Do You Favor A Government Loan To The Detroit 3?

bpizzuti

Would hope that there is some amount of competence in White House staff and Emanuel to have had ongoing communication with GM Board and then twist their arms to have them fire Wagoner rather than the President doing the job.

That's probably exactly what happened. But realistically, that amounts to Obama firing them anyway. Besides which, Obama wanted the publicity to prove he could be tough on all these bailout-beggars, and send a message to the big banks without actually having to stand up to them.

ruking1

I think it is WAY past that, and has been for a very long time.

First off, NONE of any of the numbers jive. Lets use Gagrice's post of minus - $ 82 B since 2004 or -$ 16.4 B. Assuming 20% market share of 10 M, MY sales= 2 M. that means just to achieve ZERO (if my math is correct) GM has to MAKE $8,000 per vehicle !!!!! The only cars doing that are SUVs/pick ups and they are obviously NOT selling. to the tune of minus 47% (I have read in passing)

dbostondriver

I agree with you, and don't agree with how the administration is handling the banks.

But their is a HUGE difference between bailing out AIG and GM.
If AIG fails, tonnes of banks fail, small businesses don't get loans, those small business go out of business, a majority of 401k's tank, people can't retire, and it goes on and on. This is why I believe that AIG, CITI, BoA should be temporarily nationalized and chopped up.
If GM fails, they go into bankruptcy. A relatively small number of people loose their bonds and jobs. GM comes out UAW free and more efficient. :shades:

kdhspyder

Henderson always has been the CEO-designee. So in fact nothing has changed in the running of GM on a day-to-day basis. Fresh broom.

What is significant tho is that the Board has given itself a vote of non-confidence ( prolly at DC's instigation ) because they are culpable as well in this mess that GM is in now. New BoD coming soon. It makes sense because technically now GM is bankrupt. The shareholders elected the Board but since GM is bankrupt the shareholders have lost all their rights including the Board.

Likely after BK is declared there will be three major 'owners' of GM...we the taxpayers, the bondholders, the UAW via its VEBA. These three will be the ones electing the new BoD.

kdhspyder

C'mon get off the 'Congress is the cause of everything that goes wrong in the world'. The first couple of AIG bailouts were done in the dark by Henry Paulson with no input from Congress. By the time any of us were allowed to see what he was doing they already had multi-billions of our dollars directly from him.

I know how you blame Congress for everything but it blinds you to all the other nasty dirty things going on. Paulson, Paulson, Paulson ( with Bush as his sock puppet ). The initial $800 Billion to 'solve' this mess requested on the back of a napkin so to speak. It was a stick up note...it said

'Keep your hands in plain sight and don't set off any silent alarms. Give me all the cash in your drawers and open the bank vault. I want $800 Billion or else I'm going to blow up this building with everyone in it. Now do it, You have one week.'

In the first monies that AIG got Paulson gave $Billions of our money to Societe General, UBS ( who we are currently suing for hundreds of millions because they are helping criminals evade US taxes illegally - how stupid is that? We gave them the money to pay their fines to the IRS. ) and to Goldman Sachs his own company.

That was $50 Billion that he gave away with no oversight at all. 'Give me the money or I'm going to blow up this building ( our economy ).

Keep a balanced view so that you don't miss the real crimes being committed.

kdhspyder

Also the terms of the initial handout to GM were clearly stated by the Bush Administration. It was all over the news.

GM and Chrysler got the money, $13 Billion in GM's case, but they each had to provide plans that would show that they had a chance to remain viable in the long term....or else.... by March 31st they'd have to pay back the loans.

These were only intended as 'bridge loans' for 90 days.

The plans submitted clearly showed that neither company has a chance in hell of being viable in their current structure. So the money had to be paid back by 3-31. That was clear from the beginning.

Obama essentially gave each another window because the two companies were not able to pay us back and avoid immediate bankruptcy. Neither had any right to the money. It's our money. GM is technically bankrupt and the shareholders have no further say in the running of the company, they've lost everything. We own it now.

ruking1

You talked your way around the absolute obvious. Congress coulda woulda shoulda said NO !!!

