So now the big 3 want $50B. Apparently $25B is not enough.

[First]

They've been living off subsidies and can't compete with Japanese automakers. I'd love to have at least one competitive U.S. automaker, but bailing out all of them is out of control.

 

[Ktulu]

Originally posted by: Evan
They've been living off subsidies and can't compete with Japanese automakers. I'd love to have at least one competitive U.S. automaker, but bailing out all of them is out of control.

They've been living off mainly there cash reserves but it looks like that'll be done with within the year. As good as their products have gotten, their profitability is still shit. They were projected to finally be profitable in ~2010 but it looks like they won't even make it till then.

 

[ponyo]

Originally posted by: Thump553
Remember that throwing Lehman Brothers into bankruptcy court instead of bailing them out was most likely the principal cause of the credit crunch and stock market collapse. The expenses of those two are multiple times whatever the bailout cost is.

That said, Ford and GM put out some pretty stunning numbers today. They are are burning through TWO BILLION a month (I think that's something like $3,000,000 per hour) and GM will be out of money by this spring if things don't change. Ford has been re-rated today-the are now junk bond level, fifth from the lowest.

A bailout is probably a necessary evil, but I'd like to see: (1) the current shareholders get screwed, just like for FNMA and Freddie Mac and (2) a drastic and immediate pruning of the companies, including benefits. Their health care plans are ridiculously gold plated. GM could drop at least half its model lines.

I think GM and Ford is throwing the kitchen sink out there with their insane burn rate to make it look absolutely ugly so they can get the bailout. I think if worst come to worst, they can slow their burn rate if they really wanted to.

We have come down this slippery slope by bailing out Bear, Freddie and Fannie, AIG, and this 750 billion for banks. Since we have done all this, I think it's in our interest to bailout GM and Ford. Just like letting the banks and financial institutions fail would've had grave consequences, so will letting GM and Ford go under.

 

[International Machine Consortium]

Originally posted by: sactoking
They wouldn't need this cash if:
a) they were more agile in their response to market demand
b) they weren't so capital leveraged in their manufacturing plants (which coincides with a)
-and most importantly-
c) they weren't getting ass-reamed with no reach-around by the UAW

Add to that:

D) Didn't build crap vehicles.

The American car companies are getting what they deserve. The idea of bailing them out really ticks me off.

 

[StageLeft]

boomerang, For your silly rant you earn a very rare, Skoorb-endorsed Go Fuck Yourself. I LIVE IN THE US you dumb sh*t, which you'd know if you clicked the icon next to my name that says it. My kids are US citizens, I'm a permanent resident who could be a citizen in a few years, and I'm almost certain I pay more taxes than you.

 

[Squisher]

Originally posted by: International Machine Consortium

Originally posted by: sactoking
They wouldn't need this cash if:
a) they were more agile in their response to market demand
b) they weren't so capital leveraged in their manufacturing plants (which coincides with a)
-and most importantly-
c) they weren't getting ass-reamed with no reach-around by the UAW

Add to that:

D) Didn't build crap vehicles.

The American car companies are getting what they deserve. The idea of bailing them out really ticks me off.

A) How quickly would you be able to put a car from an idea to production if you were running the company? They are under 2 years now on some. Gas went from $2/gal. to $4/gal. in less than 2 years.

B) It takes a lot of brick, mortar, and iron to build a manufacturing facility.

C) The last contract basically cut in half wages for new hires. You'll see some serious cuts in the next contract for existing workers and retirees.

D) Some of the newer models compete on equal footing with foreign rivals (CTS, Malibu, G8, Fusion, etc.) But, you are right, they need more.


Like others have said, I don't think you realize the impact on the economy as a whole if these companies tank. Think 20% unemployment in the rust belt. Brother can you spare a dime?

And, the first $25 billion wouldn't have been necessary if we hadn't enacted draconian CAFE standards.

 

[BarneyFife]

People don't realize that each automaker layoff results in the indirect impact of 12 jobs. So if they lay off 500k people, you are talking about 6 mil people unemployed.

