The devil continues to be in the details of the democrat-written bill that will use government funds to allow GM and Chrysler to survive until next March. A draft was presented by the top Democrats to the White House on Monday night.
The bill will be called the Auto Industry Financing and Restructuring Act, and a draft copy has leaked into the press.
One thing that appears to be final is the amount, $15 billion, which will go to the automakers out of the retooling fund already appropriated.
It calls for the creation of a single individual to be appointed by Bush and so-called the car czar. That person will oversee and help negotiate the restructuring effort and be able to review any expenditure of greater than $25 million.
The bill also calls for the government to receive stock in the automakers worth 20% of the loans, and limits executive compensation. There’s even a clause requiring a study as to whether the automakers could build transit vehicles.
Nancy Pelosi when speaking about the bill late Monday said “We call this a barbershop. Everyone is getting haircuts, in terms of the conditions,” referring to the shaving of dollars owed to them by creditors as well as contract guarantees from the autoworkers.
The White House has expressed concern that the bill inst tough enough on the automakers. There are fears that it may not offer taxpayers enough protection and may allow companies that cannot demonstrate long-term viability to still get loans. Since loans could be given up until March 31 it might not be possible for GM to show that it has achieved sufficient restructuring by that date. Think about how long it might realistically take to sell Saab or shut down Saturn for example.
Outspoken Senate Finance Committee member Bob Corker noted that the bill “lacked teeth” and should accomplish the same thing as bankruptcy would only without the detrimental stigma. As it stands, he said he wouldn’t support the bill.
Negotiations on the draft are to continue with the hope that a vote could be taken as early as Wednesday, but whether it can avoid a Senate filibuster is still far from clear. It still remains possible that the auto companies will not get government loans.
Source (Wall Street Journal)
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Dec 9th, 2008 (7:00 am)Thumbs up or thumbs down … let’s move on already.
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Dec 9th, 2008 (7:05 am)Check out these cartoons:
http://www.caglecartoons.com/images/preview/%7B331b404b-b230-4103-b7df-dbc9b4f8ee30%7D.gif
http://www.cagle.com/working/081117/mackay.jpg
http://www.caglecartoons.com/images/preview/%7B91ad2cd9-5b6f-437d-83cd-0f765fd1737e%7D.gif
So true…. !!
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Dec 9th, 2008 (7:18 am)What a waste of money. I’m sure the Meican and Canadien workers appreciate it!
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Dec 9th, 2008 (7:27 am)In the picture above: While Dodd is getting his ears lowered, perhaps they can insert a brain.
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Dec 9th, 2008 (7:28 am)Why paint a sign on the bridge to no where, calling it something else?
Why loan GM billions based a a plan to come up with a Czar approved restructuring plan within a year? A plan for a plan is not a plan, it is a loan the money and run scheme. If it works, why it was those everloving Dems, if it fails, it was the Bush appointed Czar. LOL
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Dec 9th, 2008 (7:50 am)I saw Senator Bob Corker talk at the hearings. He had some very good points, and seems to know a great deal about the automobile industry.
But it also appears to me that Bob Corker has a lot to learn about the art of compromise.
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Dec 9th, 2008 (8:00 am)There is no doubt in my mind that Toyota and Honda will be receiving government money in no time. Japan would not let them fail. All automakers are hurting bad. The reason why American Automakers are hurting first is because they fell for the new American way of borrowing all of your money so when no one wants to lend you anything you collapse and can’t pay bills you made long ago.
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Dec 9th, 2008 (8:11 am)#4 Rashiid — every now and then somebody makes a really funny post.
It brightens up the day for sure. Thanks.
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Dec 9th, 2008 (8:13 am)#2 Herman –> and thanks for the great cartoon links.
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Dec 9th, 2008 (8:17 am)Well, I guess nothing is easy. After what I would consider a extremely weak (and delayed) press conference yesturday that was supposed to announce this bill, we see they are posturing this morning.
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This is the problem, as it stands.
The Dems need 15 Republicans on board to get this thing done. They figured they were a lot closer to this number than they were because they just penciled in the group of Reps that was lead by George Voinovich, (Ohio R) and Kit Bond (Missouri-R). You might remember them (or not) as the two that originally proposed a bridge out of the ‘retooling’ package…that Pelosi shot down immediately as being “unacceptable”
At the heart of the concerns is that the ‘Czar’ appointed by Bush has no real powers himself (so he isn’t holding the ‘big stick’ they envisioned) ie) the power to shut the Big 2.8 down if they don’t hit benchmarks.
Also, a sticking point is if the Czar/congress doesn’t get a ‘good plan’ by March 31st, HE HIMSELF has to submit one. What? That is insane. Are they saying Detroit auto will be US government auto if they themselves can’t come up with a good enough plan?
The lack of power by the Czar (and the fact that if they don’t get a plan together by March 31st, they don’t get shut down…the gov’t merely takes over) also weakens their bargaining chip with debtors/unions/suppliers.
I think I agree with them in the question of, ‘how can the gov’t form a decent plan on March 31st, if Detroit auto can’t?’ Can you imagine those debates, and how long it would take them? I shutter to think of Maxine Waters making a viabilty plan for GM.
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“This is a real hill to climb even if we can get agreement between the White House and congressional leaders,” Sen. Carl Levin, D-Mich.
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Dec 9th, 2008 (8:18 am)There is no doubt in my mind that Toyota and Honda will be receiving government money in no time.
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Let them come to the Japanese government for help. That’s just fine with me !
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Dec 9th, 2008 (8:19 am)#5 Van says “Why loan GM billions based a a plan to come up with a Czar approved restructuring plan within a year? A plan for a plan is not a plan, it is a loan the money and run scheme.”
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But for people in congress, it kicks the can on down the road for three months maybe, which seems to be what they want to do right now.
And it is just $15B. Why get excited about it?
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Dec 9th, 2008 (8:26 am)#10 statik said “Also, a sticking point is if the Czar/congress doesn’t get a ‘good plan’ by March 31st, HE HIMSELF has to submit one. What? That is insane. Are they saying Detroit auto will be US government auto if they themselves can’t come up with a good enough plan?”
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It may be a bad idea, but it is not insane. It says that this car czar, who by then will be acting on behalf of the Obama administration, will submit a plan. If it happens, it likely will be a modified version of the auto-makers plan.
Having a plan submitted by the administration for consideration by congress is their standard operating procedure.The right person with the right assistants and advisors might be able to form a good plan. If not, congress is off the hook for making a plan themselves, which even they recognize is impossible.
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Dec 9th, 2008 (8:29 am)I heard on the radio this morning both Pelosi and Dodd stating that they will create a profitable, viable auto industry by March 31.
Be afraid. Be very afraid.
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Dec 9th, 2008 (8:40 am)I just watched Bob Lutz get grilled on Fox and Friends. Even the so-called Fair and Balanced Network slams him (and the current GM leadership) for things out of their control.
Bob tried hard to explain WHY the current GM cost structure was out of whack with regards to the transplants (primarily that they have 4 retirees per active worker and most of the transplants don’t have any….yet). However the anchors just didn’t get it.
I thought they were borderline disrespectful. And I LIKE Fox News…usually.
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Dec 9th, 2008 (8:47 am)All of this to avoid the dreaded term….bankruptcy.
Will the US auto industry learn from this experience? Chrysler did….they are back with hat in hand. What is the US government teaching BIG business? More importantly, what is the US government teaching BIG banks?
Take any risk….we will bail you out if needed.
If you are a bank, just leave a voice mail with the amount needed and our automated system will start printing the money. All others, do not forget your hat for appearance purposes before leaving for Washington.
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Dec 9th, 2008 (8:51 am)I read that the automakers are not allowed to sue states like California for setting emissions standards beyond what the EPA has set.
It is UNCONSTITUTIONAL to deny anyone their CONSTITUTIONAL rights by passing a law in Congress. Congress would DENY a corporation their right to their day in court over these regulations, which will ultimately kill their corporations, and in turn kill the US economy.
