AND 
The Automaker Bailout Congressional Debate Has Begun
Since January 2007, the goal of this site has been to be the definitive source of news, information, and discussion about the Chevy Volt.
The possible and imminent failure of GM is the most important news right now, whether we like it or not. I wish we could simply be happily discussing the Volts features, progress, and impact and indeed hopefully we soon will. However, discussing some of those details right now is sort of like marveling at the ornamentation of champagne glasses while cruising on the Titanic.
Hence the recent shift in tone in this blog. Stick with me though, if GM survives this iceberg, we will get back on track.
On Monday Senator Harry Reid opened the lame duck session of statement saying, “All it would take is one stroke of a pen and that problem would be solved,” referring to the new $25 billion dollar automaker bailout plan which hew unveiled. In response to its possible failure he said “Senators have a choice to make: We can wait until January when we have a new Congress and new president, or we can try to start working on these problems now.”
The Bush administration continues to argue against taking this money from the wall Street bailout or TARP fund. They agree assistance is needed but continue to insist the money should come from re-tooling loans already legislated but yet undispersed.
It is thought to be unlikely that the Senate will be able to muster the 60 total votes necessary to get the measure passed, as the Republicans Senators are thought to be largely against it.
Arlen Specter (R) although not ruling out supporting the bill stated, “I’ve yet to see any semblance of a plan for General Motors to become viable.” Senate Minority Whip Jon Kyl said he didn’t support the plan saying “there’s no reason to throw money at a problem that’s not going to get solved.”
If the bill passes the Senate it is expected to pass in the House, where democrats have a greater majority. House Speaker Pelosi introduced the somewhat stricter House version there last night.
GM’s CEO has said they don’t have enough capital to make it until Obama takes office in January. In fact GM just sold its stake in Suzuki for $230 million and had to defer November dealer incentive payments by 2 weeks.
Obama for his part has stated “For the auto industry to completely collapse would be a disaster in this kind of environment.”
The basic tenets of the Senate form of the bill are as follows:
– $25 billion in 10-year low-interest loans, charging 5 percent interest for the first five years and 9 percent for the remainder of the loan terms.
– Parts-makers as well as the Big Three would be eligible.
– The money would come from the $700 billion rescue/bailout plan.
– A prohibition on bonuses for automaker employees making more than $250,000 per year.
– Fast processing: Eligibility for loans will be determined within 15 days of application.
– Fast turnaround: The loans would be distributed within seven days of approval.
– “Clawback” provision: Bonuses can be taken back by the government if executive statements are found to be inaccurate.
– No golden parachutes of any sort.
– Companies receiving these loans cannot pay dividends for the duration of the loan.
Today GM CEO Rick Wagoner, and the CEOs of Ford and Chrysler and the UAW president are all expected to give testimony at a Senate hearing and plead their case.
Source (AFP) and (CNN) and (MarketWatch) and (Washington Post)
See this GM video on the risk to automakers:
[flash http://www.youtube.com/watch?v=72cHfOKoA1c]
89 Responses to “The Automaker Bailout Congressional Debate Has Begun”
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November 18th, 2008 at 7:19 am
Frankly, I’m with Specter on this one: why throw money at a problem that isn’t getting addressed? But, if we let the automakers fail, the ripple effect could be catastrophic. What’s the solution: wait until the companies decide to try to fix their problems, then give them money (when it may be too late); or give them money now, with the provision that the money could be yanked away if they don’t fix their economical issues?
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November 18th, 2008 at 7:24 am
From reading Lyle’s comments above and others in media including internet, I come away with the perception that GM’s Plan is not being communicated. I have seen nothing by GM spelling out in no uncertian terms their turn-around program. We know something about 2010 labor ageements, the Volt and E-85. ‘The Plan’ needs to be communicated to everyone. Arlen Specters confusion this late in the process is troubling.
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November 18th, 2008 at 7:25 am
This is just rewarding bad behavior. This money is really just bailing out the UAW. Let them fail so they can rid themselves of unions.
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November 18th, 2008 at 7:28 am
If we give them this money they will be back again. They will not fix the problem. CH 11 is the only answer.
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November 18th, 2008 at 7:31 am
11/18/08 0236 hours
Lyle Dennis, a New York neurologist who has emerged as the Volt’s unofficial first fan and runs the GM-Volt.com Web site (http://gm-volt.com/), has organized a letter-writing campaign to urge lawmakers to help save GM — and by extension the Volt.
“It just seems to me this could easily be the end of the Volt. There are certainly no guarantees,” said Dennis. “I’m no fan of bailouts in general. But I don’t see another way.”
=D~
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November 18th, 2008 at 7:32 am
On Monday Senator Harry Reid opened the lame duck session of statement saying, “All it would take is one stroke of a pen and that problem would be solved,” referring to the new $25 billion dollar automaker bailout plan which hew unveiled.
That is REALLY scary. Is this even real money to them anymore? There is certainly more to consider than a flipant comment of this nature indicates.
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November 18th, 2008 at 7:40 am
I don’t want America’s auto industry to fail, but I have to agree with Arlen Specter. Getting Loans is not a plan! If Rick Wagner thinks he’s the best person to lead GM through the crisis, show the American people a clear plan for turning the company around. We are the bank of America and if you go to any bank in the world looking for a loan you need a business case. Show me a business case. I do like the provisions for the loan about bonuses and such, but that’s just terms of the loan. What is GM going to do differently.
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November 18th, 2008 at 7:41 am
Chapter 11 is the way to go, UAW should be eliminated before anything necessary can happen to revive Detroit three. I will boycott any company receive taxpayer’s money at rate below market rates.
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November 18th, 2008 at 7:54 am
Spin # 4
As a 30 year retired banker, I’m with you. That is what chapter 11 is designed for. This is the only way they can reorganize GM into a company that is competitive in today’s market place. They cannot continue paying approximately $2,600 per car in benefits when Toyota is paying about $400, or less.
God Bless America.
Tom
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November 18th, 2008 at 7:56 am
I say let them fail. After all these years they finally decide to make something viable and fuel efficient?! Give me a freaking break…those 3 never did anything green and instead made gas guzzlers that make America depend on foreign oil. Do we really need cars with V8 in every model…
If a company cannot produce small cars and profit from it then how will bailing them out do anything? That is the reason why they stuck to making those gas guzzlers behemoths on the road cause they were profit driven.
Sorry but these automakers are not innovative and only go where the money is. Their idea of innovation is how many more cup holders they can put in the car or how to make chrome wheels shinier. When you talk to them about green it’s about money not about designing environmentally friendly cars. it doesn’t really matter no one will buy American cars even if they receive a bailout. Who knows if they will survive the next year, they are way behind the other car makers who has surpassed them in quality and innovation.
I will never buy American cars again. I’ll consider Korean before that. there’s already existing technology like diesel they can improve on that instead of making expensive electric hybrids as well. Just goes to show they don’t have much up their sleeves to save them.
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November 18th, 2008 at 8:16 am
From the article: “The Bush administration continues to argue against taking this money from the wall Street bailout or TARP fund. They agree assistance is needed but continue to insist the money should come from re-tooling loans already legislated but yet undispersed.”
————————————————————————————–
Yes, this is the best tactical plan. Use the $25B retooling loan as a band-aid for now. This will keep GM running until mid 2009. After Jan. 20th, it will be much easier to get a real package passed. In other words, do it in 2 phases.