 

[StageLeft]

Originally posted by: BarneyFife
People don't realize that each automaker layoff results in the indirect impact of 12 jobs. So if they lay off 500k people, you are talking about 6 mil people unemployed.

The worst-case scenario above said 2.5M jobs.

Really, though, how often does a big company simply disappear? It doesn't happen does it? They sell of their potentially profitable parts. Also, as mentioned above, the US needs to decide if non-government entities are going to survive by themselves or be propped up to varying degrees by the government. Already non gov entities get subsidies for certain things like green energy, but in theory that's to help spur new industry (for what that's worth), not simply stop the hemorrhaging on an existing one. In this case, I believe confidence is low that the loans will go toward new tech because they'll probably lack the contractual compulsions necessary to force cash in that direction.

 

[Pepsei]

what the fuck, where is the money coming from?
i guess the government just print more....

is there anything better than fiat system? (note that i got a C- when i took my only economics class in college, and i didn't learn anything.)

 

[ponyo]

Originally posted by: Squisher

Originally posted by: International Machine Consortium

Originally posted by: sactoking
They wouldn't need this cash if:
a) they were more agile in their response to market demand
b) they weren't so capital leveraged in their manufacturing plants (which coincides with a)
-and most importantly-
c) they weren't getting ass-reamed with no reach-around by the UAW

Add to that:

D) Didn't build crap vehicles.

The American car companies are getting what they deserve. The idea of bailing them out really ticks me off.

A) How quickly would you be able to put a car from an idea to production if you were running the company? They are under 2 years now on some. Gas went from $2/gal. to $4/gal. in less than 2 years.

B) It takes a lot of brick, mortar, and iron to build a manufacturing facility.

C) The last contract basically cut in half wages for new hires. You'll see some serious cuts in the next contract for existing workers and retirees.

D) Some of the newer models compete on equal footing with foreign rivals (CTS, Malibu, G8, Fusion, etc.) But, you are right, they need more.


Like others have said, I don't think you realize the impact on the economy as a whole if these companies tank. Think 20% unemployment in the rust belt. Brother can you spare a dime?

And, the first $25 billion wouldn't have been necessary if we hadn't enacted draconian CAFE standards.

Big 3 going under would harm us severely economically and national security wise. People keep saying let them go bankrupt and come out of it leaner and meaner. The problem is if they go bankrupt, they might not come back out. Who's going to buy a car from a bankrupt automaker? It's one thing for something like the airlines where it's a service industry and they transport people. Airline seat is relatively inexpensive and once the flight is over its utility is used up. It's different for a manufacturer. Car is usually the second most expensive purchase for most people outside of a house and is used everyday for years. Would you buy a car from a bankrupt automaker? Wouldn't you have concern about service, parts, and support? You think the Big 3 has problem selling cars now? They will find it near impossible once in bankruptcy. How will they operate while in bankruptcy and later emerge if they can't sell cars while in bankruptcy?

I will sell all my stocks and go into cash if GM and Ford are not saved. I think people are severely underestimating the impact of big 3 failure. Lehman's bankruptcy impacted Wall St. heavily. GM and Ford will impact the Main St and the shockwaves will be felt by everyone on Main St.

 

[TheSlamma]

What is the point, American car companies will never learn. They will need bailouts every 10 years from here out. Time for them to go buy a Corolla and a Camry, dissect them and learn how to build some real cars.

 

[sandorski]

Should be noted that the EU is considering a similar Bailout(approx the same $ amount). Here in Canada there's been an uptick in talk about a Bailout as well(wouldn't be near as much, just enough to keep current Production).

I'm torn on the issue. If this was years ago when the Economy was less fragile and if it was just 1 Automaker at risk, letting it fail could be manageable. When you're talking about the current situation and all 3 on the verge of failure that's a whole different situation that can turn a very bad Economic situation into a disaster.

 

[StageLeft]

I could actually get behind a bailout if a) the companies were heading in the right direction before (they weren't, though), and b) it was clear that high oil had really driven a nail where it otherwise wouldn't have gone (and, clearly, the spike in oil was an anomaly and though we're looking at higher oil in the future, it will follow a more predictable trend, allowing some proactive measures in car companies). If the companies were about to start not sucking, it would be dumb to let them collapse with something like an oil anomaly, since manufacturing facilities do take a long time to get properly setup and get their business processes in place.

