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

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SickBeast

Lifer
Jul 21, 2000
14,377
19
81
If they're losing money they should just fire their entire unionized labour forces, cease operations, and focus on engineering cars that people actually want (with a focus on quality for once).

Toyota and Honda pay their people well and aren't bogged down by unions to the same extent as the big 3. Their cars are built in North America anyway.

I personally could care less if the big 3 go under. If anything, it will be good for the world. Less huge SUVs on the road, and less cars breaking down.
 

ericlp

Diamond Member
Dec 24, 2000
6,134
223
106
I'd be all for it if they gave everyone in the USA a free car that got over 35 mpg.

 

Thump553

Lifer
Jun 2, 2000
12,750
2,525
126
Hot off the press from my brokerage service:

Shares of General Motors (GM 3.27 -1.09) have fallen to a fresh multi-decade low. Deutsche Bank downgradedGM to Sell from Hold and cut its price target to $0 from $4, noting without government intervention, GM may not be able to fund its U.S. operations beyond December.

Admittedly this is just a stock analyst's opinion, but a zero price target for GM (meaning that is the price he expects it to reach within a year). I wonder where they got the December date as well, the earliest I had seen was May-June 2009 in a worst case scenario.

In a word, though, gulp. You can buy 10,000 shares of GM for roughly the price of a moderate new GM model car.
 

K1052

Elite Member
Aug 21, 2003
47,997
37,169
136
Originally posted by: Thump553
Hot off the press from my brokerage service:

Shares of General Motors (GM 3.27 -1.09) have fallen to a fresh multi-decade low. Deutsche Bank downgraded GM to Sell from Hold and cut its price target to $0 from $4, noting without government intervention, GM may not be able to fund its U.S. operations beyond December.

Admittedly this is just a stock analyst's opinion, but a zero price target for GM (meaning that is the price he expects it to reach within a year). I wonder where they got the December date as well, the earliest I had seen was May-June 2009 in a worst case scenario.

In a word, though, gulp. You can buy 10,000 shares of GM for roughly the price of a moderate new GM model car.

That was included in GM's own release. They were concerned that they'd run short of operating cash by the end of the year. Odds are however that they have enough avenues open to them to stretch that to late 09, in which case they'd be the last man standing (though mortally wounded) after Ford and Chrysler go tits up in the spring.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
GM will definitely get some money, a bandage if you will, to stem the bleeding. No surgery, of course, no cauterizing of the wound to actually put it on the proper path, but it will get a bandage and it won't be long before it's also saturated with blood and GM needs another.
 

Ktulu

Diamond Member
Dec 16, 2000
4,354
0
0
Originally posted by: Skoorb
GM will definitely get some money, a bandage if you will, to stem the bleeding. No surgery, of course, no cauterizing of the wound to actually put it on the proper path, but it will get a bandage and it won't be long before it's also saturated with blood and GM needs another.

What do you suggest would be something any of the "Big 3" could do to put them on the right track?
 

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
Originally posted by: Ktulu
Originally posted by: Skoorb
GM will definitely get some money, a bandage if you will, to stem the bleeding. No surgery, of course, no cauterizing of the wound to actually put it on the proper path, but it will get a bandage and it won't be long before it's also saturated with blood and GM needs another.

What do you suggest would be something any of the "Big 3" could do to put them on the right track?
If I had the answer to that I'd be paid more than the CEOs of any of those companies; no freaking idea!

 

PingSpike

Lifer
Feb 25, 2004
21,747
579
126
Originally posted by: Ktulu
Originally posted by: Skoorb
GM will definitely get some money, a bandage if you will, to stem the bleeding. No surgery, of course, no cauterizing of the wound to actually put it on the proper path, but it will get a bandage and it won't be long before it's also saturated with blood and GM needs another.

What do you suggest would be something any of the "Big 3" could do to put them on the right track?

Get in their time machine. The big 3 got gas price rushed, kekekeke.
 

Ktulu

Diamond Member
Dec 16, 2000
4,354
0
0
Originally posted by: PingSpike
Originally posted by: Ktulu
Originally posted by: Skoorb
GM will definitely get some money, a bandage if you will, to stem the bleeding. No surgery, of course, no cauterizing of the wound to actually put it on the proper path, but it will get a bandage and it won't be long before it's also saturated with blood and GM needs another.

What do you suggest would be something any of the "Big 3" could do to put them on the right track?

Get in their time machine. The big 3 got gas price rushed, kekekeke.

Even with the gas price hike and the downturn in our economy you have to admit that the way things were being run was fundamentally wrong. So I wonder what if anything anyone here would suggest that could drastically improve the US automakers current position now.
 