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November 18th, 2008 at 8:26 am
As a 55 y/o Internist and not involved with this site I agree with many of the views. GM needs help and throwing money is not the answer but letting the company go bankrupt is not the answer either. All of bought the SUV’s and the guzzlers so we contributed to this too. We have to stick together and say this is what we want ie: good quality low gas consumtion cars that are competitive. Are there postions in GM that are overpaid and protected by the UAW or are salaries from CEO’s too much. I don’t know but there must be some belt tightening.
Lyle thank you for this site for creating a sounding board. Hopefully this will not be the end. We need good neurologists in Florida if this site falls.
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November 18th, 2008 at 8:30 am
Everyone else gets a bailout, why not mainstreet which helps workers directly. I’m watching AIG and their “retreats” with golf outings and spa treatments. That is bullshit. At least this way, some of us will get indirect benefits (with our $7,500 tax rebate) because of the Volt. Moreover, I want independence from OPEC. I’ll eat it THIS time.
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November 18th, 2008 at 8:37 am
Don’t live there but as everyone else on this planet, I always been benefiting from a strong US economy. What’s at stake here is not merely saving the job (or reputation) of a few overpaid corporatists it is about saving the whole American automobile industry from collapsing.
One may think competition will take over but if so that competition will come from abroad. Not buying anything from the us since the “local” suppliers themselves wont be able to survive this.
What we need is to make sure there is a viable plan for the industry to survive and finance that plan. The payback for the gov’t will be in revenues/tax not lost.
Anyhow here in Canada we are starting to put pressure on the federal govt to have them save the auto industry too.
And I still want the volt around in 2010…
NPNS
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November 18th, 2008 at 8:38 am
Is it really true that a peice of $25 billion could help GM limp along into the “year of all years” for the US auto industry…..2010 ???
Isnt it going to take WAY MORE $$$$ than that ???
If so….this thing just needs to go Chapter 11….
When is the contract between GM & the UAW able to be or scheduled to be restructured to a point that it isnt choking the life out of itself ???
I’m someone who thinks that if there is any federal money used for the auto industry that there needs to be many conditions set….and condition A. #1 would be ….. that there will be NO MORE
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November 18th, 2008 at 8:39 am
Let’s trust the process …
The Congress can pass a bill that provides more money, or fast track application of existing money, as long as it doesn’t take away from the $700 billion earmarked for the financial services companies.
Either Dems follow those simple rules, and get what they need for the automakers, or they don’t.
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November 18th, 2008 at 8:40 am
The bail out is a done deal.
The Republicrats can’t resist the UAW (or any other strong lobby). These traitors in congress will print the money to bail out EVERY big company who has a lobbyist with a sack full of campaign contributions.
Of course all this new money and credit flooding the market (inflation) will reduce OUR buying power so EVERYTHING we buy will cost more but these socialists will claim that THEY are our saviors because we are too stupid to think for ourselves and vote with our pocketbooks. They claim (and we seem to think) that we NEED a big brother. ;(
Inflation is a tax too…
Meanwhile, the gov’t socialists will do what they do best and through central planning micro-manage production with endless regulations until industry dies of it’s own inability to compete in the global market. Jobs will be lost and store shelves will empty just like the Soviets before us.
The people are too asleep to learn from history that bureaucrats are NOT smarter than the market so this madness will continue until there is no food. Only then will REAL change happen.
Will we go back to the Constitution or will be believe that MORE bureaucratic central planning will solve the problems caused by the previous bureaucratic central planning? That’s anyone’s guess. Polls indicate that many believe that MORE of the same equal does mean “change”..
Apparently sheeple believe anything a politician says to them on TV as long as the lie includes the word “change”. What I’d like to know is “Change into what?”
Yep, we’re pretty much screwed. Now, it’s only a question of how hard and how fast.
Welcome to the New World Order. Be careful what you wish for…
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November 18th, 2008 at 8:41 am
Was it just me, or was anyone else looking for a pattern or words spelled out in Lyle’s picture of those cars?
I mentioned this in a older thread, but it looks like the dems plan is already dead. However, according to ‘various’ sources, they already have a ’split the difference’ agreement to be tabled thursday or friday, (supposedly it has already been and rubber stamped by both sides), which is basically distributing the original 25 billion dollar package, comically envisioned as the ‘fuel efficiency plan/retooling loan program (like anyone believed that). The modified 25 billion will have the same ‘quick discharge’ properties as this current plan, but have little provisions, other than PR-type maneuvers like executive compensation limits.
Random things to watch today (GM related or not)
A) the 3 CEO’s getting grilled
B) Ben Bernanke and Henry Paulson before the House Financial Services Committe
C) Labor Department releases its October reading
D) National Association of Home Builders issues its monthly forecast
E) National Association of Realtors releases third-quarter area home prices and sales
/should be a fun one, I’m going to go out on a limb and guess a trading range greater than 100 on the DOW (600?)
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November 18th, 2008 at 8:42 am
GM needs to go Chapter 11 and completely reorganize. I want GM to succeed but 25 billion will only postpone it a few months. The Democrats are mainly trying to save the unions. They aren’t seeing the big picture.
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November 18th, 2008 at 8:46 am
Other random observations:
——
Ford sells Mazda stake to raise $540m
Ford Motor (NYSE:F) is to raise about $540m in desperately needed cash by selling 20 per cent of Mazda, its long-time Japanese affiliate and manufacturing partner.
The US automaker’s decision, announced on Tuesday, follows the sale by General Motors (NYSE:GM) of its interest in Suzuki, another Japanese producer, and underscores Detroit’s narrowing financial options.
Ford burned through $7.7bn in the latest quarter and is lobbying the US Congress for aid, alongside General Motors and Chrysler, to weather its worst US sales slump in more than two decades.
http://us.ft.com/ftgateway/superpage.ft?news_id=fto111820080727172821&referrer_id=yahoofinance
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November 18th, 2008 at 8:47 am
10:
I suggst you research the Eco lobbyists and the EPA vs. Diesel. That is why there are no “hyper efficient diesel cars that every other country has”
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November 18th, 2008 at 8:56 am
“At least this way, some of us will get indirect benefits (with our $7,500 tax rebate) because of the Volt.”
All that means is that Mr. Wagner will add 7500 to the already to the cost of the Volt – another ‘bailout’. Forget it. Let GM go into chapter 11. We will have electric cars eventually, and the world won’t come to an end if GM doesn’t produce them. But face it, is 10,000 cars the first year really for the masses?
In the midst of all this GM has launched the escalade hybrid – please. The history of Detriot is that when times are good problems are ignored. If we taxpayers help them survive, we are just delaying the inevitable which will be another bailout or chapter 11. Let’s save 25B (which we don’t have) and some time.
Lastly, I support labor but paying folks $73 bucks an hour to build cars is not sustainable.
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November 18th, 2008 at 9:00 am
#14 Lunoir
What we need is to make sure there is a viable plan for the industry to survive and finance that plan. The payback for the gov’t will be in revenues/tax not lost.
Anyhow here in Canada we are starting to put pressure on the federal govt to have them save the auto industry too.
————————————
Not to step on your toes, but proportionally we have put on very little pressure on them (probably due to the regional instensity of the auto manufacturing business in southern Ontario and virtually non-existant elsewhere) and the government has all but said ‘nice try, we’ll just sit by quietly and wait for you to please go away’ (Right now they are on ‘information gathering sessions, lol)
We have Finance Minister Flaherty on record saying, they will get nothing until the show us a plan for recovery…which is basically like asking Wagoner to show him a Unicorn.