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Dec 9th, 2008 (9:03 am)I think Jack Welch — of GE — would be an excellent choice for Auto Czar. It woud be brutal but it needs to be done. I believe that now is a perfect time to re-invent the auto industry. The environmental concerns, the energy needs and I believe the technology are all in place to light a new path for the industry.
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Dec 9th, 2008 (9:04 am)The last time that GM made a profit was only two years ago; 2006. The structural changes necessary to make a leaner, meaner car company would have been impossible in that climate. If you were the union or a supplier or a dealer, would you have agreed to a 30% cut in income or being put out of business by having the brand you sell discontinued? All of these other entities have contracts that would have to be either renegotiated or broken outright. The lawsuits and buyouts alone would have drained GM’s bank account and all of this would have been done while GM was profitable.
The drop in auto sales in almost 40% in two months! Could any of the business that you work for survive that? I’ve heard some claim that this drop is essentially permanent. If that is so, than the world has way too much capacity and some of that is going to have to go away. Is there any executive in the world that would be able to propose and execute a plan to shrink a profitable company to deal with that kind of sales downturn? Is it even possible for GM to have the capacity to make 4 million cars a year and yet still make money if they are only selling 2 million?
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Dec 9th, 2008 (9:07 am)AP ~ Pelosi likes idea of ‘car czar’ to audit bailout
Tuesday December 9, 8:14 am ET
Pelosi embraces notion of ‘car czar’; says auto industry has shown it needs close supervision
WASHINGTON (AP) — House Speaker Nancy Pelosi touted the notion of a “car czar” Tuesday to supervise an auto industry bailout, saying Big Three executives haven’t adapted well to changing conditions.
As United Auto Workers President Ron Gettelfinger voiced fresh confidence that an accommodation will be reached on a $15 billion bailout bill, Pelosi told interviewers it’s more critical than ever that change in Detroit be forced.
“I think it’s very important,” Pelosi, D-Calif., told NBC’s “Today” show. She maintained little would be accomplished if company executives were “left to their own devices.”
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You go girl?
=D~
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Dec 9th, 2008 (9:07 am)Jan,
I was thinking the same thing, that Jack Welch would be the obvious choice as car czar.
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Dec 9th, 2008 (9:08 am)I have been thinking about this for most of yesterday and this morning. If the right person is picked for car czar it might work. However only one name comes to me and that is Jack welch. He is from manufacturing and has a track record of success. He will sell off what ever is a drag on the company and will fire anyone that is not a producer. He has never been one to look at the past as a guideline. Most important, he is not from Washington.
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Dec 9th, 2008 (9:10 am)#17 Jason M Hendler
I read that the automakers are not allowed to sue states like California for setting emissions standards beyond what the EPA has set.
It is UNCONSTITUTIONAL to deny anyone their CONSTITUTIONAL rights by passing a law in Congress. Congress would DENY a corporation their right to their day in court over these regulations, which will ultimately kill their corporations, and in turn kill the US economy.
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Yupe, it is in there as a condition. What are you going to do when the gov’t is holding a big bag of money and is saying, “take it and our conditions…or don’t take it”? I guess you could take the money, then sue them, lol.
What I find even more amusing is the Big 2.8 were trying to stop individual states from setting the bar so high because it was going to cost them billions of dollars to switch their products to hit those mandates. Forcing them to withdraw those lawsuits, but also demanding they submit plans of viabilty at the same time haa created a fantastic ‘catch-22′ situation.
I’m sure the ‘Czar’ will solve this conundrum quite easily on March 31st when he submits his plan to fix all the other problems that plagues the domestic auto business, heeh.
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Dec 9th, 2008 (9:17 am)#19 maharguitar
The last time that GM made a profit was only two years ago; 2006
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“Ex-items”
Real number – ($1,978,000)
2008 (-21,260,000) through Q3
2007 (-$38,732,000)
2006 (-$1,978,000)
2005 (-$10,567,000)
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Dec 9th, 2008 (9:25 am)Ugh, I just read on Bloomberg that the US will get a 20% stake in the auto companies, without any stipulation as to whether the stock is preferred, common, voting or non-voting.
If the government gets preferred shares of voting stock, you can kiss the American auto industry good-bye. The government should get preferred shares of non-voting stock, as they are the regulating body already.
Oh well, it seems this bill is doomed not to pass, or will pass and be doomed to kill the auto industry.
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Dec 9th, 2008 (9:26 am)#24 Statik (me)
(those numbers I stated where in thousands…should have put that)
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2008 (-$21,260,000,000) through Q3
2007 (-$38,732,000,000)
2006 (- $1,978,000,000)
2005 (-$10,567,000,000)
/with zeros
SIDE NOTE: Canada just cut its rate by 75 basis points. You know it is bad when the top performer of the ‘G20′ is doing stuff like this. That will definitely affect the market open.
http://www.financialpost.com/news/story.html?id=1051659
…now if you will excuse me, I need to go buy something…LoC at 2.75% now, w00t
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Dec 9th, 2008 (9:28 am)#19 marharguitar says ” Is there any executive in the world that would be able to propose and execute a plan to shrink a profitable company to deal with that kind of sales downturn?”
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Well, yes. GM’s truck business is still high volume all by itself. Sales, though notably lower than a few years ago, continue at hundreds of thousands per year. Many customers are very loyal and need the product. Many customers view GM trucks as the truck of choice — maybe not perfect, but better than other choices.
That’s not to say that making a transition to lower (still not low) volume is easy or inexpensive, or that truck sales can carry all the rest of GM, with its layers of overhead and legacy costs. But if that was gone, GM trucks could be a strong independent business.
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Dec 9th, 2008 (9:31 am)How many sleezebag politicians are holding out for GM/Chrystler to grease the skids with tax payer money to vote for it? I E looking for contributions through the back door in order to approve money through the front. All 3 should be banned from making any polical contributions or hiring lobbyist from now until all loans are paid in full and all members of Congress banned from receiving same for 6 years effective immediately, to eliminate conflict of interest in the vote with our money. Often posturing is a request for greater bribes. They should vote their concious & fully acept the responsibility & fallout from their actions, if their Vote throws us into the next Great Depression they should be tar & feathered & ran out of Congress & required to pay for the tar & feathers. If Congress kills the big 3 what impact wil that be to national defense? What MFG ability will we have to make military hardware if needed, tanks, trucks etc… Foreign Auto MFG’s have no obligation in war to make equipment for us even if their factories are on our soil.
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Dec 9th, 2008 (9:32 am)#15 Tony Gray Says: “I just watched Bob Lutz get grilled on Fox and Friends. … I thought they were borderline disrespectful. And I LIKE Fox News…usually.”
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It seems the more you know about a subject, the more biased Fox news appears…
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Dec 9th, 2008 (9:37 am)Years of centrally controlled public school and giant corporate media programming have done their jobs well. We did NOT win the cold war. We BECAME corporate socialists and the USA has followed the USSR into oblivion and has been replaced with the US corporate state.
This was planned. We had no REAL choice. Resistance is futile.
ALL WILL BE ASSIMILATED.
Thesis: Individual Freedom & Responsibility (USA)
-vs.-
Anti-thesis: Communism w/No Freedom or Responsibility (USSR)
=
Synthesis: Corporate Socialism (New World Order)
This is the TRUE face and nature of the Creature from Jekyll Island.
http://www.orwelltoday.com/jekyllislandbook.shtml
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Dec 9th, 2008 (9:47 am)#28 Neutron Flux Says: “All 3 (car makers) should be banned from making any political contributions or hiring lobbyist from now until all loans are paid in full … to eliminate conflict of interest in the vote with our money.”
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Yes, I agree. This seems like a no-brainier.
The only thing to note is that Ford is not asking for any money. They only want a line of credit to cover the possibility of a deeper, longer recession than what is predicted right now. Also, if GM goes out of business, then many of Ford’s parts suppliers will go out of business as well, so in that case Ford may need the money to help tool up new suppliers.
The point is that Ford may only be subject to your proposed rule if they actually drew money from that line of credit. I’m not sure about all the implications with that.
