Today the CEO’s of GM, Ford, and Chrysler testified before the Senate Banking Committee trying to secure aid for their respective companies. Present as well was the president of the autoworkers union.
GM’s CEO Rick Wagoner warned them apocalyptically “this is about much more than just Detroit. It’s about saving the U.S. economy from a catastrophic collapse.” He also promised the Volt in return for aid stating:
“We’ll use this bridge to pay for essential operations… new vehicles and powertrains… parts from our suppliers… wages and benefits for our workers and retirees… and taxes for state and local governments that help deliver essential services to million of Americans. In the process, we’ll continue to reinvent the automobile, and improve the nation’s energy security, through development of advanced technologies like those in the Chevy Volt.”
You can read all of Mr. Wagoner’s comments here.
UAW President Ron Gettelfinger also warned “If one of these companies goes into bankruptcy, I’d be willing to bet it takes two, or possibly all three, with them.”
Meanwhile it is looking like the bailout bill wont muster the necessary votes, when it goes to the Senate floor tomorrow.
Another possible approach, endorsed by the Bush administration, congressional Republicans, and an increasing amount of Democrats involves changing the rules of the previously approved $25 billion retooling loan.
This low interested loan was specifically to help the automakers to re-tool assembly plants for the sole purpose of being able to build more fuel-efficient vehicles and would be gradually metered out over 7 years. In the new approach the automakers could be given immediate access to that loan and be allowed to use it instead for operations (Detroit News)
It is widely believed that without aid GM may only have enough cash to survive until the end of this year.
This entry was posted on Tuesday, November 18th, 2008 at 7:25 pm and is filed under Financial, Politics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
Nov 18th, 2008 (7:35 pm)First!!!!!!!
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Nov 18th, 2008 (7:37 pm)The small gain in this session is that all parties, including the Union, are defining their positions. Some for better, some for worse. I feel less likely to support a bail out after watching this session.
=D~
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Nov 18th, 2008 (7:44 pm)So. Chinese national auto companies are considering buying the American auto companies.
http://www.huliq.com/3169/73122/saic-dongfeng-said-buy-gm-chrysler-assets
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Nov 18th, 2008 (7:46 pm)Interesting. No matter who votes how, both parties will alienate a core group.
My biggest worry over the second option is that if money is taken from the existing 25 billion loan, it will later be used as an excuse next time we have a crisis, for NOT building more vehicles like the Volt, seeing as that money would already be gone.
Also, there is the problem in that Chrysler has NO new efficient vehicles in the running now, as they dropped most of their plans in preparation for a merger that has not happened.
Regardless of outcome, we are about to see a massive industrial thinning and it’s going to hurt.
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Nov 18th, 2008 (7:47 pm)So when this bailout doesn’t pass despite Wagoner’s “apocalyptic” talk of a “catastrophic collapse” that doesn’t come to fruition (before this thing eventually gets rammed through in Jan), will Wagoner at least admit to some level of exaggeration?
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Nov 18th, 2008 (7:52 pm)Give some money to GM for the Volt.
Give ther rest of the money to Toyota!!!!! They know how to manage it better to make more of it.
Tell all the people that lost thier jobs to go work for Toyota.
Tell the UAW to spend time in CHINA not here.
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Nov 18th, 2008 (7:57 pm)I’m a hard sell, I really don’t like the position the union has taken. I don’t like the sky is falling talk, especially after Bush has done this to us ever since the invasion of Iraq, but maybe the smart thing to do would be to give them a bridge loan that would tide them over to the next administration and some time could be taken to really look the patients over before prescribing the medicine. Considering how much we have to lose as a country if this does precipitate us into a depression, that might be the prudent course.
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Nov 18th, 2008 (8:04 pm)Wagoner said,
“We’ll use this bridge to pay for…”
Use it as a bridge to what? January? A bridge to the next handout? At no point, once again, did he ever mention any turnaround plan, nor did he mention their current cash burn, massive dealer liquidity issues, or estimated loss for Q4 of fiscal 09.
Apparently at no point will Mr. Wagoner ever have to come clean, his statement is a mass of blame shifting and unrealizable expectations.