Clement is the industry leader, so he is probably the only guy who wants to do something inline with the US…but he is so new, he has no leverage at all, and even he is quoted as going down the same ‘logic path’
“People talk about … the need to have an integrated solution. And from a theoretical point of view, that makes sense,” Clement said on Friday. “But how viable is it? What exactly does that mean?”
Clement quote source:
http://www.cbc.ca/canada/story/2008/11/14/clement-autos.html
——————-
CAW is also hardlining, this dropped this morning:
CAW OFFERS NO BREAKS FOR AUTO BAILOUT
http://www.nationalpost.com/news/story.html?id=967581
/if we give them anything…it looks to be ‘token’ in nature
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November 18th, 2008 at 9:06 am
#18 statik says
“…agreement to be tabled thursday or friday,…”
==========================================
A phrase that has a somewhat different meaning from place to place is “… to be tabled …”
In countries such as Canada, my understanding is that “to be tabled” means “to be made public for consideration” or more strongly “to be voted on”
In the USA, which tends to follow the language of Robert’s Rules (Robert having been a US Civil Engineer who presided over contentious disputes about public works) the phrase “to be tabled” means almost the opposite. Here “to be tabled” means “to be set aside” and never considered again, i.e. trashed. (That is, unless a super-majority agrees to pick it back up off the table.)
It is fascinating how language works, even when everyone thinks they are speaking “English” (even though none of us are actually in England).
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November 18th, 2008 at 9:10 am
Exchanges with Fed Chairmen
http://www.youtube.com/watch?v=CZtLdO5NmAU
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November 18th, 2008 at 9:21 am
#24 RB
A phrase that has a somewhat different meaning from place to place is “… to be tabled …”
In countries such as Canada, my understanding is that “to be tabled” means “to be made public for consideration” or more strongly “to be voted on”
In the USA, which tends to follow the language of Robert’s Rules (Robert having been a US Civil Engineer who presided over contentious disputes about public works) the phrase “to be tabled” means almost the opposite. Here “to be tabled” means “to be set aside” and never considered again, i.e. trashed. (That is, unless a super-majority agrees to pick it back up off the table.)
It is fascinating how language works, even when everyone thinks they are speaking “English” (even though none of us are actually in England).
————————————
Yes, you guys are wrong, but what would you expect from people still not using the metric system…just kidding.
Sorry, I should have said, ‘will be proposed and voted on,’ and not tabled, I try to speak as universally understood as I can…although it kills me to not put ‘U’s in everything. Now go back to what you were doing, I’m going to go outside, get in the queue for some chips, crack open a cold pop and flake out on my chesterfield.
No seriously, check the map…I think it is time to switch, regardless of how hard trade relations with Myanmar or Liberia will be hurt:
http://upload.wikimedia.org/wikipedia/commons/0/00/Countries_adopting_Metric_System_2006.png
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November 18th, 2008 at 9:23 am
#10, I agree.. Instead of making really cool cars, that people REALLY want, they produce the behemoths you refered to, but they made a hybrid version, that cost $15K MORE THAN MY 1ST HOUSE. Then to make it better, they are going to make the ULTIMATE vette, like those fly off the dealership floor to begin with, and a basic price tag of $103,000!! Are they mad???
GM knew that electric cars were the future, but they ignored it, and pursued Hummer.. What a mistake that was, now they don’t know what to do with it! Ironic, Absurd, and Stupid.. Gm should file chapter 11, and get it over with.
#21, I don’t know the debate on Hyper Diesel, but remember California is stingy, and paticular… Our Diesel is “dirtier” than Europes.
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November 18th, 2008 at 9:29 am
______________________________________________________
Doctors Are Throwing In the Towel Due to Insurance and Government Red Tape:
“Half of primary-care doctors in survey would leave medicine…an identified exodus among family doctors and internists…because there’s too much red tape generated from insurance companies and government agencies.”
Source: http://www.cnn.com/2008/HEALTH/11/17/primary.care.doctors.study/index.html
——
What does the above article have to do with GM? The answer is in the form of a question:
Will a government bailout/loan add to or partially relieve GM’s burdensome UAW, governmental, and inter-organizational red tape?
______________________________________________________
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November 18th, 2008 at 9:40 am
First of all, stop calling it a ‘bailout’! Second, realize the U.S. government has been doing this sort of thing since the dawn of this country (i.e., puting their holy hands on business). Third, I agree with most people here. GM needs to show us something. Give us a roadmap before we’re forced to invest in your company. Show us you know what the problem is and show us you know how to fix it.
Lastly, here’s some advice to GM: read everything you can about Lee Iacocca. Learn how something as homely and ungainly as a K-Car can save a company. I remember those days. Damn cars were like rats in a New York sewer. They were everywhere. It was cool to own a K-Car.
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November 18th, 2008 at 9:49 am
#26 statik says regarding a US switch to the metric system:
“No seriously, check the map…I think it is time to switch, regardless of how hard trade relations with Myanmar or Liberia will be hurt: ”
==================================================
What we are now is seriously schizophrenic as relates to units.
Everything in the USA that I do and everyone I know does that has to do with science, engineering, or business already uses metric units.
Everything that has to do with ordinary life uses English units.
The country could change in a day except for all those pesky highway signs and bathroom scales. Tradition dies hard, especially when people sort of like it.
That is, it is all the fault of George Bush.
But under Obama, our mantra is ” change “, so all will be well.
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November 18th, 2008 at 9:52 am
A lot of comments on how the failure of the big three will affect America. That would put the states into a full blown depression for sure. What about the rest of the world? Whatever happens to America, the world soon follows. Many of the raw materials and even parts for our cars are purchased from other countries. I’m sure they are scared to death right now wondering if the American Empire is going to fail, and if it does, it’s going to take a lot more than just American’s with it. When the auto industry can apply for these loans the application must have a complete plan to cut costs. If not or if the plan is not a 45% reduction in operating and support expenses, including major cuts to labor and executive pay, then the application is denied.
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November 18th, 2008 at 9:53 am
If they do get a bailout; which I don’t think they should get one of the stipulations should be forcing the UAW out. They’re a cancer on the american auto makers. That’s the only reasonable way I see any of the Big 3 surviving in the long term. I could see when I was 15 y/o that their BS was going to sink american automakers. Just like other unions have had a starring role in crippling other major american industries over the last 60 years.
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November 18th, 2008 at 9:54 am
#18 Static
Is a trading range greater than 100 out on a limb Static? Slacker. Hehe.
I have a prediction of my own. Congress will dither about and ultimately arrive at a solution that does nothing for the economy but will satisfy lobbyists who contribute to their campaigns.
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November 18th, 2008 at 10:01 am
The political nature of the recent posts is really starting to bother me. Supporting $50,000,000,000 in corporate subsidies for the big 3 seems like a long & costly distance from supporting EREV’s. And scare tactics like that YouTube video are not constructive.
IMHO Lyle, you’re using your hard-earned & well deserved credibility for the wrong thing. And credibility is a scarce resource.
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November 18th, 2008 at 10:08 am
#30 RB
I’m just busting your chops passing some time until we get some real news.
Side note: October wholesale pricing plunged 2.8%, biggest drop in…ever, well 60 years, killed the old record of -1.6 in October 2001).
Side, side note: GM busted its way into the ‘Twos’ today as well, $2.86, I think that is the low since around when they signed the Magna Carta. I believe there was some kind of GM assistance built into that too. King John gave them some horses and the deed to some forested land for use in ‘freshening up their line of wagons and catapults’ …of course he also limited the CEO at the time to no more than 6 personal peasants working in his manoUr at once.
