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Automotive News & Views Do You Favor A Government Loan To The Detroit 3?
3958 messages, Last post on Oct 02, 2009 at 4:52 PM
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I don't have enough financial experience to know if this is doable. 1 - GM spins off only Cadillac into a smaller company. 2 - GM spins off a Chevy company with only the best non-Cadillac cars and trucks 3. The remaining GM company has lousy vehicles and huge debt. It declares bankruptcy and goes into Chapter 7/liquidation. The result: a competitive Cadillac company and a competitive Chevy company, neither with any debt.
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Replying to: berri (Dec 06, 2008 5:25 pm) That is absolutely FALSE. We will sell 6,000,000 less cars this year and probably the next couple years. GM did not make 6 Million cars. If anything a GM total liquidation would boost Ford into a very good money making position. It would also help the imports that do indeed buy parts from the same suppliers as GM. It might be what Delphi needs to pull out of the doldrums and C11. More people filed for first time Unemployment this week than the total GM workforce in the USA. You also forget the most important advantage to a GM liquidation. There are people with money that would love to take over some of the GM nameplates and continue to build those cars. They may even use UAW labor if they can get contracts that don't bury them before they start. Kerkorian one of the big stockholders at one time is probably still interested. No one in their right mind would buy them in their current condition.
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Replying to: tlong (Dec 06, 2008 7:23 pm) That is not a bad idea if the UAW contracts in their 2200 pages would not put a monkey wrench in the works. And would the retirees from Chevy & Caddy have a hold on the company? Some plan like that where a new owner comes in and starts hacking all the dead weight from the company. You know like Congressman Dingell's wife that is a high ranking GM executive.
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Replying to: gagrice (Dec 06, 2008 7:32 pm) Yes, I don't know if the contracts would pass along or if they could be "GM-only" contracts. Then if GM bellies up the pension guarantee corp of the government takes over. The current GM shareholders would get new shares of Caddy, new shares of Chevy, and remaining GM's value would drop to zero. The remaining factories and assets of the remaining GM corp sold off to pay as much of the $66B in debt as possible. The new Caddy and Chevy companies would not have the GM name any longer, which would be a good thing. Then with new leadership in both of those companies, they could rise from the ashes and really kick butt. |
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Replying to: lemko (Dec 06, 2008 9:31 am) You are the one predicting the demise of America. Being weak-kneed in the face of adversity is not the American way. Just suck it up and get going. Doom and Gloom is for losers and laggards. |
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Replying to: berri (Dec 06, 2008 5:25 pm) First, Ford and Toyota have all the truck capacity the country will need even if GM and Chrysler went under. Ford especially would be a HUGE beneficiary of this since it was making nearly 1 million units as recent as 3 yrs ago but now is likely to be making half that amount. Second and this is why GM will not disappear completely. GM has plenty of good products and capabilities and production facilities. If it did go BK they wouldn't just lock the doors and tear down the facilities. The BK court likely would liquidate the company but that means selling off the excellent assets to other companies or to new owners, such as Ford for example or very likely the Chinese ( Lemko's hair starts on fire ). Those facilities and most of the jobs remain in place still making Ford Silverados and Malibus, Chinese Cadillacs, German Corvettes, etc. Rich Wagoner might even buy some of these back distressed assets so that he could run another company into the ground. I can see Chrysler disappearing completely and it's production facilities closing and the country will not miss the shortfall in supply. GM and Ford wil pick it up instantly and use some of their excess currently non-functional supply. |
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Replying to: gagrice (Dec 06, 2008 7:27 pm) Bottom line, what Detroit’s really after is a bailout that will preserve the status quo and implicitly reward 40 years of inept management, bad decisions and poor quality. It simply doesn’t make sense to throw $34 billion at businesses that are losing $6 billion a month. Like the other Federal bailouts (which I, as a proponent of the Austrian school of economics and free markets, think are fundamentally wrong), a taxpayer-funded bailout would do nothing to increase Detroit’s competitive position. Instead, a funded bailout would serve as a sort of punitive tax on successful companies like Toyota and Honda, just to name two of the most obvious. It would also allow Detroit to come back for more money after they blow through anything given to them now. There are still plenty of strong automobile companies operating in the U.S. making a slew of products ranging from ultra-plain utilitarian models to large-scale trucks and all sorts of luxury vehicles in between. And more will probably come here if they fail. So here’s to the natural order of things and, hopefully, a levelheaded Congress that will let the markets take their natural course and force a shakeout…not a bailout. Here is the rst of the economics lesson. I still vote no bailout. Better to give the money to support best in class companies!!!!! 40 Years Regards, OW |
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"The bailout commitment, in other words, is effectively open-ended, no matter what anyone says. And with the feds so invested in the companies, it will only be a short step for Congress to begin to coerce consumers to buy the cars that Washington prefers. Mr. Friedman, the concerned scientist, is already planning for that day. He said Friday that we'll eventually have to impose a "fee" (read: tax) on cars that "pollute too much" or use "too much gas." http://online.wsj.com/article/SB122852320928184421.html?mod=djemEditorialPage
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Replying to: wevk (Dec 07, 2008 6:05 am) You got your "Greens" in DC just drooling over the opportunity to own a car maker they can mold into an alternative transportation company. Cost is not even considered by this bunch. They will try to force US all into a Yugo that is powered by the Sun with peddles to assist on the long up hill roads. Fortunately we have a Congress that rarely agrees on anything, but when it is lunch time. The buildings at GM will be all rusted out before they can come up with a bailout plan. We will give them a few billion so everyone gets a nice Christmas. Then it will be on the shoulders of the new team to get the job done. I would be looking for a new job if I worked for GM or Chrysler. The UAW workers at Ford may survive if they back off on blocking progress. For those that did not see it. This IS progress, and it could have been built in the USA, but for the UAW. http://info.detnews.com/video/index.cfm?id=1189 |
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When the big guys become so BIG and it can kill the economy to let them fail, then they are too big. Today companies (Banks, manufacturers) are just plain too big. This Bigness does not bring a better life for the people. There is a point where bigger and bigger deos not provide any real benefit. Not to the shareholders maybe only the CEO's - then when there is trouble the people need to bail them out, wth our tax dollars. The globalization at any costs is not working. As Michael Moore was saying on Larry King Live - we need to bail them out but the people will need to tell the big three what kind of vehicles they will be doing. I say we need to bail them out but then make sure it never happens again. |
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