Anne was sitting with Ruby Gillis in the Gillis' garden after the day had crept lingeringly through it and was gone. It had been a warm, smoky summer afternoon. The world was in a splendor of out-flowering. The idle valleys were full of hazes. The woodways were pranked with shadows and the fields with the purple of the asters.
Anne had given up a moonlight drive to the White Sands beach that she might spend the evening with Ruby. She had so spent many evenings that summer, although she often wondered what good it did any one, and sometimes went home deciding that she could not go again.
Ruby grew paler as the summer waned; the White Sands school was given up -- "her father thought it better that she shouldn't teach till New Year's" -- and the fancy work she loved oftener and oftener fell from hands grown too weary for it. But she was always gay, always hopeful, always chattering and whispering of her beaux, and their rivalries and despairs. It was this that made Anne's visits hard for her. What had once been silly or amusing was gruesome, now; it was death peering through a wilful mask of life. Yet Ruby seemed to cling to her, and never let her go until she had promised to come again soon. Mrs. Lynde grumbled about Anne's frequent visits, and declared she would catch consumption; even Marilla was dubious.
"Every time you go to see Ruby you come home looking tired out," she said.
"It's so very sad and dreadful," said Anne in a low tone. "Ruby doesn't seem to realize her condition in the least. And yet I somehow feel she needs help -- craves it -- and I want to give it to her and can't. All the time I'm with her I feel as if I were watching her struggle with an invisible foe -- trying to push it back with such feeble resistance as she has. That is why I come home tired."
It would be nice to take a break from the escalating unreality: "We project that aliens will descend from the planet XXorkzz and selectively vaporize the Japanese automakers, the airlines, the busses, and the subways, leaving us with some very attractive market opportunities". But what does that leave us with? The sure and certain knowledge that without considerable further government assistance, the company will topple.
Well...I don't think things are quite that dire yet. GM is most assuredly doomed unless they make some fundamental structural changes, no doubt. I think their only real hope is to get small enough to make a profit. They still have some good brands -- Chevrolet, Cadillac, GM trucks -- and a smaller and more tightly-focused company could probably make fewer vehicles at a profit. The main problem with GM is not size, Lord knows; the problem is that they can't make a profit off their enormous volumes. Better to make fewer cars at a profit than to sell more and take a loss on each one.
But will GM do this? I doubt it. The fact that they seem to be doubling-down on the stupid Volt tells you all you need to know. Here is an expensive, underpowered car that probably will not outperform existing diesels or even gas-fueled cars, and yet somehow GM thinks that it will save the company. GM would be better off focusing on the performance segment and selling to the performance-car crowd. The Camaro, Corvette, and Cadillac CTS might sell in far fewer numbers, but they'd make a hell of a lot more profit per car.
Bankruptcy is still the answer, and the only answer, but, of course, is impossible now. After the government has tossed in $50 billion or so, in order to not to have to acknowledge the "loss", the government will just keep bailing like it always does.
Why so violent? Maybe the aliens from XXorkzz will descend and buy every Camaro they can find?
Another grim milestone in the Democrat's magnum opus "Requiem for a Blue State Economy."
With Detroit's Democrat enablers are now running nation; the union cancer will soon metastasize nationwide. Over-generous benefits will be mandatory and government funded until the country, like GM, can no longer borrow enough to support it.
But when the USA collapses under the weight of promises it can not keep, there will be nobody to bail it out.
(For some reason, I just feel like pouring it on EXTRA thick today...)
:)
"[T]hat they seem to be doubling-down on the stupid Volt tells you all you need to know. Here is an expensive, underpowered car that probably will not outperform existing diesels or even gas-fueled cars, and yet somehow GM thinks that it will save the company."
You have to consider the politics, not just the economics, to understand the Volt decision. As I think Holman Jenkins has pointed out, the Volt makes GM 'worthy' of government support.
I think its funny that GM is promoting the Volt at the same time as it steps up its advertising of its "professional grade" pickup trucks and SUVs in time with declining fuel prices.