Pulsar

Diamond Member
Mar 3, 2003
5,224
306
126
What, exactly, do you want to happen?

The UAW has gotten rid of the gen-pool, where people are paid for not working. They've agreed to cut wages in half. Literally.

Ford has moved up in a dead heat quality-wise with Toyota and Honda. 16 of their models are Consumer Reports best-buys. Ford models have graced the front page of that magazine for the past several years.

No one, including the Japanese, make a profit on the small cars (Civic etc). What they do get is a lending rate of near zero from their "Central Bank" (the government).

The big 3 are making improvements left and right. That's why some people have even changed Ford from "sell" to a 4 year "buy".

Unfortunately, it's going to take a bit to get there. At the same time, the news media needs to wake up and start reporting that's its bad out there for EVERY auto company. Not just the big three.

I see enough ignorance in this post to make me sick. People who don't understand the first thing about adding value to a product (aka manufacturing). Do you think our countries (including yours Mr. Know-It-All Canadian) can get by on a service industry populated by Tim Horton's and Jiffy Lubes?

It's sad, really. So many people simply refuse to educate themselves on the real issues and continue to swallow what the media feeds them. Well continue on. I'm sure you'll enjoy flipping burgers in 20 years.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
At the same time, the news media needs to wake up and start reporting that's its bad out there for EVERY auto company. Not just the big three.
Toyota isn't a few months away from bankruptcy. Nobody said the others are doing fine; we all know they are hurting.
People who don't understand the first thing about adding value to a product (aka manufacturing).
GM management.
Do you think our countries (including yours Mr. Know-It-All Canadian) can get by on a service industry populated by Tim Horton's and Jiffy Lubes?
Let's stay on topic. Although Tims is great, what does this question have to do with the topic? A couple of people in this thread are awesome at jumping to conclusions, so congrats with that!
So many people simply refuse to educate themselves on the real issues and continue to swallow what the media feeds them.
Agreed.
I'm sure you'll enjoy flipping burgers in 20 years.
Presumably that was directed at employees of the Big 3, but I am guessing they will not enjoy that.
 

Ktulu

Diamond Member
Dec 16, 2000
4,354
0
0
http://www.reuters.com/article...4AA5HB20081111?sp=true

So now according to JP Morgan GM is likely to survive and has rated GM stock as a Buy. I honestly believe that all these damn negative articles about GM going bankrupt, dying, whatever play a big part as to why the stock is so undervalued today. I think they can pull through but they definitely need help getting out of this mess.

NEW YORK (Reuters) - General Motors Corp's (GM.N: Quote, Profile, Research, Stock Buzz) extremely distressed debt is an attractive investment as the automaker has several options to improve its liquidity and survive the economic downturn, according to credit analysts at JPMorgan.

GM's bonds have tumbled as the company burns through cash and struggles to turn around its business amid a weakening economy and dire sales figures. Its shares have plummeted to the lowest level since 1946.

The automaker posted a $4.2 billion loss for the third quarter on Friday and said it would cut white-collar jobs and slash next year's capital spending budget by $2.5 billion to try to cope with a sharp sales slowdown.

In spite of this bad news, JPMorgan analysts rate GM's bonds a "buy."

"We believe GM has several sources of liquidity it can access to bridge the company to 2010 when it realizes considerable cost cuts," analysts Eric Selle and Atiba Edwards said in a report.

These include an overfunded pension plan, possible asset sales, capital market transactions, equity injections, cost cutting and government loans, they said.

GM's benchmark 8.375 percent bond due 2033 has dropped to 25.75 cents on the dollar, from 36.5 cents at the end of October, according to MarketAxess. The bonds had traded at more than 80 cents on the dollar at the beginning of the year and currently yield 32.5 percent.

The automaker's credit default swaps are also trading at extremely distressed prices, costing 68.5 percent the sum insured as an upfront cost, plus 5 percent in annual premiums for five years, according to Markit.

That means it costs $6.85 million to insure $10 million in debt for five years, plus $500,000 annually.

"We view the upside (driven by stabilization of U.S. sales volumes and liquidity enhancement measures) on the bonds as much higher and more likely than the downside of a potential bankruptcy," JPMorgan said.

"GM's recent product successes (award-winning styling, performance and quality) and its considerable international profitability give us confidence they can become profitable in North America selling cars," they added.

The analysts added that they have factored in economic weakness for the next 2-1/2 years.