But for GM and Chrysler, it seems like a no-brainier.
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Dec 9th, 2008 (9:53 am)Interesting idea regarding the Big 3 making transit vehicles. I see no problem with that except that transit vehicles MUST be very reliable, and without the experience I’m not sure how successful they could be at getting into the transit markets. I’m not sure how many transit administrators would go with an unproven new bus or train design over the choices already offered by established manufacturers. If the new equipment turns out to be unreliable or ill-suited to the job at hand, they just wasted millions or billions in taxpayer’s money, and the riding public would be at their throats. Buses I can see. But rail equipment?
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Dec 9th, 2008 (10:05 am)#2 Herman
Really good show, that. Enjoyed the cartoons. Amazing how easily cartoonist can capture events correctly. Thanks for the links.
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Dec 9th, 2008 (10:07 am)Off-topics, Better Place has begun rolling out the electric charging stations..
http://www.reghardware.co.uk/2008/12/09/bp_isreal_rollout/
Also, a nice article on new power technologies for the U.S. Army.
http://www.aviationweek.com/aw/generic/story_generic.jsp?channel=dti&id=news/DTI-Power.xml&headline=R&D Targets Lightweight Power-Generation Devices
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Dec 9th, 2008 (10:07 am)#4 Rashiid Amul
I liked the comment about Dodd. Problem they would encounter trying to insert a brain is no cavity inside the “toad’s” head. It is a solid block.
Come on Lyle. Let’s not display Dodd’s picture anymore. It is asking a lot of us this early in the morning to see his face.
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Dec 9th, 2008 (10:10 am)I wonder who really wants to be Car Czar? The job description consists of threatening an entire industry to bankruptcy. It’s not like he/she can be paid off because the auto companies have no cash. And the person will never receive recognition or praise, just the potential of being the symbol of the collapse of the US auto industry. This job has to be filled by someone who REALLY cares about the well being of the industry itself.
Just my two cents…
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Dec 9th, 2008 (10:13 am)Jake,
The GM Electro-Motive division developed the electric drive system used in current diesel locomotives back in the 1930’s.
GM makes some pretty good busses already, too.
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Dec 9th, 2008 (10:17 am)It may be that GM will decide they would rather go through C11 than to keep negotiating with congress and putting up with their requirements. A simple slit across the throat sometimes is much more preferable to endless dealings with the people in our government. Let the bleeding begin.
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Dec 9th, 2008 (10:17 am)“I wonder who really wants to be Car Czar? The job description consists of threatening an entire industry to bankruptcy.”
…Nader?
Yes, the Car Czar should be filled by “someone who REALLY cares about the well being of the industry,” but let’s not forget that this is the US Government we’re talking about.
/“If you’re not part of the solution, you’re part of the government.”
//Compared to me, Statik is an optimist
///EDIT: Agreed, N. Riley (#38), I’ve had that thought too
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Dec 9th, 2008 (10:22 am)FYI… Where I live (central Alberta, Canada) There are GM Buses running in our local Transit system now…
Who is to say … With GM’s Productivity …. Instead of Shutting down all the assembly plants… get in a contract or two for making something else… I am sure that there is a number of Items that can be built in volume that could turn the profit margins around for GM
… and without a union involved..
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Dec 9th, 2008 (10:35 am)I think that if the auto execs read this they will need to get their chins off the ground and determine how much it takes to purchase elected officials..
http://www.cnn.com/2008/POLITICS/12/08/campbell.economic.crisis/#cnnSTCText
(coles notes version: Merril Lynch exec wants $10 million BONUS because they only lost $11.5 BILLION..Only 11 bil)
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Dec 9th, 2008 (10:36 am)#13 RB
It may be a bad idea, but it is not insane. It says that this car czar, who by then will be acting on behalf of the Obama administration, will submit a plan. If it happens, it likely will be a modified version of the auto-makers plan
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No, this is insane. It doesn’t matter if there are legal powers for the car czar, this person will be the single most powerful individual in the automotive industry. Think about how washington works. It’s all about appearance.
I’m almost sick over this whole mess. Why not just call it Nationalization like it really is? Finding excess capacity to produce trains and busses? Is GM now going to produce train engines for failing commuter rail systems around the country that can’t afford them? Congress needs to stop taking stupid pills. Metra, in my hometown of Chicago, is deep in debt and cannot afford additional equipment even though it is desperately needed. Many other systems are in the same boat. Rail lines are filled to capacity with freight trains, and city transportation departments can barely afford the bus routes they already have.
Sell your leased planes? What a great idea! A couple of planes that cost maybe $50 or $100 million a year to own and operate when you are talking about lending out $15 BILLION. Yeah, that will freakin help. Hey Pelosi and Dodd, how about helping the taxpayers and offloading some of those planes at Andrews AFB?
This is beyond insane, and a horrible idea. GM would be better served by a bankruptcy. Otherwise, get ready for the beautiful 2015 GM Pelosi, which gets 150 MPG, seats 2.4 people, and costs $450,000. It will be the best car government minds can build.
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Dec 9th, 2008 (10:55 am)@18 Jan,
That’s a great idea. Wonder if Jack would be willing.
As I recall (I should probably find reference – it’s likely in one of his books) Jack had a saying along the lines of “if you’re not firing 10% of your company every year, you’re just carrying the deadwood” or words to that effect. Disclaimer: I am most certainly paraphrasing from distant memory here, but that’s the gist of it.
Detroit could definitely benefit from some tough love these days, and I think Jack would unflinchingly deliver it.
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Dec 9th, 2008 (11:02 am)Tim #30 “Resistance is futile.”
Well Tim, my homeland regiment moto is “Resist and bite”.
You are on the verge to deceive your readers !
I have read all the posts and cannot make up my mind except on this : For which reason did Lyle founded this blog ? He writes : “The car was first announced by General Motors (GM) in January 2007 as a concept car. This site, GM-volt.com was created on the same date to help make sure the car would arrive.”
I think we have to collectively resist our temptation to disillusion and act (Bite) “to make sure the Volt would arrive”, because the dependence on oil of the developed world is leading it to an impasse.
So I don’t care too much if it is through the “free market” mechanism or the state intervention provided the correct democratic controls are established and the vehicle be efficient and affordable (not a 2015 GM Pelosi as Bailers #42 anticipates).
I’m just astonished to see how Wall street reacted to the Obama economic recovery plan …
JC NPNS
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Dec 9th, 2008 (11:04 am)You see? This is what we get when we get government involved in anything. You think the economy is a mess now? Just you wait and see. Our government is the primary party that should be blamed for screwing up our economy and now they want to take over the auto business? Give me a break.
I want to see GM, Chrysler and Ford get a loan or a line of credit to get them over this rough period. I do not want to see government control over the auto business. It would be far preferable to me to see GM and Chrysler to go into C11 with loan guarantees to see them through the process. This should just be a straight up and down loan with repayment terms and without all the strings attached. If the companies cannot repay the loan, they default and the government takes over, as any creditor would, and sells off the assets. But, let the auto companies restructure themselves through the bankruptcy proceedings and decide their own fate.
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Dec 9th, 2008 (11:05 am)Sen Doddering may perhaps be engaged in creating a red herring
distraction to draw attention away from the numero uno problema
faced by teh big Three: high labor costs, compliments of Dodd’s favorite union, the UAW, which has contributed tens of millions into Dem coffers over this past year. Odd that the Dems would make silly claims that the loss of the Big Three would be catastrophic, while
hundreds of thousands of normal non-union folks are losing their jobs. So far, the UAW’s “sacrifice” to help save their jobs has been to allow the automakers to not pay laid off workers salaries higher than the national average to sit around waiting for the phone to ring with non-existent job offers. What company in its right mind would hire a former UAW worker?
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Dec 9th, 2008 (11:07 am)#4 Rashiid,
>> perhaps they can insert a brain
I guess ad hominem can not only be fun sometimes, but true!
