Gary, the only thing is, if the Gov't is indeed the top of the totem pole, and let's say they get forced into Ch 7, and the gov't insists on being made whole, and the judge agrees, then I doubt there are enough assets to sell to even make that happen. Then, we get whatever we can, and the bond and shareholders get zippo, (not even the lighter).
I think it's in everyone best interest to make this happen, and then make it work. At least then, at 10% equity, the bondholders have an opportunity to make their money back, and then some.
BTW, as far as the GM stock thing, I thing the 100-1 stock swap is for regular shareholders only. The formula they are using would allow shareholders to end up with a grand total of 1% of all outstanding shares.
That equity stake is akin to a Ponzi scheme...a sure bet,no doubt! I'm not buying!!
WASHINGTON -(Dow Jones)- Financial analysts are casting doubt on General Motors Corp.'s (GM) ability to repay billions of dollars in U.S. government loans, given the company's debt load and sales outlook.
GM has acknowledged it can't repay the U.S. loans in the original time frame. It is proposing that the Treasury Department accept majority ownership (51%) of the company in exchange for wiping out about $10 billion in debt. Discussions are ongoing.
But even with a large equity stake, the government risks losing at least some of the $15.4 billion it has lent GM since January, analysts said.
It would likely take years of profits and a significant appreciation of the company's value for the government to recoup all of its money, analysts said. That time frame would appear to conflict with the Obama administration's insistence that any government takeover of the company be short-lived.
"Should a GM bankruptcy not proceed as the government wishes, or demand for GM automobiles doesn't rebound, there is an outsized risk that the government could sustain substantial losses," said Joe Brusuelas, a director at Moody's Economy.com. He called the original decision to lend to GM risky given the company's condition.
Aaron Bragman, an automotive analyst with the consulting company IHS Global Insight, said that with a stake in the company, the U.S. government "will be left to wait, and hope that GM can pull out of this nosedive and be a successful company when this is done."
Correct....but sales will never rebound in volumes necessary. That obviates any debt repayment in our lifetime since sales will not cover the debt, let alone operating expenses.
The Obama administration has already acknowledged that it likely won't recoup $4 billion it lent to Chrysler this winter, conceding the loan was made to a deeply leveraged company "where there was probably never much hope of seeing much recovery." In addition, Chrysler probably won't be able repay in full $4.5 billion in bankruptcy financing from the U.S. and Canadian governments, an adviser to the auto maker said at a court hearing earlier this week
You only win a s a debt holder is you have the CDS trump card.
As General Motors (GM) teeters on the edge of bankruptcy, there are issues at play that are unique in today's market, and bring to the forefront some somewhat unknown financial instruments that are causing some bond-holders to root for the auto-maker to go belly up.
So, the hot air or gas is about to have a match put to it in a few weeks, like it or not...after all, what's a few billion dollars among friends, RIGHT?
I don't think that the money lent to them will be repaid as loans - ever. I do think that if the two companies are freed of their burdens that they can make good money as smaller companies. Such companies will at some point be attractive to other investors if they show consistent earnings records. If they do become money-makers then they will have value that can be sold off to other sharp investors.
If they can't ... then yes our loans/investments are at severe risk.
I think though that making a profit with the right structure is not all that hard to do. It's not a really complicated business if the structure of the company is correct. We the public love our vehicles we are willing buyers. Whether we can recover the full $8.5 Billion that will have been dumped into Chrysler or the $30 Billion that will be the final tab at GM remains to be seen.
The alternate is cratering the economies of several Midwestern states and dumping nearly a million retirees on the healthcare systems and their pensions on the PBGC.
Well, seeing their cash reserves will last 102 days at the Q1 2009 burn rate, the economies that relay on this company are on a freight train heading for a wall with no brakes.
ANY new business model that becomes viable will never support the old economies of those states. I said long ago that the wasted money shoveled to GM and C should have supported the folks on the freight train, not a failed business model that should have died 5 years ago.
Simply, bad decisions were made. There is no need to ask a Supreme Court Judge, Congress or the President of the United States to clearly see that.
Like I said, buying a car from these companies is a shade of a Ponzi scheme, IMHO. You already lost your money going in!!!
Like a Ponzi scheme, each day engulfs more unsuspecting victims.
If G.M. does have to file for bankruptcy protection, Mr. Young emphasized that the automaker would need to emerge quickly from the court proceedings to prevent sales from falling considerably more than they already have in recent months. He said that consumers worldwide already have shown hesitation toward G.M. products because of the potential for bankruptcy and that a prolonged court-supervised reorganization would hurt G.M.’s future prospects.
Could'a Should'a Would'a filed in December 2008 so we could be on the upside by now in a new business entity but who knew?? :confuse:
>The alternate is cratering the economies of several Midwestern states
And that is already happening. The shutdowns for both companies are having a ripple effect through many communities having supplier companies providing many jobs for them. The suppliers are cutting back. Behr in Dayton supplies thermal products to Chrysler (and others) is laying off people temporarily--at least we hope temporarily.
GMAC has absolutely nothing to do with the quality or popularity of GM vehicles. If they are losing money by giving mortgages to GM employees who have been hard hit by the derivatives and OPEC recession, then are they not any different that any of the 9% of America as a whole that is out of work. Is Citibank, heavily invested in by Japan, more entitled than GMAC to be part of the propped up banking system that allows our country to avoid total collapse?
