't know about you guys but I'm driving a 12 year old car and if I pass smog, I'm going to squeeze another 2 years out of my car before getting a replacement.
Maybe 14 years is aiming kind of high but I'm willing to bet there's an awful lot of 10 year old cars on the road today.
Obviously this is not something a CEO of an auto company (any company) wants to hear.

This is why I'm not optimistic about the US auto industry.
Even if they pull a rabbit out of their hat and created some amazing innovation *doubtful* that still does not change the fact that consumers aren't really in the mood to buy another car *any car* at least not for awhile. 
The auto industry (entire industry not just the USA) is going to contract and there is absolutely nothing government can do about it.
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Tony

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Re: America: Officially in recession
« Reply #30 on: December 28, 2008, 11:19:09 PM »

There's some truth to that, in at least that car sales in general are falling. GM had a 41% decline, Toyota posted its first loss since 1941, etc. The used car space isn't looking much better, but is still relatively solid; as of September, they'd only declined 4% from last year.

My company is in the used-car space, so I'm hoping the lack of new-car sales now will translate into greated used-car sales in the future.

Overall, the auto industry is huge, so there IS some validity in the "we're too big to fail" argument. But it's more of a quantitative one than qualitative, which is what the financial bailout was about (and which makes it much more scary). In that sense, it would be extremely painful if it fails, but painful in a different way than if the banks were to fail. Realistically, we could endure a very harsh few decades, let Japan expand and fill the void, and hope that the market brings forth new automakers that grow to compete. It's not impossible, but like I said - it would be a very painful few decades.
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Re: America: Officially in recession
« Reply #31 on: December 29, 2008, 07:56:03 AM »

Also keep in mind that there'd be a chain reaction if you see auto manufacturers fail.  Companies that supply parts to auto manufacturers would suffer greatly because they'd lose a ton of business, as an example.  In turn, companies that supply the metal to make those parts would also see a large dropoff in business, and so on down the line.  It won't be pretty.
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Re: America: Officially in recession
« Reply #32 on: February 09, 2009, 04:42:49 PM »

The goal with an auto bailout is that you need to prevent the industry from falling apart completely, but you don't want to reward irresponsible/unsustainable business models.

The trick to this - and it's a very difficult trick - is to offset pain caused by the greater overall economic crisis, but not to offset pain that auto makers have self-inflicted. I suspect that a relatively small bailout (certainly less than auto makers request), in which companies are obligated to pay back their debts to the government in full, is the right approach here; but that's a moderately uninformed opinion and not really a strong belief.
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HarpB

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Re: America: Officially in recession
« Reply #33 on: March 30, 2009, 11:28:19 PM »

There is no right way to react to this situation. All of actions are just the government taking risk on the economy, trying to see what will workout best.
Current assumption is to react in a way which is similar to 30's depression. Pump capital into the economy, create jobs, get people back to work and they will start to spend. However, the events which brought us into the recession are very different than from the past. Furthermore, our economy system is not fundamentally structured. Main cause being the jobs being out sourced and importing more than exporting.
The people seem to be hoping that "Green jobs" would be the solution to our economy problems. They are trying to make it the hot new thing to invest and invent in.

Yesterday, I heard a person on tv saying to buy all american as much as we can. It just sounded like as if American products are scarce in America as a result of foreign trading and out sourcing.

I also share some agreement with Peter Schiff, who thinks that the government should let the bad companies go down and the let the economy take its course. I kind of view the economy as a boxer who has taken a good beating in the ring. Instead of letting the boxer lose, learn from the mistakes and fight some other day, the trainer keeps pumping the player with PCP(Or whatever is the drug called that numbs the pain) and putting him back into the fight. The player might end up wining the fight, but his body might not be able to fight every another match.
But that is just an analogy, and not how the economy works.

----
Without reading others posts
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Re: America: Officially in recession
« Reply #34 on: July 29, 2009, 05:53:31 PM »

In order to replenish our economy, we need companies to use more secure polices on their customer's investments. No-one wants to lose out on money :( yet everyone seems to be getting ripped off(at least from the angle I'm at). I'm considering buying some CVS stock, but would prefer buying some bonds from Fanime Con ;)
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