In addition to GM's bonds, selling protection on the debt using credit default swaps is also attractive, as is buying its term loan, JPMorgan said. They added, however that the company's short-term survival will require the help of the government and/or its suppliers.

Analysts at independent research firm KDP Advisors, meanwhile, said they expect GM will benefit from additional government loans and that it is likely to avoid bankruptcy.

They have a "hold" recommendation on its bonds, however, due to the risk that the company may restructure its debt, or push them further down in the capital structure, which will be harmful to bondholders.

"The Detroit automakers have, in essence, been pursuing an out-of-court restructuring over the past three years. These efforts have produced a competitive labor contract with the UAW, a viable solution to reduce retiree healthcare expense, and a substantial downsizing of capacity and headcount," analyst Kid Penniman said in a report.

"Incremental gains achieved through bankruptcy would be minimal in comparison and would likely result in an even further deterioration of enterprise values as consumers would be far less likely to purchase an expensive vehicle from a bankrupt manufacturer, with or without government guarantees," he added.

(Reporting by Karen Brettell; Editing by Tom Hals)
 

CADsortaGUY

Lifer
Oct 19, 2001
25,162
1
76
www.ShawCAD.com
Let them go under and come back restructured without the crap they are saddled with. Drop the oldschool industrial thinking and get with the times. There should be no more bailouts of legacy companies who refuse to rid themselves of legacy policies.
 

wwswimming

Banned
Jan 21, 2006
3,695
1
0
Originally posted by: SkoorbI 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.

or the $1000 version.

GM is $190 in debt, Ford $270. billion.

if the people are going to pay for the bail-out, we should have a
say on product design.

i'd like to see an electric car, with a a Skulltrail option. re-packaged
in micro-ATX format so it will fit in an XQ-Pack.
 

dullard

Elite Member
May 21, 2001
25,476
3,976
126
Originally posted by: Pulsar
What, exactly, do you want to happen?

The UAW has gotten rid of the gen-pool, where people are paid for not working. They've agreed to cut wages in half. Literally.
GM announced today 2000 layoffs of hourly workers after 3600 were announced on Friday. Sounds like that could help the costs. EXCEPT that the unions require these people to stay on the payroll for more than two more years. There we are again: 5600 people on the payroll doing nothing.
Ford has moved up in a dead heat quality-wise with Toyota and Honda. 16 of their models are Consumer Reports best-buys. Ford models have graced the front page of that magazine for the past several years.
Ford has done better but still needs just a bit more to go, much of GM is still lacking though. Decades of bad experiences with crap cars isn't going to change instantly with a few moderately high ratings from a magazine. The big 3 really need time for this to sink in. Yes, their cars now are better. But all that means is that their cars in the past were bad.
No one, including the Japanese, make a profit on the small cars (Civic etc). What they do get is a lending rate of near zero from their "Central Bank" (the government).
So stop selling cars that carry no profit. Yes, this means a massive cut in volume. And that means closing plants and laying off more people. It probably means that they need to be half the size that they used to be. Return to cars selling that actually make money. No bailout, no quality improvement, and no great management can turn you around if your product lines are not profit lines.
The big 3 are making improvements left and right. That's why some people have even changed Ford from "sell" to a 4 year "buy".
Ford stock has lost 60% of its value in about a month. If Ford makes it through this time, of course it's stock will bounce back up and people who buy now will make a fortune. The massive decrease in price is why they are now a buy - not because of any improvement in their products. Of course, that big profit relys on a big IF. But, I do believe that Ford will make it through.
Unfortunately, it's going to take a bit to get there. At the same time, the news media needs to wake up and start reporting that's its bad out there for EVERY auto company. Not just the big three.
They do report that Honda and Toyota are doing poorly. But, you have to read them. With Toyota's 69% profit plunge and 23% plunge in sales they STILL are raking in billions of dollars of profit. Yes, they are hurting too, but they are hurting while making money unlike the American makers. Plus, I doubt that they have tens or even hundreds of billions of IOUs to their pensions like the American makers. Even if the big 3 make it through this round, they have a much, much bigger problem looming.

The rest of your post doesn't deserve comment.
 

thegimp03

Diamond Member
Jul 5, 2004
7,420
2
81
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.

I don't think the USG will let the American automakers go down. $50B is a drop in a tank compared to the amount of money thrown at Wall Street.
 

imported_Lothar

Diamond Member
Aug 10, 2006
4,559
1
0
GM's Best Option Is Bankruptcy Filing, Ackman Says

Nov. 11 (Bloomberg) -- General Motors Corp., the biggest U.S. automaker, should file for bankruptcy rather than taking money from the government, hedge fund manager Bill Ackman said.