This is NOT to say that crimes and misdemeanors do not go on all the time.

srs_49

First off, NONE of any of the numbers jive. Lets use Gagrice's post of minus - $ 82 B since 2004 or -$ 16.4 B. Assuming 20% market share of 10 M, MY sales= 2 M...

I just read in one of the weekly news magazines, either Time or Newsweek, that a lot of the analysts expect car/truck sales to be back to the 15 million/year number in a couple of years. They base this on the average age of vehicles on the road, the number/percentage that are taken off the road (junked) each year, the average replacement rate, the fact the the number of licensed drivers is going to increase, etc, etc.

I don't know if they're right or not, but it shows the wide disparity in assumptions and how changes in those assumptions (number of vehicles sold) can make a HUGE difference in whether GM or any other auto maker can remain, or return to profitability.

ruking1

Indeed. So would you confirm or deny the big 4 rode the wrong assumptions and projections curves?

In addition how many is a couple years on the road to 15 M in MY sales and @ 20% market share? Really no matter, it is pretty obvious at MINUS -16.4 B per YEAR for one company, they can't afford it. What they are asking is can YOU afford it? All those say aye can pay it!!!?? Nay don't??? :shades: :lemon:

imidazol97

Looks like another
"The rest of your paragraphs are a canned liberal rant. Political activism threads this way ======>>. "

For fun watch Frank dodge and attack using every debate skill to smear opponent at Harvard--a lowly college student. What's Frank afraid of?
Harvard student takes on Frank over role in economy

ruking1

I used to hate watching Frank coming on the air and saying anything. He could say he was giving me $ 1,000,000 of taxpayers money TAX free and it would sound like finger nails across a chalkboard!! Now it is just plain entertaining. He seems just on the verge of a massive coronary in his oratory. :shades: :lemon:

gagrice

C'mon get off the 'Congress is the cause of everything that goes wrong in the world'

Maybe not everything, just most everything. Here is why I feel that way. While Paulson or Greenspan can be pointed at as the culprits. Congress has the ULTIMATE responsibility to oversee these guys they confirmed. Congress have no term limits like the President. There are guys in Congress 40 years or more taking bribes from these corporations, unions and fat cat billionaires. So I will continue to blame Congress, that is right up to their necks in responsibility for the whole subprime and banking regulatory mess. They make the laws and have failed miserably over the last several decades. Almost every law can be traced to Congressional culpability and greed. They are no more by the people and for the people than Putin is.

imidazol97

He attacked the college student's credibility instead of answering question -- Like Sol Alinsky's ridicule your opponent strategy.
Frank did everything but explain what he did or didn't do.

dbostondriver

Looks like GM is headed steadfastly toward structured bankruptcy.
What is going on at Chrysler? Liquidation?
http://finance.yahoo.com/news/GM-in-intense-bankruptcy-prep-rb-14870456.html?sec- =topStories&pos=1&asset=TBD&ccode=TBD

kdhspyder

Yes agreed on that point that Congress should have been more proactive in trying to find out what Paulson was up to. But if you remember his first request was two pages long and it effectively said 'Give me $800 Billion or I'll blow up this building.'

He never did tell anyone even the other regulators like Ms Bair from the FDIC what he was doing...NEVER. He literally just took the first $350 Billion and gave it away as he chose, mainly to his friends. Even after it was given away if you remember he simply stonewalled every inquiry and refused to tell anyone how much and to whom he gave the money.

First he made a point of scaring the bejeezus out of the entire nation using his sock puppet(s). Then he took the money and ran with it changing his plans at least 3 times. Then he quit on Jan 20th. It was only after Jan 20th that the new Treasury Dept and Congress could find out where and when and to whom the funds went. I don't know if you remember but Paulson refused to tell Congress where he sent the funds and how much he had left. He refused up until the day he quit.