 

[WHAMPOM]

Originally posted by: Skoorb
link

Big shocker, heck it wasn't long ago at all--a few days--the sane of us said that $25B wasn't going to make a difference and these companies were dead anyway. Now they want $50B? I guess it's like asking your dad for a new bicycle and it only costs $100 and when he brings you to the store you quickly start to try and weasel out of him the $200 version instead.

Despicable, let these companies DIE already.

OOOOH!! Must need more money to fund their bone$$e$$..$$,$$$,$$$,$$$.

 

[Ktulu]

Originally posted by: TheSlamma
What is the point, American car companies will never learn. They will need bailouts every 10 years from here out. Time for them to go buy a Corolla and a Camry, dissect them and learn how to build some real cars.

How about it's no longer about the product, it's about the inability to make a profit due to the bad management and retarded union deals of the past. If you actually paid attention to their current and future products you would have noticed that they're light years ahead of the GM from last decade.

 

[Ktulu]

Originally posted by: Skoorb
I could actually get behind a bailout if a) the companies were heading in the right direction before (they weren't, though), and b) it was clear that high oil had really driven a nail where it otherwise wouldn't have gone (and, clearly, the spike in oil was an anomaly and though we're looking at higher oil in the future, it will follow a more predictable trend, allowing some proactive measures in car companies). If the companies were about to start not sucking, it would be dumb to let them collapse with something like an oil anomaly, since manufacturing facilities do take a long time to get properly setup and get their business processes in place.

That's the thing in a previous thread I gave reasons that I felt showed that GM was headed in the right direction. But this sudden economic bust has hurt EVERYONE including everyone's sainted Toyota. I can confidently say that if if this collapse didn't happen they would be right on track to profitability in 2010, but now it's most likely the grave. Seriously look at what GM has done with their products recently and for the future, all while struggling to stay alive. Imagine what they could do if they were on more stable ground. One thing I would require of GM before giving them a penny is to replace their current management, this should at least restore a little more confidence to their shareholders.

 

[Mani]

Losing all 3 would be too much - the sheer amount of lost jobs and GDP would be unfathomable. One of the Big 3 must go however - we simply don't have the market to support 3 successful US automakers with the level of international competition we have. Hoping the GM-Chrysler deal will go through.

 

[Perknose]

Originally posted by: Rustler
Now its up to 75 Billion and bein Pres Obama is beholding to the unions................you want some mo money..................here you go....................................................

You post like you've downed one too many methamphetamine-laced lattes or you're a six year old girl composing her very first MySpace bio . . . or both.

Please stop.

 

[Perknose]

Originally posted by: Fern
One way or another we in the USA are gonna pay.

If they go the bankruptcy route, their suppliers and creditors pay.

The PBG Corp will have to pick up pension costs.

So many people unemployed meaing fed/state unemployment benefits, welfare, food stamps, medicaid picks up health care etc. The fed & state don't get the income tax on the employees' wages etc.

No jobs, no mortgage payments. Housing values decline, real estate taxes collections drop. More bad mortgages? Derivitives/mortgaged back securities plunge further, more money requested from banks/financial institutions. The fed gov's investment is those products (recent bail-out plan) is lost etc.

The fed gov likely won't gets its earlier loan of $25 billion back.

One way or another, it's gonna cost.

As much as I dislike bailouts, we're screwd.

Seems some Dems here have an irrational hatred of big corporations (otherwise known as employers). All this talk of helping poor people, increasing min wages and other welfare programs etc. I think we already have enough poor people, let's not rush to make more.

Fern

Agreed, except for the previous, phantom, dream sequence $25 billion loan you reference.

 

[Thump553]

I wonder what the chances of Canada (and Mexico, to a lesser extent) joining in the bailout. Last I knew quite a few of the auto plants and jobs are located in Canada. Time to make NAFTA mean something-share the pain as well as the benefit.