Let’s give the man some credit where it’s due though. I’ve been using a glut of vacation days lately, having delayed them all year due to various deadlines. Now it’s use ‘em or lose ‘em (thank God I can at least use ‘em). So, sadly, I’ve been watching too much CSPAN lately (somebody send therapy).
That means I’ve seen Dodd speaking often, and conducting hearings. While I have virtually never agreed with Dodd’s politics, and I’ve often deeply reviled the man, he’s sounded downright coherent and/or intelligent compared to Barney Frank, Nancy Pelosi and (ugh) Harry Reid.
Hmmm. Wait a second. That’s a pretty low bar; a bit like saying liver cancer is better than brain or pancreatic cancer.
OK, this reply has officially lost its way. We now return you to your regular programming, already in progress.
Mike-o
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Dec 9th, 2008 (11:11 am)Tom Brokaw on Meet The Press mentioned Jack Welch – for the position – to Obama during there conversation. I’ve seen Jack being questioned, several years ago, about how to fix the Auto Industry. He knows exactly what needs to be done and it really isn’t a mystery, but a hard truth.
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Dec 9th, 2008 (11:12 am)#24 Static
Real number – ($1,978,000)
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I stand corrected. I based by claim on are reported operating profit of over $9 billion. The Net income for 2006 was as you stated.
GM’s cash on hand, has been relatively constant over the last three years. What’s really impacted them is the complete lack of available credit.
The bank are using the logic:
We can’t lend to you because the other banks aren’t lending to you and if they don’t lend to you, you will go out of business and we will lose on our investment.
I should amend my statement to:
Can any business handle a 40% in two month drop in sales AND no ability to borrow?
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Dec 9th, 2008 (11:13 am)#44 Jean-Charles Jacquemin
Yes, with all the turmoil over the economy and the survival of the American auto makers, we have lost sight of the true reason for this web-site. It was established to promote the development and production of the Chevrolet Volt. We need to keep that in mind, yes. But, to have the Volt produced and have its future guaranteed we need a strong economy, a strong GM and as little government interference as possible. During these troubling times we may have to accept more government interference than we normally desire, but it should be as little as possible to accomplish our goals and it should be short-lived. The problem with that is that once our great and holy government in Washington, DC gets its hands on something they never let go. It becomes a political ball to be tossed around as necessary to drum up money for supporters and votes for congress. The American taxpayers are the only ones who end up on the losing side.
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Dec 9th, 2008 (11:13 am)Lyle: The silicon battery with 10 times more capacity has been discarded by the battery community and the results has never been verified by anyone, the best scenario is a 10-15% capacity increase compare to 1000% increase claimed by the author, this shows the fraud nature of academic community and foolishness of your earlier post!
SHAME!SHAME!SHAME!SHAME!SHAME!SHAME!SHAME!
SHAME!SHAME!SHAME!SHAME!SHAME!SHAME!SHAME!SHAME!
SHAME!SHAME!SHAME!SHAME!SHAME!SHAME!SHAM
SHAME!SHAME!SHAME!SHAME!SHAME!
SHAME!SHAME!SHAME!
SHAME!
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Dec 9th, 2008 (11:14 am)BORRRRIIIIINNNNNG!
Where has the interesting tech conversation gone? If I want to read news stories like this, I can go to any other automotive blogging web site.
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Dec 9th, 2008 (11:16 am)#47 Mike-o-Matic
Great comment and funny too. We need a little chuckle every now and then.
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Dec 9th, 2008 (11:17 am)Bailers@42 said in part:
“…This is beyond insane, and a horrible idea. GM would be better served by a bankruptcy. Otherwise, get ready for the beautiful 2015 GM Pelosi, which gets 150 MPG, seats 2.4 people, and costs $450,000. It will be the best car government minds can build.
Yeah, but a Fancy Nancy would turn a $47 profit. If it just had a plug, it’d be darn near perfect (for a gov’t product).
I find myself literally spinning in place. Initially, I was anti-govt intervention. Then the shear number of jobs potentially lost scarred me into at least considering the need for it. Now the govt’s “handling” of the whole process even before it gets started reinforces my initial stance. Argh.
Long before the talk of a car czar, I figured that Rick should just arrive at the congressional hearings with Statik at his side and turn the company over to Statik. Seriously. At least the decisions would be data driven and recognize the need to get plugins on the road.
Now I think that I’m just overwhelmed by how bleak ALL of the alternatives and potential outcomes are. This from the list’s Paulianna.
Be well,
Tag
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Dec 9th, 2008 (11:17 am)Imagine the screaming that would have occurred if, when GM was in its SUV and truck selling heyday, a government car czar said GM needed to change their strategies.
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Dec 9th, 2008 (11:18 am)Final agreement within a hour?
WASHINGTON (AP) Tuesday December 9, 11:06 am ET — Senate Majority Leader Harry Reid said Tuesday that Congress could act on an auto bailout as early as the end of the day.
Reid, D-Nev., said a final agreement with the White House on help for Detroit’s Big Three could come “within an hour or so,” and hinges on only a couple of outstanding issues. He predicted the package could be finished by late tonight or tomorrow.
http://biz.yahoo.com/ap/081209/congress_autos.html
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Dec 9th, 2008 (11:19 am)Jean-Charles @ 44,
Well put; are you sure English isn’t your first language?
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Dec 9th, 2008 (11:22 am)I, for one, would certainly like to return to more interesting articles on automotive subjects (#52 Gary), but in this climate the news about the economy and the looming demise of GM and Chrysler seem to be overriding all else. Got anything more interesting to post, Lyle?
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Dec 9th, 2008 (11:30 am)#58 N Riley
I’d love a more interesting topic. But, as has been said before, it is hard to concentrate on rearranging deck chairs when the ship is sinking.
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Dec 9th, 2008 (11:34 am)Wow, can we trust them with our money. I am all in with the Volt and to help build it but it is hard to trust companies like GM. “who killed the electric car and now who killed the electric subway system”. I was astonished to find out that GM has been evil since way back when. I think karma is getting them now. I just saw in the history channel (worlds of the underground) about the electric subway (rail) system that was in place in LA and was amazed that GM and the oil companies also destroyed it. They had over 1,000 miles working back then with electric rail cars. Wow! please see some web pages I found.
http://www.trainweb.org/mts/ctc/ctc06.html
http://www.baycrossings.org/Archives/2003/04_May/paving_the_way_for_buses_the_great_gm_streetcar_conspiracy.htm
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Dec 9th, 2008 (11:34 am)#49 maharguitar said,
#24 Static
Real number – ($1,978,000)
———————————–
I stand corrected. I based by claim on are reported operating profit of over $9 billion. The Net income for 2006 was as you stated.
GM’s cash on hand, has been relatively constant over the last three years. What’s really impacted them is the complete lack of available credit.
I should amend my statement to:
Can any business handle a 40% in two month drop in sales AND no ability to borrow?
=======================================
=======================================
Well, that is the million (billions) dollar question.
Should a business that was heavy dependant on credit for surivival for almost a decade, be given special opportunity to borrow even more in this environment? Is its sheer footpring and stature in the United States a good enough reason for perpetual existence?
GM’s cash on hand has only been consistant…or even a reality at all over the past few years because of borrowing more and more money…and then selling off assets from years past when they needed even more. I’ll give you a example, April 7, 2006–GM sells GMAC for 14 billion (a asset they formed in 1919). Strip out that cash alone and they were under 10 billion in 2006…and bankrupt.
The short answer is no. That is the answer the market gave them. This situation now is a entirely different thing…this is gov’t sponsorship.
As to your question of, “Can any business handle a 40% in two month drop in sales AND no ability to borrow?”
No, very few businesses could handle a -40% scenario, so they need to borrow to pull themselves through (if it is a temporary external pressure), unfortunalely GM came to the place where they needed to borrow money to survive a decade ago (during the PEAK of the auto business), and have been living on borrowed time (and money) ever since…this event merely pushed them off the ledge 18-24 months sooner.
I don’t believe it is a question of whether GM deserves to survive, which I think goes to the heart of your post, the market has spoken…and it does not. It deserved to be bankrupt just after it released the Q3 update in November (The creditors would have made a ‘run’ on them if it were not for the possibility of gov’t intervention…and still will the second the gov’t support is in danger). However, the question still remains, “Will it survive?”
