Comments on: The Bailout Playbook http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html Dispatches from a Small Business Sun, 12 Feb 2012 15:04:09 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: jdar5039 http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html/comment-page-1#comment-14693 jdar5039 Mon, 24 Nov 2008 02:55:29 +0000 http://www.warrenmeyer.net/coyote_blog/2008/11/the-bailout-playbook.html#comment-14693 <p>I'm pretty sure that you do get a refund if your airline folds, so long as you made the purchase with a credit card. The credit company apparently holds on to the money until after the flight. Sorry to be vague, there's a post somewhere in Felix Salmon's archives.</p> I’m pretty sure that you do get a refund if your airline folds, so long as you made the purchase with a credit card. The credit company apparently holds on to the money until after the flight. Sorry to be vague, there’s a post somewhere in Felix Salmon’s archives.

]]> By: tomw http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html/comment-page-1#comment-14692 tomw Sat, 15 Nov 2008 17:38:27 +0000 http://www.warrenmeyer.net/coyote_blog/2008/11/the-bailout-playbook.html#comment-14692 <p>Tim 12:37<br /> The regulatory overburden, long lead times, and high capital investment cost between the auto manufacturers and a service provider like an airline invalidate any comparisons between the two.<br /> ....<br /> Sure sounds like the nuclear power industry, no?</p> <p>Regulate and roadblock lawsuits, EPA 'regulations' at the whim of whomever happens to warm the chair.<br /> The law means what I say it means.<br /> Congress out of my wallet, and out of industries they have no business 'regulating'.<br /> tom</p> Tim 12:37
The regulatory overburden, long lead times, and high capital investment cost between the auto manufacturers and a service provider like an airline invalidate any comparisons between the two.
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Sure sounds like the nuclear power industry, no?

Regulate and roadblock lawsuits, EPA ‘regulations’ at the whim of whomever happens to warm the chair.
The law means what I say it means.
Congress out of my wallet, and out of industries they have no business ‘regulating’.
tom

]]> By: Tim http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html/comment-page-1#comment-14691 Tim Thu, 13 Nov 2008 19:37:55 +0000 http://www.warrenmeyer.net/coyote_blog/2008/11/the-bailout-playbook.html#comment-14691 <p>One thing that invalidates the airline vs. automaker in Chapter 11 comparison is that government intervention (in the form of municipal airport ownership) provides airlines captive markets in their hub cities. Reformed Republican hit the nail on the head -- people will buy cars, just not from a Chapter 11 GM.</p> <p>The other bit of analysis is that if one of the automakers goes into reorg, the others would have to follow to be competitive. This would cascade to the large Tier 1 suppliers like Lear; Visteon; and Delphi, which is already in Ch11. No suppliers would cripple the foreign transplants; which source many of their components locally.</p> <p>There is one long term lessons to take away from this crisis, and that's the role government regulation played in creating it. Why did people buy SUVs? CAFE regulations demolished the large sedan/station wagon. Why can't the automakers resize their dealer networks? State franchise laws prohibit it. The list goes on: Low value "safety regulations" (the trunk handle release lever is one example), Congress not enforcing the commerce clause and letting states craft their own patchwork of requirements, EPA NOx low-sulfer diesel and particulate emissions requirements. </p> <p>The regulatory overburden, long lead times, and high capital investment cost between the auto manufacturers and a service provider like an airline invalidate any comparisons between the two.</p> One thing that invalidates the airline vs. automaker in Chapter 11 comparison is that government intervention (in the form of municipal airport ownership) provides airlines captive markets in their hub cities. Reformed Republican hit the nail on the head — people will buy cars, just not from a Chapter 11 GM.

The other bit of analysis is that if one of the automakers goes into reorg, the others would have to follow to be competitive. This would cascade to the large Tier 1 suppliers like Lear; Visteon; and Delphi, which is already in Ch11. No suppliers would cripple the foreign transplants; which source many of their components locally.

There is one long term lessons to take away from this crisis, and that’s the role government regulation played in creating it. Why did people buy SUVs? CAFE regulations demolished the large sedan/station wagon. Why can’t the automakers resize their dealer networks? State franchise laws prohibit it. The list goes on: Low value “safety regulations” (the trunk handle release lever is one example), Congress not enforcing the commerce clause and letting states craft their own patchwork of requirements, EPA NOx low-sulfer diesel and particulate emissions requirements.

The regulatory overburden, long lead times, and high capital investment cost between the auto manufacturers and a service provider like an airline invalidate any comparisons between the two.

]]> By: tomw http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html/comment-page-1#comment-14690 tomw Thu, 13 Nov 2008 18:02:58 +0000 http://www.warrenmeyer.net/coyote_blog/2008/11/the-bailout-playbook.html#comment-14690 <p>Automakers say bankruptcy protection is not an option because people would be reluctant to make long-term car and truck purchases from companies that might not last the life of their vehicles.<br /> .....<br /> Buy every purchaser an independent extended warranty. Lots cheaper than a bailout.</p> <p> And I am sure that customers want to buy from firms that are so well managed that they have to beg for money from Uncle Sam. Not.</p> Automakers say bankruptcy protection is not an option because people would be reluctant to make long-term car and truck purchases from companies that might not last the life of their vehicles.
…..
Buy every purchaser an independent extended warranty. Lots cheaper than a bailout.