Here is a personal fav from his ‘prepared statement’:
“…These and other actions are designed to improve GM’s liquidity by $20 billion by the end of 2009″
Say what? You have nothing…and losing 2 billion a month, and your going to impove liquidity by 20 billion in 13 months? Why not say 100 billion? Or a trillion! A faffillion dollars!
There is also a nice chestnut in there where he suggests that the share price dropped from $43 because “…our industry has been hit hard by the global financial markets crisis
/his statement is a comedy goldmine, this man must be a great poker player, he can sell any position
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Nov 18th, 2008 (8:06 pm)Watch the You-Tube Video at:
http://gmfactsandfiction.com/
E-mail your representatives in Congress by clicking on “I‘m a concerned American” and tell them that you support the Loan to GM, Ford and Chrysler.
And or Call 1-866-927-2233 to be connected to your representatives by phone.
Thanks for supporting America, GM, Ford and Chrysler.
Also please forward to fellow Americans.
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Nov 18th, 2008 (8:08 pm)Wake me when it’s over.
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Nov 18th, 2008 (8:20 pm)#9, draped in the flag,
“610,000 workers are employed by suppliers to the u.s. auto industry earning an annual payroll of $54 billion in 2007.”
Do you know what $54 billion divided by 610,000 equals?
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Nov 18th, 2008 (8:22 pm)This refusal of some politicians to support even additional short terms loan assistance, with conditions, is laughable.
I can picture it now. A couple of years down the road, with all three Detroit automakers gone, owned by Chinese automakers or others, with half a million (or more) American auto workers and employees of suppliers out of work, the federal and state governments will be wondering where all the unemployment and health care funds for those people will come from, where all the missing tax dollars from lost wages, sales, etc will come from, and on, and on. Yet another piece of this country will be owned by foreigners. Another example of how capitalism, short-sighted US version, abdicates yet another industry to others – and in this case, at the very point it is poised to become a technological leader.
Perhaps the economic Darwinism of a free market has its place. But that capitalistic purity has to be tempered with realities. As an example, several on this board have advocated for Chapter 11 as a viable alternative to loans because of the “crushing debt” on the balance sheets of the Detroit bunch. Just how many people do we on this board really believe will drop their hard earned cash on a vehicle from a bankrupt firm? Perhaps my naivete about matters financial at the C-suite level creates blinders, but I believe with smart people crafting the loan conditions – including significant concessions from the UAW – a way can be found to help the Three survive long enough to weather the storm and eventually get back to a competitve position, and to repay the loans.
As mentioned previously on this board, I hold no direct shares in any of the Big Three and have no vested interest in any of their suppliers. I am a lifelong registered Republican with a normally conservative fiscal bent. Yet to me this refusal to support a loan package is for any American elected official an act of total irresponsibility to this country’s manufacturing base and future.
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Nov 18th, 2008 (8:32 pm)All I can say is that GM is no worse managed than AIG and we are practically using $100 bill tax dollars as wall paper over there right now. What most people don’t realize is that Bernanke has given $2 trillion out so far this year (that’s about on par with the entire national budget) and losing GM would be far far far worse than losing Morgan Stanley or Merril Lynch. By an order of magnitude. You see, there’s a little difference between GM and a bank, GM ACTUALLY MAKES SOMETHING. It’s not just some giant get rich quick pyramid scheme like banks (especially the way the banks have been acting since they were deregulated). I’m not real keen on throwing money down a swirling toilet, but $25 billion will last GM at least 2 years which will allow them to get the Volt out and if they still can’t get us off oil, then getting that piddly $25 billion paid back will be the least of our worries as a country.
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Nov 18th, 2008 (8:43 pm)I’ve started to think the loan to them might be worth the trouble. Well for GM. I don’t know about the others. The volt will definately be a money maker down the road. Unless Ford and Chrysler can show they have similar plans they shouldn’t get a loan. They should all put out a business plan on how they plan to make money just like any small business owner would do for a loan. They need to reduce what their CEO’s and employees earn for sure. This 30 an hour crap is crazy. They should be making in the teens an hour. If the union workers and CEOs don’t agree to massive pay cuts, then we don’t need to loan them our hard earned money. After all, this is the primary reason their business model has failed in addition to years of lax quality controls.