Not a canned liberal rant. <========================

It's an abuse of power by one man.

However the banking mess and subprime mess problem lies with one person Alan Greenspan. He hoodwinked every one of us, you, me, every member of Congress and every President he worked for with his 'let the markets decide' philosphy. Our entire working careers were based on his economic plan. None of us were smart enough to see how big this mess had grown and as I mentioned when one woman did say that she was going in front of Congress to tell them that 'the Emperor wasn't wearing any clothes' Greenspan and Rubin told her she'd be fired.

He was supposed to be the preeminent economist guiding our business lives. We all got taken. So last year in front of Congress he said...." Oooops"

kernick

We all got taken.

Well partially. I attribute a good part of the financial mess due to stupidity - stupidity of the human race. I'm sure Greenspan and these others are relatively intelligent; but the issues are far too complex for humans to model. It's not a matter of raw computing power; the problem is developing the correct model to put in a computer in the first place!

So essentially the best case is - you have people trying their best guesstimates of interconnected levers.

Anyway there are too many auto manufacturers and plants around the world and some need to go away.

ruking1

..."Anyway there are too many auto manufacturers and plants around the world and some need to go away."...

As hard as folks want to make it, it is as easy as: if we are geared up for 16-17 M new car MY sales and the market only will buy 10 M, there is a 7 M unit over capacity. (41%)

imidazol97

>Not a canned liberal rant. ========================>

Here it goes again. Another rant. But we forget Frank, Dodd, Waters, Fannie Mae with Frank's boy friend and all kinds of other things involved with pumping up the housing bubble by encouraging excess borrowing by nonperforming buyers. When Bush wanted to lower speculation in 2005? they were vehemently against it because it might keep some undeserving buyers from being able to buy houses--which now are in default likely. Even the Clinton era had Janet Reno making threats to force lending to people unlikely to pay a mortgage to completion.

Add to that the current bubble in total housing value to 5 times higher than the excesses in the depression or any period since, based in constant dollars, and the drop in value only brought it back to 3 times higher than any past peak, so there is a whole lot of housing pricing excess to work off. I've looked for that chart but can't find it; I saw it on CNBC with a guest they had on.

Add to that hedge funds allowed to force the market to drop rather than having to buy on an uptick (dropped during Bush's era) and the hedge funds profiting from making the people scared... and the banks over extending their mortgages thanks to Fannie and Freddy with no/little controls on over lending leveraging their deposits...

We may agree on somethings in there and that's good. But there's more to the story. The bad thing is a lot of us who didn't cause this, won't benefit, and will pay to fix it will lose in the end. End of rant.

tlong

Likely after BK is declared there will be three major 'owners' of GM...we the taxpayers, the bondholders, the UAW via its VEBA. These three will be the ones electing the new BoD.

That could be a really good thing - the UAW owning a substantial part of the company. It's "skin in the game". Perhaps they wouldn't suck a golden goose dry if they owned the goose?

ruking1

While you would hope and think that, is United Airlines going through its second bankruptcy? The second being one with substantial EMPLOYEE ownership?

link title

circlew

Well, no funds for GM and C for fuel efficiency tech from the DOE fund. Only viable companies need apply. When Bankruptcy creates the Ne GOOD GM Company, then they MIGHT get leftovers!

General Motors and Chrysler have been blocked from receiving a share of the $25 billion loan program set up by the Department of Energy to provide a low-interest loans for alternative energy vehicle development. Meanwhile, Ford is said to be seeking $11 billion from the program. Under the legislation that authorized the program, only &#147;financially viable&#148; companies may receive loans.

Interestingly, the $25 billion was set aside long before GM or Chrysler went to the U.S. government to be rescued. In fact, the program predates the financial collapse of late 2008, and was actually established much earlier in the recession.

Because Ford has not received any &#147;bailout&#148; money from the U.S. government, it can be considered &#147;financially viable&#148; under the rules. Other companies vying for a piece of the pie include battery maker A123 Systems, which is seeking $1.84 billion, and Tesla Motors, which is looking for $250 million.

