Also affecting my opinion is the Fatigue factor - fatigue of hearing for the last 20 or 30 years from the Big 3 of their latest and greatest turn-around plan, marketing scheme, product that's going to turn the company around, "we've learned our lessons", Quality is Job #1, "we're right-sizing", and I'm sure we could all add others.
For these 20 or 30 years the Big 3 has been "behind the ball" of events. They have won some battles with improvements and some good products, but continue to lose the war.
Thus I have little expectation that they finally have made correct decisions, such that they'll be successful enough to repay the loans. The Big 3 may survive in some form or merger, but with current sales and their current size they'll collectively blow thru $25B in about a year, before they ever really get a factory modernized.
If anyone is a WWII buff, then they'll understand when I say I see the Big 3 being like Germany in Jan. '45. Great products on the engineering drawing board and prototypes, running out of resources and time, and grasping at desperate plans with little chance of success.
Government set new standards. Government made available funds to help meet those new standards. The funds are limited to that purpose and that purpose alone, and may only be used for capitol investment in the US. Within those simplified and strict boundaries, I really don't have much of a problem with the loans. If a manufacturer qualifies for the loan, let 'em have it. but . . .
I have little expectation that they finally have made correct decisions, such that they'll be successful enough to repay the loans.
I share this view. Everything seems to indicate that the Big 2.5 can not repay these loans, and their very survival appears questionable. They are reeling from years of rampant mediocrity with only a few shining moments and unsustainable business practices. Shoot, they almost seem to have forgotten how to make a profit on a car.
Of course, I recall a time when Chrysler was at last rites and they came begging and we gave them a hand. Worked out ok that time, but this time . . . I just don't see it yet. Then again, we otherwise appear on the verge of ponying up around one trillion anyway, so what's a few billion more.
BTW - GM projects $370 million for the new engine plant in MI. Even at twice that to retool an existing plant, a few billion could go a long way.
Government set new standards. Government made available funds to help meet those new standards.
That is an excuse. Why? Because those standards do not kick in for many years, and during that time the Big 3 would be redesigning everyone of their models at least once. So when it comes time to redesign their trucks they start using V-6's and get smaller; same with the cars. They redesign cars all the time; and instead of making the vehicles bigger and have large engines they downsize each one, during the normal product updating. Do away with most of the large cars, and build subcompacts. They have most of 12 years to do this?
BTW - GM projects $370 million for the new engine plant in MI. Even at twice that to retool an existing plant, a few billion could go a long way
Maybe instead of giving the Big 3 $, why doesn't the government change to European standards of safety, and that would save countless bilions for the Big 3 in designing fuel-efficient cars for N.A. They already have designs and manufacturing facilities to produce the type of cars that would meet the new CAFE standards. Except with our separate bureaucratic rules we can't buy them here in N.A. If they're safe enough for Europe why can't we standardize? and save those billions.
If they're safe enough for Europe why can't we standardize? and save those billions.
As an outsider, I suspect that there are a number of reasons. Two that spring to mind are :
a) it would remove a whole layer of bureaucracy from the system, (and what else would those folks do ?), and raise comments such as "If it was as simple as that, why have we been paying these folks all these years?".
b) I believe the regs were formulated with a strong view to limiting access to the US market by non-domestic producers, i.e. protectionism.
Simplistic views from an outsider and I'm sure there are other reasons. However, I can see no valid reasons for USA to demand any radically different safety or enviro aspects with their cars than those already in place, and projected, in Europe. It really is a nonsense and a huge waste of your tax $'s. What makes it totally ironic is that there are some very good Euro etc cars already produced by GM and Ford divisions outside USA, yet when they ship them across the Atlantic they feel the need to tweak the designs and powertrains and generally screw them up. That really is the USA folk playing the "Oh we better change something or we won't have jobs". Waste of money, bleeding potential profit from the corporations and wrecking some fine automobiles. :sick:
Think I'd better cease 'cos I'm heading down a road that may get me dumped in Boston harbour.
Think I'd better cease 'cos I'm heading down a road that may get me dumped in Boston harbour.
I agree with you wholeheartedly. We cannot even get cars that are sold in Canada that get better mileage than anything sold here. By the time our government agencies get through with anything it is a mess. Think about this. We can get together with NATO and decide how to bomb Yugoslavia, but cannot agree on emissions standards to save the automakers millions in R&D. It is so bad over here that we have more than one standard with CARB sticking their fat nose into the pudding. CA has to have their own agency crammed with worthless environmental whackos. And guess what all that dead weight has bankrupted CA. We are Broke. Ahnold wants an emergency loan. Well I say get rid of a couple hundred worthless agencies and do with what we got.
Well sure, I would much prefer the government stay out of it and let the market work. I don't think these mandates or this loan program were driven by market considerations. It's just that since our government has decided, in their infinite wisdom :P , to tell car makers how to build cars, I don't find it completely unreasonable that our government provide some assistance.
Maybe instead of giving the Big 3 $, why doesn't the government change to European standards of safety, and that would save countless bilions for the Big 3 in designing fuel-efficient cars for N.A. They already have designs and manufacturing facilities to produce the type of cars that would meet the new CAFE standards. Except with our separate bureaucratic rules we can't buy them here in N.A. If they're safe enough for Europe why can't we standardize? and save those billions.
This is just not in our nature. Yes, it might make sense, but why should we let something that makes sense lead us to abdicate our responsibility and subject ourselves to the regulations of any other country? (there is no sarcasm icon or it would be inserted here)
It's just that since our government has decided, in their infinite wisdom, to tell car makers how to build cars, I don't find it completely unreasonable that our government provide some assistance.