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Nov 18th, 2008 (8:45 pm)“Oh, what a tangled web we weave when we practice to deceive”.
We need to save GM and the rest but some of the relevant facts did not come out at the hearings. I watched the whole thing. GMAC was a great financing vehicle when it just made auto loans and they did say that there was very little trouble on that front. What they did not mention was that GMAC became a huge mortgage lender about ten years ago and that has cost GM $Billions. Cerberous now has the responsibility of trying to bail out from under GMACs bankrupt mortgage portfolio but GM still owns roughly half of GMAC. If GMAC were taken over by the US Treasury, it is possible that GM and Chrysler would survive without further US involvement.
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Nov 18th, 2008 (9:13 pm)“Another possible approach, endorsed by the Bush administration, congressional Republicans, and an increasing amount of Democrats involves changing the rules of the previously approved $25 billion retooling loan.”
Ok. Since the Dems don’t have enough votes to pass a second 25B, and it is becoming more and more unpopular with the folks to bail out the Big 2.8, then hold your nose and go along with the Bush plan to re word some of the first 25B loan. That money is sitting there.
Later, if things do look better, then pass a second 25B for fuel efficient expenses. That should be no problem with a Dem controlled congress and Pres.
But, I still would put heavy strings on the loans… Those mentioned in Lyle’s “The Automaker Bailout Congressional Debate Has Begun” yesterday, plus one more little thing. Union and management pay scale must be in line with Honda and Toyota USA! No need for any positioning or negotiating.
And I’m not buying a Chinese Volt.
=D~~~~
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Nov 18th, 2008 (9:30 pm)People are so Gready
These GREEN people who used to buy SUVs are now bashing GM.
I think they are angry there yuppie homes are not going up any more.
American people are getting greedy now and putting a few tax dollars of there own to make the USA a great place.
Spend 25 b now so you don’t have to spend 600b later.
Face the fact your home will lose value for the next 10 years.
Time for people to stop thinking they will make money on homes its time to get back to work on products.
WE NEED GNP
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Nov 18th, 2008 (9:33 pm)Statik,
Couple of things i’d love to get some detailed feedback on. I’ve been beating you up over the “gm’s going chapter 11″ thing for months. I’d just like to say i apologize you were right, and stated it at a time and place that wasn’t very popular, which takes grit.
First, is chapter 11 even feasible from a finacial standpoint do to the unavailable credit right now. If GM can’t get a loan now, who is going to fund their reorganazation? Especially with all the “people don’t buy cars from bankrupt companies” talk?
Assuming that the only place GM can get money for a chapter 11 is from the Fed…. Any predictions on how a bailout/chapter 11 combination might be handled?
How will it affect the shareholders? (like me) (who thought they got a steal at $5.15 a share)
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Nov 18th, 2008 (9:39 pm)Another comment on the big 3 bailout!
I find it funny that the feds will give the finacial industry $700 Billion, an industry that has a fraction of the physical assets, and employs a fraction of the amount of people.
But they won’t give the big 3, which has billions of dollars in physical assets (factories, buildings, machinery, etc…), and has a direct finacial connection to easily 3 million americans. 25 Billion dollars? It just makes no sense!
Does anybody think the entire auto industry is worth 25% of what we have already given AIG, a insurance company with probably 50K employees.
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Nov 18th, 2008 (9:49 pm)JonP
Sell tomorrow.
There is NO credit for good projects, let alone a gamble on GM.
I used to support a C11 and then Govt bailout, but now realise most of the costs will have to be picked up by Govt anyhow, eg, retirement benefits. Check out:
http://www.greencarcongress.com/2008/11/study-examines.html#more
Damned if you do, damned it you don’t.
I also note the international, ocean going, car carriers are looking to lay up 25% of the fleet. Lost Link.
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Nov 18th, 2008 (9:50 pm)I heard today that Mattel, theToy Company is still making toy cars and showing a good profit. Maybe GM should get rid of Wagoner and his cronies and let Mattel buy and run the company.