...in Philadelphia's Grays Ferry section just laid-off 265 workers. With all these people out of work nationwide, who the heck is going to buy cars? Buying food and keeping a roof over your head is going to be a challenge!
..."GMAC has absolutely nothing to do with the quality or popularity of GM vehicles..."
I am not sure in what contexts you mean the above, but to me that is almost completely the opposite (almost EVERYTHING). I know the big three have always offered so called employee discounts. But if it were not for finance companies like GMAC, my question would be: how many "employees" could, would, should buy their big three vehicles cash?
Lemko's point is reflected in the MY's projection from 16-17 M MY sales in good years to 10 M (min of -40% decline) . Now keep in mind this was "PRE" lay off policies. Now that we know that unemployement is 9/10%, would anybody reasonably expect them (30 M as a min affected people) to buy new cars? I am sure there ARE exceptions, but my guess is for a very low percentage.
GMAC is a bank. Nobody at GMAC has ANY input into the vehicle designing or producing at GM. Do we hate GM so much that we now want to stop financing from being available to those who dare even buy a GM?
Is there any data to suggest that GMAC financed vehicles have a higher default rate than FoMo Credit financed cars? GM builds $260 Billion dollars worth of vehicles in a good year. Where do you think the money to borrow to buy them comes from? The TARP money to GMAC is a small fraction of one years worth of gross sales dollars.
You sort of get what I am saying, but not the real point.
My prior post should have clearly indicated that I understand organizations like GMAC are finance companies. Indeed that is what I called it. Are you really taking umbrage to the fact you call it a bank and I a finance company? (I don't think so) While you ask the rhetorical question ...
"Do we hate GM so much that we now want to stop financing from being available to those who dare even buy a GM?"...
my take is folks that can not/will not pay cash will most certainly fianance it.
The problem is credit is so tight right now, seemingly only the HIGHEST credit rating folks can get a "fair loan" (0 to 8%) let alone a loan at all. (you can read the post again for why folks are even ASKING for car loans regardless) So in effect they are only loaning to those who can afford to.... pay cash!!??
So again, (not to be rude) for example; you just lost your job :lemon: , and or your spouse is about to lose theirs :lemon: : are you going to go out and 1. pay cash for a new GM/Ford/Chrysler, etc., automobile 2. FINANCE one?
this is the BAD/ good? news!! Now * this by the 9/10% unemployment rate (30 M folks)
8% is fair? For how long? Six years on a four-year old used car? I have top-tier credit. I'd hate to see what a guy with poor credit is paying!!! I got 0% financing on my Cadillac DTS. My girlfriend got 1% on her LaCrosse and this was before GM and others went nuts with generous financing terms.
Looks like what those bondholders were saying as they flew the white flag is (after translation): "We want the cash, we're entitled to the cash, we don't care that it's taxpayer money....but legally we don't have a right to the money. Sorry, tune in next week for our next scam."
Not to be cold-hearted about it, but their bad credit rating is their problem, not mine. If you can't afford something, whether you're going to pay for it outright or have to finance, you shouldn't be buying it, be it a house, a car, or anything else that's outside your means to pay for.
Geez, it's getting old talking about bailing out companies and people that show no signs of common sense. :sick:
No, it's still out there, but this nasty trend we're in of there being no truth anymore gets in the way of it. Far too many people think there is no right or wrong on any issue, only gray. I swear you could find someone to argue with the premise that the sky is blue. Here's how it would go right before my head explodes...
What a beautiful blue sky we have today!
Well YOU say it's blue, that doesn't make it true.
were those really tattoos all over Dennis Rodman? Those that agree that they are, how can you be so sure? I'm right with ya on those thoughts of yours.
These people financing their McMansions on little more than a hope and a prayer and the lenders that loaned them the money, then sold their loans down the river, hey I've got some ocean front property over here in Arizona I'd love to show you. :sick:
Was that really George Strait's voice recorded on that song? Did NASA and the U.S. really land on the moon?
Hate to cause explosions, but it wasn't blue, it was, in fact gray. It was cloudy today. :shades:
Thing is, while there usually (not always but usually) is a "right" and a "wrong," the trick is getting to the root of the issue to figure out what they actually are. And since they tend to never be as simple as people on each side want to convince you that they are, it's usually easier digging a tunnel to China. With a teaspoon. :sick:
Example: GM/Chrysler evil! No, UAW evil! No, bondholders evil!
It doesn't matter if anyone is in favor of loans. The D3 will get cash to stay alive. Has this column become a place to complain that my tax money goes to a manufacturer who I once bought a car from and did not have a good experience, and therefore I want to turn the tide of everyone against the D3?
What we need is a thread titled "I had a bad experience with a GM or C vehicle and now I buy ____________s". The people who will post there wouldn't even test drive a GM or C so they could all agree with each other when the D3 get trashed.