=====================================
#33 Cautious fan
“Is a trading range greater than 100 out on a limb Static? Slacker. Hehe. ”
—-
Way out on a limb, heeh.
(I put 600 in quotes…so I have it all covered)
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November 18th, 2008 at 10:12 am
#9 Tom M – “As a 30 year retired banker, I’m with you. That is what chapter 11 is designed for.”
No offense, but I’m not sure what sort of banking experience you had. Having worked with bankruptcies in an earlier life, the people arguing for bankruptcy are delusional. Not only are bankruptcies slow and inefficient, but the oversight is minimal, the standards are inappropriate for the current situation, and all plans are developed by the debtor in possession, which in this case would be the managements of the companies. I’ll generalize a bit, but if you look you’ll notice that people who know bankruptcy think it’s a bad idea and those who don’t think it is.
Moreover, this is definitely NOT what bankruptcy was designed for. Quite the opposite. You don’t seem to have the foggiest idea what is at stake here. Only in part is the issue the viability of the US auto companies. The larger issue is the survival of the manufacturing capability of the country and the ability of the country to continue its economic expansion and provide for national defense. Basically those like you advocating bankruptcy are essentially claiming that Mexico is a good template for the US. I for one strongly disagree, preferring our economic model to that of our neighbor to the south.
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November 18th, 2008 at 10:18 am
If I went to my bank without a definate business plan (including specifics as to how the monies are to be used), they would look me straight in the eyes and point to the door..
GM show America, Canada and the rest of the world your REAL intentions..
Be up front and tell us.. then show us
ok.. Chapter 11 or close the doors or whatever you have to do in the US..
There’s the door buddy..
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November 18th, 2008 at 10:18 am
#13 (Dave B) wrote “I want independence from OPEC. I’ll eat it THIS time”
This is where you, Lyle, and others have the blinders on seeing only one thing and not the big picture.
1. Chapter 11 (not chapter 7) for GM would NOT mean the Volt would be canceled.
2. These bail (hand) outs given to GM would NOT mean the Volt will be built!
3. These bail (hand) outs given to GM will ensure that the same management team and board that got GM into this situation will still be driving the ship. Why would you have faith that throwing money at them that they can fix all the problems, and in such a short time period, 3-6 months at most, before they come running back for more hand outs?
3. The Volt in and of itself would NOT give independence from OPEC (or even worse than OPEC, Russia). Even before we learned (officially) how bad GM was mismanaged, the Volt’s time table and production targets and price make it and keep it a niche vehicle. I want BEV’s to be built, but I’m also not living on fantasy island that the Volt an the Volt alone (or GM alone) would even make a dent.
4. GM is better focused to bring vehicles they make outside or North American (mainly Europe) and either import them and/or retool to make them here as well. I know, we’ve heard GM only designed them for European safety standards and it would a couple years to tweak their designs and testing to pass North American standards…. I’ve said it before, does anyone really think the Europeans have weaker safety standards than here? Europeans regulate a lot more than us. And surely congress or the DOT can hand out waivers that allow these vehicles.
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November 18th, 2008 at 10:23 am
I’m listening to the hearings and I’m finding something peculiar. On the one hand some on the Committee are saying that we don’t want to “nationalize” financial companies and make them hew to certain guidelines. In their view if the companies want to use taxpayer money for bonuses or to buy other companies that’s OK. On the other hand some in the Senate are saying we have to attach conditions to any money.
What’s the difference? Why is it a good thing to give a giant loser like AIG $150B WITHOUT conditions and a bad thing to give a much smaller loser like GM $10B WITHOUT conditions. I’d be happier with consistency, one way or the other, though conditions seem like a natural quid pro quo in return for public money.
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November 18th, 2008 at 10:29 am
#34 (Cautious Fan)
I’m in full agreement. Lyle has blinders on. He’s like a gambler who is losing money and instead of walking away and regrouping, doubles down. In this case he’s invested all his money on a single bet (GM and the Volt) and is having trouble being objective.
We’ve always known this is a “fan site” and is unabashedly biased, but sadly Lyle is going to an extreme now with the scare tactics. I’m glad he’s NOT my doctor, I wouldn’t be able to trust him.
Let’s stop throwing good money after bad! Chapter 11 is NOT failure! It’s the best solution for not only GM but also the American taxpayer. The biggest losers if GM reorganizes under chapter 11 is GM’s management (the ones who drove this ship into the iceberg not just once but repeatedly), and to a lesser degree the unions. GM will come out a lot stronger, and for not just the shorter term but long term, out of chapter 11. Chapter 11 is inevitable, throwing money at them just delays it and takes longer for GM to recover.
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November 18th, 2008 at 10:32 am
#37 Ray – If I went to my bank without a definate business plan (including specifics as to how the monies are to be used), they would look me straight in the eyes and point to the door..
GM show America, Canada and the rest of the world your REAL intentions..”
The ignorance here is palpable. GM and Ford have business plans. Do you even know what a 10K is? Check them out. Assuming you can understand them you’ll have your plan. Do you really think that banks have been loaning GM and Ford billions of dollars cause they like the logos? Please.
In the current situation the plan may need to be amended, but claiming that there is not and has never been a plan is idiotic.
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November 18th, 2008 at 10:33 am
I am in no way an expert on chapter 11 or 7. However I would think that the fastest way for the congress to make available funds for the automotive industry would be to make the offer as simular to chapter 11 as is legally possible. Then it is up to management, the U A W, and the retirees to sign it or the industry dies.
I want the bail out but I believe the money will be of no long term help unless all involved take a financial hit.
bail out with no concessions and world unemployeement will simply take longer to hit. No bailout and the hit is almost immeadiate and soon world wide.
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November 18th, 2008 at 10:36 am
Most people think of this crisis as a disaster. I do not. I vote for chapter 11 and full reorganization to put this company on a solid foundation to be a leader in the electrification of the automobile.
Sure GM and the Big 3 can limp along for many more years (decades) slowly losing their lead with foreign auto makers. Now is the time to act! A great chain of events have put the Big 3 in a position for government supported reorganization. It’s like a dream come true for our automobile industry future.
I hate a slow painful cancer-like death. I prefer to get in there, cut out the bad and get back to business.
Mark my works, if this passes (something is going to be given to GM) they will be back for more handouts before the end of next year. $25 billion is just a drop in the bucket for what our auto industry needs to get back on it’s feet. So, do you want more light radiation treatments and pain pills or get in the operating room and cut that growth out?
1) Allow nature to take its course – bankruptcy
2) Announce chapter 11 and a full, government supported plan for complete reorganization.
3) Have an open policy that has enough transparency for potential customers to feel comfortable with the reorganization progress. Doing so will keep customers from being too scared to buy cars. There is no reason why anyone would worry if the government assured people that car warrantees would be honored.
I think quite the opposite reaction would happen. People would have some new hope for our auto industry. They would be interested in what was going on and gain some real interest. Just look the interest this Volt blog is receiving. Two years out and there are thousands of people here just ready to lay down their money for the Volt. I think this is a perfect test case.
Did consumers have any long lasting bad will towards the airlines that went bankrupt? I surely don’t. I realize there were bad conditions beyond their ability to react fact enough. Everyone knows the economy crashed too hard and that gas prices skyrocketed putting GM in an almost impossible position WITH THEIR CURRENT STRUCTURE. That is the key point! Everyone already knows GM needs a complete restructure.
