OK, I get it - the pleas from the Auto makers, but there is till the bottom line

[question everything]

OK, I get it. You cannot compare them to the airlines and other companies that declared bankruptcy and then came out of it. No one would purchase a car from a bankrupt manufacturer.

But they are wrong to compare themselves to the banks. The banks are getting funds so that they can make a loan. At least, they'd better make them. The banks have "products" that many want to "purchase."

But what makes the auto executive so sure that if they get a loan, that consumers will be there to purchase their products? After all, if consumers are staying away because they cannot get a loan - well, this is what the banks with the money are for.

Yes, they need the money to keep their factories open and pay suppliers but... what if they just end up with even larger inventory?

[Why Syzygy]

1. It's never made sense to me either.

It's being assumed, I think, more due to a "Tradition" of corporate hand outs. A tradition I'd like to see abandoned.

[question everything]

16. It appears that for the rest of the respondings, this is irrelevant

they talk about union and about the Auto industry but never at the bottom line. Not a single one suggested of how the $25 billion would help their bottom line.

No wonder this kind of a yarn does not sway members of Congress.

If they will detail how it would, perhaps they may succeed.

[Warren Stupidity]

22. How exactly is the 700B and the 2T helping the bottom line

over on wall street? We aren't even allowed to know where the 2T went. The 700B is being handed out in a process that is only slightly less obscure. There is simply no guarantee at all that the Wall Street bailout is going to 'help their bottom line' either. The point was to keep a critical piece of the economy from collapsing and causing huge collateral damage as it collapsed. That is the point in keeping Detroit afloat as well.

[question everything]

23. No, the goal was to infuse cash into the banks so that they will extend

credit to borrowers - individuals and businesses.

Even AIG - is a major insurance company. Look at all the houses that were burnt to the ground in California. If the insurance company does not have funds, the homeowners are out of luck.

But, the way I understand it, the problem of Detroit is that they do have the products but no one is buying. So giving them money to pay suppliers... for what, making more cars that no one is buying?

I think that giving a one time tax credit - say, $1,000 - to tax payers who is purchasing an American car would accomplish more.

[Warren Stupidity]

26. Actually the original goal was to buy up the bad assets

so that the 'bottom line' of various financial institutions would become good enough that they would start functioning again. That was abandoned for unstated reasons, the bad debt remains on the books, and instead Paulson is out buying non-voting equity in an assortment of financial institutions apparently simply to keep them from collapsing into bankruptcy. Meanwhile the fed has done something with around 2 trillion dollars but it won't tell us exactly what or with whom it has done whatever it has done, but it seems to involve low cost loans to banks and other financial institutions to keep them from collapsing.

However I still don't quite understand why it is such a good thing to let Detroit, and the 6-10 million jobs dependent on Detroit go down, while it was unthinkable to allow wall street investment houses to collapse. There is no guarantee that the 2-3 trillion dollars we have poured into the wall street disaster will fix the problem there, it may be just putting off their collapse. Likewise, a bailout of Detroit also would not guarantee that Detroit will recover, it could be just putting off their collapse. In both cases the reason for doing so is that the3 scale of economic collapse is not acceptable. The risks associated with failure are too great.

There is of course one major difference: there is no UAW for wall street.

[sandnsea]

2. Do you want a US vehicle industry?

Or do you want to be reliant on Japan and S Korea and China and Germany.

:shrug:

That is all.

[question everything]

12. I am not in the market for a new (or a used) car

and am not going for many years in the future.

Are you? And if you are, why aren't you purchasing one right now?

How can giving them money will revive the industry if no one is buying?

[sandnsea]

19. That wasn't the question

The question was whether you think we ought to have our own vehicle manufacturing industry.

And, no one is buying because no one can get credit. Those that can get credit, don't need a car.

[question everything]

24. Yes, I do. But what I don't understand, what I am trying to find out

is how, exactly, will giving them money help, if no one is buying their product?

Instead I am getting demagogic claims about union busting. If I decide to have a lemonade stand and get a lot of money to set it and to purchase the lemons and the cups and the ice but no one is buying, what good will all the money and all the lemons do me?

If this is not the same, please explain. The banks and the insurance companies got money so that they can extend credit and pay on policies.

[ACTION BASTARD]

3. This is union busting and the (R) are fapping themselves furiously

in hopes of watching the unions get taken down hard right before their eyes. Ask yourself why the (R) are adamant about NOT helping the American auto industry?

[daninthemoon]

4. i don't know if the unions are the problem or not. i'm positive that the

biggest problem is mismanagement and failure to adapt to the decling iol supply and build economy cars. this was done out of outright greed. the workers are going to be hit hard, but the auto industry needs to undergo vast changes that the current owners and ceos can't seem to see.

[notadmblnd]

9. Not only that if they file bankruptcy, They don't have to pay pensions and health benefits.

[ACTION BASTARD]

10. Bada-Bing! You got it.

[question everything]

14. If you were right, then they would declare a bankruptcy in a heart beat

instead, they are begging Congress for funds.

If they get it, and Obama promised he will, there goes your theory.