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Nov 18th, 2008 (9:50 pm)These auto makers do not need to be bailed out. What they need to do is the following:
1. Stop the assembly lines that are building these huge overstock of SUV’s
2. Get their engineers to design retrofit electric drive trains for existing cars
3. Lay off un needed white and blue collar workers
4. Retool assembly lines to build electric drive trains for retrofitting
5. Sell these retrofit electric drive trains through their dealer networks
6. Problem solved!!!
7. NPNS
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Nov 18th, 2008 (9:56 pm)“He (Rick) also promised the Volt in return for aid stating:” – So, no “AID” reveals the threat of no VOLT?!?!?
Why is this guy still steering the ship? Why is #22’s post not being done. At least that would be the actions of a company deserving of a loan/bailout!
GO CHINA, GO VOLT! (or whoever else will build the 1st mass EV)
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Nov 18th, 2008 (9:58 pm)JonP #19.
I don’t. The banking industry is country wide, the car industry is, mostly, concentrated in a few states. NOT a good vote winner.
Maybe Warren Buffet when he bought into BYD, planned to pick up parts of GM et. al. in C7?
From my previous post, I should also mention, four months ago there was a shortage of, shipment, capacity. This is worldwide, and a serious turnaround.
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Nov 18th, 2008 (10:01 pm)I remember when this site used to be about the GM Volt and it’s technology. I used to read it eagerly every day. I don’t like reading a “bailout blog”, not so much because of my position on the matter, but due to the fact there is nothing I can do about it. This used to be where I went to get away from bad new on the TV and radio.
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Nov 18th, 2008 (10:13 pm)Alan Mulally did a great job and gave very specific plans for the future. Note to government and shareholders: Alan Mulally is the cream of the crop and should be allowed to do his work. You cannot find someone better suited for the task. Period. I also think he will be the one that brings the concept of lightweight vehicles using carbon fiber to mass market. He already did it with the Boeing 787 Dreamliner.
Mr. Wagoner also did a good job but did not give as many specifics.
The thing I didn’t hear enough about was the push for the electrification of the automobile. I guess with the current price of gas being so low people would not understand anyway. However, most of the people in the know realize the price of gas will go up again. Unless we are going to stay economically stagnated until supply can be pushed pasted 86 mbd or the EV makes oil less relevant. Both of these are going to take a long time.
Thus, I’m beginning to change my position. Perhaps that $25 billion bridge loan could be tried. Even though the companies will be back before the end of the year, we will better be able to evaluate things. If the economy is worse we will have to let them go into chapter 11. If the economy is better then they might only need another $25 billion or so all the while showing great progress towards their goals. If the union remains uncompromising and the plans are not progressing then we can then feel better about the chapter 11 decision.
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Nov 18th, 2008 (10:18 pm)#24 NZDavid,
Yeah but the big 3 aren’t asking for 700B, there asking for $25B. Which is less than a quarter of what we have given AIG. 1 company, not the entire banking sector. Plus do you think the failure of AIG (just AIG) would have a larger impact than the failure of GM, or Ford.
We’ve already had a handfull of banks fail, and a couple of others fire sale’d to competitors, plus 350B infused into the lending market.
What has changed?
I’m starting to think giving them the 25B already approved until Obama takes office is the only way it works
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Nov 18th, 2008 (10:32 pm)Socialism for the corporations. Capitalism for the rest of us.
Sign me up.
P.S. : All this cash drying up is a hoax. Just ask Uncle Lutz.
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Nov 18th, 2008 (10:58 pm)In the existing though recession, I want to see how many people will be paying $400+ for an auto loan a month. If the Volt is not priced at the right price, GM incompetence remains.
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Nov 18th, 2008 (11:12 pm)#18 JonP said
Statik,
Couple of things i’d love to get some detailed feedback on. I’ve been beating you up over the “gm’s going chapter 11″ thing for months. I’d just like to say i apologize you were right, and stated it at a time and place that wasn’t very popular, which takes grit.
First, is chapter 11 even feasible from a finacial standpoint do to the unavailable credit right now. If GM can’t get a loan now, who is going to fund their reorganazation? Especially with all the “people don’t buy cars from bankrupt companies” talk?
Assuming that the only place GM can get money for a chapter 11 is from the Fed…. Any predictions on how a bailout/chapter 11 combination might be handled?
