I am not an economist or someone with influence. I expect my practical approach stated is too pragmatic or too slow moving in that the car makers do not get a huge infusion of cash instantly (but perhaps some up front cash with strings & the instant rebate & 100K mile warranty). See below:

‘The 15% Solution”

One possible approach to dealing with the auto crisis — The federal government would give any one who buys a fuel efficient car from the Big 3 US automakers a 15% instant rebate back on the selling price. This program could have an 18 month time limit. The total of the rebate dollars might then constitute a loan the auto makers would have to pay back.

If effective, this solution would immediately jump start US auto makers by giving them a huge advantage over the competition while they work on the remaining legacy issues. Auto makers would stay employed and no money would go directly to the car makers. I realize there may be issues in that the auto makers don’t get a needed big $$$ infusion instantly, and that they may not be able to produce enough fuel efficient car because of the need to retool.

The feds might also think about underwriting an extended car warranty program for this period. Again, the total dollars to do so, could constitute a loan to the auto makers. (by the way, this could be done in a bankruptcy scenario as a way to off set the arguement no one will buy a US maker car if we let them go into bankruptcy)

If the dollars don’t proof out or if this approach does not infuse enough cash into the US automarers quickly enough because the pacing of sales and/or retooling not yet in place some concept is we worth exploring.

More…..
A quick direct “15%” instant government rebate (say averaging around $3,000) from the Dept of Treasury paid to consumer with purchase of a US auto maker lower mileage car might make these cars especially attractive.

The problem with the fed using IRS tax return deductions is you only get indirect value (a lower tax payment) and but once a year (April 15)….and higher wage earners get more real dollar benefit.

If you could buy a Camry priced today at $20,000 for $20,000 versus a Malibu priced today for $20,000 for $17,000 (plus get a100K mileage warranty), which would you buy?

Giving a bailout just keeps them from going bankrupt while they try to get a higher % of americans to buy their cars. They have not suceeded in doing that over the last 20 years. Assuming Americans were motivated to buy fuel efficient Gm-Ford-Chrysler cars, the biggest stumbling blocks might be that the auto makers could not retool fast enough to produce enough low mpg cars to get profitable, that they could not get rid of their gas guzzlers, and that they can not work out union entitlements.
I am about to buy another Toyota, but as a US citizen if I was presented with a good alternative to going American I would. GM and Ford are building some good cars now.

Joseph Hare
JoeHareJr@Aol.com
617 755 0898

As far as manufacturing goes, it’s no coincidence that manufacturing employment declined at the point when financial employment boomed in the late 70s and early 80s. With the dollar delinked from gold or any physical substance, you could make more money with arbitrage schemes around the movement of world currencies than you could making an actual product.

In addition the manufacturer is burdened with the risk of contracting for his materials months in advance, and setting the price for his finished goods months in advance, without knowing what the value of his currency will be when the contract is exercised. Between a peanut grower, a peanut-butter maker and a supermarket, one of them is going to get screwed by inflation or deflation. Better to just buy and sell futures on the peanut crop.

Interesting fact:
Worldwide solar hot water capacity added 2006:
China: 75.3%
USA: 0.4%
http://www.ren21.net/pdf/RE2007_Global_Status_Report.pdf
(If you see that data, you would almost expect, that there are no sunny days in the US.)

And as far as money going abroad: The US has has a huge trade deficit, which the US couldn’t afford if foreign countries wouldn’t finance it.

The Federal Reserve allowed monetary inflation in 2004-2005. The gold price went up and the oil price, and other commodities, which is what always happens in monetary inflation. The Fed misinterpreted these signals as an overheated economy, and raised rates eight times in 2005-2006.

The Fed raises rates in order to throw people out of work, to put it simply.

Now the car makers, who make a lot of money lending, are hit with inflation, wherein they are paid back in dollars worth 40-50% of those they lent out. Gas prices are rising because the dollar is devalued, for no reason related to supply or demand or consumer preference. There was no way for the car makers to plan for that.

Finally the Fed rate hikes did their job and threw people out of work, so the car makers are losing their customers.

The government whacked the car makers, the government is going to have to bail them out. Of course it would be better if the government had simply maintained a stable dollar, tying to gold or some other physical standard. But that’s not what happened.

As a writer mentioned above, no one saw the same scrutiny of the Wall Street bankers. Trust me, they have their jets and limos too. And you don’t see them willing working for $1 a year (thank you Bob).

And New-Klee-Are energy to power it. Even if there was one to two melt downs per year, it would not reduce our lifespans as much as burning coal. Not to mention the impact in the carbon cycle.

“Jan 08, 2008

‘Somebody once asked, could I spare some change for gas
I feel a need to get myself away from this place”
I said yep what a concept
I could use a little fuel myself
And we could all use a little CHANGE.

And how about us, ourselves, the people, we are all looking for change, but not in ourselves, in our habits, in our lives. We want the things to change, but not closer to home, we don’t want to have to save energy but want only to get cheaper gas, we don’t want to take interest in our children’s lives but we want schools to put education in our children’s heads. We want children but not the responsibility to raise them right. We want to be allowed to lead lives without standards and boundaries but want our children to know wrong from right. We don’t want to have to budget and watch our expenses, we want more money ( and so does our government).

Wars are traditionally paid for by borrowing. There is plenty of demand for lending to the US Treasury.

When Obama was talking change, I thought he meant it. But I’m disappointed with all the Clinton retreads. Obama’s brand of change is starting to look very familiar.