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Do You Favor A Government Loan To The Detroit 3?
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that about covers it for me. :P
Actually I think it was on That 70s Show.
"It gets 100 miles per gallon...and it runs on water man! :shades: "
Far out. :P
Regards,
OW
General Motors and Chrysler, the Lame Two, put their hands out for government charity in the form of a $17.4 billion bailout. They are faltering to such a degree that defaults on debt were termed imminent. Ford, in significantly better shape, has shown it can cut costs. Though there's a chance it came too little too late, Ford has also rolled out a well-reviewed stable of new cars.
The Business Press Maven has tried to separate out Ford in the recent past, to note that whatever its fate (and it is still undetermined), it must be seen in a more promising and favorable light than GM and Chrysler. Its management is better. Its cars are better. It did not take the government's money, so it will not have to deal with the government's cumbersome interference.
Yet we see the same reference to the Big Three we have seen since before Sputnik. As if they were a collective. Let it never be said that the business media does not fall in love with a phrase, beyond all reason and reality. Problem is, phraseology has subliminal effects on the thinking of savvy investors. If everywhere you look you read "Big Three," you inevitably think of these three auto companies as inexorably tied to each other, their fates all tilting in the same direction.
Today, we have the Journal. Yesterday, in a The New York Times article, we had the phrase "all the auto-lending units of the Big Three." You can only guess where you'll see the reference tomorrow.
You might read about The Big Three. Just don't believe it.
http://biz.yahoo.com/ts/081222/10454510.html?.v=1
Incidentally, since Chrysler is privately held and GM is publicly traded, they shouldn't be lumped together either. So why is it always "The Big 3" or "The Detroit 3?"
GM is burdened with too much health insurance costs as well as pensions..The UAW needs a haircut, however due to political alliances they will receive a minor trim with assurances of unionizing the transplants..Payback for votes.
It's going to be difficult to sustain capitialism with all this socialism going on, sprinkled with a dab of communism...Lots of isms...
Govt does not create prosperity with printing money and taxing the daylights out of the voters..Somebody called FDR tried the socialism approach with failure..Private investments and market-free manufacturing creates wealth..period..
Please understand the incoming president-elect wants the economy totally in the sewer for it makes it easier for Congress to enact their radical agenda changing our American way of life..
Don't forget----Elections have Consequences!!!!! We have an incoming group of individuals, both elected and appointed that are professionial politictians, never held a job that wasn't paid by a taxpaper..These clowns don't like capitialism and really don't like free markets-----they only want to nationalize industry..oil, banking, and auto..You are in for a surprise...Cash will be the king..until the govt steals it..
The free market economy is threatened...Our prosperity does not go through Washington!!!!!!!
The Dow should tank in Jan 2009--around 6000, the low point. The driveby media will spin it..
Unemployment in Detroit proper is around 30%, no surprise for it has always been high..Starting in 1968 Detroit has been in the sewer and with each new election it took a bigger hit with the exception of Mayor Archer, who decided after one term it was not fixable..and he moved on..
That sounds familiar. Some of the consequences of the 2000 and 2004 US elections weren't exactly popular with the rest of the world, but that is another thread, I guess
As a European, I'd like to see Ford survive and flourish; they're building some good cars now, including some fresh models coming out of Volvo, including some excellent diesels. GM, in the form of Opel/Vauxhall are also building some good stuff but the Chevy(ex-Daewoo)
http://www.usatoday.com/money/industries/insurance/2008-12-22-aig-hsb-sale_N.htm-
Hopefully Chrysler and GM are paying attention. Ford has sold a lot of their brands. I think it's time for GM and Chrysler to sell off their brands or excess plants.
It May Not Be Bankruptcy, But Chrysler Deconstruction Inevitable (AutoObserver)
I keep hearing things like "sell Saab!" Saab sold 852 cars in the entire country last month. What's that worth to a potential buyer? Saturn? Pontiac? no, thanks.
Chrysler has Jeep. They should have sold that a year ago when it had value. Its value is sinking by the day.
They've both got factories and such but how big is the market for that at this moment?
This is where Ford did things so right and I will admit at the time I thought they were crazy - they got lines of credit to weather exactly this back when their assets were worth something. Sure GM has more real estate and such to mortgage but no one will take them on now. A year ago would have been different.