With the exception of the Chrysler loans many years ago, the government didn't provide loans when they passed legislation. For instance I don't remember any loans when the 1st set of CAFE standards went in. I don't remember loans when leaded-gas was legislated out, and the autos had to get catalytic converters. I don't remember loans being given out when new crash standards are implemented. So by and large the auto manufacturers have paid for the changes to the vehicles and passed them along in the price of the vehicles.
What has changed is a continuing decline in their market-share and their business plans which have neither made the vehicles people want, or to right-size their businesses quick enough (always 1 step behind).
I'm sorry that the Big 3 do not have the money, can't raise the money on their own, and there is 1 new regulation. (And if you look at the regulation it is not a drastic change in a short period of time.) I still say no loan; let them produce the 1 or 2 vehicles then that they currently have that meet the standard.
Maybe all GM should sell is the Cobalt, Aveo, and Volt? Ford can sell their Focus. And Chrysler has a couple of new electric cars. If that's all they can do, then so be it.
1 or 2 more days of losses like this, and I'm going to buy a majority interest in GM and Ford. Ford stock is now down to < $3 having just lost 19% today.
So owning a majority of the stock in GM and Ford, I'm going to apply for those $25B in loans, pay myself an exorbitant salary and bonuses - worth many billion; make a cursory effort to rebuild a factory or 2, run the company into the ground (won't be hard to do since everyone's lost their retirement and won't be buying new cars), and declare bankruptcy. Of course my platinum parachute the day before the bankrupty, will be nice.
Well, this may turn out like K-Mart, especially Ford, but buying eight or ten tanks worth of Ford stock and sitting on it for 5 years could work out ok.
Then again, I'm in the basement over in the Car Stock Exchange.
It's more like I'm stuck under the spare tire in the trunk and they've lost the car keys. It could be years before I see daylight again. Sort of like Ford, GM and Chrysler. And maybe Toyota too.
As I write this GM's down another 9% and Ford is down 14%!, far more than the rest of the market. From this it looks like no one has any confidence in them making $ anytime soon. Actually these large drops may signify people think bankruptcy will be looming in a year or 2.
If you go to the GM or Ford website, (Dodge locked up on me), it's business as usual, and the future looks bright with the models 1-2 years out that are just great. They're not having any great sales - some 0% financing on the '08's and decent discounts on the trucks. It's really surprising how numb these guys are.
Steve - you might want to start a game to find the highest CD rates.
Congress: "Here's the new CAFE regs. We know it will cost you a bit to meet them, so we'll loan you some money to help out. Just let us know when you need it."
Auto Makers: "Uhhh, ok. Thanks."
one year later
Auto Makers: "Say, you know we really could use that loan now."
Congress: "Oh, you want to retool a factory to build more efficient cars?"
Auto Makers: "Ummm, well . . .uh . . . no, not really. We would just like to stay in business. Everybody stopped buying our trucks, we can't get anyone financed to buy our cars, and we have bills to pay. Wadda ya say?"
That CAFE law of course is entirely unneeded as the market-forces will push the manufacturers to higher mpg ratings sooner than that Act.
The CAFE law is probably around because some people 1) have to have every aspect of life documented and be in control of said issue, and 2) the auto lobbyists can then use that hokey reason to justify the loans.
As I said before the Big 3 and all companies pay for renovation and updates to their factories as a normal part of their business. What is different this time is that the Big 3 are hurting, and want the loans for their capital improvements, so that they then can use that money to pay their pensions and salaries. It's like loaning a relative money for fixing his roof when he can't get a bank loan, so he can still buy food. The problem isn't that nature required the relative to make known needed repairs, the problem is the relative can't afford to live in that house. The loan does not solve the long-term problem of not enough coming in and too much going out. Unless you want to continue to loan them money periodically? Maybe the government can next exempt the Big 3 from income taxes? and give them large research grants so that they don't fund their R&D and design?
Isn't this what the Japanese government did for Toyota and Honda so they could develop hybrids?
Yes and in the mid 1990s we gave the Big 3 $billions to develop hybrids and EVs. What do they have to show for our investment. Chrysler came up with the a diesel hybrid while GM and Ford built EVs How many are on the road?
I think the market does a better job of dictating what should be built. As we can see the government pretty much screws up everything they touch.
Isn't this what the Japanese government did for Toyota and Honda so they could develop hybrids?
I don't care what happened in the 90's or now, in Europe or China or Japan. I do not want the government propping up GM, IBM, Microsoft, Dupont, Citibank, McDonald's or whomever.
The debt the U.S. government is digging itself into will affect your likelihood to collect Social Security. The more they spend, the less likely you are to get much or anything.
I want the government to set decent rules for businesses, provide for defense, and provide infrastructure. It should not be subjectively deciding which companies or industries survive or fail, and change the rules of whether this Congress will give loans but in the past they won't.
If Congress was proactive and setup decent business and financial rules; also not allowing new financial investment types to be created - which is what makes this current mess, so messy, then they would be doing their job. Instead Congress has a faulty set of rules for the economy to run by, and then makes a bunch of expensive and biased decisions to try and fix the mess they created.
Is this allowing the 3 Stooges to make dinner, and then clean the kitchen?!
I hope you understand that I really do agree with you to a large extent. I wish the government would just stay out of the way and let the market work.
There are those who would argue that without fuel efficiency regulations, our average fuel efficiency would be significantly lower today than it is, and that our total fuel consumption would be significantly higher than it is today. They could make a pretty good argument. Of course there is a counter argument, and yours is pretty good. The recent/current upheaval in the US auto market supports it pretty well.
We could probably come up with a much more extensive list of spurious reasons as to why CAFE exists.