Has this column become a place to complain that my tax money goes to a manufacturer who I once bought a car from and did not have a good experience
I think it is just what the heading says. Some people believe the government is capable of fixing the domestic auto industry and others myself included think government should stay the H*** out of private business. I think that a large percentage of Americans do not believe the bailouts are a good thing. GM and Chrysler will lose potential customers that do not want to support Government Motors. If nothing else it is unfair for the legitimate car makers that are not taking tax dollars. These are not simple loans like Chrysler in 1980. This is life support. Both GM and Chrysler would have been done last year if Bush had not pulled a sneaky play to get money allocated for the banks handed over to the automakers.
GM and Chrysler will lose potential customers that do not want to support Government Motors
And how does this group size stack up with the group size of the owners of the more than 88 million GM vehicles out on the road today? None of those folks will ever need replacemant parts in the future?
I believe more would be driven away if BK came fast than will be driven away because a company got a lift. Toyota and Honda didn't lose that many customers when it was discovered that their gov. pays their employees health ins. and subsidizes R&D for their industry.
As long as a large group of vehicles are on the road the aftermarket parts will be available. Most of the OEM parts are not made by GM. That is not the point. Many people are not in favor of a USSR type government that controls what you buy. With Congress and the President overseeing GM, do you think they will offer what we want?
Toyota and Honda didn't lose that many customers when it was discovered that their gov. pays their employees health ins. and subsidizes R&D for their industry.
The US government has spent billions on R&D that has directly benefited the Domestic auto makers. HonToy does not get health care coverage for their US employees. And in Japan the people are taxed very heavily for that coverage. You and Rocky are always looking for a free lunch. There is no such thing as FREE Health Care for the working man and woman. YOU WILL PAY FOR IT.
>Toyota and Honda didn't lose that many customers when it was discovered that their gov. pays their employees health ins. and subsidizes R&D for their industry.
That's because the media presented it with the same bias indicating it was a good thing rather than a bad thing for competition with US brand cars from US companies. If the media had treated that as the unfair trade item it is -- or it the media were to have treated it like they treated the C & GM companies needing some cash after the gov crashed the credit market making it even harder to sell the cars and crashed the consumer confidence market making it even harder to get people to buy cars, people would have perceived the government subsidized foreign companies as the factor it is.
..."After running up the biggest loss in its history, Toyota Motor will focus on finding ways to make more money selling small cars to cope with a devastating shift in consumer demand."
Toyota executives outlined their back-to-basics approach Friday as the company disclosed a stunning $7.7 billion loss for the January-March quarter, a bigger loss than General Motors suffered in the same period. "...
While this might come across as an exercise in watching paint dry, for my .02 cents, this (along with the big 4 bru ha ha) signals that prices even the small car segment will rise (almost exponentially) in the 5-10 year/s time frame/s.
I think it is just what the heading says. Some people believe the government is capable of fixing the domestic auto industry and others myself included think government should stay the H*** out of private business. I think that a large percentage of Americans do not believe the bailouts are a good thing. GM and Chrysler will lose potential customers that do not want to support Government Motors. If nothing else it is unfair for the legitimate car makers that are not taking tax dollars. These are not simple loans like Chrysler in 1980. This is life support. Both GM and Chrysler would have been done last year if Bush had not pulled a sneaky play to get money allocated for the banks handed over to the automakers.
Sorry this is just naive.
Governments are nothing more thant the politcal arm of the business community. The reason that we're independent is a consumer/commercial revolt against British business/governmental practices.
The Articles of Confederation failed and the Constitution resulted because of business disputes.
Business is the money-making arm of the government and the government protects business by instituting laws to keep peace and stability. The two are opposite side of the same coin, you can't have one without the other. Government can't stay the H*** out of business, it IS an integral part of business.
Yes I agree that they two of them would have disappeared already without intervention. I also think that it was a good thing for the country as a whole. Preferences and politcal considerations aside it has kept workers working, it has kept ( thus far ) two huge American businesses making vehicles for the future, it has kept certain towns in the Midwest from becoming complete wastelands.
This is the job of the President, to look at the entire picture for the entire country. YOU may not want GM / C to continue in business but there are millions in the Midwest that would differ. Bush recognized this, to his credit. Obama obviously has bills to pay back to the midwestern states.
In several years I truly believe that the two companies will be smaller, obviously, but more efficient, leaner and more profitable. This is good for America.
Are you saying that because Japanese taxpayers allow their government to pick their pockets to pay for these subsidies, we American taxpayers should likewise let our government mug us to "level the playing field"? (Whenever I hear that unholy phrase, I put my hand on my wallet.) Even if Japanese taxpayers willingly allow themselves to be victimized, why should I also be a victim? Please explain that to me.
Folks who are obsessed with so-called "unfair trade practices" seem to assume that people buy cars the same way they buy ground beef - by the pound. In their minds, price is all that matters. Getting rid of these practices will make imports more expensive & thus less attractive. They forget that most car buyers will gladly pay more for something that they really like. Once upon a time, the Big 3 - particularly GM - understood that & built hugely profitable franchises around that basic fact.
GM's problem isn't "unfair trade practices" or that it builds bad cars - it doesn't - but that very little of what it makes gets most of us excited. Someone else made a good point about GM: they build excellent trucks, SUVs & one of the best sports cars in the world. But if you're not a truck/SUV guy - I'm not - & your wife won't let you buy a Corvette, then GM has very little to offer you. For me, there's the Caddy CTS, which I'll certainly consider the next time I'm in the market, & nothing else.