You're right, DaveinHackensack. GM is pursuing the Volt for political reasons, to curry favor with specific politicians. In other words, it's following in the footsteps of Fannie and Freddie, and look at how well that turned out!
Why Megan is talking about GM today and not the Republican budget proposals? Embarrassment? As far as GM is concerned it's fairly simple. They have massive over capacity for a market that is currently annualizing at around 9 million units. If the market was annualizing at its "natural" level of around 14 million which is way below its peak of 17.5 million they would be fine with a SOM at around 23%. The problem is making cars is a capital intensive business with very high fixed and development costs so when a market collapses you are very exposed. This is particularly the case with GM because of US social policies that have lumbered them with legacy costs that are picked up by the state in the HQ countries of their major competitors. At the end of the day it's risible to say the largest economy in the world which has put men on the moon cannot support a domestic auto industry. The challenge is to eliminate capacity in an orderly fashion but preserve a viable enterprise that can hold onto that 23% SOM when the market recovers. Bankruptcy for a host of reasons, some obvious, some invisible, is not the best route to do this. This is one of those occasions when the national interest, far more than invading Iraq, demands we do it.
At the end of the day it's risible to say the largest economy in the world which has put men on the moon cannot support a domestic auto industry.
Yes, but at what size?
The automakers are much too large for their revenue. When that happens, you downsize. If you don't downsize fast enough or can't due to legal agreements, you can't make your debt payments and you declare bankruptcy and then the creditors take over and fire all the people the company doesn't need. This is just how business works.
The government should not be in the business of trying to guess when a market is going to recover and underwriting massive losses in the meantime.
Read my post....it says the industry has to downsize. The debate is about how you get there....Apparently you have no problem with the US auto industry ending up with about a 25% collective share which would happen as customers flee domestic manufacturers in bankruptcy; turning large areas of the upper midwest into an economic desert; and bankrupting literally thousands of auto suppliers.... Unfortunately the real world doensn't look very like the theoretical Schumpeterian one.
I agree with TallDave in that I'm not sure that GM, Ford and Chrysler can survive this current downturn without infeasible amounts of government aid. However, I do think the government can help create an "orderly" bankruptcy, by which the American automakers are allowed to fail without reneging on their pension agreements and while providing generous severance packages to laid off workers. I think that this would clear the way for a rebirth in American manufacturing, as there would be many skilled workers and engineers that would be now available to start working on new ideas and concepts.
Although cannibalism will certainly become common, the upper midwest will refrain from eating children, at least, while crossing that economic desert; sober midwesterners will still prefer tender septugenarian thigh meat.
Dealing with the substantive part of the post, the long-term trend is the Big 3 losing market share. GM, Chrysler and Ford Motor Co. have 43 percent righ now, I believe. Down from 80 percent in the mid 1980s. Whether anyone has "no problem" with that or not, those companies need to either adjust to that reality or turn that around.
I note that despite much assistance from the US taxpayer during the past two decades, the Detroit companies failed to turn that trend around. The companies' most recent plans do not present a convincing case that *now* are ready to turn around that trend.
I note also that other companies besides the Big 3 produce cars in America. So when discussing the US-produced portion of market share, we need to think about not just GM, Ford, and Chrysler. Those other auto producers--employing American workers--would likely experience gains in sales as the Big 3 continue to flounder. Those other companies will likely employ more US workers to service those increased orders.
Looking at all that, it is, I think, reasonable for people to feel that we should not put more public money into the Big 3. Someone could conclude that public resources sent into the Detroit companies are not going to the highest value use, given other alternative uses for that money.
That that opinion does not require the opinion-holder be uncaring about economic dislocation or have affection for Schumpeterian orthodoxy. It is, put simply, a reasonable opinion based on the facts. There are other reasonable opinions available. Yours may be one of them.