I am looking at this from a perspective that differs with you somewhat. At this point, no auto maker has gotten any loan at all, and I don't think any of the Big 2.5 should be approved primarily because I don't think they can pay it back. I am also not stupid enough to be fooled into thinking they really want these loans to cover costs of retooling or establishing new programs. They want them to shore up their books.
But the idea of the loan program itself, in spite of my desire for the government to back off, doesn't bother me as much. I am much more open to a loan that at least has some hope of being repaid than some other ways our government subsidizes business activity. Our government makes money available to businesses in a wide variety of ways, including regularly providing loans to businesses. Government also provides grants, favorable tax credits and schemes, and yes, even in some cases, tax exemptions. Sometimes these are hidden in government organizations, agencies, and quasi-government public-private partnerships. Bottom line it, it means we routinely give money to businesses in various direct and indirect ways. This type of activity is what many characterize as corporate welfare. (Note - Our government is not unique in this manner.)
A few examples: The Cooperative Research Act of 1984 later amended as the National Cooperative Research and Production Act of 1993. Ostensibly antitrust legislation that ultimately includes tons of money given to many industries to promote innovation, car manufacturers are a big beneficiary. USCAR and its sub-organizations. Grew out of the above legislation. Through this, we have paid for a big portion of the research, development, and production costs of a wide variety of auto technology. One notable example is the EV1. We paid for a big part of the research and development of that project, not GM. The very Act that sets up the loan program we have been discussing also includes many grant programs to pay for fuel and car technology development. Grants are more popular with academia and private research orgs, but big business and industry goes after them through orgs like the ones mentioned above. Tax incentives that promote consumer activity on various technologies inherently are favorable or punitive to the companies that develop and market those technologies. A local example, not car related, we gave away the farm to entice Dell to build a production facility here. We bought the land, rezoned it, then simply gave it to Dell. They are exempt from income and property taxes. We paid for supporting infrastructure improvements. All they had to do was promise to create 1500 jobs, a significant number around here and they did do that, and keep the facility in operation until 2010. The hoped for additional development from support businesses has not materialized. Last month Dell announced they were considering closing the plant - in 2010. We will just kiss all that state and local government give-away, the jobs, and the lost revenue goodbye.
No, I am not a fan of government give-aways to business and industry to fund business and industrial activity. A loan program just smells a little different. It might still stink, but it doesn't offend me as much.
What you are saying makes me consider that one can look at this issue (at least) 2 ways: 1) what is fair and appropriate, and 2) what we consider fair and appropriate based on what others are doing (Japan ...) and the history (prior subsidies and loans from the U.S government).
My viewpoint is that we need to disregard 2) at some point in this country or else we're going to be broke (at least the non-executives ranks).
We need as a society to draw a line-in-the-sand, and somehow get Congress to work for individuals and not the lobbyists. We need an across-the-board simplification of the tax codes, eliminating all sorts of deductions and programs for everyone, and every industry. We need the government to write financial laws that only the most basic and transparent of financial transactions will be allowed. .......
Well, the whole thing sure is a mess. I think everyone here would agree on that to some extent.
I have yet another fear. Government intervention may not be so bad in and of itself, but only in very small and extremely limited amounts. I'm afraid the New Deal has turned into a very Bad Deal. It appears we have created/are creating a market that is incapable of functioning without the government being involved, or at least we have fostered an environment that promotes such thinking. And that is the mother of all royal screw ups.
Stock report - Ford was down another 20% and GM down 30% today. I wonder if I could just buy the 51% of either stock on my Mastercard? I'll have to check my credit limit (if my bank that issued the card is still in business).
I thought these sort of stock markets only occurred in Latin America and such? The policies of the Democrats and Republicans, and our business and financial leaders have made quite the mess.
Yes and in the mid 1990s we gave the Big 3 $billions to develop hybrids and EVs. What do they have to show for our investment. Chrysler came up with the a diesel hybrid while GM and Ford built EVs How many are on the road?
I am unsure... I don't really know the bill or the law that was passed back in the 90's for the car manufacturers.
The way it was explained to me was that because the big SUV's were having horrible emmision ratings, the government said they had to make EV to get their "money"....
What I was told is that they (the big 3) made golf carts. I was told that when you take the total number of units.... SUV's, trucks, cars, and the EV's... and take the average for emissions out of all vehicle listed it would make the bill pass... :confuse:
As I said I am not sure but that is how I understood it. Please excuse my explanation in this post but I hope you get what I am saying here.
was a cooperative research program between the U.S. government and major auto corporations, aimed at establishing U.S. leadership in the development of extremely fuel-efficient (up to 80 mpg) vehicles while retaining the features that make them marketable and affordable. The partnership, formed in 1993, involved 8 federal agencies, the national laboratories, universities, and the United States Council for Automotive Research (USCAR), which comprises DaimlerChrysler, Ford Motor Company and General Motors Corporation.
Ralph Nader called PNGV "an effort to coordinate the transfer of property rights for federally funded research and development to the automotive industry".
GM, Ford, and Chrysler all created working concept vehicles of 5 passenger family cars that achieved at least 72 mpg. GM created the 80 mpg Precept, Ford created the 72 mpg Prodigy, and Chrysler created the 72 mpg ESX-3.
GM stated that they spent over US$1 billion developing and marketing the EV1, though a portion of this cost was defrayed by the Clinton Administration's US$1.25 billion Partnership for a New Generation of Vehicles (PNGV) project
The fix for GM's problems must come from within GM and not in the form of another government handout. I still see people complaining about brake and other problems on brand new trucks that existed 10 years ago. GM continues to kick their customers in the teeth and then wonders why they don't come back for more later.
GM never puts the customer first and could care less after the sale, so why should I have any pity for GM now? I say let the cookie crumble.... GM wouldn't be the first automaker to disappear into oblivion. I've owned GM vehicles for 30 years and still have three, but my last car purchase was not a GM built product.
