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There is no single black and white, right and wrong standard here. Everything is gray. Simply put the banks and the B2 were too big to fail given the current condition of the economy. As dtownfb noted previously the situation might have been entirely different in 2006 when the economy was booming. Everything is gray.
In different circumstances probably Chrysler would have been allowed to be liquidated and Ford and the rest would have benefitted. But saving jobs now in this depression is most important. I agree that BK is the right tool to get rid of the dead weight....just not right now. Everything is gray.
It appears that this will all work out for the good as both companies have exited BK court as planned with very good structures and GM at least has a good product lineup available to it. Chrysler is very ??? IMO. We'll see more in the next 18 months but at least both companies have a decent chance of survival. If they can do so then this is good for the nation.....and I compete against both.
Lots of potential losses when your throwing 30 billion + down a bottomless money pit.
Potential earnings I am talking about could be:
1) putting that 30 billion into investments that pay dividends and interest
2) using some of that money to start a TRULY new car company that will actually make money and pay taxes on earnings due to being profitable.
3) putting that 30 billion into the stock market.
4) putting that 30 billion into a lottery or Las Vegas Casino.
5) giving it back to the "people" in tax rebates
6) giving it to companies that are successful and profitable so that they can expand and grow and become EVEN more profitable and successful.
7) using it for infrastructure that helps improve everyone's productivity.
8) and the list goes on and on.
Saving jobs for some is no better than giving people that already have jobs raises equivalent to those lost jobs.
If Jack is making $50/hour and Joe is making 0 dollars an hour, that works out the same as if they were both making $25/hour. It's just too bad so sad if Joe isn't keeping up his end of the bargain in helping to run a company into the ground. If Jack has helped a company succeed, I say give them a bailout RAISE.
There have been bigger bankruptcies than the Big 2 in the history of the US. Showing favoritism for the UAW based ones is simply wrong again. Here are some that are bigger:
http://money.cnn.com/galleries/2009/fortune/0905/gallery.largest_bankruptcies.fo- - rtune/index.html
Saving jobs is just fueling the fire. These companies are sucking more out than they put back. The sooner they fall the sooner someone competent can take over. Delaying the inevitable costs more. Haven't we already seen this?
Bu,t then again, with the government essentially owning GM, I might pass out of spite for the Socialism this represents.
This President is anti Constitution. You are beating your head against a wall trying to talk sense into a died in the wool Liberal. They cannot see past their own little world. You want to see real corruption in Politics look at how the stimulus is being handed out. C4C is peanuts compared to the rest of the $800 billion in vote buying dollars.
Billions in aid go to areas that backed Obama in '08
By Brad Heath, USA TODAY
WASHINGTON — Billions of dollars in federal aid delivered directly to the local level to help revive the economy have gone overwhelmingly to places that supported President Obama in last year's presidential election.
That aid — about $17 billion — is the first piece of the administration's massive stimulus package that can be tracked locally. Much of it has followed a well-worn path to places that regularly collect a bigger share of federal grants and contracts, guided by formulas that have been in place for decades and leave little room for manipulation.
REPORT: Cities missing out on much needed road funds
STIMULUS FUNDS: States aren't using money as intended
"There's no politics at work when it comes to spending for the recovery," White House spokesman Robert Gibbs says.
Counties that supported Obama last year have reaped twice as much money per person from the administration's $787 billion economic stimulus package as those that voted for his Republican rival, Sen. John McCain, a USA TODAY analysis of government disclosure and accounting records shows. That money includes aid to repair military bases, improve public housing and help students pay for college.
You focus on the UAW an easy whipping boy. If it was only the UAW then they might actually have let both companies fail and be liquidated. But there is much much more to the picture here. There are all the suppliers to the B2 and all their jobs. Make the B2 disappear and all those jobs are gone too....at least at this time in these economic conditions.
Then there are all the downstream jobs that would be affected. Between the B2 there were nearly 10,000 dealerships in NA. If each one only employed 50 people that's 500,000 jobs you've just made disappear.