Let’s take the opportunity that this free operation (chapter 11 reorganization) will give us for the future! Vote NO to an endless and useless bailout that will only allow the Big 3 to limp around. Now that Suzuki is gone what’s left? Hummmm. Well, the Volt program is very expensive and won’t generate profits for many years. That and the price of oil is almost down to $55 per barrel. Believe it! The Volt program is also on the block. GM can always say that due to the dire financial situation they unfortunately have to delay the Volt program to allow for a reorganization of operations, etc. The bailout does not prevent the Volt program from being delayed.
Don’t forget that GM no longer has huge SUVs and Hummers to make money. They have to start building tiny cars. You know, the ones that the Japanese and Europeans have been perfecting for decades. Who expects success in that environment with the current structure? Anyone? Vote no for the bailout and yes to a strong future!
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November 18th, 2008 at 10:39 am
Govt welfare…Hey, maybe the govt will help me with my property taxes… think about it…not paying taxes is far better than taking funds!
Currently the volt is just an idea….there is NO PRODUCTION VERSIONS (as continually advertised as)..and with all the continual changes every day they are nowhere near beta stage.
The real kick is going to be to taxpayers if this thing ever comes reality. Then we will need GOVT rebates to get people to buy them
(taking more taxpayer subsidies) while Lutz and Wagoneer take credit for “saving” GM
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November 18th, 2008 at 10:41 am
Let them go Ch.11. They’ll shake off the unions and reemerge as competitive companies. No one bailed out tech companies of dot com era, these guys don’t deserve it as well.
As for Volt … if it really is a good technology, it’d either pave the way up from Ch.11, or someone will end up buying it.
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November 18th, 2008 at 10:43 am
#40 Jeff M – “I’m in full agreement. Lyle has blinders on. He’s like a gambler who is losing money and instead of walking away and regrouping, doubles down.”
It may be that you are clueless and Lyle is not blind. You have a lot to say about bankruptcy being a solution. What exactly is your experience with bankruptcy? Have you ever participated in a serious Chapter 11 or 7? Inquiring minds would like to know the basis for your accusations against Lyle.
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November 18th, 2008 at 10:44 am
Lyle, Don’t listen to #40, I think most of us here would be honored to have you as our doctor. Even if posters sometimes disagree we know you have a good heart and only want to do what’s best. Keep up the good work!
Who knew this fan site would be so interesting and such a good place to meet up to discuss so many important topics. Fate I guess.
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November 18th, 2008 at 10:44 am
Enough with the Lyle-bashing. He’s a Volt enthusiast & wants the company creating it to succeed. The topics he posts pertain to that & rightly so.
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November 18th, 2008 at 10:57 am
I see GM put a pop up ad on many websites directing them to a facts vs fiction page. Mostly the same talking points each of us have gone over on this web site. I haven’t gone through every page, but I don’t see anything about a significant restructuring other than upcoming products.
They still refuse to list Chapter 11, putting away any brands, or consolidating dealerships, but that is not surprising.
I do believe they are trying to do a lot to reduce short term spending and are trying to get cash where they can (trying to sell Hummer and Suzuki, etc). I just don’t know if they can make it.
My brother has sold Chevy’s for 25 years. This month he has only two cars out the door so far….the worst he has ever done.
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November 18th, 2008 at 10:58 am
It appears that DONC is on a bashing people day..
Looking over the comments listed so far…
Everyone has an opionion… good, bad, or indifferent.. Please do not demean any of the commentators here.. It is rude and tasteless.
Maybe your status in life is higher than most of us…it does not entitle you to browbeat us for our opinions.
Like my momma says.. if you cannot say anything nice… don’t say anything..
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November 18th, 2008 at 10:59 am
I heard an Arab country/company is looking at buying Hummer. I did a quick search, but didnt find any links on it.
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November 18th, 2008 at 11:00 am
As a long-time observer of boom-and-abort electric car projects (mostly “demonstrators” and “California-only-mobiles”), I think we have now seen the answer to the question:
“What will it take to get a real electric offering out of a mainstream manufacturer?”
That answer being:
“The spectre of utter annihilation.”
Would we really have seen a Volt program from a financially healthy GM?
I actually don’t have too much concern over the Volt’s future (or at least, for the electrification of the automobile).
The coming administration is deeply concerned by both climate change and energy independence (though sadly, seems unwilling at this point to give nuclear and clean coal a fair hearing). A meaningful national fleet of EVs seems to be an inevitable requirement to reach these goals.
Furthermore, any option which would end with throwing the UAW under the bus will be OFF THE TABLE for 4 years. Unions are too important a voting block for the Democrat majority to ignore, so that takes care of Chapter 11, or any initiative which might allow GM to shed that particular burden.
GM will exist long enough to create the Volt, but we’ll all be taxed to keep them afloat with all union contracts intact. We’ll get our Volts, maybe, but will pay for them twice if we do.
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November 18th, 2008 at 11:00 am
#43 Texas – “2) Announce chapter 11 and a full, government supported plan for complete reorganization.
3) Have an open policy that has enough transparency for potential customers to feel comfortable with the reorganization progress.”
This is not the standard “let them go bankrupt” position, What you’re suggesting is not a standard bankruptcy.
Granted that your suggestion has much to recommend it and would probably work, it doesn’t really seem different than doing the same thing through the political process rather than through a bankruptcy. In both cases the shareholders of GM are wiped out and have no real voice. Bankruptcy would give somewhat more clout to lenders and current management and the political process would presumably give slightly more clout to the unions. But the differences would be marginal.
A bankruptcy isn’t so much a legal proceeding as it is a giant negotiation, and having the government backstopping it would make it one giant political negotiation. Not that much different than what it would be without the bankruptcy.
Keep in mind that a bankruptcy usually helps the company by freezing payments to vendors or in writing off lending debts or pensions. Those things are not entirely desirable here. Cutting payments to suppliers would force them out of business, defeating the purpose of helping the manufacturing sector. Throwing out debt obligations would put more stress on financial institutions which the government is already propping up. And killing pension obligations, assuming its politically possible, would move the obligation to the Pension Guarantee Corporation and bankrupt it, requiring taxpayer to bail it out.
I’m not seeing any obvious advantage for bankruptcy here but perhaps I’m missing something.
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November 18th, 2008 at 11:13 am
Where is the business plan ? They want to BORROW some money for a short time to cover their expenses until they start to make the kind of cars that the people want need and demand.
It doesn’t matter if the price of gas goes to 50 cents a gallon , the people have a long memory and the oil companies did it to us twice with the high price. This last time they screwed our economy into the ground.
We wont forget this ever and will never forgive them for it.
The only way to fix the oil companies and fix them good is to drive only vehicles that use very little gasoline or no gasoline.
This can only be achieved if our auto industry makes very fuel efficient vehicles . If they cant do it and show that they can do it through a sound business plan then let them fail and move out of the way for somebody who can.
I don’t care who actually does it but whoever it is had better come prepared with one fine business plan because without a business plan no bank will give you a loan.
It is the job of elected officials to look after the people who voted for them as representatives .
The representatives are going to be much more careful with the taxpayers money than a bank is.
If the auto assemblers came before me the first thing I would say to them is “Gentlemen show me your business plans , I will take these plans before The Finance Committee and get back to you in a couple of weeks after we go over them with a fine toothed comb .”
“Don’t even think you are going to come here with your hand out for billions of dollars without a sound business plan , because it wont work in this Congress”.