How will it affect the shareholders? (like me) (who thought they got a steal at $5.15 a share)
#19 Jon P said, “But they won’t give the big 3, which has billions of dollars in physical assets (factories, buildings, machinery, etc…), and has a direct finacial connection to easily 3 million americans. 25 Billion dollars? It just makes no sense!”
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HowDee Jon,
We’ve had some moments haven’t we? It’s all good though, well…its not ‘good’, but you know what I mean. I enjoyed our banter the last few months, keeps things exciting. I
On to your C11 thoughts.
In my mind it is NOT feasibly possible to do it right now in any traditional (or way it was intended) sense, as you say credit is unavailable. Actually, it is remotely possible that most decently healthy companies will be swallowed whole by this economy, so thinking GM can pull off a C11 is dellusional thinking…at best.
What needs to happen here is a government sponsored bankruptcy, which sounds like a official, real entity…but it isn’t, I made that up.
Basically, the check list goes like this, (at least in my mind), the government gives GM some cash out of the ‘its just a retooling loan…no wait it is a bridge loan’ fund. (Look for the real deal to be tabled friday-ish and the money to go out 15 days later, lets pencil in December 5th or 8th lightly in our calenders)
With this money and another few billion from Cerberus it takes over Chrysler (which also scored a touchdown of billions from the US gov’t). It quickly streamlines the management and other random things it can still do on its own. Then it enters C11 (with a predestined/gov’t approved plan) where it cuts brands, dealerships, covers the union in pwnsauce, destroys lots of the suppliers who don’t make critical parts (retains/supports the ‘good/major’ suppliers from the artists formerly known as GM & Chrysler)…and unfortunately, totally oblivates you (if you are still around) and various other debtholders.
After it does all the twirrly things C11 can do, the government strolls up to the bankruptcy judge and plunks down another 25 billion or so, gives him the wink, and it is abnormally accelerated out of C11. (Ideally, a 3 month process…which would be unprecedented, but this is 2009ish and the gov’t is pretty much doing whatever it feels is necessary…so never say never).
GM/Chrysler is reborn as a debt free, with a product deep and rich, with employee costs per hour the envy of all its peers. At which point, the economy could be in a depression and it goes under…or things have levelled off and we get another glorius 100 years of summer buying our American made/America proud cars.
Side note to your comment in #19: The ‘big 2.8+Tesla beggers’ already have the first 25 billion, all the dems have to do is ask, everyone is on board with it. What is happening now is just old fashioned greed, going for the bonus bucks. The first 25 billion can easily be doled out in such a way to see the 2.8 through until Jan 20th, they are just going for the extra score on the old Bush watch (it is like passing go and getting $200 before your responsible for where you land after that).
Side, side note: I’d sell on the rumoUr that they are getting the ‘retooled’ bailout package later this week…might get lucky and get a good pop.
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Nov 18th, 2008 (11:20 pm)If they all refered to their doom and gloom of things to come, then why didn’t they do something about it berforehand? Kind of like buying a house knowing your mortgage is going to “Adjust” then scream for help because you did nothing about it.
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Nov 18th, 2008 (11:38 pm)#11, Carcus, That’s a very good question. I make it less than 0.5% of what Wagoner pulled in last year. Of course, since Wagoner’s salary is in that $54 billion… Well… Sometimes, it’s better to look at the median wage, rather than the average. And when we examine the median, the median gets jack and Wagoner lives like a king.
#3, Lurtz, GM’s market cap today was $1.89 billion. Don’t wait for the Chinese to move, you can pick up a big chunk of GM for pocket change and help avert a Chinese takeover.
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Nov 18th, 2008 (11:40 pm)12 StevePA “This refusal of some politicians to support even additional short terms loan assistance, with conditions, is laughable.”
If you want comedy, show me someone naive enough to believe this $ will come with any conditions attached that lead to real solvency, now that is knee slapping funny!
14 matt “I’ve started to think the loan to them might be worth the trouble…They need to reduce what their CEO’s and employees earn for sure. This 30 an hour crap is crazy”
Can anyone show me WHERE in ANY article written about this a single politician has put forward the idea of pay cuts for the UAW? I suspect the purpose of this bailout is less about preventing some mythical “catastrophe” and more about preventing precisely that change.