In this depression it's not very smart economics to kill off ...
100,000 direct automotive jobs
100,000 supplier jobs
500,000 downstream jobs
Is this really what you're proposing? You wouldn't last very long in any political office if your ideology is slash and burn..cut them jobs, send 'em all home.
But by brilliant efforts both companies will survive to get another chance. If the new companies are lean with little or no debt how do you come to the conclusion that they'd be sucking out more than they put back? If they're making vehicles that people are buying that's the definition of productivity. Why should they fail?
BILLIONS GO TO AREAS THAT DIDN'T SUPPORT OBAMA
Can you imagine that?? It's shocking.
Here let me set your hair on fire. Not only has Paul Krugman called for more stimulus but so also has the Saint of American Business....
http://www.cnbc.com/id/31828467
Legendary investor Warren Buffett said in an interview aired on Thursday unemployment could hit 11 percent and a second stimulus package might be needed as the economy struggles to recover from recession.
The current president doesn't respect the Constitution? Seriously you can say that with a straight face err type it I mean. After the past eight years seriously really come on you can't believe that? Can you? Oh god I bet you do.
Also I have heard this story reported over and over today but I just don't get it.
So cities aren't getting as much stimulus aid as rural areas. but Where is the traditional democratic support base? Let me answer that for you. CITIES
Republicans almost always do better in rural areas. Seems to me like the world is upside down. I am going to need to see a lot more data, preferably unmassaged data, before I buy this report.
Warren is getting senile as noted by his tumbling stock. My Fidelity has done better over the last year than Berkshire Hathaway. Of course he wants more stimulus. He got Billions on the Morgan deal.
Then there are all the downstream jobs that would be affected. Between the B2 there were nearly 10,000 dealerships in NA. If each one only employed 50 people that's 500,000 jobs you've just made disappear."
This is just plain wrong. People would continue to buy cars if GM and Chrysler filed for bankruptcy, and someone would produce the cars to meet the demand. The survivors or newly formed auto companies would buy from suppliers, as needed, and the cars would be sold through dealers.
If allowed to work, our market system, together with our democratic institutions, rule of law, respect for human rights, etc., though not perfect, perhaps, have a great ability for renewal and regeneration. Too much intervention, while well intentioned, can interfere with the renewal process, and end up causing more misery.
The debate between those with a liberal orientation and those with a conservative one (for want of better terms) is endless. It's almost as if we're hard wired in our beliefs. Sure, conservatives may occasionally concede some points to liberals, and visa-versa, but the core beliefs rarely change. I sometimes wonder if some of the concessions aren't offered to demonstrate objectivity and flexibility, rather than out of conviction.
One of the factors responsible for dragging these discussions on without resolution is the use of half-truths. The skillful use of half-truths can be very persuasive in scoring debating points.
Anyhow, Bob, this is a long way of saying that it's highly unlikely that you and I will succeed in changing each other's mind. That might not be such a bad thing, though, because there would be no need for discussions if everyone agreed on everything. Can we agree on that?
Did you expect to see massive changes in 3 months? Well maybe YOU did. I'm sure that YOU thought that massive infrastructure projects would simply leap off the drawing boards and into full production before summer. According to Krugman and Buffett the $787 Billion is only about 2/3rds of what is actually needed. THAT'S probably why you haven't seen immediate results.
Rest assured though, things have turned around and they're getting better.
I had the same opinion last fall before the depths of the crisis hit, that demand and jobs would simply move to the survivors. Then I saw how really bad it was. To kill off GM and Chrysler at that time would have created an economic crater in the midwest because the other survivors, primarily Ford-Toyota-Honda, were in no condition to absorb the shift. It was too much too suddenly.
It would have been truly horrendous at the local levels where every GM and Chrysler store in N America would have been effectively put out of business on Jan 1...BLAM!. If this had happened over a period of a couple of years where first one then the other went belly up - in a stronger market situation - then I'd agree that the job losses could have been managed. But not in Dec/Jan/Feb in the depths of our dark winter of economic collapse.
