Rich Dad's Water Cooler Blog

Below is our Rich Dad's Water Cooler Blog! This one is from Bob Turner who works in the Accounting Department blogging about his opinion regarding the auto makers requesting na bailout. Please read and click her to comment on how you feel about it:

Friday, December 5, 2008

Big 3 Bailout/loan total FRAUD

I'm sitting here in disbelief that the big 3 automakers are in Washington asking for these loans totaling $34 billion. I see that Toyota/Nissan/Honda is working in the same environment as the big 3, yet they are in no financial trouble. The Japanese auto companies are even expanding in the US and are still profitable.

As I see it, the US automakers are operating on a poor business model on two fronts. One, they are building cars that are not competing well with the world auto market and, secondly, the contracts with the United Auto Workers Union don't fit with reality of the world today. My point being is that unions in general are a JOKE and are OBSOLETE. Why are the big 3 still funding retirements on the old model of the defined benefit pension? Why do they EVEN DEAL with the UAW?

The big 3 are paying, including retirement benefits, somewhere near $78 an hour where Honda, Toyota and Nissan are paying around $35 an hour. I read somewhere that the UAW contract allows workers to collect up to 90% of their pay as they sit in a "job pool" waiting for work. That's welfare as far as I'm concerned and not sustainable for the long term well-being of the companies.

The defined benefit pension essentially met its defeat in 1974 after the US Congress passed the ERISA act. The act basically put the power of retirement investing into the hands of the employee and not the employer. Essentially, it evolved into the 401k.

My solution is to breech all UAW contracts and FIRE ALL the union workers. Then, hire them back under a REASONABLE agreement that suits the 21st GLOBAL economy. TAKE IT OR LEAVE IT.

So, this bailout/loan will just delay the inevitable- the bankruptcy of the big 3. It may be a year or two but that's my prediction. If they went bankrupt now, they would emerge so much more powerful and be able to compete globally for the first time in a long while.

Posted by Bob at 8:34 AM 1 comments