If these big boys who run the auto companies want to play big boy games they had better come prepared with one hell of a business plan or they are finished and so is the Volt .
It is time to financially declare war against the oil companies and the OPEC gang of thugs who are members for what they did to us. Our enemies are the oil producers from the Middle East , not the union workers our fellow Americans who just lucked out and got a good paying job.
I Just hope that a good working business plan is presented so we can go forward and get on with our lives again and wait for the most advanced car ever made or designed by human intelligence , THE VOLT.
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November 18th, 2008 at 11:18 am
Okay sorry but if they are going to cut bonuses for anyone who makes over $250,000 that is ridiculous.
Anyone who brings in 6 figures in a year should not be allowed to collect a bonus. Its not necessary
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November 18th, 2008 at 11:22 am
I hate to say it, but I agree with Bush. There is already $25B allotted to GM for re-tooling, just give that to them now, without the restrictions. If we keep using this TARP money for other things, where does it stop? Should we loan money to Circuit City too?
When Obama is president in January, there will be plenty of support for passing a bill like this, but it doesn’t sound like GM can wait until then.
Also, I’m so sick of the term “bailout” (or handout as some have commented). These are loans. Chrysler was loaned 1.5B in 1979, and it paid all the money back, plus it has kept them in business for the last 30 years.
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November 18th, 2008 at 11:30 am
There is a whole lot of high drama in the wind this morning.
http://www.citynews.ca/news/news_29253.aspx
Take Care
Arch
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November 18th, 2008 at 11:32 am
Jeff (post #38), GM isn’t the only manufacturer working on electric vehicles – IIRC, Toyota is releasing the plug-in Prius, Nissan and Mitsubishi are working on an all-electric, as is Chrysler. Also, IIRC, all these other “green” cars are slated to come out in 2010.
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November 18th, 2008 at 11:32 am
@#10 “If a company cannot produce small cars and profit from it then how will bailing them out do anything? That is the reason why they stuck to making those gas guzzlers behemoths on the road cause they were profit driven.”
You’re kidding, right? What corporation in America is not profit driven? Have you ever taken economics courses? They sell SUVs because the demand was there. Nobody gave a crap about fuel efficiency until gas prices rose to $4/gallon. They were not prepared for this sudden change in demand but are changing their business strategy as fast as they can. An example is the Volt program. I wonder how long people are even going to stay away from the “gas guzzlers behemoths” now that gas is down to below $2/gallon.
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November 18th, 2008 at 11:36 am
@#55 kucharjo:
“Anyone who brings in 6 figures in a year should not be allowed to collect a bonus. Its not necessary”
Sorry but where are you from? Here in Boston you won’t be able to afford a decent house in a safe neighborhood on $100,000 a year (~$60,000 after taxes, etc). I can only imagine how much more that’s true in places like New York and California.
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November 18th, 2008 at 11:38 am
GM -
You need cash, I have cash. I’ll give you $10k for a decent mule. I’ll even keep a data logger on it so you can use the results.
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November 18th, 2008 at 11:38 am
#39 Don C:
No kidding. Has anyone seen a credible “business plan” from the God Almighty “financial industry”? The policy there seems to be write checks, recite a few Hail Marys, and hope for the best. And by the way, make !@#$% sure that $25 billion of our designated honey pot doesn’t get slid off the auto industry.
A double standard at best, IMHO. And a cleaning out of the treasury before the barbarians arrive at worst.
I have commented at length about the need for a transparent and totally vetted plan from the “Big 2.8″ and the UAW before they get any public money. I’m just saying that we need to watch our backs. A lot bigger corporate welfare giveaway continues in the meantime.
And thanks again Dr. Dennis for all that you have done and continue to do. You are right about discussing the place settings on the Titanic. As much as I hate this ongoing soap opera, I am drawn here every day. Kind of like the cobra and the mongoose, I guess.
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November 18th, 2008 at 11:45 am
#61 ThombDbhomb:
I already volunteered to pay the $850/mo lease a la the electric Mini. Bring it on.
I dunno though, unless the Feds arrive pretty quick with the bailout for my business, I may not be able to afford it.
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November 18th, 2008 at 11:46 am
#36 DonC “You don’t seem to have the foggiest idea what is at stake here. Only in part is the issue the viability of the US auto companies. The larger issue is the survival of the manufacturing capability of the country and the ability of the country to continue its economic expansion and provide for national defense.Basically those like you advocating bankruptcy are essentially claiming that Mexico is a good template for the US. I for one strongly disagree, preferring our economic model to that of our neighbor to the south.”
Really? Where precisely is anyone advocating anything remotely like that? The more you handout advocates scream about the sky falling the more suspicious I get. It seems like every time a skeptical person scoffs at the practicality of the bailout proposal, they are lectured about being rubes and the cries of Armageddon increase. I’ve noticed a direct correlation, the more reasoned the skepticism, the more dire the predictions, today we’re Mexico. Maybe tomorrow GM filing Ch 11 will cause America to stop having indoor plumbing because of the ripple effect it will have on the plumbing manufacture industry. There’s no limit to the hyperbole.
I have to agree with #8, Wagoner is gambling that with the far left sweeping into the Federal government that corporate welfare is a slam dunk, but he failed to consider the “ripple effect” that such a bailout would have on patriotic Americans that bought GM when foreign was so much sexier, is the same demographic that would boycott them for such an unAmerican handout. I hope for GM’s sake they don’t get the bailout, and heads publicly roll in the corporate offices.
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November 18th, 2008 at 11:54 am
I just watched a video about how GM is the number one premium brand in China. Imagine that. It’s still growing right now, even though all of this financial mess. I watched the China factories building the GM cars and wondered what the unions are like. What they are paid.
They also said that in a few years the production of GM cars in China will surpass the production numbers in America. Wow!
Now I can see why GM does not want the sound of bankruptcy hurting their image.
Perhaps the above poster is right that government negotiations can take place without the bankruptcy tag. Either way it’s going to cost the U.S. taxpayer hundreds of billions of dollars to right the Big 3 ship. If you think that’s too high of a number you don’t know how bad the situation is.
Anyway, how about the government sit down with everyone, including the unions and basically say, “OK, you are now in virtual bankruptcy. We are going to proceed exactly like it’s a bankruptcy.”
No, wait. That would not work. Without filing for bankruptcy you cannot legally be protected from creditors and past obligations. Then again that protection from creditors is going to cost us taxpayers anyway. We are going to get the bill one way or another.
I still think that the unions will not give in unless bankruptcy is filed. They will go down with the ship before caving. If they are up for the long-term concessions that a bankruptcy would give then fine, let’s do the virtual bankruptcy and avoid the bankruptcy reputation.
I don’t think that’s possible but If I were the government or GM I would be open to the possibility. Basically, we need to cut brands, platforms, inefficient plants, be allowed to install as much automation as needed, be allowed to put up a plant in the best location and allowed to operate it in a way that is competitive with foreign manufactures on our soil. If the unions are up for that and executives are up for the drastic downsizing then I say full speed ahead with the reorganization. It’s time to cut out the cancer. If we don’t want to alarm the family by not telling them it’s cancer then fine. As long as the operation happens. That’s the important thing – to get our auto industry prepared for the electrification of the auto industry and prepared to compete with foreign auto manufactures. Let’s cut the ball and chain.
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November 18th, 2008 at 11:55 am
Noel #62
I agree with you and the other bloggers who thank Lyle for what he has done so far.
BTW, in Europe Opel has asked for a public warranty on its financial flows.