17 greg finkbiner “American people are getting greedy now and putting a few tax dollars of there own to make the USA a great place.”
Uh, I don’t know what grade you got in basic American Civics class, but the government using tax dollars to give away to mismanaged corporations….hold on, looking in my dictionary….nope, “greedy” doesn’t seem to apply in any way.
I’m scared that you vote.
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Nov 19th, 2008 (12:09 am)I thought the hearing was interesting and I was impressed with most of the Senators. Generally speaking they asked more insightful questions that I expected and were prepared for some give and take.
#30 Statik – “What needs to happen here is a government sponsored bankruptcy, which sounds like a official, real entity…but it isn’t, I made that up.”
Texas suggested something similar but yes, you’re right, a government sponsored bankruptcy doesn’t exist. One basic problem is that a bankruptcy proceeding couldn’t possibly be as short as three months because the issues are far too complex and solutions would take quite a while to sort out. It would be at least a year, probably two or three.
The reality is that anything you can do in a bankruptcy Congress can do outside a bankruptcy so it’s unclear why you’d want to add a layer to the process. In this regard, some of the Senators joked that it was cheaper to do a bail out than to have to pick up the health care and pension pieces, but in fact there is some truth to this.
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Nov 19th, 2008 (12:26 am)GM is a multi-national company. Why should the US be the only one to bail them out?
I’ve thought about this for some time and while I don’t like saying, none of the companies should be bailed out.
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Nov 19th, 2008 (12:51 am)Statik,
I’m thinking monday, but maybe i should wait a little longer?
Maybe buy a couple hundred tomorrow to offset my original losses?
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Nov 19th, 2008 (2:00 am)ditech a GMAC company
Lost another loan to ditech!
Maybe they shouldn’t have made that loan LOL
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Nov 19th, 2008 (2:53 am)Gotta love how Ricky didn’t want to give up any more of his salary when asked by the senate. He said he already gave up 50%.
Poor bastard only gets a “reported” 8.5 million.
Whats an ass hole that has no concept of reality.
If he cant handle no salary until he turns around the company he has no capacity to run the company period.
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Nov 19th, 2008 (3:36 am)First Chimes GM & Chrysler falls
Second Chime Ford Falls
Thirds Chime USA citizens ride bikes to work!
Always new this was going to happen – but the speed it’s happening is really suprising me.
What Say –
If all the Amerians are sitting in eateries eating or shoping at Walmart buying Crap from the PRC.
? Who exactly is working to make ANYTHING in the USA any how you going to pay back your “lifestyle” to the rest of the world.
The US dollar should be worth about near nothing one would think by now.
Maybe the overseas interests are keeping it high so they can milk every bit out until they pull the life support plug right out of the wall.
Seems to be the go of the majority of the US congress / senate and big CEO / Union mentality short term quick buck metality.
“Medals all round” (For stupidity)
Tragic really for the Volt it’s starting to appear.
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Nov 19th, 2008 (3:52 am)
Nov 19th, 2008 (3:55 am)My last V8 was sold in 1985. My last V6 was sold in 2002. My wife and I now drive 4 cylinder cars and I ride my motorcycle as often as possible. We want to replace one 4 cylinder gas burner with an electric car.
We know the price of pump gas will march side-by-side with the S&P. Which means a return to $3.50 a gallon as the economy recovers.
This is a funny game. Analysts are so sure of a dropping economy that they have estimated many very fine stocks with very low expectations. These low expectations will be easily beat and the economy will see this as the storm having passed. I expect a strong recovery within 18 months.
I also expect a downsized GM with some sort of shared interest from a former Chrysler LLC. One of the topics mentioned in the Congressional meeting of yesterday was a shared R&D department wherein the big 3 could save costs by working as a team. This is a small step forward. And good news to shareholders.
=D~
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Nov 19th, 2008 (6:07 am)hi JonP #18,
“How will it affect the shareholders? (like me) (who thought they got a steal at $5.15 a share)”
______________________________
I’m with you. I thought GM at $5.28 was a flat out bargain. The information GM had released concerning a plug-in Vue, a 25MPG 200HP Camaro, and a soon to be released Cruze painted a nice picture. My advice is to place a sell order on all of your stock at $4.93 per share.