The issue is whether they remain stuck in lots of unworkable agreements. Only bankruptcy can get them out of those.
which would happen as customers flee domestic manufacturers in bankruptcy
Why would bankruptcy make a large difference to a car buyer? You're not buying bonds or stock from them, you're buying a car -- you want the best car for the best price. At any rate, they seem to be fleeing anyway; GM's best hope for be able to sell cars at a reasonable price in the future is bankruptcy.
US social policies that have lumbered them with legacy costs
No, the deals with the unions have lumbered them with legacy costs.
At the end of the day it's risible to say the largest economy in the world which has put men on the moon cannot support a domestic auto industry.
Putting men on the moon is entirely irrelevant.
As for "the biggest economy in the world" sure the US economy is big enough to have a "domestic X industry", for any X. That doesn't mean we can or should try to produce everything here.
If American companies compete well in auto manufacturing great. If instead they lose money and waste resources in the effort, than its better to either reorganize them (probably through bankruptcy), or just use the resources to produce something else.
Go out to the parking lot
And you get in your car and you drive real far
And you drive all night and then you see a light
And it comes right down and lands on the ground
And out comes a man from Mars
And you try to run but he's got a gun
And he shoots you dead and he eats your head
And then you're in the man from Mars
You go out at night, eatin' cars
You eat Cadillacs, Lincolns too
Mercurys and Subarus
And you don't stop, you keep on eatin' cars...
LMAO! That song was the first one that popped into my mind, too.
Yancey's right: bankruptcy is the answer.
Look, this is why we have bankruptcy proceedings. Automakers are not some magical creature immune to the laws of business. Bailing them out was a huge mistake.
I disagree. Squint hard, and you too will see the unicorn horn atop GM and Ford's brow. Or maybe that is a sagittal crest I see there...
Also, per Ottovbvs' demand, no topic can be discussed until after the one minute hate at the GOP. After all, when a minority party proposes a budget, attention must be paid!
Kidding aside, the argument Otto makes that we need to help GM et al because "US social policies ... lumbered them with legacy costs that are picked up by the state in the HQ countries of their major competitors" is pretty rich. Yeah, all those import quotas and other protectionist measures back in the day to help the Big 3 (paid for by the US taxpayer, of course) was not enough help. We should have also paid for worker health care and any other such thing, because other nations did. Our nation's failure to fund that part of GM's compensation system is why GM is in this position.
Are there any other taxpayer wealth transfers necessary to save GM? I mean besides import restrictions, wage subsidies, and now outright cash payments. Seriously, where is enough enough, and the business can be allowed to go under, no matter how many UAW workers lose that Traverse City cottage and bass boat?
I can see you don't know much about the car business Spartee. There were and are virtually no barriers to the import of foreign manufacturers vehicles into the US. Conversely there are immense visible and invisible barriers to the import of US cars in Japan, Korea, Germany etc. These barriers enabled foreign manufacturers to build up their own industries behind protective walls with very few social costs and export to the US. If you've ever been to any of these countries how many US manufactured vehicles which are now of completely comparable quality have you seen on their roads. Not many. This situation could have continued indefinitely but sometime in the late eighties there was a head of steam building against particularly Japanese imports so they decided to set up manufacturing locations in the US. When doing this they invariably got sweetheart deals like tax holidays, free land, training subidies etc with the states where they were setting up(I know I was involved in a couple of them). In many cases these manufacturers are still importing large volumes of units under cover of these domestic operations and even many of the major components in US manufactured autos like engines are imported from their national home. If you're happy screwing America and it's workers so that you can preserve your conservative principles, that's fine just as long as you understand the economic reality that underpins this situation. Believe me there is no way the German, Korean or Japanese govt's would let their national champions in the auto industry founder. The US meanwhile is sufficiently full of dum-clucks to make the possibility of it happening here not impossible. So go ahead fill Korean, Japanese and German hearts with glee.
Otto, the prospect of foreign taxpayers subsidizing the American consumer does fill my heart with glee.
I just wish foreign taxpayers would subsidize porn, video games, and other goods I actually buy.
"I can see you don't know much about the car business Spartee. There were and are virtually no barriers to the import of foreign manufacturers vehicles into the US."