I commented today on the GMEurope social media blog (I do not paste the link otherwise my comment will disappear) and I reproduce my comment here :
“The news in my Belgian favorite newspaper was saying that there was some resistance (for instance from Roland Koch, Governor of the German Land Hesse) to give this guarantee to Opel because of the fear of financial transfers from German and more generally European public funds to GMNA.
They were also writing (Source Der Spiegel) that GMNA has a debt of several billions of dollars to Opel GmbH.
I agree that Opel produces very good automobiles that are affordable by the general public and are not exclusive to the upper class. IMHO this must indeed be preserved.”
And I add here that if a condition must eventually be added to the financial aid to the NA automakers, it is that the Volt must get on its wheels asap.
The second condition for avoiding transfer pricing and other mechanisms be applied by global automakers is that the governments of developed countries cooperate, otherwise it is most probable that the aid from one country will serve particular interests in another country but not the common good.
As Arch often concludes , take care and NPNS.
JC
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November 18th, 2008 at 11:56 am
http://www.earthtimes.org/articles/show/afs-trinity-to-seek-25,626159.shtml
Take Care
Arch
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November 18th, 2008 at 12:01 pm
The best way to come to a common solution regarding the GM~TARP~Volt dilemma is to break it down to it’s most simple form.
1>What does the public want?
a>The Volt
b>The Cruze
c>The plug in Vue
2>What does GM want?
a>Money to continue operations (three billion a quarter).
3>What does the government want?
a>Low unemployment (TARP).
b>American made fuel efficient vehicles (Obama program).
We can pretty much agree on the “wants” list. The obvious way to go, beside GM selling the Volt rights to Nissan, is a per month trickle feed of TARP money to GM. This being a $1 billion loan per month for six quarters.
To honor the “wants” of the public, these loans must be utilized at 70% directly toward the accelerated release of the three efficient vehicles. With 20% covering grandfather union obligations. And 10% covering mini bail outs to GM vendors (Delphi). This $18 billion total will ensure that each of the three fuel efficient vehicles makes it to market.
If these three vehicles were on delivery trucks right NOW, we wouldn’t be mentioning the “B” word. We would be watching GM stock race to double digits.
=D~
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November 18th, 2008 at 12:27 pm
#67 Arch:
Why not? Thanks for another great link.
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November 18th, 2008 at 12:31 pm
#66 Jean-Charles Jacquemin:
It sounds like Mr. Koch is right to be concerned. Your expert observations are always interesting and educational. Thank you.
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November 18th, 2008 at 12:33 pm
This has turned into a animated thread. I’m getting to the point where I would just like something to happen and be done with it.
So other random news to pass the time while we wait:
—
Median home prices fall around US in Q3
WASHINGTON (AP) — …National Association of Realtors said Tuesday that sales fell by almost 8 percent in the third quarter compared with the same period a year ago.
Sales of foreclosures and other distressed properties made up around 40 (FORTY) percent of transactions in the quarter, bringing down the median price by 9 percent from a year ago to $200,500.
“A very large proportion of distressed home sales are taking place at discounted prices compared to more normal conditions a year ago,” Charles McMillan, the Realtors group’s president, said in a statement.
That’s especially true in places like Sacramento and Riverside, Calif., where prices were down 37 percent and 39 percent, respectively, from last year. The two California cities had the largest annual price declines in the report.
http://biz.yahoo.com/ap/081118/metro_home_prices.html
—-
/I didn’t say it was good news
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November 18th, 2008 at 1:00 pm
They are treating the symptom and not the problem. They are very concerned about bonuses being paid to employees making over $250,000 and the golden parachutes, and rightly so, but they fail to address anything about the union/labor costs. The rich guy has been the “whipping boy” for too long. The real problems are the legacy benefits/entitlements for the retired workers, and the outrageous wages the unions have negotiated for their barely-skilled workforce. If GM has to pay a guy with a G.E.D. sweeping floors $40.00 an hour with a gold plated health plan, then they will never be able to compete.
The taxpayers will once again get hosed because congress will show the worker as the victim and vilify the greedy rich guy. Look how well it worked for the home loan bailout.
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November 18th, 2008 at 2:06 pm
72 Cal –
Exactly right. Unless the UAW is dealt with, there will be no economic viability in the future for any of the big 2.8 trying to sell small cars.
If the UAW will not make any concessions to save their own jobs, then screw them. Let the big 3 fall and take their overpaid undereducated lazy whiny greedy workforce down with them.
Then mandate 100% domestic content on all the remaining auto manufacturers selling vehicles in the US.
That will keep the workers working. The whiners can sit at home and gripe on the internet about having to go get a job making 1/6 of what they made a year ago.
FYI, I work for a non-UAW supplier to the big 3. The people out here in this plant work every bit as hard as the assembly line folks, and make maybe 1/3 the money. And the people making safety-critical parts are more important in the big picture than the guy bolting the dashboard on.
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November 18th, 2008 at 2:15 pm
Debate on National Public Radio now
http://www.npr.org/templates/story/story.php?storyId=97128088
You can listen to the archive after the fact too.
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November 18th, 2008 at 2:43 pm
Interesting article just appeared here in Michigan concerning the most vocal opponents of help for the big 3. here is the article…..
Sen. McConnell: a dog not barking about the Big Three bailout
By LoRayne Apo-Joynt 11/18/08 2:02 PM
Michigan blogger Marcy Wheeler points out that a lot of the ruckus we’ve heard against any effort to bailout the Big Three automakers comes from a predictable group of legislators. Sen. Richard Shelby (R-Alabama), for instance, is the most prominent anti-bailout spokesperson; one could hardly believe it to be coincidence that Sen. Shelby’s state is also home to the fourth largest amount of investment by foreign automakers, to the tune of $3.5 billion and nearly 9,000 employees.
There are other legislators whose relationship to foreign automakers is more tenuous, as in the case of Sen. John Kyl (R-Arizona). There are no manufacturing facilities building foreign label cars in his state. However, Arizona has not one but two facilities belonging to Nissan and Toyota, dedicated to research and testing; the state also has seen legal scuffling pitting foreign auto sales against American auto sales with regards to that state’s franchise law and what information can be disclosed by automakers on their respective websites.
Both Shelby and Kyl appeared on talk shows this past Sunday to decry any government bailout of the American auto industry.
But one dog not barking has been Sen. Mitch McConnell (R-Kentucky); this quiet automotive bailout objector was noticeably absent from the Sunday talk shows, although his state has the fifth largest amount invested by foreign automakers at nearly $6 billion and nearly 9,000 employees.
Perhaps the reason McConnell isn’t appearing as widely as his counterparts lies in the fact that his state is home to American automakers’ plants as well — and that in Kentucky, Toyota workers now make more on average than similar unionized workers for the Big Three in his state.
Kind of kills the argument that union workers are paid too much compared to foreign automakers, yes?
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November 18th, 2008 at 3:07 pm
#39 DonC says
“Why is it a good thing to give a giant loser like AIG $150B WITHOUT conditions ”
========================================
It is not a good thing, and indeed it has not happened. For example
“In addition to the pay rules, AIG faces restrictions on lobbying and corporate expenses and must follow other rules imposed on it under the terms of its September loan, the Treasury officials said. ” [article in Business Week Nov 10]
Other rules include limits on executive pay and restructuring of its investments.
Treasury said “In our view this [bailout] wasn’t done for AIG shareholders, this was done to protect the taxpayer,” by giving AIG time to sell assets in an orderly fashion, the official said”
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November 18th, 2008 at 3:17 pm
#71 statik says
WASHINGTON (AP) — …National Association of Realtors said Tuesday that sales fell by almost 8 percent in the third quarter compared with the same period a year ago.