Will the sleeping giant finally wake up.... or is it too late for GM to save itself from extinction?
Back in 1990, the Government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it. They failed and it closed. Now we are trusting the economy of our country to a pack of nit-wits who couldn't make money running a whore house and selling booze? :mad: :sick: :P
Back in 1990, the Government seized the Mustang Ranch brothel in Nevada for tax evasion and, as required by law, tried to run it. They failed and it closed. Now we are trusting the economy of our country to a pack of nit-wits who couldn't make money running a whore house and selling booze?
If that wasn't so sad, (and true), it would be funny. Pretty much true here on the small island, as well.................apart from the brothel, of course. These folks went into politics 'cos they weren't fit for anything else and now they're going to run the major banks. Aaaaaarrrggggghhhhhh. :sick:
I think this guy touches all sides of the issue, and is looking at the situation unbiased. of note there is a section in there about how the most aggressive traders won't touch GM bond debt. If we think the government will ever get its $25B back ... let's just be honest and call it grants.
...the government will be spending more than $25 billion if Chrysler, Ford, and GM go under in the forms of unemployment, welfare, law enforcement, and prisons. Maybe they can wall-off Detroit and make it one gigantic supermax prison?
The scary part is a few days ago when GM and Ford stocks hit rock bottom, Toyota could have easily bought both companies. Why did Jim Press leave Toyota for Chrysler?????
No not true. I remember 15-20 years ago when the computer industry went thru the same thing. Digital and Wang and several other companies went under. Other companies sprang up or grew to replace them.
As people needed a certain amount of computers; similarly people will need a certain amount of cars (to repalce those crushed ot toalled, and for population growth). If GM, Ford, and Chrysler go under maybe GE buys up some of the plants, or maybe its Microsoft, or Toyota or Honda. They will hire experienced good workers.
The only reason I see the fed. government should step in to keep any industry, is if it is deemed a matter of national security. I don't see why the auto plants in Detroit being owned by the Big 3 or being owned by GE or Toyota, changes national security. The fed. government could take control whenever they want to, and convert them to making war-materials. It doesn't matter who owns or runs them.
I wouldn't buy any of the Big 3 until they declare bankruptcy, and all their contracts are legally dead - I'd want them free of all obligations to retirees, unions, suppliers, dealers and executives.
I would want to buy the equipment and factories, buy the designs and nameplates, setup a much smaller dealer network, hire the non-union workers I want, eliminate executives ...
The last thing I would want is the system that keeps these guys bleeding money. It must be swept away!
Give Ford/GM cheap loans to build the next generation of small, fuel effecient cars, or alternative fuel cars HERE IN THE USA! Re-tool plants, modernize plants. Why not? Japan and Korea does it. These two countries have heavily subsidized their auto industries for years. Time for the U.S. government to invest in its own people/industry. Aren't you tired of sending Billions of your tax dollars overseas to rebuild OTHER countries? Countries that don't even like us to being with!! This could infuse new jobs/technologies into our economy. The government could make back these loans 3x over with the results. Good paying family wage jobs once again!
That's really not a very good reason; as you could say why doesn't the U.S. subsidize gas like Venezuela, or become communist because China is. You stand by your principles, which by the way made us #1 in the world.
I certainly don't want the U.S. economy to become mired down like Japan - take a look at the last 15 years in Japan, or to be like Korea which is only doing so well because it was propped up by the U.S. for many years.
Why do you assume if the Big 3 fade away corporately, that we could not restart those same plants and make U.S. cars under some new owners :confuse: :confuse: !! I don't understand why the posters here think the auto industry is unique and certain companies can fail and be replaced. :confuse:
Let GM, G and Chry and their system and paradigms go bankrupt, and let some other U.S. company like GE, Boeing, or Apple buy it up and run it with a new set of rules and ideas. (I say Apple even though you may say a computer computer(?), because they could bring a whole unique design/idea/panache) to the U.S. auto industry.
So please explain to me why we need to bailout the investors and owners of GM, F, and Chry., instead of letting them manage as they will, and if they fail others here in this country take over or start new auto plants?
To see how this all turns out. We gave 700 Billion, looks like it will be more like 800 Billion to people that don't contribute any products to our country. All they do is make money by speculating on what people will buy. What a waste of our tax dollars. Make the wall street brokers go out and sell pencils. But no we will give corporate heads loanes so they can spend big bucks on failing executives that have driven the companies into the ground. Either we are capitalists or we aren't but I do agree with some that we need to take a view that it is our country against everyone else. We need to see how other countries respond to the downturn and make sure our companies aren't competing with other companies supported by they government. How will Japan respond to what Business week reported on October the 8th.
Posted by: Ian Rowley on October 08 In a shocking day for Japanese stocks—the benchmark Nikkei index had its third worst session in history, falling 9.4%—Toyota’s recent stock slump accelerated. By the close of trading at 3pm, Toyota’s stock was down 12% on reports that its earnings will fall a worse-than-expected 40% this year. During 2008, Toyota is now down an eye-watering 46%—and this at a company which is still expected to make over $10 billion this year.
If Japan or Korea or even China start propping up their auto industries we would only have two choices, prop up or own or Tariffs. Neither idea is all that thrilling. Maybe if we let them find their own solutions they will do a better job of meeting the consumers needs or someone else will meet them for us?
Who's for just giving them a blank check? Or enough "loans" so that they can pay most of their expenses, and thus sell their vehicles for $10K - so they can sell lots of cars and trucks (be competitive)?
All of us who go to work each day and earn money; well we should just pay more taxes so we can subsidize someone else's company and job. Just once in life I'd like to be on the receiving end. Enough is enough !! :mad:
As I said before - The Dem. and Rep. are just about the same - bought and paid for by lobbyists. And the smart lobbyists contribute to both parties, so they win no matter who wins the elections.