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Dec 9th, 2008 (11:34 am)I’m poised and ready to do my part to help the industry. Where is my VOLT, we have cash ready to buy it, where do I sign the sales order and pay for it ?? So, it may be on back order for a bit but we can wait.
Note: did anyone else hear the head of OPEC on CBS’s 60 min.
12-7-08 ? They are very much opposed to electric vehicles…….
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Dec 9th, 2008 (11:43 am)That Bob Corker guy, what a pecker-head, can’t even stand the sound of him talking. geesh!!!
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Dec 9th, 2008 (11:57 am)These CEOs need to be put in jail for what they have done!
ALL OF THEM – BEHIND BARS NOW !!!
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Dec 9th, 2008 (12:02 pm)hi Dr. Science #62,
“I’m poised and ready to do my part to help the industry. Where is my VOLT, we have cash ready to buy it, where do I sign the sales order and pay for it ?? So, it may be on back order for a bit but we can wait.”
_______________________________
Good question. Many here have asked this same thing. Any guesses why GM won’t take orders on the Volt? (Beside the obvious), it will be lease only (?).
Has GM hinted at anything Lyle? I know CEO Wagoner has mentioned a “big waiting list”. Why wait?
This picture just doesn’t balance out. Maybe to make sure the Union is gone before raking in the “mother load”?
Anyone know?
=D~
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Dec 9th, 2008 (12:03 pm)“Outspoken Senate Finance Committee member Bob Corker noted that the bill “lacked teeth” and should accomplish the same thing as bankruptcy would only without the detrimental stigma. As it stands, he said he wouldn’t support the bill.”
That’s not all that’s going to lack teeth if America loses its auto industry over a $15 billion loan (already promised to the automakers I might add). Our economy would never be the same.
Let’s not forget you have over $2 trillion in bank hand outs Senator. If you ever want to see anything good come from that, we’d better do more than give the people money that produce nothing and make a living off of charging people interest for “loaning them money”.
I won’t even mention the obvious irony in giving the lenders money for liquidity to be able to lend again, while at the same time allowing at least 1 million people to get laid off and still thinking there would be people out there who are going to be able to get financing for new cars and houses. I won’t mention that.
Do you realize what panic would hit wall street alone? We would lose trillions of dollars (conservatively estimating) alone in market value across the board, and what how you think 1 million unemployed people are going to make their house payments? Do you have any idea what that would do to the housing market? Can you say cliff? This is just the short term. What happens when every single car Americans buy has to be bought overseas? That’s like all of the sudden we stop pumping oil out of the ground and decide we will just buy 100% of it. Our trade deficit would be ridiculous.
The price is WRONG Bob
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Dec 9th, 2008 (12:04 pm)N Riley #50
I should have written your comments, I also experienced temporary taxes that have become permanent …
Dave B. #57
Well thanks,
French is my mother language and I live and work in the French speaking part of Belgium, I hope I show that all frenchspeaking persons are not completely handicaped as it comes to write some English.
JC NPNS
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Dec 9th, 2008 (12:05 pm)Just a little diversion from ‘Volt Bailout Nation’:
Autoblog has a little ditty on Tesla delivering its 100th Roadster…it would seem they have actual production going now, not just the odd car being spit out here and there anymore.
http://www.autobloggreen.com/2008/12/09/tesla-delivering-the-100th-roadster-today/
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Dec 9th, 2008 (12:08 pm)#15 Tony Gray
“I just watched Bob Lutz get grilled on Fox and Friends”
I was watching our 2nd governor in a row, Rod Blagojevich being arrested.
Now that’s sad.
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Dec 9th, 2008 (12:29 pm)Relax comrades it is not your money, money control belong to wise fearless leaders Dodd and Pelosi, A trillion here a trillion there pretty soon you will have two to five million federal reserve notes to do your grocery shopping. News flash the federal reserve has ordered new high speed printing equipment from Sweden, so look forward to a Zimbavway style economy. Looking forward to peoples car designed by Pelosi and Dodd part of design plenty of hot air to keep you warm.
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Dec 9th, 2008 (12:30 pm)How sad.
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Dec 9th, 2008 (12:35 pm)#63 Jerry:
Now there’s something I can agree with! I guess all is not quite lost yet. Thanks.
NPNS!
DBNGCMEMEV
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Dec 9th, 2008 (12:41 pm)hi chevronly #70,
“Looking forward to peoples car”
____________________
Yes we are looking forward to “the peoples car”. As opposed to Big Oil’s car.
BTW: Any Czar working for President Bush will have an accord (no pun intended) with Big Oil.
_______________________
A quote from George W. Bush
There’s no such thing as being too closely aligned with the oil industry in West Texas.
In 1978, when he was running for U.S. Congress, Time Magazine, Jul. 3, 2000
=D~
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Dec 9th, 2008 (12:45 pm)# 69 George K
We’re better off without him. Daley must be birthing bricks in the bathroom right now. They’re both crooks.
#54 Tagamet
I agree with you 100%. I’m torn betwen saying we need to save the companies for the sake of the country, to let them die rather then the Government dictate the types of cars they buy. I’d love to buy a Volt, but that doesn’t mean I’m going to give up my crossover SUV anytime. Can’t fit three kids in the backseat of a volt or Cruze (at least without giving up my sanity). I worry that the larger cars and trucks that many people need for various reasons will go by the wayside if the current drive toward fuel efficient cars is pushed even further by the ideological decisons of congress.
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Dec 9th, 2008 (12:54 pm)Lee Iacocca says US auto execs shouldn’t be ousted
Tuesday December 9, 11:35 am ET
http://biz.yahoo.com/ap/081209/congress_autos_iacocca.html?.v=5
The drama continues…
=D~
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Dec 9th, 2008 (1:07 pm)My second vehicle, fun, free-wheeling, electric or hybrid versions.
http://www.persumobility.com/ formerly venture vehicles. Approximately the same launch date.
Every means and method to get off Middle-East oil run by an oligopoly who have contrarian values to our democratic civilization.
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Dec 9th, 2008 (1:10 pm)I have 2 opinions on this issue and its hard to make a solid choice. 1 I say let the auto makers fail just like any other business that made poor decisions. 2 they can’t be allowed to fail because they represent directly 200,000 jobs and indirectly 2 million jobs thus allowing them to fail will push the US into a true depression.
I like the idea that the tax dollars will come with some oversight. The Detroit 3 (notice they’re not called big 3 any more) have been behaving like a hippopotamus. A hippo is the biggest baddest animal in the river and it acts like it, get in the way, get bumped. The Detroit 3 have been doing it their way for 100 years, damn any new technology that is more environmentally correct and will make America a better place, profit or potential profit is the ONLY motive. This results in lots of money now but a poor foundation for the future.
If you exclude the EV1 (because it was destroyed) the only innovative thing GM has put on the road in the last 30 years is “ON-Star”. ON-Star isn’t particularly innovative since it is an adaptation of cell phone technology. Air bags etc. are technologies that were invented by other companies and the rest is a tweak of existing technology.
GM’s past actions are coming back to haunt them. I listened to the hearings and was stunned when the Detroit 3 were asked about the law suits brought against the states. You know the ones that were to keep the individual states from setting higher pollution standards, like the one chronicled in the film “Who Killed the Electric Car”.
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Dec 9th, 2008 (1:15 pm)First, thanks Lyle for the laugh…between the picture at the top of this post and the comment by Pelosi saying this was a “barbershop,” I got a much needed smile on this dreary day!
Second, I’m certainly no expert (props to statik), but it looks to me like this “Bailout/Bridge” Boondoggle really amounts to the government putting GM (and Chrysler eventually), through Chapter 11 with a “Car Czar” in place of a Bankruptcy Judge. When this is all said and done, I’d be willing to bet the outcome will be the same. Come March 31, the “Judge” will render his/her decision and everything from legacy benefit costs to future production plans will be affected.
