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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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What is this discussion about? Legislation


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#650 of 3958
Re: A previous poster is quoted below. [jpf] by gmctruck
Nov 20, 2008 (12:02 pm)
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Replying to: jpf (Nov 20, 2008 10:53 am)

We're not talking about shutting the big 3 down completely. Bankruptcy would allow them time to restructure their business and make the necessary changes.
 
Mulally from Ford is OK, but Wagoner needs to go and then bring in someone with a viable business plan and the guts to make the necessary changes at GM to expedite it's recovery. It's long past time for Wagoner to retire.
#651 of 3958
Re: A previous poster is quoted below. [gmctruck] by berri
Nov 20, 2008 (12:16 pm)
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Replying to: gmctruck (Nov 20, 2008 12:02 pm)

Unfortunately, Chapter 7 often ends up in a rather fast fall and demise whether intended or not. I'm not sure that GM or Chrysler have the cash flow and time to wait out a thorough restructuring. And once bankruptcy hits, lawsuits start flying and the company has less time and resources to focus on restructuring. Also control is usually ceded to the courts. It really isn't all that easy to successfully navigate the bankruptcy game that is often filled with unexpected problems and complications. An awful lot of Chapter 11's don't make it through restructure. Politicians know this since most are lawyers, but its easy and expedient to flaunt bankruptcy as the "solution" to most people that aren't knowledgeable of the real process.
#652 of 3958
Re: A previous poster is quoted below. [gmctruck] by joel0622
Nov 20, 2008 (12:19 pm)
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Replying to: gmctruck (Nov 20, 2008 12:02 pm)

I think it is pretty arogantof them to sit there and belittle the group on how they run there business. Whats the National Debt right now??????
#653 of 3958
Let's try to simplify this.... by michaell
Nov 20, 2008 (12:19 pm)
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Take this quiz:
 
1) Do you think the Big 3 have too much manufacturing capacity for a market on pace to sell 10-12 million vehicles per year?
 
YES NO
 
2) Do you think the Big 3 have a dealer network that is too large to support the sales of 5-6 million vehicles per year?
 
YES NO
 
If you answered either question with a "YES", then what do you propose should be done?
 
If you answered both questions with a "NO", well, then, there isn't any chance that anything that is said, either here in this forum or in the media at large, is going to have any affect on your perspective.
#654 of 3958
Re: A previous poster is quoted below. [jpf] by kernick
Nov 20, 2008 (12:26 pm)
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Replying to: jpf (Nov 20, 2008 10:53 am)

So, let's get real tough. Let Ford, GM, and Chrysler fail.
 
They're all not going to fail at once, so your theories flawed right there. If GM declares BK, that does not change the number of cars that people are going to buy. Ford and Chrysler would benefit by having more sales, along with the others. People who buy GM would probably go to Ford and Chrysler - buying doemstic type cars, rather than the imports.
 
If the suppliers make parts for Ford, GM, and Chrysler, well then their business will not change. The only thing that changes is that the supplier makes more of parts F and C and none of GM.
 
The rest of your story, you've probably picked up from the people who would benefit from the $25B, and thus is so biased and phoney, trying to get the gullible public to believe this sort of economic nonsense.
 
If McDonald's closes today, this does not put the meat suppliers out of business, decrease jobs, and cause a Depression in farmland. Burger King, Wendies and such are going to see more business, hire more, and buy the beef that otherwise McD's would have.
#655 of 3958
Re: A previous poster is quoted below. [berri] by kernick
Nov 20, 2008 (12:45 pm)
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Replying to: berri (Nov 20, 2008 11:51 am)

If you look at history, it takes awhile for sudden lost capacity to be replaced. That likely means a several year period of vehicle shortages and much higher purchase prices due to the reduced competition brought on by the reduced supply and the startup and/or expansion costs of new or remaining producers and suppliers.
 
Could you give some examples of that history? I don't see why if GM goes BK the bankruptcy courts couldn't sell off the assets quickly. The government can cut their own red-tape if they want. GM goes bankrupt and I'll be willing to bid on the Bowling Green plant tomorrow, and start the production lines up again on Mon. pumping out Corvettes.
Also if you want to consider startup time and look at history, do some research on what a little motivation can do. The Russians moved tractor factories hundreds of miles during WWII with their lousy infrastructure, and had them up and running within days converting them to making T-34 tanks and cannons. It does not years or months to convert from making a GM mirror to making a Ford mirror especially since the tooling exists, and the suppliers are running at low capacity now.
 
Detroit's loan is puny compared to what the banks and financial service companies are getting, and I haven't seen any indication that the finance world is changing their ways either!
 