I don't really believe this but it may strike a chord with some of you:
"The entire ruling class wants you to vote for the same reason dictators claim a 100% turnout: Casting a ballot tricks you into believing you have as equal a stake in the power structure as the rich and connected."
So would you feel better if Moody's rated GM debt AAA, and told everyone that GM is very likely to repay the loans, and that it had a bright future? No because GM like everyone else is paying to get that rating. It's like directly paying your kids' teachers to give them a grade.
I'm to the point where I don't care who falls. :mad: THE system is broke - there are enough payoffs and deals going on that it dwarfs anything you see on the Sopranos or imagine in organized crime. About the only difference is these guys, wrote the rules to make what they're doing legal, even though unethical and immoral.
The government should cancel every loan, bailout, grant, and taxbreak they have to these financial institutions and corporations. Give that $1500 billion directly back to the taxpayers to buy food, gas, and pay the mortgages. Help the individuals, not the wealthy CEO class of this country.
that the domestics went crying to the government for money today, talking about how they indirectly provide employment for 4.5 million Americans, and we would all be sorry if they went out of business?
Truth is, we would never lose them all, the domestic tide would rush into the yawning void left by whichever one folds first, and all of that excess capacity and lack of sales would get soaked up.
And then in ten years, they would be right back in the same spot, broke as all heck, having lost another 10 points of market share, etc etc etc.
But I guess instead, we taxpayers, already stockholders in some mighty big banks, are about to be shareholders in some car companies as well....the stock warrants they plan to issue won't even have the value of toilet paper, let alone anything approaching appropriate collateral for the massive "loans" we are about to give them...... :sick:
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
Comments
For these 20 or 30 years the Big 3 has been "behind the ball" of events. They have won some battles with improvements and some good products, but continue to lose the war.
Thus I have little expectation that they finally have made correct decisions, such that they'll be successful enough to repay the loans. The Big 3 may survive in some form or merger, but with current sales and their current size they'll collectively blow thru $25B in about a year, before they ever really get a factory modernized.
If anyone is a WWII buff, then they'll understand when I say I see the Big 3 being like Germany in Jan. '45. Great products on the engineering drawing board and prototypes, running out of resources and time, and grasping at desperate plans with little chance of success.
I have little expectation that they finally have made correct decisions, such that they'll be successful enough to repay the loans.
I share this view. Everything seems to indicate that the Big 2.5 can not repay these loans, and their very survival appears questionable. They are reeling from years of rampant mediocrity with only a few shining moments and unsustainable business practices. Shoot, they almost seem to have forgotten how to make a profit on a car.
Of course, I recall a time when Chrysler was at last rites and they came begging and we gave them a hand. Worked out ok that time, but this time . . . I just don't see it yet. Then again, we otherwise appear on the verge of ponying up around one trillion anyway, so what's a few billion more.
BTW - GM projects $370 million for the new engine plant in MI. Even at twice that to retool an existing plant, a few billion could go a long way.
That is an excuse. Why? Because those standards do not kick in for many years, and during that time the Big 3 would be redesigning everyone of their models at least once. So when it comes time to redesign their trucks they start using V-6's and get smaller; same with the cars. They redesign cars all the time; and instead of making the vehicles bigger and have large engines they downsize each one, during the normal product updating. Do away with most of the large cars, and build subcompacts. They have most of 12 years to do this?
BTW - GM projects $370 million for the new engine plant in MI. Even at twice that to retool an existing plant, a few billion could go a long way
Maybe instead of giving the Big 3 $, why doesn't the government change to European standards of safety, and that would save countless bilions for the Big 3 in designing fuel-efficient cars for N.A. They already have designs and manufacturing facilities to produce the type of cars that would meet the new CAFE standards. Except with our separate bureaucratic rules we can't buy them here in N.A. If they're safe enough for Europe why can't we standardize? and save those billions.
As an outsider, I suspect that there are a number of reasons. Two that spring to mind are :
a) it would remove a whole layer of bureaucracy from the system, (and what else would those folks do ?), and raise comments such as "If it was as simple as that, why have we been paying these folks all these years?".
b) I believe the regs were formulated with a strong view to limiting access to the US market by non-domestic producers, i.e. protectionism.
Simplistic views from an outsider and I'm sure there are other reasons. However, I can see no valid reasons for USA to demand any radically different safety or enviro aspects with their cars than those already in place, and projected, in Europe. It really is a nonsense and a huge waste of your tax $'s. What makes it totally ironic is that there are some very good Euro etc cars already produced by GM and Ford divisions outside USA, yet when they ship them across the Atlantic they feel the need to tweak the designs and powertrains and generally screw them up. That really is the USA folk playing the "Oh we better change something or we won't have jobs". Waste of money, bleeding potential profit from the corporations and wrecking some fine automobiles. :sick:
Think I'd better cease 'cos I'm heading down a road that may get me dumped in Boston harbour.
I agree with you wholeheartedly. We cannot even get cars that are sold in Canada that get better mileage than anything sold here. By the time our government agencies get through with anything it is a mess. Think about this. We can get together with NATO and decide how to bomb Yugoslavia, but cannot agree on emissions standards to save the automakers millions in R&D. It is so bad over here that we have more than one standard with CARB sticking their fat nose into the pudding. CA has to have their own agency crammed with worthless environmental whackos. And guess what all that dead weight has bankrupted CA. We are Broke. Ahnold wants an emergency loan. Well I say get rid of a couple hundred worthless agencies and do with what we got.
Now you got me ranting.