I hope GM doesn’t eventually stand for Government Motors…and that the Volt, given its lack of revenue generation initially, survives..
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Dec 9th, 2008 (1:25 pm)As I see this, first Congress allows the banking failure, and then it blames GM and the other automakers for “poor management”.
GM is in big trouble because of frozen credit and job destruction, not poor management or even its product mix. In the last thread, this became clear when debunking the idea that falling gas prices were goosing truck sales. During the first six months of this year, when gas prices were high and rising, GM truck sales were off 16% while car sales were off 21%. During the last reported month (November), when gas prices were low and falling, truck sales were off 39% and car sales were off 44%. This much larger drop occurred when GM was going all out with its Red Tag Sale which included things like a $2000 discount and $5500 cash back offer on a $29,000 Silverado truck, and was as well offering special financing deals on its GMAC products.
The obvious point made by these numbers is that GM is being pummeled by credit problems and the economic downturn, not poor management or even a poor mix of vehicles. The recession started in January of 2008. It hurt GM sales for the first half of the year, dropping them by roughly 15%. Then the bottom fell out of the credit market and sales dropped by 40%, even with aggressive discounts which should have at least doubled sales. Since GM vehicles didn’t suddenly develop all kinds of defects, we can rest assured that GM’s problem are based on the macro economic situation not on management decisions or even on its mix of vehicles.
In this regard the sales figures for cars and trucks are of particular interest. In the first half of the year, when gas prices were higher, truck sales outperformed car sales. Recently, in the midst of lower and falling gas prices, cars have performed relatively better, down a little more than twice while truck sales are down about two and a half times. How to explain this difference? One theory would be that the numbers represent a lag between dealer orders and consumer sales (the numbers are dealer numbers). A second theory would be that the numbers represent a permanent shift in consumer outlook that regards high gas prices as normal and current prices as an aberration (consumers have a short memory but not this short). A third, and more likely explanation, is that trucks are simply more expensive than cars, and the relative under-performance of trucks reflects deteriorating economic conditions.
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Dec 9th, 2008 (1:36 pm)#63
Senator Bob Corker is the only sane, intelligent, one in the Senate Finance committee. Interestingly enough, both Republicans and Democrats were praising him in both the Senate and House. He is a successful businessman and knows what is required. I’d like to see him as the Car Czar, myself.
He penetrated to the essence of the matter, and demanded balance sheet restructuring when every one else was merely talking about loans and liquidity. He was equal handed, demanding tthat the UAW take stock and delay the VEBA payments. He ALSO said the banks and bondholders had to be shaved. He said the auto debt was currently selling at 15 cents on the dollar, on the secondary market. Usual bankruptcy actions, double market prices, so the debt should be converted to equity at 30 cents on the dollar. Both actions would restructure the companies balance sheets and make GM, Ford and Chrysler (remnants) viable, long term.
But Chrysler needs to be merged into one of the two, or split between them. That is true for long term auto industry viability.
Unlike the pure liquidity bill, such an action would provide profits in both good times and bad, whereas the simple leverage will swing them to high profitablity in the eventual recovery. But they would have the same problems in the eventual subsequent downturn.
He is the one pushing for the benefits of Ch 11 bankruptcy without calling it ‘bankruptcy’. His obstinacy now, is just like Mr. Bush’s opposition, merely holding out to the last minute to give the ‘car czar’ enough power to do his job.
Effectively the same power as a bankruptcy Judge, is what they both want, amid the discussions of viability.
Jack Welch would be a good choice for Car Czar; he did a phenomenal job putting GE into fighting trim. I agree with the wisdom of his “Be first or second in an industry or get out”. I wish Immelt would do that to NBC, MSNBC and CNBC news. Fire all the Ar$$holes, and hire an entirely new and balanced newstaff.
Another good choice would be Mitt Romney. He is a good business man, he straightened out the Olympics fiasco, and walked the minefield of the corruption and political payoffs there. Doing that, is a requisite for the job. His political party may make him unacceptable to the Obama administration though. But his selection would add a patina of bi-partisanship to the incoming Administration.
For another choice, how about Lee Iacocca? Now outside the business, he has to know where the bodies are buried in both Chrysler and Ford from his times there.
For a REALLY off the wall possibility, I would offer the guy who demanded that the UAW find a way to equalize labor and legacy cost the first year he faced the problem. And he succeeded. Of course it ended up compromising as a transition plan. He was sabotaged by the downturn before the transition completed in 3-5 years, in 2010. But it was a revolutionary approach, and he succeeded. It was equivalent to actually reforming Social Security. What politician dares touch that third rail?
Assuming that an equal amount of money would be available to be put into the domestic cars, for the first time; which buys equivalent features, he undertook to develop vehicles that matched the imports feature for feature, meant for sale at an equal price.
Now that costs are, or will be equalized, by 2010, vehicles with the equal features that they have here-to-for been unable to match from the imports and break even, are showing up. Judging by the car industry awards, the offerings coming to market already have been superbly received. He has also embraced a revolutionary technology that moves the industry toward electric cars.
Like Al Sloan, he understood that GM can grow from successfully merging new brands into the company that bring new unavailable features, like minivans, new V6s, new I-4s, and small off-road vehicles like Jeep, to his company.
Plus I understand that he will be forced to be looking for new employment soon.
I nominate Rick Wagoner to finish the restructuring job he started, for his company, but now for the entire domestic industry.
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Dec 9th, 2008 (1:58 pm)All this requirement stuff is political posturing designed to appease voters (see how tough we were). The loans are designed to kick the problem to the incoming administration, which will make the decisions. Nothing more than this. Any decision at this point can be redone or undone later.
#80 stas peterson – “He penetrated to the essence of the matter, and demanded balance sheet restructuring when every one else was merely talking about loans and liquidity.”
The Center for American Progress, which is advising the Obama transition team, has been saying this for almost a year. Basically its point of view, which you see reflected in Obama’s statements, is that loans only make sense if the auto industry restructures. As a related note, while everyone has been praising Corker and denigrating Dodd, it should be obvious that Dodd set Corker up to present the case for restructuring.
“Jack Welch would be a good choice for Car Czar”
Given Welch’s reputation for “hands on” management, I doubt any President would want him anywhere near the White House, much less inside it on a daily basis.
As for individuals, I’d think Paul Volker would be able to get the players in the room to cut a deal very quickly, assuming he had the threat of bankruptcy hanging over the participants.
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Dec 9th, 2008 (2:03 pm)I am not sure I would agree that states should be allowed to force the auto companies to produce cars with pollution requirements that exceed the federal mandated rules. I understand the desire to produce ever cleaner vehicles but before long we will have 50 different set of rules then some states will ban cars made for other states. This is a slippery slope we are allowing ourselves onto. This is very similar to the state requirements for different fuel mixtures depending on the state or region. That kind of mandates are the ones that limit our refiners from being able to produce enough of gasoline to meet demand at times. They must curtail production of one type of fuel to satisfy the needs of another. We don’t need to go this route again, please.
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Dec 9th, 2008 (2:04 pm)I think what we are all forgetting in this soap opera is we are dealing with politicians. One, as stupid as we might think they are they DO know it is economic suicide to let the automakers fail as in go into bankruptcy. Two, they also know auto sales have fallen 30 to almost 50%!!!!!! And yes, no one could have predicted or prepared for such an historic fall in car sales and NO it is not because US automakers are uncompetitive or incompetent. WHAT THE REAL ISSUE IS is once the automakers get the money they WILL use it to restructure for a market that is 30 to 50% smaller which will mean MASSIVE LAYOFF and THAT is what the politicians KNOW will happen and the PUBLIC WILL BLAME THE POLITICIANS FOR LOANING MONEY TO THE COMPANIES THAT WILL LAYOFF TENS OF THOUSANDS of workers. BUT that is still better than the layoff of HUNDREDS of thousands of workers and thousands of failed suppliers. (Remember, the automakers do not make cars they assemble cars!)
And that is what is coming.