``It has been hamstrung for years because it has too much debt and it has contracts that are uneconomic,'' Ackman, manager of the Pershing Square Capital Management LP hedge fund in New York, said in a taping of the Charlie Rose show yesterday. ``The way to solve that problem is not to lend more money. They should do prepackaged bankruptcy.''

GM is petitioning the U.S. government for aid after saying last week that it may not have enough cash to operate this year. A bankruptcy would leave bondholders in control of the company in exchange for forgiving some debts, Ackman said.

The automaker dropped to its lowest level in 59 years yesterday after a Deutsche Bank AG analyst downgraded the shares and said they may be worthless in a year. The slump demonstrated mounting pessimism that a turnaround will succeed amid a global credit crisis and the worst sales market in at least 15 years.

GM fell 44 cents, or 13 percent, to $2.92 as of 4:02 p.m. in New York Stock Exchange composite trading. The shares have lost more than 90 percent of their value over the last year.

`Not an Option'
A bankruptcy filing ``would be a disaster far beyond General Motors and a sad chapter in American history,'' GM Chief Executive Officer Rick Wagoner said in a Bloomberg Television interview last week. GM said on Oct. 24 that bankruptcy ``is not an option.''

GM's 8.375 percent bonds due in July 2033 traded at 25.75 cents on the dollar yesterday, less than half their price two months ago, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority. The notes yielded 32.5 percent.

GM needs to reduce debt to a supportable level, Ackman said.

``The `bankruptcy' word scares people but it's simply a system,'' said Ackman, who said he doesn't have a position in GM securities. A Chapter 11 bankruptcy filing enables a company to seek protection from creditors while still continuing to operate.

Ackman, 42, profited as a short seller when MBIA Inc. and Ambac Financial Group Inc., the two largest bond insurers, plummeted this year over guarantees they issued on securities tied to subprime mortgages. In July Ackman said he had short positions in Fannie Mae and Freddie Mac, which were seized by U.S. regulators in September after $14.9 billion in net losses threatened to further disrupt the housing market. Last month Ackman said he bought a 9 percent stake in Wachovia Corp.

Federal Aid
GM, Ford and Chrysler LLC, owned by Cerberus Capital Management LP, may be moving closer to gaining federal aid. U.S. House Speaker Nancy Pelosi of California and Senate Majority Leader Harry Reid of Nevada wrote to Treasury Secretary Henry Paulson to urge that bank-bailout funds be opened up for loans to automakers.

Rahm Emanuel, chief of staff to President-elect Barack Obama, has said the U.S. auto industry is ``essential'' to the economy.

While Emanuel stopped short of endorsing such a plan, the White House yesterday signaled its opposition, saying aid to the industry wasn't discussed during the debate on the banking bailout. Congress may take up automaker assistance when it returns next week.

The government should ensure GM uses funds to retrain workers and shouldn't put money into the company if it will only be used to service existing debt, Ackman said.

``The welders at GM could help on the infrastructure of the country,'' Ackman said. ``That's a much better use of taxpayer money.''

The Ackman interview is scheduled to air today, according to the Charlie Rose show's Web site.
http://www.charlierose.com/home

http://www.bloomberg.com/apps/...chive&sid=asT0y.5Oak5Y
 

CADsortaGUY

Lifer
Oct 19, 2001
25,162
1
76
www.ShawCAD.com
Originally posted by: Mark R
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.

What about laying off the non-productive automakers, or the partially productive ones?

A friend tells me that the way things are run at the major plants, a good 10-15% of workers only do about 15-30 minutes work per day, but receive a full days salary and benefits. Something to do with union regulations about 'one machine, one worker' - every machine must have its dedicated operator, even if it's only used for a few minutes each day.

Of course, this doesn't solve the problem that there is significant overproduction of cars and trucks. GM and Ford have tried to increase capacity and market share in an already saturated market.

What is needed is a massive reduction in capacity, as well as efficiency savings. If you accept that the market is saturated, then the companies need to concentrate on a particular segment of the market, that they can do better than the others, and to maximize their efficiency.

The more I think about it, the more bankruptcy strikes me as a viable option. You fire the management, you get rid of the vampires that are the unions, reduce capacity and sell off unnecessary factories, and you retool the remainder to produce cars that people want and can afford. At that point, the govt can step in with $25 or $50 billion should it be needed to retain manufacturing and engineering capabilities - there's no point in throwing good money into the bottomless pit that is a badly run company. Change the manament and kill the parasites first, that way the medicine has a chance to work.