The way it's working out is actually a brilliant and effective solution given the short timeframe. Both may survive and actually be stronger with a minimal loss in jobs in the country.
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The liberal media have been feeding us that line for over three months now and it's pure propaganda. There is no credible evidence that anything has "turned around or gotten better" in this year.
The credit markets and the economy as a whole is still are in a state of crisis and will likely remain there for the foreseeable future. Think 2011 and then we'll START to things really getting better. In the second half of '09 (likely by September) we'll see how big a hole we're really in. It's an enormous, $5 trillion dollar plus, hole that will take years to recover from. A robust economy is years away. Sorry.
Supplier Lear Files for Chapter 11 Bankruptcy
Deadline Set for Delphi Bidders; Auction Scheduled
Reorganizing should be an easier pill than liquidation though.
He did say during the campaign it should be changed. He did circumvent the 5th amendment with his bullying the bond holders in the GM & C faux bankruptcy. You like him that is your choice. I think he is bad for the USA. Difference of opinion.
On this we agree.
"The way it's working out is actually a brilliant and effective solution given the short time frame. Both may survive and actually be stronger with a minimal loss in jobs in the country."
Now that we've spent all this money to save these companies, I hope you're right. However, I think it's way to early to say that it's working our brilliantly. Let's see if the $60 billion + and interest is repaid.
As for the topic of this thread though, Yo! Obama & Co! I'm NOT the "rightful owner" of the $4500 you are about to GIVE me on this clunker program in the midst of this present "crisis" but thanks anyway.
Just my humble opinion of course...or is that illegal yet? Disagreeing with the current group of propagandists and distortionists? Reeducation camp here I come!!!
I don't know about maryh3, but I will. Well, maybe not forever, but it'll take a while for me to get over the blackmail that GM and the UAW forced upon the taxpayers. I was against the bailout, and I still feel that the existing UAW workers (those that drove GM and Chrysler to the brink) gave up very little in return for the $30 billion+ that the taxpayers have given them. I think your "successful IPO next year" for GM is just a pipe dream.
It's taken me 30 years to forget and move on with Ford after the pos '78 Ford Fairmont they made. and I was fool enough to buy. Though I do not own a Ford product, I may consider one. I had the CTS on my short list of vehicles I was considering, but it's off if it now. Nothing from GM for me.
But when your corporations name is Haliburton or Exxon/Mobil the money isn't supposed to carry more weight, but if your name is GM it is --- right? And those 2 companies are sooooooooo darn profitable, and contribute so much in revenues --- whereas GM doesn't. Funny how that works.
This has always been our history from the very beginning.
Ever heard of Trust-Buster Teddy Roosevelt, Sherman Anti-trust Act, Clayton Anti-Trust Act etc. These acts enforced by US law are supposed to make competition fair so the big guys can't shut out the little guys from competing. Except that in this case the government itself is doing the enabling for the unfair competition.
You focus on the UAW an easy whipping boy.
Except that in Chicago the exact opposite is happening BECAUSE the Unions are not involved. They won't let big boy Walmart in to compete with the Mom and Pops. And they use the strong arm of the government to discriminate against Walmart and block them from opening stores. And could that possibly be because they won't unionize? The government SELECTIVELY follows the money and the big boy IF they grease the proper pockets only.
For a government supposedly founded on the principles that men were equal and should have equal rights to compete -- there is something rotten in the State.
There are all the suppliers to the B2 and all their jobs. Make the B2 disappear and all those jobs are gone too....at least at this time in these economic conditions.
Not necessarily. People will still need cars. The suppliers will simply start selling more to Honda, Ford and Toyota instead of GM. Someone will have to pick up the slack.
Why should they fail? Because they ran out of money, their creditors got sick of waiting for them to turn it around and the government has no business getting involved with the private sector and showing favoritism.
"No. The law requires your trade-in vehicle to be destroyed. Therefore, the value you negotiate with the dealer for your trade-in vehicle is not likely to exceed its scrap value. The law requires the dealer to disclose to you an estimate of the scrap value of your trade-in vehicle."