 

[Puffnstuff]

Perhaps uncle sam should just give each of them a first alert monitor so that when they do collapse they can push the button and say "help I've fallen and I can't get up.":laugh:

Seriously though the government can't just hand over public cash to entities that have mismanaged their own business resources so badly. There should be stringent conditions attached to any money loaned to them and under no circumstances should they be allowed to squander it on more gas guzzlers. If they aren't building the fuel efficient cars of tomorrow then let them die w/o any government help.

 

[Balt]

Is there a realistic expectation that this bailout money would actually help the companies survive and return to consistent profitability? Or are we throwing our money away on companies that are going to continue whatever policies have led them to where they stand now?

These domestic producers also have a significant image problem. Even if they can get their automobiles' reliability ratings up to snuff with some of the overseas companies, people are not necessarily going to immediately trust them. Many people (including myself) have witnessed and experienced more problems with domestic cars than foreign ones, and trust isn't going to return overnight.

 

[StageLeft]

Even if they can get their automobiles' reliability ratings up to snuff with some of the overseas companies, people are not necessarily going to immediately trust them. Many people (including myself) have witnessed and experienced more problems with domestic cars than foreign ones, and trust isn't going to return overnight.

That is a key problem. The quality of some of the domestics is close if not at par or above in some cases the foreign brands now, at least based on initial quality or the first few years of life. They had scraped the bottom of the barrel for so long that now with products that are not equivalent to throwing money in the toilet they have a big image problem.

 

[tvarad]

Originally posted by: Thump553
Remember that throwing Lehman Brothers into bankruptcy court instead of bailing them out was most likely the principal cause of the credit crunch and stock market collapse. The expenses of those two are multiple times whatever the bailout cost is.

That said, Ford and GM put out some pretty stunning numbers today. They are are burning through TWO BILLION a month (I think that's something like $3,000,000 per hour) and GM will be out of money by this spring if things don't change. Ford has been re-rated today-the are now junk bond level, fifth from the lowest.

A bailout is probably a necessary evil, but I'd like to see: (1) the current shareholders get screwed, just like for FNMA and Freddie Mac and (2) a drastic and immediate pruning of the companies, including benefits. Their health care plans are ridiculously gold plated. GM could drop at least half its model lines.

Why not, instead, give the money to auto companies that are well run and making money to set up new plants. I'm talking about Toyota and Honda. Why throw good money after bad?

 

[boomerang]

Originally posted by: Skoorb
boomerang, For your silly rant you earn a very rare, Skoorb-endorsed Go Fuck Yourself. I LIVE IN THE US you dumb sh*t, which you'd know if you clicked the icon next to my name that says it. My kids are US citizens, I'm a permanent resident who could be a citizen in a few years, and I'm almost certain I pay more taxes than you.

I'll take your Go Fuck Yourself and give you another one right back. You still aren't a citizen of this country by your own admission. I know you live in New York and where you live is irrelevent. Where your kids were born is irrelevent. My issue is with the nature of your multitude of posts here.

If you want to quit using us and we in your posts I'm fine with anything you've got to say. You're a citizen of another country and as such 'we' and 'us' would refer to yourself and your fellow Canadians. When you make this statement 'who could be a citizen in a few years' you're making your allegiances very clear.

You've started yet another thread lambasting the auto industry in this country. It's stating your uninformed opinion for the umpteenth time. You don't have a dog in this fight. If things get bad enough over here, well hell, you can just pack up and go back home. You choose to live and work over here - fine. You pay taxes - that's great. You live and work here by choice. You pay taxes because it's required. You can't vote here.

When US citizens are unhappy with things of a political nature we have a means to convey that. We can contact our Representative, our Congressman, our Senator. We can write to our President. We have the ultimate power and that is the power of our vote. It's a right that we as citizens have. You're not a citizen and I resent the depth of your political involvement here. I don't feel you have the right to declare your thoughts and opinions in a manner that leads people to believe you're a citizen of the US. I can't say it any more simply.

If and when you ever decide to make the move and become a citizen of this country, when you're 'fully vested' here and have the right to vote, I'll have no problems with you voicing your opinions. At this time, I find your posts deceitful.