Maybe instead of giving the Big 3 $, why doesn't the government change to European standards of safety, and that would save countless bilions for the Big 3 in designing fuel-efficient cars for N.A. They already have designs and manufacturing facilities to produce the type of cars that would meet the new CAFE standards. Except with our separate bureaucratic rules we can't buy them here in N.A. If they're safe enough for Europe why can't we standardize? and save those billions.
This is just not in our nature. Yes, it might make sense, but why should we let something that makes sense lead us to abdicate our responsibility and subject ourselves to the regulations of any other country? (there is no sarcasm icon or it would be inserted here)
With the exception of the Chrysler loans many years ago, the government didn't provide loans when they passed legislation. For instance I don't remember any loans when the 1st set of CAFE standards went in. I don't remember loans when leaded-gas was legislated out, and the autos had to get catalytic converters. I don't remember loans being given out when new crash standards are implemented. So by and large the auto manufacturers have paid for the changes to the vehicles and passed them along in the price of the vehicles.
What has changed is a continuing decline in their market-share and their business plans which have neither made the vehicles people want, or to right-size their businesses quick enough (always 1 step behind).
I'm sorry that the Big 3 do not have the money, can't raise the money on their own, and there is 1 new regulation. (And if you look at the regulation it is not a drastic change in a short period of time.) I still say no loan; let them produce the 1 or 2 vehicles then that they currently have that meet the standard.
Maybe all GM should sell is the Cobalt, Aveo, and Volt? Ford can sell their Focus. And Chrysler has a couple of new electric cars. If that's all they can do, then so be it.
So owning a majority of the stock in GM and Ford, I'm going to apply for those $25B in loans, pay myself an exorbitant salary and bonuses - worth many billion; make a cursory effort to rebuild a factory or 2, run the company into the ground (won't be hard to do since everyone's lost their retirement and won't be buying new cars), and declare bankruptcy. Of course my platinum parachute the day before the bankrupty, will be nice.
That will only take like, what, $300 or $400. :P
Then again, I'm in the basement over in the Car Stock Exchange.
Is it a damp basement? :P
If you go to the GM or Ford website, (Dodge locked up on me), it's business as usual, and the future looks bright with the models 1-2 years out that are just great. They're not having any great sales - some 0% financing on the '08's and decent discounts on the trucks. It's really surprising how numb these guys are.
Steve - you might want to start a game to find the highest CD rates.
http://www.marketwatch.com/news/story/citigroups-baffling-call-ford-gm/story.asp- x?guid=%7BDED83B48%2D5E8A%2D4C11%2D8D31%2D4EF59563202B%7D
Congress passing this loan legislation last yyear, seems like an entirely different universe than this year.
Auto Makers: "Uhhh, ok. Thanks."
one year later
Auto Makers: "Say, you know we really could use that loan now."
Congress: "Oh, you want to retool a factory to build more efficient cars?"
Auto Makers: "Ummm, well . . .uh . . . no, not really. We would just like to stay in business. Everybody stopped buying our trucks, we can't get anyone financed to buy our cars, and we have bills to pay. Wadda ya say?"
The CAFE law is probably around because some people 1) have to have every aspect of life documented and be in control of said issue, and 2) the auto lobbyists can then use that hokey reason to justify the loans.
As I said before the Big 3 and all companies pay for renovation and updates to their factories as a normal part of their business. What is different this time is that the Big 3 are hurting, and want the loans for their capital improvements, so that they then can use that money to pay their pensions and salaries. It's like loaning a relative money for fixing his roof when he can't get a bank loan, so he can still buy food. The problem isn't that nature required the relative to make known needed repairs, the problem is the relative can't afford to live in that house.
The loan does not solve the long-term problem of not enough coming in and too much going out. Unless you want to continue to loan them money periodically? Maybe the government can next exempt the Big 3 from income taxes? and give them large research grants so that they don't fund their R&D and design?
Isn't this what the Japanese government did for Toyota and Honda so they could develop hybrids?
Yes and in the mid 1990s we gave the Big 3 $billions to develop hybrids and EVs. What do they have to show for our investment. Chrysler came up with the a diesel hybrid while GM and Ford built EVs How many are on the road?
I think the market does a better job of dictating what should be built. As we can see the government pretty much screws up everything they touch.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
I don't care what happened in the 90's or now, in Europe or China or Japan. I do not want the government propping up GM, IBM, Microsoft, Dupont, Citibank, McDonald's or whomever.
The debt the U.S. government is digging itself into will affect your likelihood to collect Social Security. The more they spend, the less likely you are to get much or anything.
I want the government to set decent rules for businesses, provide for defense, and provide infrastructure. It should not be subjectively deciding which companies or industries survive or fail, and change the rules of whether this Congress will give loans but in the past they won't.
If Congress was proactive and setup decent business and financial rules; also not allowing new financial investment types to be created - which is what makes this current mess, so messy, then they would be doing their job. Instead Congress has a faulty set of rules for the economy to run by, and then makes a bunch of expensive and biased decisions to try and fix the mess they created.
Is this allowing the 3 Stooges to make dinner, and then clean the kitchen?!
There are those who would argue that without fuel efficiency regulations, our average fuel efficiency would be significantly lower today than it is, and that our total fuel consumption would be significantly higher than it is today. They could make a pretty good argument. Of course there is a counter argument, and yours is pretty good. The recent/current upheaval in the US auto market supports it pretty well.
We could probably come up with a much more extensive list of spurious reasons as to why CAFE exists.
I am looking at this from a perspective that differs with you somewhat. At this point, no auto maker has gotten any loan at all, and I don't think any of the Big 2.5 should be approved primarily because I don't think they can pay it back. I am also not stupid enough to be fooled into thinking they really want these loans to cover costs of retooling or establishing new programs. They want them to shore up their books.