Surely the scrap value is worth something. I just don't want to hand that to the dealer. Thanks in advance.
While polls can be made to say what the pollster desires. I think you are in the minority as of today. 37% disapprove of the President's handling of the job and only 32% approve. Guess which group I am in. You have already stated which group you are in.
And it has been over 4 months since the stimulus was signed. BO's statement was the money would go first to shovel ready projects. When in fact 90% of the money spent according to USA Today is for Medicaid to the states and other social services. So tell me again about these jobs that are being created? Handing out welfare money is NOT creating jobs. Or how a C4C $billion will help more than a few car salesmen get rid of excess inventory.
The stimulus package Obama signed in February includes about $499 billion in new spending, and to date, the Obama administration has allocated about $158 billion to specific projects and programs. Most of that money has gone directly to state governments, which then disperse the money to prevent school layoffs, repair roads and fund social services.
Does this relate to my ideas about the C4C? I disagree with it yet will take advantage of it? For me, I have a true clunker whose useful life is coming to and end (194K). It still bothers me that anyone will drill a hole into this engine but it would probably be going for a tradein value of $500 soon without this program. The dealer who takes it off me would probably just wholesale it for parts anyway. Since I dislike the government, I will take advantage of the program and screw the government that screws me.
Clever move there no matter what I come up with it is just part of the Agenda of the Liberal Media to keep us from knowing the truth... :sick: :surprise: :confuse:
President of Philly fed sees improvement towards end of 2009.
I expect the housing sector will finally hit bottom in 2009 and the financial markets will gradually return to some semblance of normalcy. So my forecast sees the economy starting to slowly recover in the second half of 2009 and building up more momentum in 2010,” said Plosser, who was the featured speaker at the annual event, hosted by Lyons Companies and the University of Delaware Center for Economic Education and Entrepreneurship.
Initial Jobless claims fall to lowest level since Jan. Sounds like good news to me. Yes the overall employment rate is still climbing but the rate is slowing and that is the first sign of an improvement.
Plant closing for automakers skew results With both Chrysler and GM out of BK the numbers should be getting even better as they get plants back online that were shut down. I don't think we will see much improvement for this month but probably a little bit better for next month.
Is Bloomberg liberal or conservative?
Your link does not reflect your spin:
Georgia unemployment claims surge
By AJC staff
Friday, July 10, 2009
The number of laid-off Georgia workers filing first-time claims for state unemployment benefits jumped by 88,756 in June, an increase of 94.8 percent from June 2008.
If Gov't Motors had gone Chap. 11 from the beginning, the taxpayers would have been saved billions of dollars, the featherbedded UAW contracts would have gone out the window, and instead of being a wholly owned subsidiary of the US Government, we'd have a reinvented car company capable of being a world beater.
Instead, we're going to see a company beholden to 535 congresscritters. Personally, I'm opening a pool to see how long until Government Motors starts building a factory in West Virginia named the Robert C. Byrd engine plant, the Jack Murtha windshield wiper factory, etc. :lemon:
I'm still holding a Volvo grudge dating back to '74. I'm irrational about some other stuff too. :P
Scrap Value Received under Program
Windsurferk, try the Cash for Clunkers - Does it Work for You? discussion. It's more nuts and bolts about the program than this one.
Here we are in a HUGE financial mess and I see some media commentators suggesting we do the same exact things that got us so screwed up in the first place.
As if the past 8 years never happened.
Unbelievable, simply unbelievable.
Hey, ONE BRIGHT SPOT! --- The new Camaro is a big hit (so far). This model, in one month, outsold the entire Buick or Cadillac division.
$60 billion? That's only 6.5 months in Iraq and might be worth hundreds of thousands of jobs. Relatively speaking, a good gamble.
I don't think many people realize the utter, total catastrophe of the annihilation of GM, should it have happened suddenly and without preparation. I would hazard to say that even civil unrest would not have been out of the realm of possibility.