The current bail out talks will ebb and flow between do able and not do able. You may be able to get out on a pop. Most stock holders will place sell orders at $5 even. Don’t be greedy, get out at $4.93 and wait for news. If things work out. Then GM at $6 will be a good buy. There will be plenty of opportunity to get back in.
=D~
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Nov 19th, 2008 (7:10 am)What bothers me is that the US government can give 700 billion to wall street for paper but can’t come up with another 25 billion loan to automakers so they can survive until they can bring new lines of cars to the market.
IMO the government needs to loan the 25 billion to the automakers but with the stipulation that 1/2 the cars they produce across all lines, starting now, would be CNG. You can refuel at home but what about long trips… What? No refueling stations? Contact Walmart and tell them to put a public CNG refueling station at every store. Walmart is currently considering converting to CNG for their trucks.
Build something that will give people a reason to buy a new car and they will buy a new car.
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Nov 19th, 2008 (8:40 am)#36 JonP
Statik,
I’m thinking monday, but maybe i should wait a little longer?
Maybe buy a couple hundred tomorrow to offset my original losses?
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Your a gambler my friend.
I would not pick a hard day, just watch it play out.
I don’t know if I would want to keep playing the GM stock game, but theoretically Wednesday/Thursday would be the low before the pop on rumoUr that the 25 billion is going through (I don’t know why everyone has not already put together the fact the first 25 billion is all but guaranteed).
I think you would be better off just holding the line right now, trying to get out at $4.00 and just take your losses on the other $1 and be happy. If you have to play something, buy some puts on Caterpillar or somthing.
I like this if you want to do a little market gambling and want to get right in there today and try and chase down that 20 points today, lol:
CATNI.X–Feb 09 puts ($45) @ 11.85
(Caterpillar closed at about 36 bucks yesturday)
http://finance.yahoo.com/q/op?s=CAT&m=2009-02-20
(Standard disclaimer: As always, invest at your own risk and do your homework, and don’t make me feel bad if you lose money, hehe)
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Nov 19th, 2008 (9:05 am)#34 DonC
#30 Statik – “What needs to happen here is a government sponsored bankruptcy, which sounds like a official, real entity…but it isn’t, I made that up.”
Texas suggested something similar but yes, you’re right, a government sponsored bankruptcy doesn’t exist. One basic problem is that a bankruptcy proceeding couldn’t possibly be as short as three months because the issues are far too complex and solutions would take quite a while to sort out. It would be at least a year, probably two or three.
The reality is that anything you can do in a bankruptcy Congress can do outside a bankruptcy so it’s unclear why you’d want to add a layer to the process. In this regard, some of the Senators joked that it was cheaper to do a bail out than to have to pick up the health care and pension pieces, but in fact there is some truth to this.
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A gov’t sponsored entity could be anything or any timeline they set it out to be, because basically they are exerting external pressure on their own system and they ‘control the show’ Am I saying that is what is going to happen for sure? No.
I freely admit I am not good at predicting what the gov’t/bureaucracy is going to do, it is too big and has too many backdoor handshakes and trade-off deals…the market is more my thing.
This is your quote, “The reality is that anything you can do in a bankruptcy Congress can do outside a bankruptcy so it’s unclear why you’d want to add a layer to the process”
Yes I agree, it does add a layer to the process, you are completely right. However you cannot do all the things outside of bankruptcy that you can inside…congress or not. We have become to focused on this as a US problem, there are external factors at play here as well.
The problem is that the US does not live in a vacuum. It can not subsidize the auto industry to the extend it needs to. Future problems (post your suggested massive government intervention) is the EU and the WTO…as there are about a zillion rules the WTO has governing how member nations can subsidize their industries. Even as it stands right now they may be in violation.
Jose Manuel Barroso (European Commission President) is already out there pounding the drum warning the US to not take it too far, and they have oversight monitoring it. If this was a Chrysler only bailout, they could press the limits and skirt the authority, but it is not…it involves GM, and the only place GM makes sense right now is in Europe (with a little AP and Latin America on the side).
