Keeping the Bubble Inflated?

mr.broderick

experience08 wrote: »

What a STUPID post....read what "MyLastFiver" wrote.

Ok big boy i did and i think my reply was valid

mr.broderick

experience08 wrote: »

Listen pal, get out of the car trade and into the bicycle trade...there will be a future there for you.

I'll give it some consideration.

MrFonzerelli

Wookster wrote: »

Its not the fittest who survive, but those best able to adapt.

The point is that there's not a level playing field.

In a world of car manufacturer bailouts, do you honestly think it will be:
a) UK based car industry which receives little support or
b) foreign car industry which is given government support
which finds itself best able to 'survive' in a downturn?

MyLastFiver

Just to return to my own OP, and perhaps to widen the debate, I was using car manufacturing as an example only, because it was topical this morning with LDV asking the govt for help.

But actually, I'm referring to the government propping up any private enterprise which is suffering because demand has fallen. Construction? Estate agency? Financial Services? Retail? Logistics? And all the rest.

My point is irrespective of sector, and can be summarized thus: Do we think that measures to help businesses ride out the recession, in the hope that consumer demand will return to 2007 levels, is wise?

In my view, relative levels of consumption will not return to 2007 levels for a very, very long time. Perhaps concentrating on the demand side and helping individuals rather than businesses would be preferable.

I hope someone understands what I'm trying to say...

A._Badger

Three observations. The first is that history teaches us that government subsidies to foreign owned companies rarely purchase loyalty.

There is no reason to believe that showering Japanese, French, German or American owned car assemblers will keep plants open when the next crisis comes .

The second is to what extent are these really useful jobs anyway, from a national (as opposed to a personal) perspective? Hondas are not designed in the UK, nor are Toyotas or Vauxhalls. We are a bridgehead into the EU for Japanese vehicle companies and a historical accident for the Americans, who are far more interested in Germany than the UK.

Not to belittle the importance of jobs to the workers involved, bolting together components designed and manufactured elsewhere is pretty close to a McJob.

It would have been far more intelligent had the government backed the nuclear engineering industry a few years ago, instead of handing over our skills and expertise to others.

The third observation. Am I the only one to sense a deep irony in watching a government so in hock to the 'Greens' that is has has made both motoring and road haulage sheer misery, now starting to worry about the demise of vehicle makers?

itsnever2lateisit?

I dont get why lending LDV £30m is a bad idea, such that the Govt says NO! that £30m will keep 6,000 people in their homes, and repaying mortgages etc. Yet throwing £1.3 Trillion at the Banks is OK The guys at LDV just want to survive, the bankers still feel 'got at' over their bonuses:mad:


PS I know that LDV havent made a profit for 4 years, but that is mainly unfortunate events First their partner Daewoo got bust leaving them holding the baby, then just as the new van is launched MG Rover go down, and suddenly LDV's suppliers want COD. The company has a sound product, but never mind let buy our vans from Turkey instead, saves collecting Income Tax and NI:rolleyes:

lostinrates

itsnever2lateisit? wrote: »

buy our vans from Turkey instead,

Turkey/Russia....whats the difference?

Ok, I don't mean to be flippant, I think the job losses are horrific and I think the idea to help a company reinvent itself as a managment takeover that plans to attempt future proofing by becoming a green vehicle provider would be more valuable than a lot else thats happening, but then it would stick in my gullet a little that an overseas parent company can hold our indebted country to ransome to support a non-profit making employer.

I don't know what the answer is though. Right, wrong...who knows. Its all bad news

dopester

mr.broderick wrote: »

Dopester i really like you but do you actually believe what you have posted above?

It might not seem like it Brodders, but I just want the least painful solutions, to keep people in work and earning, even if it has to be less than income than before, but much better than the dole. If you have better solutions please lets hear them.

Friday 20th February, 2009

New car production in the UK has fallen in January from a year earlier.

The dramatic fall has come with the falling demand for cars which is being felt all over the world.

According to Britain’s Society of Motor Manufacturers and Traders, a total of 61,404 new cars were produced last month, which is 58.7% lower than January 2008.

Many UK car firms have now gone to three day weeks or have extended closures since Christmas.

MyLastFiver

I dont get why lending LDV £30m is a bad idea

I've got a better idea. Let LDV go bust and split the £30 million amongst the workers.

dopester

MyLastFiver wrote: »

I've got a better idea. Let LDV go bust and split the £30 million amongst the workers.

Let it go bust and put the business up for liquidation or auction - giving new owners opportunity to turn it around.

That is how markets should operate.

The boom does certain things, certain bad things. Usually the boom is considered to be good times.

In economics this is the exact opposite.. boom times are the bad times.. boom times are the bad times because that's when the mistakes are made.

On the contrary, people feel and understand the bust as something bad and something terrible.. while in reality it is the exact opposite. The bust, what the bust does, is correct the previous mistakes in the boom.

Well, what are the previous mistakes in the boom?

Well they're very simple; malinvestment.

//

Liquidations.. asset is sold to the highest bidder

Who will be the highest bidder? The answer is simple - those that can use best the capital as it is today, or those who can retrofit it best for some other use.

In other words what the liquidation does is to change the use of a poorly invested asset, into a better use that will be more profitable.

In an auction the most efficient wins. A liquidation takes an inefficiently invested and used asset, and put in to it's best currently available efficient use.

Liquidation is the process to enhance or increase efficiency and thereby productivity and thereby overall output. So liquidation serves as the reversal as malinvestment. With liquidation you put it back to the right line of business.

BusinessCycles, Part 4 of 4 - The Austrian Bust, Prof. Krassimir Petrov
Google Video