Sales of foreclosures and other distressed properties made up around 40 (FORTY) percent of transactions in the quarter, bringing down the median price by 9 percent from a year ago to $200,500.
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There is a good side to homeowner news also. Both Lowe’s Home Improvement and Home Depot have ended the quarter with better than expected results and are making not-so-bad (as compared to deep gloom) forecasts. That means there are a lot of people who still own homes and keep fixing them up and improving them. Saying it differently, most homes are not in bankruptcy and most homeowners are concerned but not in fiscal distress.
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November 18th, 2008 at 3:36 pm
I am like Statik. I am just ready for it to be over one way or the other. I do not want to see GM and Ford sold off to a foreign buyer. No matter what it takes, we need to keep the three in American hands. Chrysler could be sold and divided up between GM and Ford, but not a foreign buyer.
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November 18th, 2008 at 3:54 pm
People here are so stupid I almost fell off my chair reading these comments.
When Toyota makes the tundra 400hp truck to try to level ford and GM people say Toyota is super green. Even though Toyota trucks get 13 MPG.
When people say Detroit makes gas guzzles people forget that Ford developed hybrid technology Toyota bought. GM developed the EV1 that was so much better than any Toyota product.
Also Toyota Lexus hybrids are jokes at 500HP 19 MPG cars.
When people say Toyota is GREEN its sick because its just not true. Its pure PR and rumor.
The only thing green about Toyota is USA money going to Japan.
Here we are again Detroit trying to make a good car the chevc volt but people are so negative it’s not funny.
Letting Detroit fail is really dumb. Give them money with rules make them lower the UAW wages and benefits or no money. Simple money with stipulations.
Simple Chapter 11 is not the answer.
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November 18th, 2008 at 3:56 pm
If Detroit fails so does the USA.
Watch your home price fall.
If we lose our big industry GM Ford your home will fall 20%-30%
Can we afford not to bail them out?
25M now or costing Americans 600Billion later
Simple spend the money now. Today’s dollars are cheaper than tomorrows
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November 18th, 2008 at 5:10 pm
I said it before and I’ll say it again. NO BAIL OUT!!!
Place a $5,000 tax on imported vehicles and make American’s buy American. It does not get any simpler than that.
At this point in the quality wars GM and Ford are on equal footing with Toyota, Honda and Nissan. So wake up and support your country and your next door neighbor.
My 2003 Ford truck has 85,000 miles on it and it has never been in the shop, my Jeep Grand Cherokee went 110,000 miles with only two trips to the shop (both under warranty).
I just put a new top end on my daughter’s 2004 Honda due to a broken timing belt at 40,000 miles, so I’m not impressed with Japanese engineering and quality.
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November 18th, 2008 at 6:47 pm
Why the hell would congress want to have any auto executive testify before them. They must not be able to do their jobs or they would not be in this predicament. I would love to see someone like Iacocca come in and say goodbye to unions and tell workers here are the jobs and what they pay. Take it or leave it. In the immortal words of Rick Wagoner….I am their leader, which way did they go??
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November 18th, 2008 at 6:55 pm
I wish people would quit blaming this mess on GM’s current product line. Apparently these people have been asleep several years. Time to wake up…
Aveo=Yarus
Cobalt=Corolla
Malibu=Camry
Vibe=Matrix
Silverado=Tundra
Traverse=Highlander
Tahoe=Sequoia
In each case, the GM product has equivalent (sometimes better) mileage and price, and a better warranty. The only thing missing is a Prius counterpart, and that’s where the Volt comes in.
If I hear “Detroit only makes gas guzzlers, so they deserve it” one more friggen’ time, I’m going to start spitting blood.
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November 18th, 2008 at 7:08 pm
#83 Paul-R:
Now compare the gas mileage of each pair of cars.
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November 18th, 2008 at 7:22 pm
Just watched the Tuesday bail out hearings. And from my chair it looks like Ford and GM are NOT willing to see things Congress way. While Chrysler says they, “Are willing to do what it takes to get help. And will consider every offer”.
GM’s CEO was asked if he would take a $1 a year salary through “This economic trough”. He replied by saying, “I have already taken a 50% cut in pay”. Chrysler and Ford leaders said they would. Ford went on to say that they didn’t want to cut pay to the point where workers weren’t motivated to make good cars. “We want to be competitive with the rest of the world market”.
When Ford, GM, and Chrysler were asked if the American tax payer can be reassured that this bail out money wouldn’t just be spent over seas, they replied, “Our over seas industry is still making money. We see ourselves as global industries”. In other words, a double speak non-answer.
When Congress suggested that an immediate infusion of tax payer money into road, bridge, and high way upgrading will create demand for cars. And that this will help the auto industry. The reply from all three is that, “We need money now to avoid a collapse of the entire production and support systems”. They worked the “fear” factor to assure the money will go to them directly and not to infrastructure upgrades.
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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November 18th, 2008 at 8:10 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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November 18th, 2008 at 8:28 pm
Well Said #83
Yes people that buy transplants are VERY misinformed!
And I laugh at them daily when they think they got a deal.
FACT FOLKS Look it up
http://www.fueleconomy.gov/feg/sbs.htm
I wish people would quit blaming this mess on GM’s current product line. Apparently these people have been asleep several years. Time to wake up…
Cobalt XFE37>Corolla35
Malibu33>Camry31
Impala29>Avalon28
SilveradoXFE21>Tundra19
Traverse24=Highlander24
Tahoe HYBRID21>Sequoia17
In each case, the GM product has better mileage and price, and a better warranty. The only thing missing is a Prius counterpart, and that’s where the Volt comes in.
If I hear “Detroit only makes gas guzzlers, so they deserve it” one more friggen’ time, I’m going to start spitting blood.
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November 18th, 2008 at 10:21 pm
Statik,
“We have Finance Minister Flaherty on record saying, they will get nothing until the show us a plan for recovery…which is basically like asking Wagoner to show him a Unicorn. ”
Now that is FUNNY!
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November 18th, 2008 at 11:03 pm
No bailot for the losers says….
I say let them fail. After all these years they finally decide to make something viable and fuel efficient?! Give me a freaking break…those 3 never did anything green and instead made gas guzzlers that make America depend on foreign oil. Do we really need cars with V8 in every model…
You are a total idiot, GM, Ford, and Chrysler for the decades they have been around have built what people WANTED. During the muscle car era, they built muscle cars. In the times of cheap gas everybody(not me) wanted a damn big gas guzzling SUV. I admit, they should have had more gas sippers on the sidelines waiting for doomsday(4 dollar gas) But they were catering to most American WANTS and needs. Who thought gas would skyrocket overnight like it did. MOST of us on this blog were guilty for jumping on that same bandwagon, buying what we WANTED, even if it was a gas guzzler . Enter the Chevy Volt concept, everybody piles onto the bandwagon because, wow gas costs so much, boo hoo.
I support the Chevy Volt because it is an American idea. American car manufacturers sell YOUR DREAMS!!! If we lose them, we will fall victim to the sterile boring Asian built crap that keeps seeping into our roads. NO imagination, no innovation, just copy it make it smaller and cheaper.. POOF…you got a Toyota. Put a timing belt on it that snaps and takes out the whole motor…POOF…Honda…you get the idea. If we lose them, what do we have left that is American? Everything else is built somewhere else already.
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