This is the bigger problem once we get passed this bailout. The WTO wants the ‘big 2.8′ alive, but not so much that they are competitive beasts because of gov’t support. It is a slippery slope to be sure. That is why the company has to go through the ‘C11′ dance, it has to be obliterated inside those governances then be given ‘the loan’ when the money has the desired effect of making Detroit autos a force to be reckoned with again.
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Nov 19th, 2008 (11:06 am)A history lesson on why this only delays the inevitable
A British Lesson on Auto Bailouts
http://www.nytimes.com/2008/11/18/business/economy/18car.html?_r=1&th&emc=th
and another $25B is only enough to get them to the Spring…. they will be back for more, and more and more and more….
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Nov 19th, 2008 (11:17 am)JonP
Well, if you really want to double down and try to hit a pop on the first 25 billion being approved later in the week…now is the time.
Currently:
$2.52 -.57 (-18%)
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Nov 19th, 2008 (11:28 am)Just a bit of history, as we seem to constantly repeat mistakes. In 1982 Ronald Regan hired an outside consultant to review the Savings and Loan mess that was just developing. It was estimated that Uncle Sam would have to spend around $25 Billion, at that time, to straighten out the few weak S&Ls. The outside consultant came back six months later and published a white paper saying that there was no real problem, that all would right itself and the US Government should do nothing. That consultant was Alan Greenspan. Three years later it took $250 Billion (plus that much again in interest on the borrowings) to straighten out the S&L industry. The problem was later identified as resulting from deregulation over the previous decade.
This bit of history crosses over the lines of both our current financial mess and the ones the auto companies face.
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Nov 19th, 2008 (12:11 pm)Brad G says,
What bothers me is that the US government can give 700 billion to wall street for paper but can’t come up with another 25 billion loan to automakers so they can survive until they can bring new lines of cars to the market.
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What did they do with the Sept. 25 billion? Has GM been blind for the last several years? VW came out with the Beetle and that should have been the first clue to the Big 3 that they had better get the lead out. And now 30+ years later they want to retool and get propped up by the taxpayers. Get Rick Wagoner to donate some of his millions to the cause. 60% of the US retail product is labor so no wonder the US cars won’t sell. The Japanese auto market accounted for 54.7% of the auto sales in the US. Get with it Big 3 !!!
An American named Demming offered big companies a plan to improve their products and service several years ago. The Big 3 turned it down, the Japanese Auto makers accepted the plan. Soooo
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Nov 19th, 2008 (12:28 pm)“First Chimes GM & Chrysler falls
Second Chime Ford Falls
Thirds Chime USA citizens ride bikes to work!”
It’s not like the rest of the car companies won’t exist because American car companies fail. And why do people think that if gm dies the rest will, if people want to buy American then American cars will get more business…so the rest should start doing better.
Suppose they all did die, I would imagine in less than 5 years there would be another US automaker, this time with products that are as good or better then Japan. It’s not like we can never have a car company if these fail.
Like so many other people have stated, what is throwing money at a problem without a solution going to do. They will continue to throw the money away, and eventually we may get the volt, if they are still around. Honestly im sure that if they go down another company will buy the volt and continue development. Even though Toyota and Honda say they are not interested, im sure they would like to study the technology to see if it offers some improvements on their own system.
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Nov 19th, 2008 (12:41 pm)Well, I have to agree with Statik, once again. He has been right in the past and I believe he is right now. The only problem is to get GM and the government to agree to go through a “government sponsored” C11 as Statik explains it. Sounds good, but will they do it? Can they do it?
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Nov 19th, 2008 (4:27 pm)Funny how folks are saying “They” when referring to the govt. handouts. The govt is and should be “Us” not “They”. We are the ones giving up this money, not “They”
It’s as if folks believe in some magical government piggy bank that mysteriously gets replenished with free money whenever we take a draw for a few hundred billion….
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Nov 20th, 2008 (7:35 am)I liked the hearing bit where the senators questioned the execs about arriving in private jets.
If the execs can figure how to cut the salaries of 16,000 employees by $1,000 they are ecstatic. Saving the same amount by cutting one executive is unthinkable to them.
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