If that's the best that GM can do, then it deserves to die - or at least get much, much smaller.
"......GM's problem isn't "unfair trade practices" or that it builds bad cars - it doesn't - but that very little of what it makes gets most of us excited."
I won't argue that fully, as it has merit ( think GM X bodies, Century and Ciera being built from 1982-1996, 15 MODEL YEARS, w/ very little changes). However, it is a well known fact that GM has been losing money on it's cars not only because there is an extra $3000 on the hood of undesirable cars, but because of legacy costs that other companies don't have, whether their cars are built here or in Japan.
Now, I'm not going to say gov't sponsored healthcare is the way to go, but I think we can (and should!!!) do better.
As long as a large group of vehicles are on the road the aftermarket parts will be available. Most of the OEM parts are not made by GM. That is not the point. Many people are not in favor of a USSR type government that controls what you buy. With Congress and the President overseeing GM, do you think they will offer what we want? I don't care if they offer what I want at some future point. They offer it today. What I want includes tech jobs for America. Hontoy doesn't hire engineers and technicians or managers. They only offer jobs that do not create intellectual property or support America's retention of a technological edge.
The US government has spent billions on R&D that has directly benefited the Domestic auto makers.
A few crumbs fell on the floor? What direct benefit is there?
HonToy does not get health care coverage for their US employees. And in Japan the people are taxed very heavily for that coverage. You and Rocky are always looking for a free lunch.
Not always, just during this recession. Me and Rocky didn't coin the word 'Bailout'. Did you gorget we gave $35 Billion of TARP money to Euro banks.
However, it is a well known fact that GM has been losing money on it's cars not only because there is an extra $3000 on the hood of undesirable cars, but because of legacy costs that other companies don't have, whether their cars are built here or in Japan.
You're probably right, but this argument wins no sympathy points from me. Those "legacy costs" aren't like the color of your eyes - something beyond your control. No one forced these costs on the D3. They're the consequences of really bad business decisions. The domestic manufacturers tried to buy labor peace by giving the UAW pretty much everything it wanted, figuring that it could pass the cost on to us car buyers. Well, too many of us didn't like what GM (or Ford or Chrysler) were trying to sell us & went elsewhere.
The D3 should have planned for that possibility. They didn't, & the market punished them, as it should. Whenever you see the words "legacy costs", substitute the more accurate phrase "imbecilic business decision", & you'll get the idea.
If your biggest business rival shoots himself in the foot by failing to control his costs, are you obligated to ride to his rescue - or even feel sorry for him? Of course not. He screwed up & now he'll suffer. It may be cruel, but it's fair.
>very little of what it makes gets most of us excited
Here the distinction between the car enthusiast who wants to be exciting or it's not a good car and the people who use cars for transportation shows up. I believe many on here are enthusiast and they want their cars to "turn them on when they turn the car on" to quote the CTS advertisement... And that's not bad. But for many people an Echo got them there just as well as a Civic or MazdaSpeed. Or in my case in the comfort of a LeSabre/Park Avenue for traveling 6-8 hours for a weekend getaway or a stay with friends. Don't both have their merits. The cars for each may not be enthusiast cars.
The government should help the US auto industry because it's creating part of the problem and/or has allowed the creation thereof.
As for the rest... remember the US made VCRs? Wonder why they don't make them here. In fact the TV industry got copied. I recall the story about a shoe manufacturer who had Japanese show up at his company wanting to see his plant. A few years later they were making shoes to compete with him. Recall socks made in the USA? Recall oak furniture made in the USA? Remember when the foreign cars had signs of design from US cars but were smaller?
The government should help the US auto industry because it's creating part of the problem and/or has allowed the creation thereof.
Here's where you lose me. Even if I accept your hypothesis that the government caused the industry's problems, which I don't, I don't accept your conclusion that the government ought to help. For one thing, I don't think that that government is smart enough & nimble enough to do anything but make things worse.
More to the point, I deeply resent the use of my tax dollars to reward incompetence. You may see the domestic manufacturers as victims, but I don't. They're in the soup today because they've made a string of bad decisions that go back 35 years. As far as I'm concerned, the market is working just as it should -- by punishing corporate stupidity.
Sorry, but I'm not a socialist - not anymore, at least. (I was a real lefty in my youth. I would've been a lot more sympathetic to your ideas back then.)
remember the US made VCRs?
No, but I recall that one company tried to sell a VTR (video tape recorder) in the early 70s. It didn't work very well & consumer response was underwhelming, so the company dropped it after only a year. Sony used different technology when it introduced the 1st successful home VCR a few years later.
Sony used different technology when it introduced the 1st successful home VCR a few years later.
The Sony Beta VCR was a short lived product, as Matsushita (Panasonic) built the VHS VCR and through superior marketing made the Sony Beta obsolete. Even though the Beta machine was superior.
The same goes for automobiles. It requires a combination of good engineering, good manufacturing processes, good marketing, consumer confidence, consumer appeal, good dealers and some luck. GM and Chrysler have little of any of the needed ingredients. How the Feds think they can make a silk purse out of a sow's ear is beyond me.
