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Do You Favor A Government Loan To The Detroit 3?

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  • nippononlynippononly Member Posts: 12,555
    Mark Zandi, chief economist with Moody's Economy.com, predicts that over the next few years taxpayers will pay a total of $75-$125 billion to keep the Big Three out of bankruptcy.

    "The bailout will likely cost $100 billion or more before we're through," University of Maryland economist Peter Morici told ABC News, adding that much of that money, technically loans, might never be paid back.

    If the automakers start coming back for more handouts I think we'll cut them off long before they start asking for those kind of numbers. We'll do that, right?


    No, I'm quite sure we won't. :sick:

    But it's so IMPERATIVE to the American economy that we keep churning out 16 brands of crap (along with the occasional winner) that fewer people want all the time, that we will waste all this money. Whatever, we blew close to a trillion dollars on a pointless war, makes the $125 billion to try to pointlessly prop up the domestic automakers pale by comparison...

    2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)

  • gagricegagrice Member Posts: 31,450
    we blew close to a trillion dollars on a pointless war

    Most of that went into making war materials here at home. There will be more unemployment when those factories making rockets, Humvees and air craft grind to a halt. We have a military that left momma at home to spend war bucks. We have many Americans working on rebuilding Iraq that send money home. Nothing makes an economy boom like a war. The Dot.com bubble is a once in a lifetime phenomenon. All the planned expenditures for the future will mainly be more drain on the economy. Nothing to stop the trade deficit that I can see. I am optimistic about the spending on the infrastructure. I just do not believe the government can pull it off. There are already states with bridges to nowhere lined up to pilfer that fund. How about a snow making machine for Minnesota and a gangster museum in Las Vegas?

    I see a lot of corruption and a few roads that get the pot holes filled.
  • kernickkernick Member Posts: 4,072
    I don't see much urgency from the D3 to restructure their business, so that they make $ by the time the loans run out. That would seem to be a very large job if they have to renegotiate everything.

    But from the lack of activity, I guess the involved parties are all home enjoying the holidays? I would think these guys should be locking themselves into some conference until they get a business model together that works.

    Their wasting time means it's more likely they're going to be begging again shortly. I'm afraid that giving them the first loan is resulting in them thumbing-their noses at the idea they need to change or to change quickly.
  • euphoniumeuphonium Member Posts: 3,425
    Nothing makes an economy boom like a war.

    When FD Roosevelt saught advice with the UK economist, Lord John M. Keynes, Keynes said there were two ways out of a depression.

    1. Make work on unneeded infrastructure = CCC, WPA

    2. Start a war = Oil embargo against Japan

    The rest is history, but have you ever wondered what we would be today had "natural economics" been allowed to take place? The Genesis of Deficit Spending began with FDR in the 30's. Now, it is a tradition & we'll be paying forever.
  • tlongtlong Member Posts: 5,194
    I don't see much urgency from the D3 to restructure their business, so that they make $ by the time the loans run out. That would seem to be a very large job if they have to renegotiate everything.

    Your post is spot on. With the money coming there will not be any urgency to make changes. Bush's conditions are recommendations, not anything locked in stone. With an Obama administration the D3 figure they will be off the hook. I do have some hope that Obama is smart enough to hold their feet to the fire; I hope I am correct.

    I still feel that BK is the real way to put enough urgency into these companies to either restructure for success, or close up shop.
  • fintailfintail Member Posts: 58,439
    Makes the 20BN or 30BN or 100BN the big 2 want look pretty inconsequential. If you're already bankrupt, what's another debt? :P

    You're not saying someone was goaded into a war, are you? ;)
  • smr36smr36 Member Posts: 59
    I see redundant comments about the disparity in big3 union worker pay with that of southern non-union workers of foreign auto makers assembling cars in the US. Of course, it's the averaging of benefits to no longer working members in a declining workforce which distorts to comparison. The big3 are on the hook for these benefits but the current worker doesn't take home anywhere near the $70hr average cost. The confusion arises in comparing hourly averages of what the employer pays for past + present workers with what current workers receive.

    What is needed is a carefully thought out reorganization, preferably in CH11, of the 3 makers. The present temporary bail out is merely a small down payment which postpones the hard issues.

    Don't even get me started on the Paulson give away to the financial industry.
  • circlewcirclew Member Posts: 8,666
    Who wants to bet that they will need not more funds in Q1 or Q2 2009? I'll give you 50 to 1 odds they will be back. We can't let them fail, right? Any takers??

    Regards,
    OW
  • circlewcirclew Member Posts: 8,666
    I passed the dealers in Eatontown, NJ on Rte. 36 this past Saturday. Only Honda had people looking at cars. Chevy and Ford were ghost towns. Just a moment in time.