Chrysler is dead. It just doesn't know - or hasn't admitted - it yet. Any guesses on how many of those Chrysler plants that they closed for a month will ever reopen?
http://vodpod.com/watch/1236385-santa-claus-bailout-hearings
Great to hear you are from Europe, I was married for 55 yrs. to a German gal, so I got a little insight on the European culture/politics..Lots of Govt, lots of Socialism, and lots of things the USA has avoided..
Somewhere I read that GM pays health insurance for 1,000,000 employees, lots of retirees, when they have only 96,000 working, sounds like some BIG Changes are coming. Universal health care =no health care, inplace of the world's current best system.
Automobiles have turned 100% political, there goes the fun..If GM is planning on the Volt to enhance anything,it won't, my IHO, it was a carrot to extract govt money..It consists of batteries and a 4-banger motor to recharge the batteries only..How exciting is that?????
I am going to garage to hug the 09 Bullitt, and bless the 06 GPGT..
And they do it with a 4-banger. :shades:
Oh, not only that, but the Mazda3 is really...shhh, don't tell anyone....a Ford. :P
Is it really? I was under the impression the engines and platform at least came from Mazda engineers. Ford then borrowed it and spread it across its European lines, Volvo, the Euro Focus, and the like.
With Ford having sold its stake in Mazda down to only 13%, my guess is it won't be able to do as much of that in future, more's the pity.
2014 Mini Cooper (stick shift of course), 2016 Camry hybrid, 2009 Outback Sport 5-spd (keeping the stick alive)
I agree with that whole heartedly! If I have to buy from a Big 3 manufacturer, it'll be Ford because they didn't extort, beg, steal, coerce, and defraud the American public and gov't to get a bailout.
However, my Chrysler experience was so bad that I seriously would put 10,000 to 1 odds on me personally ever buying Big 3 again. Chrysler ruined it for all three of them. Guilty by association with the big 3. That's how bad that car was, in the 90's no less! However, I do like that Ford is dissassociating themselves with the Big 3 somewhat, though I loathe that Mullaly went to DC in a "team" effort to swindle tax payer money from the public.
I'd say the chances of me buying a Ford in my lifetime are like 100 to 1, GM is 10,000 to 1, and Chrysler is 1,000,000 to the 100th Power to 1
I think I'll stick with the tried and true companies like Audi, Honda, Toyota, Nissan, Acura, Infinity, Lexus, and BMW. Am I forgetting anyone? I don't think so?
Mazda is off the list due to Ford quality problems and partnership, but they are on the fence, heard a bad experience from my wife's coworker on a Mazda 3 recently; that didn't help my perception.
Saab is doomed with GM's association and management. VW hasn't followed in Audi's footsteps with ever increasing reliability since 2000. Mercedes reliability went down the tubes to match that of their cohorts at Chrysler (like a sickness infecting the brand).
As far as the BIg Three my disastrous experience was with Ford. That was in the late 90s. I'm only now coming around to maybe giving them another chance. I wouldn't buy from GM or Chrysler until I felt relatively confident they'd still be here for the length of the warranty. This effectively rules out Chrysler forever. GM may have a shot.
First in addition to spending the $3 Billion to get all the stock you are also acquiring all the liabilities. You are immediately on the hook to somehow give the UAW something in the range of $50 Billion in order to fund the VEBA. Then you've got all the other creditors.
Second, and this goes to Chrysler's current situation, both companies GM / C are sinkholes for money. Every month after you buy it you have to spend $2 Billion more than you take in!!!!! Ouch!! Got $24 Billion to burn up next year? The year after?
Okay, so I guess we should keep paying for Black & White TV's because some of those were made in the USA, but the color flat screen HDTV's of today are not made in the USA, so let's not buy them either. They might have much better picture quality, better reliability, and bettter long term durability, but all Americans should waste their money on overpriced Black & White Televisions because it would help to boost the ecomomy of overpriced TV repair shops and part suppliers.
While were at it, let's not advance Civilization, productivity, or quality, because the good old days are just so good! Let's keep buying 10 MPG vehicles that pollute 100X more than that Honda, let's not invest in State of the ART medical equipment because superstition heals much better.
Also, stop using those automatic dishwashers and hire a maid! The maid industry has suffered due to all those automatic appliances. Heck, let's not use washer and dryers to launder clothes either, it would certainly add jobs if we didn't have advanced machines to do things in less time at less cost.