Funds are expected to be dispersed in the next few weeks. Last week, President Barack Obama gave Chrysler 30 days to merge with Fiat, and GM 60 days to restructure or enter bankruptcy. If the two automakers &#147;miss the boat&#148; on the DEO loans, so to speak, it&#146;s not known if they will get a second chance. For example, a portion of the money could be set aside until the companies&#146; ultimate fates are decided, but that&#146;s purely speculation. GM is hoping to get $10.3 billion, while Chrysler wants $6 billion. A total of $44.6 billion in requests have been submitted by various companies.

&#147;They can&#146;t give us the loans until all other issues are worked out,&#148; GM spokesman Kerry Christopher told the Detroit Free Press. She noted the DOE was working closely with the Treasury on the loan decisions.

Regards,
OW

dbostondriver

Looks like bankruptcy is in the works.
http://www.freep.com/article/20090407/BUSINESS01/90407055/1210/BUSINESS/Chrysler- +bankruptcy+risk+greater+than+70+++more+than+GM++report+says
Maybe no more Cobalts?!?

bpizzuti

Under the legislation that authorized the program, only &#147;financially viable&#148; companies may receive loans.

No soup for you! :shades:

circlew

NEXT!

Regards,
OW

tlong

Under the legislation that authorized the program, only &#147;financially viable&#148; companies may receive loans.

No soup for you!

That's perversely humorous. The companies that fought tooth and nail against government regulations for any new innovation - airbags, catalytic converters, crash-resistant bumpers - are now begging for loans to innovate!

dtownfb

If the intention was to save the company, they simply would have given GM $60B and Chrysler $20B and been done with it. And Wagoner would still be CEO. The bondholders hold secured debt with GM and would be one of the first in line in a bankruptcy. Congress is useless and have been this way since 1999.

tlong

The rumors of GM bankruptcy say that they might break GM into a "strong" company and a "weak" company. I suggested something similar to this in post 1331 on December 6:

I don't have enough financial experience to know if this is doable.

1 - GM spins off only Cadillac into a smaller company.
2 - GM spins off a Chevy company with only the best non-Cadillac cars and trucks
3. The remaining GM company has lousy vehicles and huge debt. It declares bankruptcy and goes into Chapter 7/liquidation.

The result: a competitive Cadillac company and a competitive Chevy company, neither with any debt.

The whole idea is "take the gems and make a viable company, put the trashy stuff into a lousy company which can be sold off for parts".

I think I just earned $10M for consulting on restructuring. Fritz, please send me a check. :P :shades:

wreckerman9

i say NO loan, let 'em go into a structured bankruptcy,learn to fix their problems with some oversight, or reduce some of the crazy costs. less advertising, drop the overpayed bogus workers, cut back,like all americans are doing, or go belly up. chrysler is headed to the crusher a long time in coming,and ford can FOCUS on its own future, it's all coming down to a budgeting issue,,,,what did they do with all the money made in the past,when the S.U.V.market was hot? where'd the profits go? stop the madness,besides,if they're not profitable,how can they repay the loans,with interest? no loans, handle it,or let someone else drive.

PF_Flyer

Perhaps bankruptcy is going to be the only way to change the company and the culture at GM.

Sometimes this is a lot like watching a stunt show and a daredevil saying Watch THIS! :P

dbostondriver

When your living on tax payer life support, getting complaints that your cars are stale, and the President is telling you to make fuel efficient cars; the last thing you need to do is create this. It looks like an ugly version of the current model that got punched in the nose. Yikes! :sick:
http://www.edmunds.com/insideline/autoshows/newyork/2009/2011jeepgrandcherokeene- ws.html#jpgrchf34

bpizzuti

I dunno...feature-wise it seems like a lot of decent improvements that are relevant to the model. You're right on the timing though...wrong time to trumpet a new largish SUV with a Hemi. This may just be them trying to boost the value of the Jeep brand to help the Fiat deal, or maybe for the oncoming BK.

ruking1

You are hitting some of the the more important issues. For my .02 cents the most important point is where THEY (GM for example) will BE, going forward. It is what "the great one" Wayne Gretsche is reported to have said: (concept not actual) skate to where the puck will be, NOT where it has BEEN. Secondarily what are the back up plans in case the best case scenarios do no pan out.