    Regards,
    OW
  • circlewcirclew Member Posts: 8,666
    Agree completely on both counts.

    Regards,
    OW
  • driver100driver100 Member Posts: 32,594
    That $73 per hour figure is still inflated. The reason that it comes out to that is because GM, Ford, and Chrysler have a huge number of retirees on their books. They actually have more retirees than they do workers!

    The $73 is still the total package cost per hour including benefits. The UAW worker gets $35 hour, but he is getting health benefits etc. but a sizeable amount goes to pay for retirees. No problem, but one day this worker will be retired and he will collect. If you put money into your retirement plan it comes out of your pay, in this case it also comes out of the workers pay....but before he sees it.

    The retirement plan is like a pyramid scheme. It would have worked if GM continued to grow and prosper and if no competition came along. It was devised in much simpler and better times, when no one thought the largest company in the world (at the time) would end up on the brink of bankrupcy. No one realized that automation and cheap labor would be building cars and people would actually live longer. You have fewer workers building fewer cars, but more retirees lining up.....what a mess....bring on Chapter 11!

    2017 MB E400 , 2015 MB GLK350, 2014 MB C250

  • tlongtlong Member Posts: 5,194
    Who wants to bet that they will need not more funds in Q1 or Q2 2009?

    I just read an article in the past couple of days (don't remember where) that said that the bailout loan would only hold GM through February. 62', does that sound correct?
  • fezofezo Member Posts: 10,386
    Eatontown? Are you another Jersey guy? I'm in the next county south of there.
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • circlewcirclew Member Posts: 8,666
    Yes! You're my neighbor.

    Regards,
    OW
  • dtownfbdtownfb Member Posts: 2,918
    I hope you all are taking care of the good old Jersey Shore. Lived their the first 21 years of my life......
  • fezofezo Member Posts: 10,386
    We're doing our best....

    I'm down in Manahawkin. Big event for the new year is that they have recommissioned the Barnegat Lighthouse and will light it up on January 1 at dusk. Way cool.

    Meanwhile, I can't think of the last time it looked like any of our dealerships looked busy. I keep waiting for the Chrysler guy to just drop but not yet....

    Meanwhile, you knew this was coming.... Hey, boys and girls! Now we own a chunk of GMAC!
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • dtownfbdtownfb Member Posts: 2,918
    So far our dealers in south central PA are surviving. A couple of dealerships have merged (Dodge and Chrysler dealerships) and a Lincoln is about to merge with a Ford dealership.

    Not surprised about GMAC. Disappointed but not surprised. January will be an interesting month. We should learn the fate of Chrysler. And January sales are always down so the news will not get better.
  • circlewcirclew Member Posts: 8,666
    Ponint Pleasant is real busy these days so we go to Avon by the Sea...Belmar if we are daring with the College set!

    Here is a 12 month sales chart that backs your view which I posted on the GM Market Share board.

    image

    Regards,
    OW
  • steverstever Guest Posts: 52,454
    Your chart isn't showing up for me OW (nor in your other post). You're probably seeing it because it's cached on your computer or something.
  • circlewcirclew Member Posts: 8,666
    Interesting. It does show for me fine. I'll try again.

    image

    Can you see me now??

    Regards,
    OW
  • steverstever Guest Posts: 52,454
    Nope.

    I can see the one you posted about the Genesis fine (link).

    Anyone else not able to see it?
  • jimbresjimbres Member Posts: 2,025
    Can't see it, Steve.
  • nortsr1nortsr1 Member Posts: 1,060
    I can't get it either!!!
  • steverstever Guest Posts: 52,454
    Ok, so it's not just me. Back to you OW. :-)

    Pic Posting Help
  • circlewcirclew Member Posts: 8,666
    One last time...

    image

    Can you see me now???

    Regards,
    OW
  • steverstever Guest Posts: 52,454
    That one works. :shades:
  • circlewcirclew Member Posts: 8,666
    Finally! I feel like Wagoner!! :blush:

    Regards,
    OW
  • steverstever Guest Posts: 52,454
    I better go check my wallet then. :P
  • circlewcirclew Member Posts: 8,666
    No need...there is a lot less in it!

    Regards,
    OW
  • kdhspyderkdhspyder Member Posts: 7,160
    I moved from Wayne to the Outer Banks 12 yrs ago. I used to inhabit Hominy Hills GC every weekend.
  • kernickkernick Member Posts: 4,072
    So over the years Chrysler spent their money on extravagences - like sending 300 dealers (and their wives?) on all-inclusive vacations to these luxury resorts, and now that they've blown their $, we're supposed to bail them out?

    http://www.usatoday.com/money/autos/2008-12-30-chrysler-dealers_N.htm

    I'm sure GM and Ford had lists of this largesse also, though the private planes to DC last month may have been the last blatant example.