I'm not sure I buy into that. The country survived layoffs and the loss of hundreds of thousands of jobs in the aerospace industry back in the early 90s because of mergers and defense cutbacks. Hard to see how the demise of GM would have been worse, even with the more optimistic (higher) estimates of jobs that are directly or indirectly tied to Detroit.
The best of GM would have survived in some form even if it had undergone a more radical form of bankruptcy. The best plants would have been bought by someone. All the workers would have been let go, the existing contracts voided, and workers could then have applied for their old jobs under a lower cost wage structure. Sort of like what happens when a public school gets reconstituted for poor performance.
I think you also have to take into account the symbolic value of the total, sudden, shocking annihilation of General Motors and its affect upon the prestige and public attitudes of America as a whole. It would have been incredibly depressive...because if GM can disappear overnight, how about other giants? How about YOU?
Thanks
Don't selectively pick the one or two articles about Georgia when every other article on that page talks about how the rate for new unemployment claims went down.
Now who is spinning.
Americans have been saving money and paying off debt like crazy now for over a year. Their debt has fallen from 13.9 Trillion to 13.8 Trillion. A hundred Billion dollar drop. Another 50 years and we can start spending again.
The stimulus is spun by conservatives as not doing it's required job. It turns out to be a stealth wealth redistribution. Better that poor people get free health care than banks get bonus money? Both come at the future taxation on my children. Most of the news is meant to be a distraction.. M.J., C4C, bonuses. Cap and trade is wealth redist. also. An excuse to send poor people $400 apiece each year.
So now we are getting worse but at a slower pace? Awesome job BO
I'm don't agree with your "symbolic value". GM's reputation has been on a downward decline for years. The prestige of America, if it is tied to any industry, is more tied to that of Boeing, Microsoft, and Intel than it ever will be to the D3/2.
GM should have disappeared (maybe allowed to fade away is a better way to put it) years ago, way before it was able to accumulate $60+ billion in debt. That would have spread the pain out over years
The worsening trend is improving.
As I read it this means that when you and your Dad go in to have the vehicle appraised the dealer has to tell you what the estimated scrap value is. YOU DO NOT GET ANY CREDIT FOR THIS SCRAP VALUE!!
Most people are smart enough to have a good idea of what their trade is worth. If it's a 97 Explorer V8 with 150,000 on the clock it's scrap value is about $500. This is the number that has to be disclosed.
The more common situation would be when somebody trades in a 2002 Explorer V8 and the vehicle is 'worth' $5000 at scrap. THIS is the situation why the dealer must disclose the trade in value. Taking the $4500 voucher for a $5000 vehicle isn't smart. No one should be encouraged to do so.
Again you get no credit for the scrap value as I read it. If you want some of this 'scrap value' then take out the 'sellable' parts yourself before giving it to the dealer. This is perfectly above board as long as the vehicle is still legal to be driven on the road.
I have to agree with others that you are being very naive in your thinking. Money controls this country. We don't live in a democratic society. We live in a capitalistic society (officially we are considered a republic). The simple fact we only have two political parties and there is no realistic way a third party could ever become president or hold a major political office is added proof. Money drives our politics. Why else would millionaires spend $$millions to get elected to a job that pays $200k?
that statement bothers me on other levels as well. I wish our country was run like this but history has shown time and time again this is not the case.
for the record, i have written many times that we should do a government backed bankruptcy for Gm and absolutely nothing for Chrysler. A failure of both would have destroyed the suppliers and dealership network. Based on your thinking of not having TARP, you would have to pay cash for your car because banks would be very reluctant to offer credit.. Ask some of the salesmen that hang out on these boards how tough credit has gotten in the past year. Now imagine what it would be like if AIG and Citi had failed along with Lehman. think sales are down now.... and no Honda and Toyota would not simply fill the void. Both of those companies are struggling as well. The difference is their business model and credit rating allow them to survive in this environment. Both have major production reductions this year compared to the last several years. Nissan was in talks with Chrysler for a year to merge but backed out. Fiat merged with Chrysler without spending a dime. And there were no better offers for Chrysler! that should tell you how bad the auto industry is right now.
