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Subject: Bailout approved: Automakers to get $17.4B rss

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http://news.yahoo.com/s/ap/20081219/ap_on_bi_ge/meltdown_aut...


Two things I dont get--

An Obama quote:
"With the short-term assistance provided by this package, the auto companies must bring all their stakeholders together — including labor, dealers, creditors and suppliers — to make the hard choices necessary to achieve long-term viability" (bold, mine)

This hasn't happened up to this point. Why would it happen, now? Especially considering they know they can just get bailed out.


Also:
"If the carmakers fail to prove viability by March 31, they will be required to repay the loans, which they would find all but impossible."


Okay, so what happens when they haven't 'proven viability by March 31' and can't repay their loans? They're gonna go under! Uh oh, better bail them out! Unless we all think the economy is going to fully rebound in 3 months--sure okay.


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Kenneth Bailey
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The second part is a bone thrown to the doofuses in the Senate that punted this to the President.
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Kenneth Bailey
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Koldfoot wrote:
Hmmm. Snuck this one in on a Friday. A sure sign that it can't withstand much scrutiny..... But wait... It's the Friday before the Christmas break. This could only mean the taxpayers got the shaft in a bad way.

And how is this any different than the bank bailout? At least this one has strings attached to it. There was no such thing attached to the bank bailout. Hell, they can't even account for the money they spent 2 months ago.

I'm not a huge fan of GM but I think their collapse would be devastating (especially in my neck of the woods). At least this gives a little breathing room so that they don't collapse uncontrolled.
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Kenneth Bailey
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bjlillo wrote:
mikoyan wrote:
Koldfoot wrote:
Hmmm. Snuck this one in on a Friday. A sure sign that it can't withstand much scrutiny..... But wait... It's the Friday before the Christmas break. This could only mean the taxpayers got the shaft in a bad way.

And how is this any different than the bank bailout? At least this one has strings attached to it. There was no such thing attached to the bank bailout. Hell, they can't even account for the money they spent 2 months ago.

I'm not a huge fan of GM but I think their collapse would be devastating (especially in my neck of the woods). At least this gives a little breathing room so that they don't collapse uncontrolled.


The bank bailout, as foolish as it was, was passed by Congress. This time, Congress said no and Bush still flipped the bird to the democratic process and did it anyway.

Congress didn't so much as say no as a few senators saying no. But they were pretty safe in doing so because they pretty much knew that Bush would do what he was going to do. His job isn't on the line, there's is. So they got the best of both worlds, they could be on record as being against it. The auto companies get bailed out. Noone gets held accountible for anything. Win win all around.

But as I said, if GM and Chrysler are to be believed, if they didn't get this they could be done at the end of the year. Like it or not, that would have a huge ripple effect.
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Marco Bing
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The Bailout predicament regularly makes the news here in France. Like the US, France's automobile industry is also quite big by comparison (Citroën, Peugeot, Renault), but noone here can understand how GM, Ford & Chrysler management just refused to look at the signs (smaller eco friendly, new technology, etc...) and let the debt keep growing.

However I think it's a really difficult decision. I'm not a US tax payer, so I can't put myself firmly in your shoes, but I just can't see the Big 3 let to 'go under'. Maybe this IS the chance to turn things around, but before any handshakes and agreements are signed the whole lot of these private-jet flying management bunglers should be kicked out for a pure and simple 'bad job'.

This whole thing will slide on past (yes, during the well timed Christmas period) with noone being held accountable. That's what really make me angry about the bailouts. Heads should roll, but they only keep spinning.
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Dwayne Hendrickson
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I misread the title of the post as
"Automakers to get $17.48"

And even then I thought they got too much.
I'm wondering where the bailout is for the makers of 8-track tapes, buggy whips, skate keys, and large ice-tongs?
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Thomas Eastside, Esq.
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okiedokie wrote:
I misread the title of the post as
"Automakers to get $17.48"

And even then I thought they got too much.
I'm wondering where the bailout is for the makers of 8-track tapes, buggy whips, skate keys, and large ice-tongs?


Um, cars as technology aren't obsolete. You know that, right?
 
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Dreadnaut wrote:
Um, cars as technology aren't obsolete. You know that, right?

the big 3 are blaming the credit crunch and the sub prime debacle for all their problems, people cannot get loans and so no one can buy their cars. bull shit. people that have no business getting loans cannot get loans and thats as it should be. but that is just the current reason that people are not buying cars, that's not what got the big three into their problems, they have been losing money for years.
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I think that the auto manufacturers ARE going to have to change their business practices. I very much doubt that they would be getting another bailout any time in the next four or five decades, so this is a lifeline to keep them operational long enough to turn their business around and make it economically feasible.