    It's really not fair to ask people who don't lead this sort of lifestyle, to now bailout the organizations that spent their $ in these ways. Every $5M or $10M spent this way each year over the last 30 years, is $ the D3 should have held onto. Again I have to use the analogy of these guys behaved like drunken sailors.
  • circlewcirclew Member Posts: 8,666
    Nice course but I only played it once...it was 95 degrees that day!

    Regards,
    OW
  • PF_FlyerPF_Flyer Member Posts: 9,372
  • gagricegagrice Member Posts: 31,450
    Don't forget bailing out the Chinese that make the over priced Audio, DVD, NAV, etc etc Units for most of the new cars. Is there any audio, video or NAV equipment used in new cars made in the USA? Many times that is 10% to 20% of the price on a new vehicle. I am assuming it is almost pure profit as they buy that stuff from sweatshops in China. Built by children chained to a work location.
  • driver100driver100 Member Posts: 32,594
    So over the years Chrysler spent their money on extravagences - like sending 300 dealers (and their wives?) on all-inclusive vacations to these luxury resorts,

    I don't have much sympathy for the B3 either, but to be fair, few companies won't splurge when times are good. Having sales meetings and spending is all write-off stuff, and you have to do something with all those unexpected profits. Corporations don't really save for a rainy day. Besides, if the union saw excess profits guess who would want their share. Also, the guys who sell the product in the trenches - the dealers, need to be rewarded. I worked for a publishing company and in good years we had great sales meetings, in bad years some of us met at airport hotels and were given our pink slips. It's just part of corporate culture. Although you or I might not spend sudden gains recklessly, not too many corporations have the same attitude.

    2017 MB E400 , 2015 MB GLK350, 2014 MB C250

  • kernickkernick Member Posts: 4,072
    It's just part of corporate culture. Although you or I might not spend sudden gains recklessly, not too many corporations have the same attitude.

    Hey I'm not necessarily against corporations spending their money anyway they want. Let them live it up when times are good. The only time that's a problem to me is when I'm then forced to help them when times are bad and they don't have any reserves. Then those corporations should morally be allowed to fail.
    I've known many people who have made 6-figure incomes for many years, splurged on $5,000 outdoor grills (and such), while I'm making do with the end of season $200 grill from Walmart, and such and then something negative happens in their lives, and then they can't afford their lifestyle. Do I feel sorry for them or feel obligated to help - no. That's the choices they made in life with their money.

    I feel the same way about the D3 and the UAW. They've chose to live the last 20-30 years beyond their income, living off the profits and market-share of the previous generation, and now that they are broke ... well tough. Time to make the hard choices and live like the rest of us, where you can't spend more than you make.
  • gagricegagrice Member Posts: 31,450
    well tough. Time to make the hard choices and live like the rest of us, where you can't spend more than you make

    Why is it so tough for people to understand that concept. The ant and the grasshopper.
  • driver100driver100 Member Posts: 32,594
    The only time that's a problem to me is when I'm then forced to help them when times are bad and they don't have any reserves.

    I agree completely, but there are a lot of things wrong today with corporate culture. Not saving for a rainy day is one. Another we found out today is that if the average CEO in Canada makes $10 million per year, the average worker $40,000, so if the CEO starts work at 9 am, he would have to work until 9:05 to make an amount equal to the average workers full year salary. This is very wrong. Lots of resentment by workers. Also, lots of short term planning to max out on salary because who knows what will happen long term - CEOs want to make as much as possible as fast as possible. Not sure what the answer is but a totally free market system doesn't seem to be the answer any more. I am thinking people should only invest in companies where the CEOs are paid 10 or 20 times an average employees rate. These obsene salaries don't attract people who are prudent and responsible........no one is worth $10 million a year!

    2017 MB E400 , 2015 MB GLK350, 2014 MB C250

  • fezofezo Member Posts: 10,386
    The CEO of Costco agrees with you. He ties his salary to the average worker's. I don't remember what his multiplier is but he makes a nice living without being outrageous. Of course as the founder of the company he has a couple of hundred million in stock but he did that by growing his own company.
    2015 Mazda 6 Grand Touring, 2014 Mazda 3 Sport Hatchback, 1999 Mazda Miata 2004 Toyota Camry LE, 1999.
  • mikefm58mikefm58 Member Posts: 2,882
    no one is worth $10 million a year

    Oh that's chump change. I watched the Today show the other day and they showed a VP from either Lehman Brothers or Merril Lynch, not sure what one, who was with the company for 4 weeks and when they went belly up, he collected 25 million from his golden parachute. That is so wrong!!!.
  • gagricegagrice Member Posts: 31,450
    I am thinking people should only invest in companies where the CEOs are paid 10 or 20 times an average employees rate.