I will concede being wrong when I see the money paid back with or without interest. Until then I think it is a giant mistake to bail out a company that has NO Chance for survival. But what the heck, we are bailing out half the countries in the World. Why not the Midwest. Though they got their freebie with the Corn Ethanol debacle. That is $billions$ down the toilet paid for by the rest of the states that are forced to use the stuff.
>Why not the Midwest. Though they got their freebie with the Corn Ethanol
Errr, excuse me. I believe the ethanol von corn was to the benefit of congress's large contributors like ADM and Andersen who built the corn plants and not to Midwesterns in general.
Even I could figure out this was going to cause a problem in the pricing of corn and supply for food. A few large farmers, mostly agribusiness rather than individually owned farms, may have been very profitable due to higher corn prices, but most smaller farmers found the increased cost of everything cut into their small profits from their corn acreage.
BTW have we seen decreases in costs of those products that went up because fuel was $4 per gallon? Where is that extra margin in profit going?
I think you know I agree with you. I watched the little farmers being pushed out by the giants when I tried farming in the late 1970s. I am not optimistic for the future of your state no matter what kind of schemes Obama comes up with. Just like the money going into the pockets of ADM and VeraSun executives, bailout money for the Domestic auto industry will end up in the pockets of a few. The new APPOINTED CEO of GM has said part of the plan is to move most of their operation offshore.
What Ohio needs to bring back industry is two things. First and foremost they need to pass a "Right to Work" law. Only an idiot would open a new business in a state where the UAW has a strangle hold. Look at the latest with VW. They looked at Michigan before picking TN for their new $Billion plant. The key to growing jobs and making money is labor that does not feel they are entitled to a job no matter how well they perform.
All the bailout money Obama can print will not open the eyes of those with an entitlement mentality. In my 46 years of labor, I was always thankful for the job. Even when I disagreed with management which was most of the time.
Those "legacy costs" aren't like the color of your eyes - something beyond your control. No one forced these costs on the D3. They're the consequences of really bad business decisions. The domestic manufacturers tried to buy labor peace by giving the UAW pretty much everything it wanted, figuring that it could pass the cost on to us car buyers. Well, too many of us didn't like what GM (or Ford or Chrysler) were trying to sell us & went elsewhere.
At least Nissan made money when the economy was good. Like in 2007 when we bought 17 million vehicles in the USA. GM lost $20 Billion that year. How can they ever make a profit when their business plan is so screwed up? Just be content buying a Chinese built Buick. They are far better looking than the USA made ones.
Yeah, and that Chinese showgirl was far better looking than any American woman I dated, but she drugged my drinks, stole my credit cards, wrecked my new car, burned down my house, and there's a mysterious scar on my stomach where my kidney would be. No thanks! I'll stay safe in my American-made Buicks rather than be splattered all over the wrecked and tangled mass that used to be the dashboard and front-end of my Chinese-made "buick?" after I hit a toy poodle. Oh well, the poodle walked away.
UAW/GM/Ford/Chrysler for lack of more precise divisions in the actual market share, need just 6 M MORE of folks like you every year to buy one of their yearly offerings.
No thanks! I'll stay safe in my American-made Buicks
How do you know they have much US content? I did not see any Buick models on the top ten list. They may just bring the parts from China and let the unskilled UAW workers slap them together. You may look up under your fender and see Lucky Lager. No that was things from Japan in the 1950s. My mistake.
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I think it's in everyone best interest to make this happen, and then make it work. At least then, at 10% equity, the bondholders have an opportunity to make their money back, and then some.
BTW, as far as the GM stock thing, I thing the 100-1 stock swap is for regular shareholders only. The formula they are using would allow shareholders to end up with a grand total of 1% of all outstanding shares.
The baby is out with the bathwater. Time to stamp a new logo on the steel already in inventory.
Regards,
OW
WASHINGTON -(Dow Jones)- Financial analysts are casting doubt on General Motors Corp.'s (GM) ability to repay billions of dollars in U.S. government loans, given the company's debt load and sales outlook.
GM has acknowledged it can't repay the U.S. loans in the original time frame. It is proposing that the Treasury Department accept majority ownership (51%) of the company in exchange for wiping out about $10 billion in debt. Discussions are ongoing.
But even with a large equity stake, the government risks losing at least some of the $15.4 billion it has lent GM since January, analysts said.
It would likely take years of profits and a significant appreciation of the company's value for the government to recoup all of its money, analysts said. That time frame would appear to conflict with the Obama administration's insistence that any government takeover of the company be short-lived.
"Should a GM bankruptcy not proceed as the government wishes, or demand for GM automobiles doesn't rebound, there is an outsized risk that the government could sustain substantial losses," said Joe Brusuelas, a director at Moody's Economy.com. He called the original decision to lend to GM risky given the company's condition.
Aaron Bragman, an automotive analyst with the consulting company IHS Global Insight, said that with a stake in the company, the U.S. government "will be left to wait, and hope that GM can pull out of this nosedive and be a successful company when this is done."
Regards,
OW
Regards,
OW
The Obama administration has already acknowledged that it likely won't recoup $4 billion it lent to Chrysler this winter, conceding the loan was made to a deeply leveraged company "where there was probably never much hope of seeing much recovery." In addition, Chrysler probably won't be able repay in full $4.5 billion in bankruptcy financing from the U.S. and Canadian governments, an adviser to the auto maker said at a court hearing earlier this week
Sayonara bailot $$$$.