Let's provide no incentives for society to advance, produce, work hard, be productive, or innovate! These are all such terrible things. Let's do it the Big 3 way instead!
By MARTIN CRUTSINGER
WASHINGTON (AP) - The Treasury Department says it has provided an additional $4.7 billion to 92 banks as part of the government's $700 billion rescue of the financial system.
The department released a list of 49 banks that got final approval last Friday to receive $2.8 billion. It said an additional 43 banks received final approval Tuesday, but those names will not be released until Monday.
Treasury also confirmed that it had given preliminary approval to American Express Co. and CIT Group to receive support from the $700 billion bailout fund.
The money is being disbursed as part of the government's effort to buy stock in banks, to bolster their balance sheets and spur them to step up lending to fight the worst financial crisis to hit the country in seven decades.
But critics contend that many banks are not using the government funds for the purpose Congress intended.
An Associated Press survey of 21 banks that received at least $1 billion each in government support found that none of them would provide specific answers on how the money was used.
Credit card giant American Express said it had received preliminary approval for $3.39 billion in government money. And commercial finance company CIT Group said it had received approval to obtain $2.33 billion.
The Treasury confirmed that both companies had received preliminary approval for government support. The final authorization comes after lawyers draw up the documents needed to transfer the funds. Under the rescue legislation passed in October, Treasury has two business days after the final documents are signed to announce the actual release of the money.
In the list of banks released Tuesday were 14 banks that do not have publicly traded stock. They were the first institutions in this category of banks to win government funds.
The Bush administration last Friday said it would lend $17.4 billion to General Motors and Chrysler LLC in an effort to buy them time to reorganize and avoid having to file for bankruptcy. GM and Chrysler had said they would run out of cash within weeks if they didn't get help.
Under the White House plan, the two companies must extract enough financial concessions from workers, dealers and other stakeholders by the end of March to show their long-term viability. But the biggest decisions about the industry's future have been left to President-elect Barack Obama.
Treasury Secretary Henry Paulson announced Friday that with the decision to provide loans to the auto companies, the first half of the $700 billion bailout fund has been committed. He said Congress needed to approve the release of the final $350 billion.
House Financial Services Committee Chairman Barney Frank, D-Mass., said Monday he is preparing legislation to require that some of the bailout money be spent for specific purposes, such as stemming foreclosures and reducing mortgage rates. Frank is pushing to get the second half of the $700 billion rescue fund released next month, before Obama is inaugurated.
Frank's bill would impose tighter restrictions on the second $350 billion, such as requiring banks to report on their new lending every quarter and toughening limits on executive compensation.
Frank said his legislation would also include a version of a plan, supported by Federal Deposit Insurance Corp. Chairman Sheila Bair, to spend $24 billion to give lenders financial incentives to modify more loans and help more borrowers keep their homes. Bair has estimated it could prevent 1.5 million foreclosures.
It was unclear whether Frank could gain enough support to win congressional approval to release the second $350 billion before Obama takes office, given opposition among Republicans.
Meanwhile, other financial industry groups are pushing to use the bailout fund to help a wider array of companies, including automotive financing companies such as GMAC Financial Services. GMAC is 51 percent owned by Cerberus Capital Management LP, a private equity firm; General Motors owns the rest.
GMAC, which provides financing for GM vehicle and dealer loans along with home mortgages, is having trouble finding adequate support from its bondholders for a debt transaction that would allow it to become a bank holding company and gain eligibility for bailout money.
Our maid comes in weekly. She makes good use of the automatic appliances which leaves her more time to clean the things we don't want to thoroughly clean a couple times each week. It's wonderful. :P
Not sure what your point is however.
2014 Malibu 2LT, 2015 Cruze 2LT,
My thinking exactly: "You can make that choice for yourself, just don't make it for us." There are lots of posters who try to force their preferences onto everyone else
2014 Malibu 2LT, 2015 Cruze 2LT,
If you put out an average product, but are intransigent about reducing your pay and benefits, then when the conomy takes a downturn - which is a normal cycle, then you pay the price. Hopefully the government gets its loan-$ back if someone outright fails or gets liquidated in parts.
Just like a herd of animals - the weak die, and by them dying the remaining animals have more food/animal, and thus a better chance to thrive.