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Dec 9th, 2008 (2:09 pm)From Dave K “There’s no such thing as being too closely aligned with the oil industry in West Texas.”
————–
Every politician is closely aligned with some group or other. For many years there was absolutely nothing wrong with being aligned with the oil industry. It employed millions of Americans (and does still) and produced vast amounts of energy for Americans (and does still) and was instrumental in helping our nation become a world power. I don’t think it is any worse to be aligned today with the oil industry than it is to be aligned with American unions. They both play a vital role in America.
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Dec 9th, 2008 (3:48 pm)#84 – “It employed millions of Americans (and does still) and produced vast amounts of energy for Americans (and does still) and was instrumental in helping our nation become a world power”
Not disagreeing with the fact that the oil industry is vital, but millions of workers? I thought it was a few hundred thousand, most in four states: TX, CA, LA, OK.
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Dec 9th, 2008 (3:49 pm)To KentT #83.
Good post, I hadn’t really thought about it that way.
This explains why they are pretty giving them enough money to last until Obama can deal with it. I would imagine Obama has some thoughts on what to do here. It may or may not be good that Bush is appointing the car czar. I am personally hoping its Rep. Mitt Romney since he is not only well acquainted with politics and business and has a very good track record of fixing very desperate financial situations. He’s a good balance of business savviness and political savviness and his own father was a turn around CEO in the auto industry in the 50’s. If Obama were to pick, it’s unlikely he’d pick Romney since they are of two different political parties (sad as it is).
I don’t understand what “teeth” Corker is looking for. There’s mandatory restructuring, there’s a car czar that can pull back funding if he doesn’t like what’s going on. We’re talking about $15 billion! Most of it will be going into the economy so it’s a little mini stimulus that you actually get paid back with interest as opposed to last year stimulus that was 3 times that and didn’t get paid back.
I kind of agree that the economy probably had a lot to do with the auto industry downturn but no use crying over spilled milk. This is the perfect opportunity to restructure and a car czar is like a holy grail of the auto industry. He can tell the unions to go screw themselves when they make demands, he can tell creditors they need a haircut and do whatever he wants. If I were in the auto industry I’d be glad.
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Dec 9th, 2008 (3:53 pm)Would someone tell me what is going on with FORD. I heard they said they don’t need the money and walked but I can’t find any news at all about it. If you heard something – please respond.
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Dec 9th, 2008 (4:08 pm)#85 DonC
Oil is used by many different industries around the country to produce many products. Employment in oil related fields do amount to many more employees than your initial comment seemed to imply but may be less than I stated. Oil based products are wide ranging and it would take a real expert to tell us just how many people are presently employed by companies utilizing oil products in their processes. Needless to say, oil is a very important product today to a long list of industries.
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Dec 9th, 2008 (4:14 pm)_____________________________________________________
Math Perspective:
The Apollo Program (Man on The Moon) was a massive government project that put man on the Moon 6 times over the course of 13 years at a total cost to the American taxpayers of $23B in 1966 dollars (about $145B in today’s dollars). The average monthly operating cost for this massive project was $930M/month in today’s dollars.
GM and Chrysler are looking to get a $15B taxpayer backed loan from the government so that those enterprises can operate through March 2008 therefore requiring $5B/month to continue operating. This means that the monthly cost to keep the doors open for GM/Chrysler will be 5.4 times the cost in today’s dollars of the monthly operating cost of the Apollo program.
The total cost (about $1.2T) of the taxpayer backed bailout/loans (TARP, Auto, etc…) allocated thus far in just one year will end up being over 8 times the cost in today’s dollars of the 13 year long Apollo program. This means that the one year cost of “shoring up” the economy through taxpayer back bailouts/loan will be over 100 times the one year cost of operating the Apollo program.
It can be argued that the recent bailouts/loans have an equity component (shares, notes, etc) that will allow the taxpayers to recover a portion their investment at some future date. It can also be argued that the Apollo Program also had an equity component that flowed back to the benefit of the American people by way of allowing American industry to substantially exploit all the derivative technology that came from the Apollo program.
American Energy Independence is the ONLY result that can conceivably yield a return in scale of the investments we are currently making.
Bottom line is Nuclear Power + Electric Cars…end of story. All the other available alternative energy options (clean liquid coal, geo-thermal, wind power, solar, ocean waves, hydrogen, ethanol, pig urine, etc.) should also be exploited but are marginal in “assurable availability” and marginal in terms of economic viability compared to nuclear power.
Is the Obama administration capable of directing these absolute massive taxpayer backed commitments to yield a result as dynamic and important as the Apollo Program? Can Obama match John Kennedy in vision, resolve, and political clout? Or will Obama’s promise of American Energy Independence be a hallow promise similar to the last five presidents before him?
______________________________________________________
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Dec 9th, 2008 (4:14 pm)#88 N Riley – “Oil based products are wide ranging and it would take a real expert to tell us just how many people are presently employed by companies utilizing oil products in their processes.”
Again no argument on the importance, but usually employment is done in a more direct way. This strikes me as the claim by the auto industry that 10 million jobs depend on it — if you count taxi cab drivers.
But no big deal. I was just very surprised by the number.
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Dec 9th, 2008 (4:14 pm)wwskinn3 #87, Here is your answer. It’s from the Newsweek website: http://www.newsweek.com/id/172243
Below is an exerpt but it answers your question.
“The fact is, though, Ford is sick, too. It’s lost $8.7 billion so far this year and struggles with the same high labor costs and SUV dependence as GM and Chrysler. But the company is in better shape because of what Mulally calls “the biggest home-equity loan in history.” As soon as he arrived in Detroit from Boeing two years ago, Mulally mortgaged every asset Ford had—even old Henry’s family name—to secure $23 billion in loans. Today, even after burning through billions, Ford still has a formidable stash of cash and credit worth almost $30 billion. That’s nearly twice the size of GM’s cash cushion and 12 times more than Chrysler has. Mulally’s bet-the-house loan looked risky back in 2006, but now with credit frozen “it turned out to be a brilliant deal,” says Lombard.”
Ford mortgaged the farm for every penny.
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Dec 9th, 2008 (4:18 pm)I much as don’t look forward to it, the next 90 days or so are going to be extremely interesting. I only hope reason will prevail with all parties concerned. I can understand the democrats wanting to give the auto companies loans so that the unions will not lose jobs (either in the auto companies or its suppliers, which are also heavily unionized) and the republicans wanting to insure sound business decisions will be enforced which would by their very nature require the unions to either lose a large dose of employment or take a big pay cut. Neither side has the taxpayer’s interest truly at heart, but if I had to decide which side to chose, I would come out for a sound business plan. I think either way the chips fall you are going to see jobs lost either as part of a restructuring plan or through bankruptcy and closure of plants. The devil may be in the details, but the devil is going to get his dues in either case, it appears. People are going to suffer and I don’t see much congress can do about it.
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Dec 9th, 2008 (4:28 pm)#92 should have started out as: “As much as I don’t look forward to it,…..”
My fingers got knotted up, I guess.
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Dec 9th, 2008 (4:34 pm)#90 DonC
I had not heard about the 10 million job claim. I knew they said at one point there could be 2 or 3 million jobs affected by the three of them going under. At any rate, it is not something most of us would like to see, in any case. I am hoping for a good outcome.
I am not too interested in seeing someone appointed as a “car czar” (what a stupid name – only a congressman could come with something like that) without some manufacturing or restructuring experience. Jack Welch or Romney would both be excellent choices.
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Dec 9th, 2008 (4:57 pm)I hope the “Car Czar” doesn’t have anything against the upcoming Chevy Camaro. I’ve already pre-sold 8 of them and I’d like to get them delivered this spring before he (or she) axes the V8 engine.
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Dec 9th, 2008 (5:00 pm)#95 Gordon
Don’t hold your breath. The V8 engine dies this month. So long to a great engine for fun and speed. But there are a lot of good V6 engines around that can do pretty darn well, too.