OK, most of the band wagon environs hate large cars, pick ups and suv's. I probably left out a few. Fine, It has come to light the democrats while encouraging hot air debate ballons on more fuel efficient cars have legislatively kept the standards low, and have for literally decades if not generations.

In the process, they have really and defacto limited choices!!! Can't buy a better mpg American car? Don't worry we won't let them import cars that do get better fuel mileage, so you won't have much to compare it to. The limits to/on 50 mpg VW diesels up to 2006 and the outright ban on 2007-2008 MY's are cases in point. Another is severe limits to USLD till Oct 06. So if anyone thinks their continued dictation of legislative choices and oversight will aid the big 4 out of the current morass, they have simply ignored the (real) history of what got us into the morass in the first place.

On the other hand I have been an advocate (for whatever .02 cents will buy ) for choice in the market place, more importantly, what folks actually will buy. What no one has seemingly not done is identify and implement (so called reason for the bail out monies and business plans), which products WILL take the place of the profit work horses, aka, large cars, light trucks, suv's and more importantly again, what folks will actually buy !!!

Another is what is going to be done with the unsold inventories of new, by then "old" 2008,2009, and 2010, 2011's ? Auto industry figures indicate the average age/life of the average persons car is 7.5 to 8.5 years. Industry salvage figures are at 7% per year. This was PRE current economic situations. Do folks/planners reasonably expect these figures to go UP/DOWN?

I suspect BO wants to lift sanctions and resume trade with CUBA for it has the single most largest inventory of American 40's 50's, 60's and 70's cars in the world. Guy's like Foose can pioneer a whole new industry.

kernick

I don't see a $30K-$40K Jeep that gets under 20mpg (big PU territory) as being very enticing to the next owner.

But since this redesign was probably 2+ years in the making, they figure they have to go with it.

It would be nice to see VW pickup Jeep, and start putting some of their 4 cyl. diesels in the Jeep vehicles. I'd buy a VW Wrangler as a 3rd vehicle if it could get closer to 30mpg.

bpizzuti

They did mention a diesel version, so maybe it'll do better than 20 MPG. Besides, jeep has always been about off-road and rugged, and Italy's got plenty of terrain that Jeeps would be useful in.

besides, like you said, it's 2 years in the making, and probably the best bullet they had in the clip. :shades: Which doesn't say much for the popgun that is today's Chrysler.

ruking1

The "Jeep" was the greatest weapon of WW2 according to General Eisenhower (look at wikipedia if folks don't know his significance). Nothing like a 70 plus year old concept to power Chrysler foward :lemon:

xrunner2

You got the formula. Chevrolet and Cadillac are brand new companies with absolutely no connection to the GM brand. Unclear what would happen to GMC trucks and suvs. Loyal buyers of GMC products would probably buy trucks/suvs with the Chevrolet brand.

anythngbutgm

I gotta say there is some impressive improvements there. It still misses the elegance of the generation before the current one though, but it is still an improvement. And they fixed the cheapo interior as well. But I agree with you as well in that this is not the proper time to be marketing a BOF SUV when the shift to crossovers is in full swing.

Here again, Ford has taken the tough, but right steps towards a bright future as their competition to the GC, the Explorer is set to abandon its BOF roots...