The U.S. taxpayer is the bartender being begged by the drunken sailors - to give them a tab to keep partying, after blowing their month's pay.
That is pure BUNK!!!!! They don't "make" $70/hr!!!!! It may cost GM that much per man/hr due to retiree bennies, but the current employees are NOT compensated that much. There is NO WAY they can make $30/hr cash and come up with $40/hr in bennies. NO health plan is that expensive.
How they get out from under THAT seems to be one of the biggest hangups in the whole process.
It's all in how you look at it. I would say it is the equivalent of making $73 an hour because you have about $35 actual pay, plus almost $40 in medical benefits, pension plan etc. A family doctor might make $150,000 to $200,000 a year, out of that pay for an office, staff, expenses (accounting etc.), and put some money in his pension plan and pay for his medical insurance. He probably ends up not that much better off than the auto worker. Something like 90% of university professors don't make as much as auto workers. Work that is basically unskilled and requires a high school diploma at best is just not worth over $150,000 a year.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
That is Not true. The Company must put in money for the current employees also. When they say the pension fund is fully funded that means for those that are already retired and those that are eligible to receive a retirement in the future. Also the GM fund is no longer fully funded. As it lost a lot of money since last audited. I believe it is still within legal limits. Many Companies are having to add money as the funds have diminished in the market downturn. I would imagine the average top UAW guy is getting about $50 in wages and benefits. As you pointed out there are 750k retirees living off the backs of current employees. This is unacceptable. Those that concocted that kind of contract should be thrown to the wolves. The company and UAW have screwed current and future employees with that kind of system.
The only reason I see Ford surviving this catastrophe is because they have learnt from their past follies. Mazda has full control on what makes it into their design. That is why I like Allan Mullaly.
2021 Kia Soul LX 6-speed stick
i recommend you reading 'The Appeal' by John Grisham. :sick:
future auto designers
my point is, it's not about a 'stand alone' situation. there are lots of ripples.
Now you want to see the reality of our society and one reason we are in this mess.
SAN DIEGO — As a supervisor at a Washington Mutual mortgage processing center, John D. Parsons was accustomed to seeing baby sitters claiming salaries worthy of college presidents, and schoolteachers with incomes rivaling stockbrokers’. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known, was all about saying yes.
Yet even by WaMu’s relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer.
Mr. Parsons could not verify the singer’s income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved.
http://www.nytimes.com/2008/12/28/business/28wamu.html
One reason? I'd say that is THE primary reason we are in this mess!
That would be hilarious if it wasn't so true....and sad.
Too bad we can't track all these CEOs and commissioned salespeople and nail them for fraud or something. Unfortunately they get to keep their millions.
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
Isn't that amazing. Calvin and Hobbs writer understands business better than the multi-million dollar bankers and car CEOs. And he was way ahead of his time.
Calvin and Hobbs should be president!
2017 MB E400 , 2015 MB GLK350, 2014 MB C250
It's Payday in Detroit!
That $73 per hour figure is still inflated. The reason that it comes out to that is because GM, Ford, and Chrysler have a huge number of retirees on their books. They actually have more retirees than they do workers!
That $73 per hour figure is derived by taking the company's total outlay for personnel, both working and retired, and then dividing it by the number of employees that are still working.
I've heard that in reality, the typical UAW wage is more like $28-30 per hour. Once you add in benefits, it might get boosted to around $48-50. But the "legacy costs"...all those pensions paid out for people who are retired, health insurance, and all that other stuff, allocates out to about another $23-25 per hour. But that final $23-25 per hour is nothing the current employees see in any form.
Sometimes you might hear stories of UAW workers raking in $100K per year, but that's mainly in good times when workers are in short supply and there's a lot of demand for the product. They probably get time and a half for anything over 40 hours per week, and might get double-time or even triple-time on holidays or other special times.
If an employee makes $50K per year for a 40 hour workweek, but gets 1.5x for overtime, then if he/she worked an average of 66-67 hours per week, that would put them to around $100K with OT.
A UAW tradesman can make $32 per hour. That is $66,500 base pay for working just 40 hours per week. I agree that about $25 per hour of that $73 per hour you see in the papers, is to pay for past promises. GM and the UAW thought they were the US government that can print money as needed. Unless we keep giving them money, the Big 3 cannot sustain that hourly wage.