[Warren Stupidity]

18. No they wouldn't.

While they would indeed like to get rid of their unions and their contractual obligations, zeroing out the stock price is generally not what the people sitting on the board of their company have an interest in doing.


Note: Investors should be cautious when buying common stock of companies in Chapter 11 bankruptcy. It is extremely risky and is likely to lead to financial loss. Although a company may emerge from bankruptcy as a viable entity, generally, the creditors and the bondholders become the new owners of the shares. In most instances, the company's plan of reorganization will cancel the existing equity shares. This happens in bankruptcy cases because secured and unsecured creditors are paid from the company's assets before common stockholders. And in situations where shareholders do participate in the plan, their shares are usually subject to substantial dilution.

http://www.sec.gov/investor/pubs/bankrupt.htm

And that is a chapter 11 bankruptcy. Chapter 7, which is another very real possibility is a simple liquidation - and shareholders again will get nothing.

The motivation to push GM into bankruptcy is coming primarily from republicans, and primarily from southern republicans with non-union foreign owned auto plants. Get a damn clue.

[question everything]

13. I heard Chris Dodd harshly criticizing them and not inclining to help

Last we've seen, he had a very strong (D) after his name.

[Warren Stupidity]

20. Dodd is frequently an idiot.

Criticizing GM's management for getting themselves into this mess is one thing, supporting letting our domestic auto industry collapse is stupid.

[Romulox]

25. Chris Dodd: Number One Wall Street Bailout Booster. nt

[Motown_Johnny]

5. First, it takes about 5 years to go from concept to production of a vehicle, not like changing your

interest rate every fucking day


second, people want big vehicles. You know damn well Americans love SUVs so don't give me that shit that we don't want them just because oil spiked in the last 18 months.

third, fuck the banks. I can borrow money from Germany just as easily as from Connecticut and not care a bit.

forth, the auto makers are victims of the banking fuck ups. They need capital to keep operating. Banks are not lending their capital because of all the bad loans they made. Banks fucked up more than the auto makers did.

fifth, all the auto makers want is a fucking loan. The same as they would be able to get if the banks had not fucked up so bad. Just filter the 25 billion out of the 700 billion banking bail out through some banks to the auto makers. Just give them the fucking loan and be done with it.

[ContinentalOp]

6. I can buy a car from Germany just as easily as well.

I don't get your point. :shrug:

[Motown_Johnny]

7. go for it.. end the American automakers and watch unemployment jump 10% overnight

AIG was given 135 billion in a bail out. Just for that one company.

All the automakers together are asking for a total of 50 billion, and just in the form of loans. Not buying up bad mortgages and shit the way the banks want to be bailed out.


The point is that we could replace the entire banking industry in America with foreign banks fairly quickly and easily without to much damage to our nation. If we lose the automakers then American has taken a huge step toward no longer being an industrial nation. Our manufacturing base has already taken far to much damage. This would change the very essence of what our nation has been since the end of World War 2.

[ACTION BASTARD]

11. Yep, those precious already overpriced BMW/Benz will skyrocket in price.

Japan would love to see the American market eat it and follow the Germans. Hope you like riding mass transit/your bike everywhere.

[notadmblnd]

8. more and more I'm wondering if this financial crisis is intentional

I read today that China is laying off people by the 10s of thousands due to the decline in demand for exports. Have the banks cut off credit to corporations and people intentionally to put the squeeze on China?

[question everything]

15. This is the sad reality of a consumer society

For decades we were convinced to buy stuff whether we needed it or not. One gift for Christmas is not enough; there have to be many, all for one child or one spouse.

And then we shifted the manufacturing of all the gifts to China. As we stopped buying "stuff" we are hurting the middle class in China and in India. Even in Mexico.

So here you have it. The whole global economy is dependent of us, the American consumers, buying "stuff.' Is it any wonder that both Bushes told us to go shopping in time of a recession?

[Warren Stupidity]

17. This is an attempt to kill the UAW.

That is all that is behind the REPUBLICAN lead effort to kill our domestic auto industry. I am truly sorry that you and others here do not understand, do not have a clue about what is going on.

[Fumesucker]

21. I think most of us understand that..

You have to realize that a lot of us are conflicted about this bailout.

I really hate the idea of giving yet more billions to people who are vastly overpaid and who have vastly underperformed, the big wheels at the big three.

I also hate the idea of seeing the domestic manufacturers go Tango Uniform.

It seems to me that management of the big three is unlikely to change in any truly meaningful way until someone makes them change.

And before you start, I was against the financial sector bailout.

[pampango]

27. That may be, but the majority (108-91) of the repubs in the House voted against

the financial industry bailout, while Dems voted for it 172-63. In the Senate, the majority of repubs voted for the financial bailout, but Democratic support for it was even greater.

At least repubs can make a case that they were against both bailouts (even if they have an ulterior motive of killing the domestic auto industry and union). Our side, by contrast, voted overwhelmingly (3-1 in the House and 5-1 in the Senate) in favor of the financial bailout, but now appears to be reluctant to use their majority status to force a vote on an auto industry bailout.