At the moment, the big 3 have been poorly managed and are bloated and inefficient. Unless something happens, they risk closure and the loss of a generation of manufacturing capability - and once it's gone, and the jobs gone elsewhere, it may never come back. A bailout isn't the way to preserve capabilities. Better to go Chapter 11, cut out the fat, and build-up the core manufacturing, labor and engineering divisions free from leeches.

:thumbsup:
 

MikeyLSU

Platinum Member
Dec 21, 2005
2,747
0
71
bankruptcy is the one thing that can save the Big 3. File for chapter 11. Continue operations, get rid of the unions...start being profitable again.
 

CLite

Golden Member
Dec 6, 2005
1,726
7
76
Originally posted by: MikeyLSU
bankruptcy is the one thing that can save the Big 3. File for chapter 11. Continue operations, get rid of the unions...start being profitable again.

No.

If they file for chapter 11 the bond holders will become the new owners of the Big 3 and they will rip it apart piecemeal and sell it off. Additionally people would simply stop purchasing cars that they feel like could stop being serviced/produced in the future. Chapter 11 = the deathtoll.

This would hurt the U.S. a lot. I mean the d*bags who lost trillions of dollars by mismanaging risk cried for money and we gave it to them. Now they have the AUDACITY to claim that some UAW guy making 75$ grand is lazy and hurts the U.S. economy. Well f*** you d*bags who get huge compensations to lose trillions of dollars, I'd rather give my tax dollars to the UAW than those f***s on wallstreet.
 

CADsortaGUY

Lifer
Oct 19, 2001
25,162
1
76
www.ShawCAD.com
Originally posted by: CLite
Originally posted by: MikeyLSU
bankruptcy is the one thing that can save the Big 3. File for chapter 11. Continue operations, get rid of the unions...start being profitable again.

No.

If they file for chapter 11 the bond holders will become the new owners of the Big 3 and they will rip it apart piecemeal and sell it off. Additionally people would simply stop purchasing cars that they feel like could stop being serviced/produced in the future. Chapter 11 = the deathtoll.

This would hurt the U.S. a lot. I mean the d*bags who lost trillions of dollars by mismanaging risk cried for money and we gave it to them. Now they have the AUDACITY to claim that some UAW guy making 75$ grand is lazy and hurts the U.S. economy. Well f*** you d*bags who get huge compensations to lose trillions of dollars, I'd rather give my tax dollars to the UAW than those f***s on wallstreet.

:roll:
IF they wanted to survive and IF things really are as bad as they say - then they must restructure while in Bankruptcy. The Gov't lending more and more to them is throwing good money after bad. The big 3 are stuck with legacy liabilities they need to ditch. If they could - they could/would be profitable.

No more gov't bail outs. It's gone too far already and there is no reason to hand out money just because there is a hand sitting in front of us...
 

MikeyLSU

Platinum Member
Dec 21, 2005
2,747
0
71
Originally posted by: CLite
Originally posted by: MikeyLSU
bankruptcy is the one thing that can save the Big 3. File for chapter 11. Continue operations, get rid of the unions...start being profitable again.

No.

If they file for chapter 11 the bond holders will become the new owners of the Big 3 and they will rip it apart piecemeal and sell it off. Additionally people would simply stop purchasing cars that they feel like could stop being serviced/produced in the future. Chapter 11 = the deathtoll.

This would hurt the U.S. a lot. I mean the d*bags who lost trillions of dollars by mismanaging risk cried for money and we gave it to them. Now they have the AUDACITY to claim that some UAW guy making 75$ grand is lazy and hurts the U.S. economy. Well f*** you d*bags who get huge compensations to lose trillions of dollars, I'd rather give my tax dollars to the UAW than those f***s on wallstreet.

first off, I'm against both, but the UAW is a parasite group. Where else in the world can 5,000 people work by sitting and doing nothing. What a freaking joke.

Unions no longer serve a purpose. Time for them to go. And the government needs to stop bailing companies out. If companies are failing, let them fail, sure it will hurt for a little. But they are failing for a reason, THEY MESSED UP. And if you keep bailing them out, they will keep messing up and keep wanting more and more money.
 

StageLeft

No Lifer
Sep 29, 2000
70,150
5
0
No.

If they file for chapter 11 the bond holders will become the new owners of the Big 3 and they will rip it apart piecemeal and sell it off. Additionally people would simply stop purchasing cars that they feel like could stop being serviced/produced in the future. Chapter 11 = the deathtoll.
Is that bad? Many would keep their jobs in these new companies. In regard to people buying cars, few are buying cars from these companies now anyway.