From Wikipedia:
"When the automobile industry in the United States was threatened by the popularity of cheaper more fuel efficient Japanese cars, a 1981 "voluntary restraint agreement" limited the Japanese to exporting 1.68 million cars to the U.S. annually. The Japanese automobile industry responded by exporting bigger more expensive cars and building assembly plants in the U.S."
Definition of VER on Answer.com:
"A trade restriction on the quantity of a good that an exporting country is allowed to export to another country. This limit is self-imposed by the exporting country. Typically, VERs are a result of requests made by the importing country to provide a measure of protection for its domestic businesses that produce substitute goods. VERs are often created because the exporting countries would prefer to impose their own restrictions than risk sustaining worse terms from tariffs and/or quotas.
Investopedia Says:
The most notable example of VERs is when Japan imposed a VER on its auto exports into the U.S. as a result of American pressure in the 1980s. The VER subsequently gave the U.S. auto industry some protection against a flood of foreign competition.
However, there are ways which a company can avoid a VER. For example, the exporting country's company can always build a manufacturing plant in the country to which exports would be directed. By doing so, the company will no longer need to export goods, and should not be bound by its country's VER."
I knew about this history 20 years ago, Otto, as I have worked in and with the auto industry, first as a line worker for college book money, and later as a professional advisor to auto parts suppliers at different tiers, for the better part of my adult life.
So I know *something* about the auto industry. Whether that is a lot or a little relative to you, I am unsure.
"If you're happy screwing America and it's workers so that you can preserve your conservative principles, that's fine just as long as you understand the economic reality that underpins this situation."
I think you owe me an apology.
GM 'dying of consumption' is wierdly right. Consumers getting more sophisticated and buying the better cars that has been GM's disease. It could have been treated, years ago. Now all that can be offered is sympathy and necessarily temporary life support.
Megan
Shouldn't the qualification in your final sentence read 'with or without'?
Here's the only important question: If GM goes under, what happens to the "Test Track by GM" ride at Epcot? I love that ride.
"This is one of those occasions when the national interest, far more than invading Iraq, demands we do it."
ottovbvs - Your argument is that weak, noncompetitive industries are in the national interest. Why? Surely you learned from the past that protecting industries makes them weaker over time, and that only demanding competition can lead to healthy, thriving companies. Japan is a good example - its only strong industries are the ones that have had to compete (i.e. export). For example, the Japanese automobile manufacturers knew that they had to sell in foreign markets where they couldn't rely on misplaced patriotism and could only sell cars by offering superior products (while US carmakers knew that some locals would buy their cars even if they were more dangerous and less reliable, so the managers and union members could afford to coast for a few decades, which they did). Japan's purely domestic industries have been protected from foreign competition and aren't good, while the exporting industries have been forced to improve.
Why do you think that we're better off with weak, sick industries? Or do you really believe that Americans are so vastly inferior that we should all just give up now and accept being permanently behind? I'd rather have a healthy domestic car industry, even if it takes time to develop.
Um Ann, because 2 million+ union jobs are at stake? That is in the national interest.
Um Ann, because 2 million+ union jobs are at stake? That is in the national interest.
No, that's in the union's interest. If we have 2 million people working in an industry that can't make money, that's bad for the national interest.
A huge number of jobs would be lost, but not two million. GM certified mechanics, for example, would still be in demand until all Chevys, GMCs, Saturns and Cadillacs become obsolete.
If they lose their jobs, big whoop. They get retrained and retooled and redeployed in industries with demand.
They can all become green technicians.
And then something else after that.
Happens all the time.
I can see how it would be in the national interest to help dismantle the Big Three (or whichever of them need to be) in an orderly fashion so as not to dump all of the workers into the job market at one time. But that is different from propping them up indefinitely.
I do like how they are continuing to (and being encouraged to) develop "green" vehicles that require a government subsidy to even be remotely competitive. No doubt, Congress will look at tightening up CAFE rules, too.