I'm only asking for $5M so why not throw that my way. What's the difference right(?); we're already so far in debt as a nation. But seriously, are you ignoring the fact that Citi just layed off 52,000 more people in addition to 20,000 last month? Are you ignoring that some stock brokerage firms have closed? The $700B is not going to save many in the fianancial and insurance sectors.
#656 of 3958
Re: A previous poster is quoted below. [kernick] by berri
Nov 20, 2008 (1:35 pm)
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Replying to: kernick (Nov 20, 2008 12:45 pm)

It took quite awhile after WWII to convert their equipment back to pure consumer. Production really didn't get rolling until the late forties. During wars capital isn't really an issue, so in Russia at that time there was essentially a blank check to get it done and whatever labor and equipment was needed was government provided quickly. Few will want the Detroit facilites because many are old and they are all UAW workforce. Ford and Chrysler already have too much capacity. Plants can't be moved around like jetliners. A lot of the Detroit workforce has also lost jobs over the past years whereas Wall St. was in a hiring boom until recently, and even with the job losses I'm not seeing pay cuts for those remaining other than bonuses. If GM goes under, the volume impact will pressure common vendors because overall demand will decrease. Trust me, Toyota and Honda don't want a sudden collapse of GM. GM failure will have an economic impact on lost jobs, govt pension guarantees, etc. What little is gained from a bankruptcy will quickly be divided between creditors, not reinvested. Its going to cost the taxpayers either way. You appear to assume that bankruptcy is inevitable and GM will not be able to pay back the loan. Chrysler was in awful shape in the eighties, but paid the loan back early giving Uncle a nice profit. Today, if GM gets over their short term liquidity, I think they are actually in better shape than Chrysler product wise. Please explain to me why Wall Street's AIG is more important than GM to the economy? Individually, this insurance company has already received far more cash infusion than all of Detroit is asking and it doesn't make anything.
#657 of 3958
Re: A previous poster is quoted below. [berri] by kernick
Nov 20, 2008 (2:08 pm)
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Replying to: berri (Nov 20, 2008 1:35 pm)

Few will want the Detroit facilites because many are old and they are all UAW workforce.
 
Many may be old, but as Dave just posted, who worked for GM they are very modernized with robotics. The workers are only UAW while working for one of the Big3. If GM sells me, or I buy at auction an auto factory, I can hire who I want.
 
You appear to assume that bankruptcy is inevitable and GM will not be able to pay back the loan.
 
Why won't anyone loan them the money then, such that they're begging to the government? Let's look at the opinion here - http://www.marketwatch.com/news/story/Lame-ducks-lurch-toward-a/story.aspx?guid=- - %7BB42C8F84%2D5FF8%2D4F25%2DA0E2%2D8964F117878E%7D
 
"But the bailout doesn't even remotely solve the long-term issues facing Detroit. Taxpayers and investors can still rightfully wonder what these companies are going to look like when the money runs out. Will they have achieved in a few months the turnaround their executives claim they have been pushing through for the past two years? Anyone willing to bet on that outcome is probably more prayerful than realistic."
 
GM failure will have an economic impact on lost jobs, govt pension guarantees, etc.
 
The Wall Street Journal thinks many others will pickup the business lost by Detroit.
 
http://online.wsj.com/article/SB122714059184542693.html?mod=mktw
 
Please explain to me why Wall Street's AIG is more important than GM to the economy?
 
I don't believe AIG should have been bailed out, and I feel the same way about the Big3. The government should not play favorites. There are too many lobbyists in DC to believe intervention in the economic market can be fair. Do you think it looks fair if Chrysler which is owned by Cerberus, who's CEO is former VP Dan Quayle gets billions of $'s? Maybe then Cerberus can funnel mucho $ back to Quayle's friends in DC to get elected? That is why typically the US government does not loan $ to businesses, and allows banks to.
 
This argument that because A got $, then B should, and we should is what could break this country financially. We have to stop promoting this drunken-sailor routine. Because we have wasted $ in the past, is not an excuse to say let's wate some more. It needs to STOP.
#658 of 3958
Re: The B word [mikefm58] by dave8697
Nov 20, 2008 (2:20 pm)
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Replying to: mikefm58 (Nov 20, 2008 8:16 am)

Image is shallow.
 
The silver lining in a 11 year low in the S&P is a little less depreciation comes with the colonization?
#659 of 3958
Re: A previous poster is quoted below. [kernick] by berri
Nov 20, 2008 (3:00 pm)
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Replying to: kernick (Nov 20, 2008 2:08 pm)

I certainly understand and respect your opinion. This is a very complicated issue and there are arguments and counter-arguments to both sides. The experts are just as divided as we bloggers are and you can easily find professional sources and quotes to both sides. If bankruptcy was an easy solution, then Delphi would have been an easy pre-packaged resolution. Instead it drags on, only existing because GM has propped it up. Bankruptcies almost always have unexpected problems and consequences. I think it boils down to whether you think GM is a lost cause. If you think it is over, they shouldn't get any money and the US should pay any short term economic consequences because it will be better off in the long run. If you think they can survive, then a loan that will make the taxpayers a profit down the road makes long term sense. Incidently, I don't currently own a Detroit vehicle and am not a union member. I just think GM can make it, so we should ride with it a bit, avoid any short term hits, and make a few taxpayer bucks out of it when it is resolved. If I were to throw a company out it would probably be Chrysler because I just don't see the product and quality down the road, even though Nardelli may be a better executive than Wagoner (GE people will probably say that, Home Depot will probably not!).. Of course, Congress is its usual cowardly self injecting politics and avoiding decisons (whichever side they may favor).

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