Regards,
OW
As General Motors (GM) teeters on the edge of bankruptcy, there are issues at play that are unique in today's market, and bring to the forefront some somewhat unknown financial instruments that are causing some bond-holders to root for the auto-maker to go belly up.
So, the hot air or gas is about to have a match put to it in a few weeks, like it or not...after all, what's a few billion dollars among friends, RIGHT?
Regards,
OW
If they can't ... then yes our loans/investments are at severe risk.
I think though that making a profit with the right structure is not all that hard to do. It's not a really complicated business if the structure of the company is correct. We the public love our vehicles we are willing buyers. Whether we can recover the full $8.5 Billion that will have been dumped into Chrysler or the $30 Billion that will be the final tab at GM remains to be seen.
The alternate is cratering the economies of several Midwestern states and dumping nearly a million retirees on the healthcare systems and their pensions on the PBGC.
ANY new business model that becomes viable will never support the old economies of those states. I said long ago that the wasted money shoveled to GM and C should have supported the folks on the freight train, not a failed business model that should have died 5 years ago.
Simply, bad decisions were made. There is no need to ask a Supreme Court Judge, Congress or the President of the United States to clearly see that.
Like I said, buying a car from these companies is a shade of a Ponzi scheme, IMHO. You already lost your money going in!!!
Regards,
OW
If G.M. does have to file for bankruptcy protection, Mr. Young emphasized that the automaker would need to emerge quickly from the court proceedings to prevent sales from falling considerably more than they already have in recent months. He said that consumers worldwide already have shown hesitation toward G.M. products because of the potential for bankruptcy and that a prolonged court-supervised reorganization would hurt G.M.’s future prospects.
Could'a Should'a Would'a filed in December 2008 so we could be on the upside by now in a new business entity but who knew?? :confuse:
Regards,
OW
And that is already happening. The shutdowns for both companies are having a ripple effect through many communities having supplier companies providing many jobs for them. The suppliers are cutting back. Behr in Dayton supplies thermal products to Chrysler (and others) is laying off people temporarily--at least we hope temporarily.
2014 Malibu 2LT, 2015 Cruze 2LT,
I am not sure in what contexts you mean the above, but to me that is almost completely the opposite (almost EVERYTHING). I know the big three have always offered so called employee discounts. But if it were not for finance companies like GMAC, my question would be: how many "employees" could, would, should buy their big three vehicles cash?
Lemko's point is reflected in the MY's projection from 16-17 M MY sales in good years to 10 M (min of -40% decline) . Now keep in mind this was "PRE" lay off policies. Now that we know that unemployement is 9/10%, would anybody reasonably expect them (30 M as a min affected people) to buy new cars? I am sure there ARE exceptions, but my guess is for a very low percentage.
Is there any data to suggest that GMAC financed vehicles have a higher default rate than FoMo Credit financed cars? GM builds $260 Billion dollars worth of vehicles in a good year. Where do you think the money to borrow to buy them comes from? The TARP money to GMAC is a small fraction of one years worth of gross sales dollars.
You sort of get what I am saying, but not the real point.
My prior post should have clearly indicated that I understand organizations like GMAC are finance companies. Indeed that is what I called it. Are you really taking umbrage to the fact you call it a bank and I a finance company? (I don't think so) While you ask the rhetorical question ...
"Do we hate GM so much that we now want to stop financing from being available to those who dare even buy a GM?"...
my take is folks that can not/will not pay cash will most certainly fianance it.
The problem is credit is so tight right now, seemingly only the HIGHEST credit rating folks can get a "fair loan" (0 to 8%) let alone a loan at all. (you can read the post again for why folks are even ASKING for car loans regardless) So in effect they are only loaning to those who can afford to.... pay cash!!??
So again, (not to be rude) for example; you just lost your job :lemon: , and or your spouse is about to lose theirs :lemon: : are you going to go out and
1. pay cash for a new GM/Ford/Chrysler, etc., automobile
2. FINANCE one?
this is the BAD/ good? news!! Now * this by the 9/10% unemployment rate (30 M folks)
:shades:
I've known people who have paid as bad as ~20% for their car loans.
Geez, it's getting old talking about bailing out companies and people that show no signs of common sense. :sick:
Maybe common sense isn't so common after all?
What a beautiful blue sky we have today!
Well YOU say it's blue, that doesn't make it true.
KAFLOOOEEE!!!!
These people financing their McMansions on little more than a hope and a prayer and the lenders that loaned them the money, then sold their loans down the river, hey I've got some ocean front property over here in Arizona I'd love to show you. :sick:
Was that really George Strait's voice recorded on that song?
2021 Kia Soul LX 6-speed stick
Thing is, while there usually (not always but usually) is a "right" and a "wrong," the trick is getting to the root of the issue to figure out what they actually are. And since they tend to never be as simple as people on each side want to convince you that they are, it's usually easier digging a tunnel to China. With a teaspoon. :sick:
Example: GM/Chrysler evil! No, UAW evil! No, bondholders evil!
Right answer: GM/Chrysler = stupid, UAW = sneaky weasels, bondholders = scam artists.