    I think we can thank the entertainment and sports industry for over paid individuals. You are the CEO of a company that shows a profit of a billion dollars and you are only making $500,000 per year. You see where some half baked actor gets $20 million for making a movie that only grosses $50 million. Or a sports star that gets a multi million dollar contract. As a CEO that sees his company making big profits you figure you are worth more than that actor or football player. So the race to making the most per year is on.

    Now we have huge salaries for movies that lose, sports franchises that are just a tax write-offs and corporations that do not make a decent profit. With the front people or stars demanding the huge salaries. Profitability seems unimportant. So the UAW says look how much Wagoner is making while we are losing money. Must be plenty for us also. In the end the business collapses or gets bailed out by the unwilling tax payer.

    If anyone really wants to know the result of the government bailing out and taking over the auto industry, Look at the UK. They Nationalized steel and auto making and they were shortly broke and out of business. The government is ill equipped to run any kind of business.
  • explorerx4explorerx4 Member Posts: 20,743
    did the government get any GM stock in return for the loan?
    if they did, they just made 14% TODAY. :P
    2024 Ford F-150 STX, 2023 Ford Explorer ST, 91 Mustang GT vert
  • circlewcirclew Member Posts: 8,666
    Only if they sell their stake!!!

    Regards,
    OW
  • explorerx4explorerx4 Member Posts: 20,743
    maybe the government is using the old wall street trick of beating a stock down, buying it, then ride it up. :surprise:
    2024 Ford F-150 STX, 2023 Ford Explorer ST, 91 Mustang GT vert
  • driver100driver100 Member Posts: 32,594
    For doing his job as the President of the USA, President Bush is paid USD US 400, 000 per annum. This is supplemented by USD 50000 per annum as expense account, USD 100000 towards non-taxable travel, USD 19,000 per annum towards official entertainment and of course free housing. Free housing in this case is the White House, which consists of 132 rooms, 32 bathrooms, a movie theatre, a bowling alley, a billiards room, tennis courts, a jogging track and putting greens. He also gets to utilize the facility of Camp David, the Presidential retreat and these are some of the benefits that go with the job of course.

    Does it make sense? The president of the USA makes $500,000 a year and the president of the B3 make $10 million plus. Do you get paid more the more incompetent you are?

    2017 MB E400 , 2015 MB GLK350, 2014 MB C250

  • bpizzutibpizzuti Member Posts: 2,743
    Does it make sense? The president of the USA makes $500,000 a year and the president of the B3 make $10 million plus. Do you get paid more the more incompetent you are?

    Considering that some of the worst performing companies contain the executives with the highest pay, I'd say yes.
  • gagricegagrice Member Posts: 31,450
    Do you get paid more the more incompetent you are?

    It almost looks that way. Yet you have a lot of very competent CEOs in this country. We only see the ones that make headlines for one reason or another. The ultimate responsibility lies with the board members. They sign on the line for these ridiculous packages. And of course you have to remember. The CEO of XYZ corporation is on the board of QPR corporation. It is a very exclusive group. You vote for me I will vote for you. These atrocious packages for top executives have ballooned over the last 20 years. The dot.com bubble with all its vaporware money was a big part of the problem. Maybe over the next 20 years we can get executive packages down to a realistic figure. Based on performance not the ability of the attorney to write a great contract.
  • elroy5elroy5 Member Posts: 3,735
    It seems the thinking of these board members is like "the more we pay him, the harder he will work for us". This has not turned out to be true, and no matter how much you pay them, it will not increase their intelligence. It only makes them think they have to make all the tough decisions on their own. How can someone making $10 million/year ask someone making $100k/year for advise? If you make that much, you should know it all, right?
  • gagricegagrice Member Posts: 31,450
    If you are Bill Gates you hire someone and pay him as much as yourself for advice. Steve Ballmer. Is now one of the richest men in the world. I believe 3 billionaires in the top 20 are all from Microsoft. Amassing $15 billion as CEO of Microsoft is a good trick. I would say he has made more than any of the piker Auto CEOs. Probably more than ALL the auto maker CEOs in the world combined. Yet you rarely read much about him.

    Maybe it is because he has never gone to Congress whining about competition from imports or looking for a bailout.
  • SmoothieSmoothie Member Posts: 5
    If anyone should be bailing out the automakers, it should be the big oil companies. They are having obscene profits, and they would be gone without the auto companies.
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