But the idea of the loan program itself, in spite of my desire for the government to back off, doesn't bother me as much. I am much more open to a loan that at least has some hope of being repaid than some other ways our government subsidizes business activity. Our government makes money available to businesses in a wide variety of ways, including regularly providing loans to businesses. Government also provides grants, favorable tax credits and schemes, and yes, even in some cases, tax exemptions. Sometimes these are hidden in government organizations, agencies, and quasi-government public-private partnerships. Bottom line it, it means we routinely give money to businesses in various direct and indirect ways. This type of activity is what many characterize as corporate welfare. (Note - Our government is not unique in this manner.)
A few examples:
The Cooperative Research Act of 1984 later amended as the National Cooperative Research and Production Act of 1993. Ostensibly antitrust legislation that ultimately includes tons of money given to many industries to promote innovation, car manufacturers are a big beneficiary.
USCAR and its sub-organizations. Grew out of the above legislation. Through this, we have paid for a big portion of the research, development, and production costs of a wide variety of auto technology. One notable example is the EV1. We paid for a big part of the research and development of that project, not GM.
The very Act that sets up the loan program we have been discussing also includes many grant programs to pay for fuel and car technology development. Grants are more popular with academia and private research orgs, but big business and industry goes after them through orgs like the ones mentioned above.
Tax incentives that promote consumer activity on various technologies inherently are favorable or punitive to the companies that develop and market those technologies.
A local example, not car related, we gave away the farm to entice Dell to build a production facility here. We bought the land, rezoned it, then simply gave it to Dell. They are exempt from income and property taxes. We paid for supporting infrastructure improvements. All they had to do was promise to create 1500 jobs, a significant number around here and they did do that, and keep the facility in operation until 2010. The hoped for additional development from support businesses has not materialized. Last month Dell announced they were considering closing the plant - in 2010. We will just kiss all that state and local government give-away, the jobs, and the lost revenue goodbye.
No, I am not a fan of government give-aways to business and industry to fund business and industrial activity. A loan program just smells a little different. It might still stink, but it doesn't offend me as much.
1) what is fair and appropriate, and
2) what we consider fair and appropriate based on what others are doing (Japan ...) and the history (prior subsidies and loans from the U.S government).
My viewpoint is that we need to disregard 2) at some point in this country or else we're going to be broke (at least the non-executives ranks).
We need as a society to draw a line-in-the-sand, and somehow get Congress to work for individuals and not the lobbyists. We need an across-the-board simplification of the tax codes, eliminating all sorts of deductions and programs for everyone, and every industry. We need the government to write financial laws that only the most basic and transparent of financial transactions will be allowed. .......
What I'm saying to everyone here - is we can't continue to spend like we are w/o crashing our society. http://www.cnn.com/2008/US/10/09/national.debt.clock.ap/index.html
Not any recent ones. Not sure which is the most incompetent. CA's legislature or the 110th Congress with Bush signing their lame legislation.
I have yet another fear. Government intervention may not be so bad in and of itself, but only in very small and extremely limited amounts. I'm afraid the New Deal has turned into a very Bad Deal. It appears we have created/are creating a market that is incapable of functioning without the government being involved, or at least we have fostered an environment that promotes such thinking. And that is the mother of all royal screw ups.
I thought these sort of stock markets only occurred in Latin America and such? The policies of the Democrats and Republicans, and our business and financial leaders have made quite the mess.
I am unsure... I don't really know the bill or the law that was passed back in the 90's for the car manufacturers.
The way it was explained to me was that because the big SUV's were having horrible emmision ratings, the government said they had to make EV to get their "money"....
What I was told is that they (the big 3) made golf carts. I was told that when you take the total number of units.... SUV's, trucks, cars, and the EV's... and take the average for emissions out of all vehicle listed it would make the bill pass... :confuse:
As I said I am not sure but that is how I understood it. Please excuse my explanation in this post but I hope you get what I am saying here.
GP
was a cooperative research program between the U.S. government and major auto corporations, aimed at establishing U.S. leadership in the development of extremely fuel-efficient (up to 80 mpg) vehicles while retaining the features that make them marketable and affordable. The partnership, formed in 1993, involved 8 federal agencies, the national laboratories, universities, and the United States Council for Automotive Research (USCAR), which comprises DaimlerChrysler, Ford Motor Company and General Motors Corporation.
Ralph Nader called PNGV "an effort to coordinate the transfer of property rights for federally funded research and development to the automotive industry".
GM, Ford, and Chrysler all created working concept vehicles of 5 passenger family cars that achieved at least 72 mpg. GM created the 80 mpg Precept, Ford created the 72 mpg Prodigy, and Chrysler created the 72 mpg ESX-3.
GM stated that they spent over US$1 billion developing and marketing the EV1, though a portion of this cost was defrayed by the Clinton Administration's US$1.25 billion Partnership for a New Generation of Vehicles (PNGV) project
GM never puts the customer first and could care less after the sale, so why should I have any pity for GM now? I say let the cookie crumble.... GM wouldn't be the first automaker to disappear into oblivion. I've owned GM vehicles for 30 years and still have three, but my last car purchase was not a GM built product.
Will the sleeping giant finally wake up.... or is it too late for GM to save itself from extinction?
http://www.theonion.com/content/video/obama_promises_to_stop_americas
Nevada for tax evasion and, as required by law, tried to run it. They
failed and it closed. Now we are trusting the economy of our country to
a pack of nit-wits who couldn't make money running a whore house and
selling booze? :mad: :sick:
Nevada for tax evasion and, as required by law, tried to run it. They
failed and it closed. Now we are trusting the economy of our country to
a pack of nit-wits who couldn't make money running a whore house and
selling booze?