Simple...once you dig through a million miles of mud, generated by all the flinging of it. :shades:
What we need is a thread titled "I had a bad experience with a GM or C vehicle and now I buy ____________s". The people who will post there wouldn't even test drive a GM or C so they could all agree with each other when the D3 get trashed.
I think it is just what the heading says. Some people believe the government is capable of fixing the domestic auto industry and others myself included think government should stay the H*** out of private business. I think that a large percentage of Americans do not believe the bailouts are a good thing. GM and Chrysler will lose potential customers that do not want to support Government Motors. If nothing else it is unfair for the legitimate car makers that are not taking tax dollars. These are not simple loans like Chrysler in 1980. This is life support. Both GM and Chrysler would have been done last year if Bush had not pulled a sneaky play to get money allocated for the banks handed over to the automakers.
And how does this group size stack up with the group size of the owners of the more than 88 million GM vehicles out on the road today? None of those folks will ever need replacemant parts in the future?
I believe more would be driven away if BK came fast than will be driven away because a company got a lift. Toyota and Honda didn't lose that many customers when it was discovered that their gov. pays their employees health ins. and subsidizes R&D for their industry.
Toyota and Honda didn't lose that many customers when it was discovered that their gov. pays their employees health ins. and subsidizes R&D for their industry.
The US government has spent billions on R&D that has directly benefited the Domestic auto makers. HonToy does not get health care coverage for their US employees. And in Japan the people are taxed very heavily for that coverage. You and Rocky are always looking for a free lunch. There is no such thing as FREE Health Care for the working man and woman. YOU WILL PAY FOR IT.
That's because the media presented it with the same bias indicating it was a good thing rather than a bad thing for competition with US brand cars from US companies. If the media had treated that as the unfair trade item it is -- or it the media were to have treated it like they treated the C & GM companies needing some cash after the gov crashed the credit market making it even harder to sell the cars and crashed the consumer confidence market making it even harder to get people to buy cars, people would have perceived the government subsidized foreign companies as the factor it is.
2014 Malibu 2LT, 2015 Cruze 2LT,
That's a good thing. At least we've not been subsidizing the foreign companies even more than through past two decades.
2014 Malibu 2LT, 2015 Cruze 2LT,
Toyota executives outlined their back-to-basics approach Friday as the company disclosed a stunning $7.7 billion loss for the January-March quarter, a bigger loss than General Motors suffered in the same period. "...
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While this might come across as an exercise in watching paint dry, for my .02 cents, this (along with the big 4 bru ha ha) signals that prices even the small car segment will rise (almost exponentially) in the 5-10 year/s time frame/s.
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Sorry this is just naive.
Governments are nothing more thant the politcal arm of the business community. The reason that we're independent is a consumer/commercial revolt against British business/governmental practices.
The Articles of Confederation failed and the Constitution resulted because of business disputes.
Business is the money-making arm of the government and the government protects business by instituting laws to keep peace and stability. The two are opposite side of the same coin, you can't have one without the other. Government can't stay the H*** out of business, it IS an integral part of business.
Yes I agree that they two of them would have disappeared already without intervention. I also think that it was a good thing for the country as a whole. Preferences and politcal considerations aside it has kept workers working, it has kept ( thus far ) two huge American businesses making vehicles for the future, it has kept certain towns in the Midwest from becoming complete wastelands.
This is the job of the President, to look at the entire picture for the entire country. YOU may not want GM / C to continue in business but there are millions in the Midwest that would differ. Bush recognized this, to his credit. Obama obviously has bills to pay back to the midwestern states.
In several years I truly believe that the two companies will be smaller, obviously, but more efficient, leaner and more profitable. This is good for America.
Folks who are obsessed with so-called "unfair trade practices" seem to assume that people buy cars the same way they buy ground beef - by the pound. In their minds, price is all that matters. Getting rid of these practices will make imports more expensive & thus less attractive. They forget that most car buyers will gladly pay more for something that they really like. Once upon a time, the Big 3 - particularly GM - understood that & built hugely profitable franchises around that basic fact.
GM's problem isn't "unfair trade practices" or that it builds bad cars - it doesn't - but that very little of what it makes gets most of us excited. Someone else made a good point about GM: they build excellent trucks, SUVs & one of the best sports cars in the world. But if you're not a truck/SUV guy - I'm not - & your wife won't let you buy a Corvette, then GM has very little to offer you. For me, there's the Caddy CTS, which I'll certainly consider the next time I'm in the market, & nothing else.
If that's the best that GM can do, then it deserves to die - or at least get much, much smaller.
I won't argue that fully, as it has merit ( think GM X bodies, Century and Ciera being built from 1982-1996, 15 MODEL YEARS, w/ very little changes). However, it is a well known fact that GM has been losing money on it's cars not only because there is an extra $3000 on the hood of undesirable cars, but because of legacy costs that other companies don't have, whether their cars are built here or in Japan.
Now, I'm not going to say gov't sponsored healthcare is the way to go, but I think we can (and should!!!) do better.
I don't care if they offer what I want at some future point. They offer it today. What I want includes tech jobs for America. Hontoy doesn't hire engineers and technicians or managers. They only offer jobs that do not create intellectual property or support America's retention of a technological edge.
The US government has spent billions on R&D that has directly benefited the Domestic auto makers.
A few crumbs fell on the floor? What direct benefit is there?