And I am sure that customers want to buy from firms that are so well managed that they have to beg for money from Uncle Sam. Not.

]]> By: ErikTheRed http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html/comment-page-1#comment-14689 ErikTheRed Thu, 13 Nov 2008 18:01:10 +0000 http://www.warrenmeyer.net/coyote_blog/2008/11/the-bailout-playbook.html#comment-14689 <p>Ummm... we're already not buying their cars because they suck (aside from some Cadillacs, which aren't really my taste). How does this change anything?</p> Ummm… we’re already not buying their cars because they suck (aside from some Cadillacs, which aren’t really my taste). How does this change anything?

]]> By: Jeff http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html/comment-page-1#comment-14688 Jeff Thu, 13 Nov 2008 14:47:21 +0000 http://www.warrenmeyer.net/coyote_blog/2008/11/the-bailout-playbook.html#comment-14688 <p>GM should be allowed to reorganize via bankruptcy. More cash won't solve the problems they have, just postpone the inevitable.</p> <p>I don't see how consumer confidence in GM is different if they go chapter 11 vs. getting $50B from the US Govt. Seems like GM's long term solvency risk is just about equal either way.</p> <p>Jeff</p> GM should be allowed to reorganize via bankruptcy. More cash won’t solve the problems they have, just postpone the inevitable.

I don’t see how consumer confidence in GM is different if they go chapter 11 vs. getting $50B from the US Govt. Seems like GM’s long term solvency risk is just about equal either way.

Jeff

]]> By: MattJ http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html/comment-page-1#comment-14687 MattJ Thu, 13 Nov 2008 14:26:24 +0000 http://www.warrenmeyer.net/coyote_blog/2008/11/the-bailout-playbook.html#comment-14687 <p>I am more careful with $30,000 purchases than with $300 ones. It is a very different thing buying a car and buying an airplane ticket. Having said that, I am against a bailout that does not address the viability of the company, and forcing them to build low (or no) margin cars that buyers may not want does not address their long-term viability. The point you dismiss is just that an auto company bankruptcy is not the same thing as an airline bankruptcy, and it will probably be riskier to the company.</p> <p>Maybe the bailout should be Treasury financed Debtor-in-possession financing during the time in chapter 11.</p> I am more careful with $30,000 purchases than with $300 ones. It is a very different thing buying a car and buying an airplane ticket. Having said that, I am against a bailout that does not address the viability of the company, and forcing them to build low (or no) margin cars that buyers may not want does not address their long-term viability. The point you dismiss is just that an auto company bankruptcy is not the same thing as an airline bankruptcy, and it will probably be riskier to the company.

Maybe the bailout should be Treasury financed Debtor-in-possession financing during the time in chapter 11.

]]> By: Reformed Republican http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html/comment-page-1#comment-14686 Reformed Republican Thu, 13 Nov 2008 14:15:13 +0000 http://www.warrenmeyer.net/coyote_blog/2008/11/the-bailout-playbook.html#comment-14686 <p>So they will buy from someone who is not about to go bankrupt. People will still buy cars. That does not justify propping up one company.</p> So they will buy from someone who is not about to go bankrupt. People will still buy cars. That does not justify propping up one company.

]]> By: Charlie B http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html/comment-page-1#comment-14685 Charlie B Thu, 13 Nov 2008 12:44:09 +0000 http://www.warrenmeyer.net/coyote_blog/2008/11/the-bailout-playbook.html#comment-14685 <p>There is no warranty on a airline ticket other than everybody hopes you arrive safely. Who wants to buy a Big 3 car without a warranty? If GM declares bankruptcy, where is the money to pay warranty claims on cars sold before or after the bankruptcy?</p> There is no warranty on a airline ticket other than everybody hopes you arrive safely. Who wants to buy a Big 3 car without a warranty? If GM declares bankruptcy, where is the money to pay warranty claims on cars sold before or after the bankruptcy?

]]> By: mjh http://www.coyoteblog.com/coyote_blog/2008/11/the-bailout-playbook.html/comment-page-1#comment-14684 mjh Thu, 13 Nov 2008 11:48:10 +0000 http://www.warrenmeyer.net/coyote_blog/2008/11/the-bailout-playbook.html#comment-14684 <blockquote><i>I think if people still buy tickets on airlines that are operating out of chapter 11 (an item that has zero value if the company folds) then people will still buy cars. This is so totally lame it is tremendously irritating.</i></blockquote> I'm surprised by the last remark. Certainly many people will still buy cars. But at the margin, where people are right on the verge of deciding to buy or not buy a car, this may in fact keep some of them from doing so. How big is this impact? I don't know. But it's likely not 0%. Of course, it's also likely not 100%.

I think if people still buy tickets on airlines that are operating out of chapter 11 (an item that has zero value if the company folds) then people will still buy cars. This is so totally lame it is tremendously irritating.

I’m surprised by the last remark. Certainly many people will still buy cars. But at the margin, where people are right on the verge of deciding to buy or not buy a car, this may in fact keep some of them from doing so. How big is this impact? I don’t know. But it’s likely not 0%. Of course, it’s also likely not 100%.

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