If that wasn't so sad, (and true), it would be funny. Pretty much true here on the small island, as well.................apart from the brothel, of course. These folks went into politics 'cos they weren't fit for anything else and now they're going to run the major banks. Aaaaaarrrggggghhhhhh. :sick:
http://money.cnn.com/2008/10/14/news/companies/gmwoes_taylor.fortune/index.htm?c- nn=yes
The scary part is a few days ago when GM and Ford stocks hit rock bottom, Toyota could have easily bought both companies. Why did Jim Press leave Toyota for Chrysler?????
As people needed a certain amount of computers; similarly people will need a certain amount of cars (to repalce those crushed ot toalled, and for population growth). If GM, Ford, and Chrysler go under maybe GE buys up some of the plants, or maybe its Microsoft, or Toyota or Honda. They will hire experienced good workers.
The only reason I see the fed. government should step in to keep any industry, is if it is deemed a matter of national security. I don't see why the auto plants in Detroit being owned by the Big 3 or being owned by GE or Toyota, changes national security. The fed. government could take control whenever they want to, and convert them to making war-materials. It doesn't matter who owns or runs them.
I would want to buy the equipment and factories, buy the designs and nameplates, setup a much smaller dealer network, hire the non-union workers I want, eliminate executives ...
The last thing I would want is the system that keeps these guys bleeding money. It must be swept away!
That's really not a very good reason; as you could say why doesn't the U.S. subsidize gas like Venezuela, or become communist because China is. You stand by your principles, which by the way made us #1 in the world.
I certainly don't want the U.S. economy to become mired down like Japan - take a look at the last 15 years in Japan, or to be like Korea which is only doing so well because it was propped up by the U.S. for many years.
Why do you assume if the Big 3 fade away corporately, that we could not restart those same plants and make U.S. cars under some new owners :confuse: :confuse: !! I don't understand why the posters here think the auto industry is unique and certain companies can fail and be replaced. :confuse:
Let GM, G and Chry and their system and paradigms go bankrupt, and let some other U.S. company like GE, Boeing, or Apple buy it up and run it with a new set of rules and ideas. (I say Apple even though you may say a computer computer(?), because they could bring a whole unique design/idea/panache) to the U.S. auto industry.
So please explain to me why we need to bailout the investors and owners of GM, F, and Chry., instead of letting them manage as they will, and if they fail others here in this country take over or start new auto plants?
Posted by: Ian Rowley on October 08
In a shocking day for Japanese stocks—the benchmark Nikkei index had its third worst session in history, falling 9.4%—Toyota’s recent stock slump accelerated. By the close of trading at 3pm, Toyota’s stock was down 12% on reports that its earnings will fall a worse-than-expected 40% this year. During 2008, Toyota is now down an eye-watering 46%—and this at a company which is still expected to make over $10 billion this year.
If Japan or Korea or even China start propping up their auto industries we would only have two choices, prop up or own or Tariffs. Neither idea is all that thrilling. Maybe if we let them find their own solutions they will do a better job of meeting the consumers needs or someone else will meet them for us?
http://www.usatoday.com/money/autos/2008-10-19-gm-chrysler_N.htm?loc=interstitia- lskip
Who's for just giving them a blank check? Or enough "loans" so that they can pay most of their expenses, and thus sell their vehicles for $10K - so they can sell lots of cars and trucks (be competitive)?
All of us who go to work each day and earn money; well we should just pay more taxes so we can subsidize someone else's company and job. Just once in life I'd like to be on the receiving end. Enough is enough !! :mad:
http://www.marketwatch.com/news/story/14-reasons-main-street-loses/story.aspx?gu- id=%7BF63EC448%2DD9C1%2D4138%2DAC18%2D97BF0FE68EE3%7D
As I said before - The Dem. and Rep. are just about the same - bought and paid for by lobbyists. And the smart lobbyists contribute to both parties, so they win no matter who wins the elections.
It comes down to this - why should we trust the people who created the mess to get themselves out of the mess?
"The entire ruling class wants you to vote for the same reason dictators claim a 100% turnout: Casting a ballot tricks you into believing you have as equal a stake in the power structure as the rich and connected."
Joel Stein
Voting in this system is more symbolic than anything.
Anyone got any more car loan scoop?
http://www.marketwatch.com/news/story/Ratings-agencies-put-system-risk/story.asp- x?guid=%7B6A0F18B2%2D1DB3%2D4D77%2D89C7%2DB5EE7C1829D2%7D
So would you feel better if Moody's rated GM debt AAA, and told everyone that GM is very likely to repay the loans, and that it had a bright future? No because GM like everyone else is paying to get that rating. It's like directly paying your kids' teachers to give them a grade.
I'm to the point where I don't care who falls. :mad: THE system is broke - there are enough payoffs and deals going on that it dwarfs anything you see on the Sopranos or imagine in organized crime. About the only difference is these guys, wrote the rules to make what they're doing legal, even though unethical and immoral.
The government should cancel every loan, bailout, grant, and taxbreak they have to these financial institutions and corporations. Give that $1500 billion directly back to the taxpayers to buy food, gas, and pay the mortgages. Help the individuals, not the wealthy CEO class of this country.
Truth is, we would never lose them all, the domestic tide would rush into the yawning void left by whichever one folds first, and all of that excess capacity and lack of sales would get soaked up.
And then in ten years, they would be right back in the same spot, broke as all heck, having lost another 10 points of market share, etc etc etc.
But I guess instead, we taxpayers, already stockholders in some mighty big banks, are about to be shareholders in some car companies as well....the stock warrants they plan to issue won't even have the value of toilet paper, let alone anything approaching appropriate collateral for the massive "loans" we are about to give them...... :sick:
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)