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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
You are in the Automotive News & Views Forum. Your Hosts are steve_ & claires
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Replying to: chikoo (Mar 02, 2009 12:16 pm) Or you could buy a year or two old used model that has taken the similar deep depreciation hit. 
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Replying to: anythngbutgm (Mar 03, 2009 5:26 am) |
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Replying to: kdhspyder (Mar 02, 2009 2:24 pm) > It's taxpayers money first. The bailout money is also taxpayers money, lest you forget.
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Replying to: chikoo (Mar 03, 2009 8:34 am) The voucher system is a gift of taxpayer money to the D3. It never has to be paid back and there is no profit to be made from giving it away. It'll never fly.
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Replying to: chikoo (Mar 03, 2009 8:34 am) We've already been thru this discussion a few weeks ago. It is not correct to say it's okay to make another bad decision, based on the fact that a bad decision was made before. The government loans to the D3 or any other company in the private sector is not normal, benefitting some citizens and hurting others. Supporting GM and Chrysler hurts those companies competitors, by lowering the competitors sales. Government should be neutral, setting equal and fair rules (emissions, CAFE, ...) for all to follow - that's it . I sincerely think that by trying to keep the entire D3 in business, they are hurting the chances of 1 or 2 of them coming out of this depression healthy. By supporting Chrysler and GM, they are keeping some people from going to Ford to buy their products. What the government is going to end up with on a course of loans, is all of the D3 being small and losing money, and requiring loans. If loans continue, we'll end up with 3 too large car companies, with high costs, borrowing money, instead of 1 or 2 bigger companies that are fairly healthy, and have enough business to support their legacy and current costs. I would also like to see if 1 or 2 of these corporations go under, that some individuals with some new ideas on how to make and sell cars would then be able to buy a plant or 2 cheap, and start a new company.
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Replying to: kernick (Mar 03, 2009 9:39 am) Starting a new company reminds me of Tesla Motors. They are out there, although sometimes it's hard to tell if they are selling cars or shares of stock. So your poison is deciding whether to give a loan to a known failing company or loaning money to an unknown startup. Then there's that third option where you fire sale everything (and even if you pick up a factory for peanuts, you'll still need some bucks to buy supplies and hire workers until you can turn your cash flow on). That leaves some outfit like Chery or Tata I guess, assuming they have enough reserves to pick up the slack.
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Replying to: kdhspyder (Mar 03, 2009 8:50 am) What I am proposing is also a loan, albeit only to the extent that vouchers are turned in. The regular bailout is all money upfront. If the voucher system is used, the only money that will loaned out will be dependent on the # of vehicles D3 sold. Makes sense? |
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Replying to: steve_ (Feb 28, 2009 8:12 am) We are now learning how well that one worked... |
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Replying to: kernick (Mar 03, 2009 9:39 am) By it hanging around it's taking customers away from GM and F which also have to shrink btw. It's just that with C still sucking up customers for a while GM and F have to shrink more than they would otherwise.
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Replying to: steve_ (Mar 03, 2009 9:54 am) There is no difference between your option 1 and this option. Everything has a particular value today - a steak dinner, a car, an auto plant, or a whole company. It has 1 value. That value is the most someone is willing to pay for it. There is no difference between a regular sale and a fire-sale. A fire-sale is simply the description for something that has lost so much value. Because GM and Chrysler do not sell their assets means they are UNWILLING to do so, and take the loss. Some of us may have Citi or Fannie Mae stock - very similar situation. Maybe we're holding onto it because we don't want to sell so low. That's our right, but then again maybe we need to sell it to pay bills. But of course if the government is chump enough to give me money, there's no forced sale, right? That leaves some outfit like Chery or Tata I guess Do you have a paradigm that a non-auto company can't get into the auto business? Why couldn't Boeing, GE, Walmart, Exxon, or Warren Buffett buy some of the assets? Many of those know how to manufacture something far more complicated than an auto. |
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