I don't like all the spending or government involvement but again, this is not 2006 when everything was flowing nicely and the stock market was over 13,000. The fact that there was serious talk of nationalizing the banks should tell you how serious the situation is/was.
BTW, even with Chrysler and GM coming out of bankruptcy, there is still a good chance that both companies fail. will I ever buy a Fiat/Chrysler or GM? F/C probably not but Chrysler hasn't sold anything in the past 15 years that has appealed to me. GM? I had a pretty bad experience with 2001 Malibu. I need more time with them plus there are still better cars available for the price.
I wonder if I can take off the catalytic converter on my minivan, trade it as a clunker, and not get tagged by the feds for the $11,000 fine or whatever it is? :shades:
Take advantage of the C4C bill. You aren't screwing the government, you are actually screwing the taxpayers (and we will not go into that any further). It's nice to debate all of this but you would be foolish not to use this to your advantage. last year I hated getting that $600 stimulus check that Bush authorized, but i cashed it and spent it.....on $4 gas
What car are you looking to get?
Dealers usually don't have any specific knowledge of what scrapped parts bring 'at retail'. They only have auction values from the Black Book and other sources. This is one of the multitude of clarifications that will be made in the next several days.
If one giant can go, why not others? And if others can go, what does that say about consumer confidence, the stock market, faith in government, etc.
Exactly....horrendous case of the jitters.
America's auto industry changed the world. We are not talking about the bankruptcy of Ms. Field's cookies here.
Khspyder, I suspect the salvage yards are all working the rounds trying to tie in relationships with the dealers. C4C should be a bit of a boon for stocking up on spare parts for their inventory.
The Jobs Bank program is finito. Non-issue
What is significant are Fixed Costs, Legacy Costs and Debt Load. These were huge expenses that GM and Chrysler and Ford were fighting for the last 15 years. These are all but gone due to BK. GM for example..
.. had plants with the capacity to make 5 million vehicles yet it only sold 3 million units, shrinking to less than 2 million units this year. Those plants are mostly closed and gone. Pffft, ZERO cost.
.. had nearly $40 Billion in Fixed Cost Bond Debt....now it has $9 Billion.
.. had $2000 - $4000 per vehicle in Legacy Costs....now these are gone, ZERO.
.. had staffing to support 6000 dealers....2400 of these dealers are now being closed.
Variable costs for all vehicle makers are roughly the same. I know I was there for 25 years. The big issues that caused the D3 to be crushed are all related to Fixed Costs....and bad management. This is something that cannot be gauged yet. Are the managements of the new companies up to the task of making GM and Chrysler profitable. Ford seems to have an edge here.
Sorry this statement is just wrong because you don't understand the ins and outs of bankruptcies. To go into Chap 11 the debtor must have pre-arranged financing in place, or soon after, so that it can continue to do business on a daily basis while it's in bankruptcy. Businesses while in bankruptcy need to continue to pay for lights and computer services and steel and gas and welding wire and..and..and ...etc, etc, etc. This is called Debtor-in-Possession financing ( DIP ) and it's controlled by the BK court to ensure against any questionable payments. Normally banks compete for this type of business because it's easy guaranteed money on a short term basis while the debtor is in BK court.
But when did GM and Chrysler begin to fail?...last Fall. What else was happening last Fall? The entire banking system all over the world was failing at the same time. NO BANK IN THE ENTIRE WORLD was willing to offer the B2 any DIP financing. As a result Chapter 11 was out of the question at that time.
Since Chap 11 was out of the question without any DIP financing being available the only other option was Chap 7 ( liquidation ) in Jan 2009. The Bush administration didn't want to go out with its final act being the murder of GM, arguably the most important industrial icon of the entire 20th Century, so it gave the B2 temporary loans and punted the ball 3 months downfield to let the Obama administration handle it.