I do like the new GC even if it isn't something I would ever shop. :shades:

ruking1

Yes, brands and models that come to mind are Cad , CTS V, Corvette, some to all variants. Chev trucks. turbo diesel engines I4,I6, V6,V8. While I am not sure how this would play under new regimes, Corvette for example does not build a car until/unless it has a "valid" order. TV specials documenting so called custom work on Chev specialty engines are examples of proud American manufacturing and workmanship. It would be an utter shame to let that kind of cutting edge stuff die.

dbostondriver

Hopefully it will sell. Looks are in the eye of the beholder, but I think the grill looks a little rough. Than again the Genesis's grill is busted and they seem to be selling plenty. A turbo diesel would have been a great addition, but Chrysler is not very forward looking . Doesn't Dodge own Cummings?

ruking1

I think Cummins does really SELL to Dodge. I think? not sure, ownership is not in Dodge's hands.

So for example, one literally wonderful success story: hidden in plain view, albeit more special purpose, aka not many folks buy, is the Dodge Sprinter (variants) with the MB turbo diesel and drive train !!!! (looks like a sleeker bread truck) Yahoo I'd say !!!!! It is as great and bullet proof a mating as they come !!! This thing gets like 25 mpg!!?? www.bobistheoilguy.com even has documentation of EXCELLENT UOA's with 30,000 miles OCI's, cleared for even LONGER !!! (They use I believe Mobil One formula M 5w40, if this is of interest)

I recall Gagrice saying he had one, so if he is willing to chime in....

bpizzuti

Unfortunately, that's not a Dodge, it's a Daimler...left over from the DaimlerChrysler days. :sick:

dbostondriver

Cummins looks like a good company. Would be a good "strategic" partnership for Dodge, and they sell a ton over sees. I don't know what the big negative about diesel is? :confuse:
http://en.wikipedia.org/wiki/Cummins_Diesel

dbostondriver

At the end of March, dealers had 3,479 G3s in stock, according to Autodata. That&#146;s enough to last 617 days at the current rate of sales &#150; close to two full years.
http://blogs.wsj.com/autoshow/2009/04/07/pontiac-g3-the-reprise/

ruking1

Thanks for the post. It gives a REAL LIFE (practical) illustration on the points I was making about the inventories.

dbostondriver

Thanks. Obama is going to have to order the destruction of G3s to make the market competitive like FDR ordered the slaughter of livestock.
What was the old Pontiac jingle? "Pontiac, feel the excitement?"

ruking1

..."What no one has seemingly not done is identify and implement (so called reason for the bail out monies and business plans), which products WILL take the place of the profit work horses, aka, large cars, light trucks, suv's and more importantly again, what folks will actually buy !!! "...

Make it 20-40% better mpg by offering turbo diesel? NAH !!!
So the sound of one hand clapping: :lemon: :lemon: :lemon:

Dspite scolding, Chrysler sticks with Grand Cherokee
COMPANY INSISTS JEEP SUV IS KEY PART OF LINEUP
BY Dan Strumpf-Associated Press

link title

kernick

2 things these auto companies ought to start doing:

1) Stop building inventory. Stop building in advance of orders. Put the first vehicles out in the rental fleet, so that people have a way to test-drive and touch and see a vehicle. Put a few vehicles at dealers for those buyers who absolutely need a vehicle tomorrow. Make the typical car purchase - an order. People would realize they need to come in 4 weeks early, place the order for the exact ext/int colors and options and then build it.

2) Stop making 1 vehicle into 1+ vehicle, wasting money doing so, and stealing your own sales internally. Pontiac should not compete with Chevy!

nvbanker

What was the old Pontiac jingle? "Pontiac, feel the excitement?"

To me it was more like, "Feel the Excrement".......

ruking1

Well it does make me lookback and wonder why I liked the 1967 GTO.

ruking1

hide? Let's use GM's yearly average loss of 16.4 billlion. Suppose they make 15,000 dollars/2,000 dollars per car. Just to break even, how many cars do they need to sell? Well this is a grade school math problem 16.4B/15,000 dollars. Only 1,093,333 units. 16.4B/2,000 dollars = 8,200,000 units.

Not apples to apples but conversely @ 10 M my sales with 20% of the market share with 16.4 B my losses , they are telling you they are losing -8,200 per car (2m my sales and -16.4 B )as a very rough estimate. So what are the realities?