HonToy does not get health care coverage for their US employees. And in Japan the people are taxed very heavily for that coverage. You and Rocky are always looking for a free lunch.
Not always, just during this recession. Me and Rocky didn't coin the word 'Bailout'. Did you gorget we gave $35 Billion of TARP money to Euro banks.
You're probably right, but this argument wins no sympathy points from me. Those "legacy costs" aren't like the color of your eyes - something beyond your control. No one forced these costs on the D3. They're the consequences of really bad business decisions. The domestic manufacturers tried to buy labor peace by giving the UAW pretty much everything it wanted, figuring that it could pass the cost on to us car buyers. Well, too many of us didn't like what GM (or Ford or Chrysler) were trying to sell us & went elsewhere.
The D3 should have planned for that possibility. They didn't, & the market punished them, as it should. Whenever you see the words "legacy costs", substitute the more accurate phrase "imbecilic business decision", & you'll get the idea.
If your biggest business rival shoots himself in the foot by failing to control his costs, are you obligated to ride to his rescue - or even feel sorry for him? Of course not. He screwed up & now he'll suffer. It may be cruel, but it's fair.
Here the distinction between the car enthusiast who wants to be exciting or it's not a good car and the people who use cars for transportation shows up. I believe many on here are enthusiast and they want their cars to "turn them on when they turn the car on" to quote the CTS advertisement... And that's not bad. But for many people an Echo got them there just as well as a Civic or MazdaSpeed. Or in my case in the comfort of a LeSabre/Park Avenue for traveling 6-8 hours for a weekend getaway or a stay with friends. Don't both have their merits. The cars for each may not be enthusiast cars.
The government should help the US auto industry because it's creating part of the problem and/or has allowed the creation thereof.
As for the rest... remember the US made VCRs? Wonder why they don't make them here. In fact the TV industry got copied. I recall the story about a shoe manufacturer who had Japanese show up at his company wanting to see his plant. A few years later they were making shoes to compete with him. Recall socks made in the USA? Recall oak furniture made in the USA? Remember when the foreign cars had signs of design from US cars but were smaller?
2014 Malibu 2LT, 2015 Cruze 2LT,
Here's where you lose me. Even if I accept your hypothesis that the government caused the industry's problems, which I don't, I don't accept your conclusion that the government ought to help. For one thing, I don't think that that government is smart enough & nimble enough to do anything but make things worse.
More to the point, I deeply resent the use of my tax dollars to reward incompetence. You may see the domestic manufacturers as victims, but I don't. They're in the soup today because they've made a string of bad decisions that go back 35 years. As far as I'm concerned, the market is working just as it should -- by punishing corporate stupidity.
Sorry, but I'm not a socialist - not anymore, at least. (I was a real lefty in my youth. I would've been a lot more sympathetic to your ideas back then.)
remember the US made VCRs?
No, but I recall that one company tried to sell a VTR (video tape recorder) in the early 70s. It didn't work very well & consumer response was underwhelming, so the company dropped it after only a year. Sony used different technology when it introduced the 1st successful home VCR a few years later.
The Sony Beta VCR was a short lived product, as Matsushita (Panasonic) built the VHS VCR and through superior marketing made the Sony Beta obsolete. Even though the Beta machine was superior.
The same goes for automobiles. It requires a combination of good engineering, good manufacturing processes, good marketing, consumer confidence, consumer appeal, good dealers and some luck. GM and Chrysler have little of any of the needed ingredients. How the Feds think they can make a silk purse out of a sow's ear is beyond me.
I will concede being wrong when I see the money paid back with or without interest. Until then I think it is a giant mistake to bail out a company that has NO Chance for survival. But what the heck, we are bailing out half the countries in the World. Why not the Midwest. Though they got their freebie with the Corn Ethanol debacle. That is $billions$ down the toilet paid for by the rest of the states that are forced to use the stuff.
Errr, excuse me. I believe the ethanol von corn was to the benefit of congress's large contributors like ADM and Andersen who built the corn plants and not to Midwesterns in general.
Even I could figure out this was going to cause a problem in the pricing of corn and supply for food. A few large farmers, mostly agribusiness rather than individually owned farms, may have been very profitable due to higher corn prices, but most smaller farmers found the increased cost of everything cut into their small profits from their corn acreage.
BTW have we seen decreases in costs of those products that went up because fuel was $4 per gallon? Where is that extra margin in profit going?
2014 Malibu 2LT, 2015 Cruze 2LT,
What Ohio needs to bring back industry is two things. First and foremost they need to pass a "Right to Work" law. Only an idiot would open a new business in a state where the UAW has a strangle hold. Look at the latest with VW. They looked at Michigan before picking TN for their new $Billion plant. The key to growing jobs and making money is labor that does not feel they are entitled to a job no matter how well they perform.
All the bailout money Obama can print will not open the eyes of those with an entitlement mentality. In my 46 years of labor, I was always thankful for the job. Even when I disagreed with management which was most of the time.
Absolutely right.
Nissan Reports 1st Annual Loss in a Decade
How do you know they have much US content? I did not see any Buick models on the top ten list. They may just bring the parts from China and let the unskilled UAW workers slap them together. You may look up under your fender and see Lucky Lager. No that was things from Japan in the 1950s. My mistake.