Not giving the money would have been a bad move. It would have dumped a large number of unemployed people into the system and decimated American confidence in American industry. The cost of not giving (lending, hopefully) the money would have been higher than the cost of giving it.

Since the vast majority of the money paid to the manufacturers goes to American citizens, it's not like the money is being thrown away.

Perconally, I think the payout should have meant that the companies become partly nationalised, so that American taxpayers could reap the benefits directly when (hopefully) the industry sheds its backwards thinking executives and starts working towards realistic goals.
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Kenneth Bailey
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bjlillo wrote:
You're right. It would have a huge ripple effect ultimately resulting in people who know how to make money at manufacturing cars running new businesses or the American auto industry going the way of the American piano industry in the '30s. Either way, the country goes on and is stronger for it in the long run. With this deal, failure is rewarded, lessons are not learned, and Obama gets to deal with it in February or March.

http://mises.org/story/3253

Hey maybe we could make sure that we don't produce anything in the United States. After all, all the economists were all going gaga over the coming service economy. Never mind that the service economy is another step towards the gentrification of the country.

Given that Toyota and Honda are losing money right now, maybe they aren't our saviors either.
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jmilum wrote:
Dreadnaut wrote:
Um, cars as technology aren't obsolete. You know that, right?

the big 3 are blaming the credit crunch and the sub prime debacle for all their problems, people cannot get loans and so no one can buy their cars. bull shit. people that have no business getting loans cannot get loans and thats as it should be. but that is just the current reason that people are not buying cars, that's not what got the big three into their problems, they have been losing money for years.

Losing money is a fairly recent phenonomenom for them. And Ford just reported that they are gaining sales. So we'll see.

And they aren't blaming the credit crunch for all of their problems just the current set. The realize that they need to change. But I guess if they gave more money to Congress, they would have gotten the bailout passed 2 weeks ago with less strings.
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Thomas Eastside, Esq.
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mikoyan wrote:
jmilum wrote:
Dreadnaut wrote:
Um, cars as technology aren't obsolete. You know that, right?

the big 3 are blaming the credit crunch and the sub prime debacle for all their problems, people cannot get loans and so no one can buy their cars. bull shit. people that have no business getting loans cannot get loans and thats as it should be. but that is just the current reason that people are not buying cars, that's not what got the big three into their problems, they have been losing money for years.

Losing money is a fairly recent phenonomenom for them. And Ford just reported that they are gaining sales. So we'll see.

And they aren't blaming the credit crunch for all of their problems just the current set. The realize that they need to change. But I guess if they gave more money to Congress, they would have gotten the bailout passed 2 weeks ago with less strings.


I also think it's funny how the unions are expected to provide concessions in regards to their pay, but no where were the banks expected to do the same. Another fine example of whose pockets our congress is in. I mean, the banks were only looking for 20 times what the automakers asked for.
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mikoyan wrote:
jmilum wrote:
they have been losing money for years.

Losing money is a fairly recent phenonomenom for them.

GM's income statement sheet shows a net loss of $10.4 Billion in 2005, $1.9 Billion in 2006, and $38.7 Billion in 2007. Ford made $1.4 Billion in 2005 but lost $12.6 Billion in 2006 and lost $2.7 Billion in 2007 the same years. They both lost money this year. so GM has been losing money for the past 4 years (2005 - 2008) and Ford for the past 3 (2006 - 2008). so i think my statement that they have been losing money for years is correct.
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jmilum wrote:
mikoyan wrote:
jmilum wrote:
they have been losing money for years.

Losing money is a fairly recent phenonomenom for them.

GM's income statement sheet shows a net loss of $10.4 Billion in 2005, $1.9 Billion in 2006, and $38.7 Billion in 2007. Ford made $1.4 Billion in 2005 but lost $12.6 Billion in 2006 and lost $2.7 Billion in 2007 the same years. They both lost money this year. so GM has been losing money for the past 4 years (2005 - 2008) and Ford for the past 3 (2006 - 2008). so i think my statement that they have been losing money for years is correct.

When someone says years, they usually imply more than 3 years.

But hey, let's just kill the goose that laid the golden egg so that we all can work and shop at Wal Mart.
 
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Dreadnaut wrote:
okiedokie wrote:
I misread the title of the post as
"Automakers to get $17.48"

And even then I thought they got too much.
I'm wondering where the bailout is for the makers of 8-track tapes, buggy whips, skate keys, and large ice-tongs?


Um, cars as technology aren't obsolete. You know that, right?


I'm wondering why we bail out a company that continues to make items folks aren't buying. Buggy Whips are still used as well as large ice-tongs, however, their sales are not what they were years ago. They adapted, cut back, merged, or started building other things.
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Ken
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BoB3K wrote:
This hasn't happened up to this point. Why would it happen, now? Especially considering they know they can just get bailed out.


I'd challenge the assumption that this hasn't happened to this point as a universal truth. There's new union contracts that take effect next year with significant reductions on the labor side, and Ford certainly has been working on improving quality and retooling their business. GM and Chrysler haven't so much, which is why I think we should let them file bankruptcy and then help them out.

It's a reasonable step. The automakers have been concerned that filing Chapter 11 in this climate will turn into Chapter 7. With the structure of the package provided, the US Gov't now has a pretty big stick in hand to force a Chapter 11 filing in March, get rid of crummy executive teams, and really get active in a government supported bankruptcy if the companies don't do it themselves. And that, in my mind, isn't a bad thing if they're going to survive.

Look at it this way - the companies have massive challenges (some more than others) and it's going to take time and creative thought to fix them. GM & Chrysler are way behind in the thought department, so they've now got a bit of breathing room to do some, but they'd better come up with some interesting ideas pretty quickly or they're going to lose control of their destiny (I don't think Ford will have any issues meeting the requirement). And if they don't then we'll need the ability to force action, which is what we now have.

In my mind, it's gonna end up being lots cheaper than the financial company's implosions and do more to keep the economy rolling on an immediate basis.
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mikoyan wrote:
Losing money is a fairly recent phenonomenom for them. And Ford just reported that they are gaining sales. So we'll see.


Not so much, no. All of the Big 3 have been hurting financially for the last 3-5 years. And Ford may be gaining sales month-over-month, but they're still down north of 20% year-over-year.

That said, all of the automakers are seeing significant sales declines. Ford is in line with the Japanese/Korean import manufacturers. GM/Chrysler are down by as much as 20 points more in sales. It's not like sales declines are limited to the US manufacturers.
 
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jmilum wrote:
the big 3 are blaming the credit crunch and the sub prime debacle for all their problems, people cannot get loans and so no one can buy their cars. bull shit. people that have no business getting loans cannot get loans and thats as it should be. but that is just the current reason that people are not buying cars, that's not what got the big three into their problems, they have been losing money for years.


Except that now people who have sufficient credit to purchase a car now can't qualify for a loan. Want one? Better have nearly spotless credit (no delinquencies reported within the past year) with a FICO north of 720. NPR was just reporting on how hard it's become to qualify for auto loans and it's really gone whacko the other way.

So how would your business do if nobody could actually pay you for the goods or services you produce? Even granting that GM/Chrysler have done an awful job of making any progress retooling their business plan, stating that the overall market hasn't pushed them completely over the edge is fanciful at best. Toyota is projected to have a full year loss for this year - isn't that a pretty good indication that the entire market's been creamed?
 
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mikoyan wrote:
When someone says years, they usually imply more than 3 years.

'years' is plural so it fits the bill for 2+, so 3 or more is sufficient, but since GM has been losing money for 4 years, it should suit your definition as well.
 
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okiedokie wrote:
Dreadnaut wrote:
okiedokie wrote:
I misread the title of the post as
"Automakers to get $17.48"

And even then I thought they got too much.
I'm wondering where the bailout is for the makers of 8-track tapes, buggy whips, skate keys, and large ice-tongs?


Um, cars as technology aren't obsolete. You know that, right?


I'm wondering why we bail out a company that continues to make items folks aren't buying. Buggy Whips are still used as well as large ice-tongs, however, their sales are not what they were years ago. They adapted, cut back, merged, or started building other things.


As mentioned previously in this thread, it is not only GM and Chrysler that have experienced drops in sales, the Japanese manufacturers have as well. Theirs are larger than others, but I think it's quite a stretch to liken GM/Chrysler/Ford cars to large ice-tongs or buggy whips. American cars are still a large percentage of vehicles sold. GM does have the Volt and Cruze coming in 2010, so these loans are just an attempt to bridge to that point.

Also, in your case of buggy whips and ice-tongs, the technology that replaced them was a large step up, cars and refrigerators, respectively. I don't see how that compares to cars.
 
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MarcoBing69 wrote:
The Bailout predicament regularly makes the news here in France. Like the US, France's automobile industry is also quite big by comparison (Citroën, Peugeot, Renault), but noone here can understand how GM, Ford & Chrysler management just refused to look at the signs (smaller eco friendly, new technology, etc...) and let the debt keep growing.


Totally right. I've been in the market for a hatchback, and was surprised at how few are produced by US companies. The first one is #18 on the list. Of them, the Vibe and Astra are gutless, the Aveo is horrible and the Caliber is cramped and has huge blind spots. I'll be buying Japanese simply because Detroit is conceding the the small car market. http://usnews.rankingsandreviews.com/cars-trucks/rankings/Ha...

Needless to say, if I need a $40000 gas-guzzler, US car-makers have many, many choices.
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