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Dec 9th, 2008 (5:04 pm)Did anyone see the news story where Obama and Al Gore were to meet and discuss something or other? Any thing come out about that meeting? Maybe Al will serve as the car czar. Yuck! Oh, I mean SH*T! No, I mean, FUNNY! But just think about it a moment….! No, don’t go there, Obama.
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Dec 9th, 2008 (5:24 pm)The bailout will just postpone the inevitable. Unless we are prepared to given the car companies 150-200 billion over the next 5 years, we should cut our losses now. Otherwise its just good money after bad. I urged my congress reps to vote no bailout.
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Dec 9th, 2008 (5:32 pm)Farewell LS7 Engine. We hardly knew ye… (sniff!)
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Dec 9th, 2008 (5:35 pm)Ralph Nader is available! Another Connecticut native to boot!
Or, getting serious, how old is Iacocca these days? Is he up to it?
Romney might be OK. Bring back the Rambler, that’s what we need. And if it doesn’t work, then hey, they’ve got something to blame on a Republican!
Too bad Jay Leno has the new 10 o’clock gig coming up. I’ll bet he would be better than whoever actually gets the job.
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Dec 9th, 2008 (5:38 pm)N Riley – No one in Chicago cared about Gore today. Our Governor is in jail and the weather is misearable.
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Dec 9th, 2008 (5:45 pm)Anyone think that the Government has become involved in something they shouldn’t have? Stop all bailout money now. Revoke TARP and reclaim all money remaining. Let the manufacturing system function normally. Things will change for the better under restructuring. I am willing to buy a Volt from a restructured GM. What seems to be the delay here?
All the “hurting” people who spent $600,000 for homes. And then realized that they could afford just $2000 a month payment instead of the needed $3000 are out of luck. Sorry, what’s makes you more special then someone who rented until prices were affordable? I bought a home I could afford and worked hard to pay it off. So where’s my “do-good” check?
Company CEO’s who at one time had plenty of profit and clout to operate find themselves with empty wallets. This is the tax payers problem?
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Congress should not be engineering our future using tax payer betting money. We all know that the Bush appointed “Czar” will get rid of all the Volt people. An oil man (woman) doesn’t want electric cars on the road.
This is a serious battle folks. Get Government out of this before they are hoodwinked into appointing an Oil Czar. Even a small time Municipal Court Judge would throw this request out.
Displaced employees will just have to search for work. What’s so hard to understand about that? Anyone here ever been out of work?
I just don’t believe Union employees are special. Why are they more precious than you or I when we were out of work?
Sorry, the candy store is closed.
=D~
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Dec 9th, 2008 (6:38 pm)I’m frustrated that with all this press about the problems with the domestic auto industry, the Volt has not been emphasized as the game changer that it is! Bob Lutz had a golden opportunity on Fox yesterday to use his flamboyant character to rally the troops. We need this kind of leadership in explaining to the American people that we do have the technology and guts to make the hard choices. In 2010 when the Volt is slated to hit the streets, there will be pent up demand for the Volt. I am one of those citizens waiting and saving!
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Dec 9th, 2008 (6:39 pm)Basically there is no very good solution. In the current economic state it would be disastrous to let the auto industry sink. Bankruptcy is not a realistic alternative because: (1) there is no debtor in possession financing available; and (2) consumers won’t buy cars from a company in bankruptcy.
The non-bankruptcy bankruptcy, which is the road we’re headed down, isn’t a great alternative because it’s too political. The great thing about bankruptcy is that bankruptcy judges aren’t all that political. A few posters have mentioned the restructuring in the steel industry as an example of what can be done. However, that restructuring was done by throwing retirees under the bus — their health care and pensions were completely eliminated. A bankruptcy judge signed off on that, but what political appointee would do the same? Doesn’t seem like a career enhancing opportunity. Plus as more players become involved you end up with the Sierra Club picking what cars GM should build.
Basically the Bush Administration screwed up once again. It should have used TARP and had the Federal Reserve loan the money. Like a bankruptcy court, the Federal Reserve is shielded from a lot of politics, and is hence more able to force necessary changes. By making Congress handle the issue, it has turned an economic problem into a political circus.
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Dec 9th, 2008 (6:47 pm)hi DonC #104,
“… you end up with the Sierra Club picking what cars GM should build.”
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I needed a giggle, good one.
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hi Gordon #99,
When I’m ready to buy a new car I’ll drive down to Riverside to check your Chevy stock. As with most here, I like the Volt. But, may go the E-REV Cruze route. I hope the control panel is more traditional. The IPOD system on the Volt is a bit much for my liking.
I have your address and phone number from the dealer link page. Very nice web page, clean and simple.
=D~
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Dec 9th, 2008 (7:02 pm)I am seeing a lot of temporary plates on new cars. Sales seem brisk in Oklahoma. Buy now before the government sets prices high to guarantee profits!
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Dec 9th, 2008 (7:13 pm)Is this a Volt site or Governemtn bailout site. Is there no “new” news about the Volt. I’m sure their still working on it. Come on already.
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Dec 9th, 2008 (7:32 pm)#107 Mike:
Really!!!! Words fail me to adequately describe how sick and tired I am of this seemingly endless drama (soap opera?).
If GM, et al, will not agree to drop litigation over the CA CO2 rules, they can die right now, as far as I’m concerned.
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Dec 9th, 2008 (7:39 pm)#102. Totally agree. I have worked for 3 companies that went out of business. 2 with absolutely no notice or severance. And you know what? I got off my ass and found even better jobs to take care of my family.
No one is owed a job. Suck it up people and get another one.
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Dec 9th, 2008 (7:42 pm)“That person will oversee and help negotiate the restructuring effort and be able to review any expenditure of greater than $25 million.”
Oh good, they’ll still be able to buy 24 million dollar hammers!
GO EV(use to be GM, but alas I’ve lost faith in them), GO VOLT !
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Dec 9th, 2008 (8:10 pm)hi MarkRW #109,
“And you know what? I got off my ass and found even better jobs”
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Woo hoo! Hey Mark, I got a few 20’s in my pocket. Let’s go get a beer!
The drama continues…..
=D~
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Dec 9th, 2008 (8:16 pm)Lyle,
How can I get an e-mail to you?
Thanks,
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Dec 9th, 2008 (8:20 pm)“That person will oversee and help negotiate the restructuring effort and be able to review any expenditure of greater than $25 million.”
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I wonder how long that review will take and how much delay everything in the companies will have to endure to get any decision, one way or the other.
One of the aspects of government approvals for anything is that the goals are always described with the most high-minded reasons, and then approvals take a long, long time because of trivial issues or distractions. So even if the decision in the end is correct, often it comes too late to matter.
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Dec 9th, 2008 (8:34 pm)I hope GM and Chrysler snub the loans and go bankrupt. Actually I hope it doesn’t come to that. There is a saying, as GM goes, so goes the country. I’ll be in the basement with nothing but cash and a shotgun. If this isn’t the great recession, it will be after 3 millions jobs evaporate. It’ll be really great watching people rush the banks causing all $700 billion to go up in thin air. It will be even better when the US government is paying out $25 Billion a month in unemployment, pension and health care benefits.
The Bush administration has done nothing right so far; why start now?
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Dec 9th, 2008 (8:47 pm)Tony Gray (#15),
I watched the Fox news interview with Bob Lutz, and I didn’t think any of the questions were out of line. Their questions were really the same crap-statements the media keeps repeating over and over, but in the form of a question. So in that respect it was actually good that they asked them, because it gave Bob a chance to rebut each one.
It was annoying that they kept interrupting Bob before he was finished answering, but Bob can be kind of long winded sometimes, and at least they gave him a final chance to get his points across before the interview was over.
Anyway, that was my take.
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Dec 9th, 2008 (9:59 pm)91. KentT – thanks for the information on Ford – I really appreciate it. I wasn’t aware of it. Perhaps this will keep the “Car Czar” out of Ford’s business.
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Dec 9th, 2008 (10:15 pm)12/05/08
United Auto Workers president Ron Gettelfinger testified Thursday that if government help doesn’t come soon, “we could lose General Motors by the end of the month.”
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Yeah, the old milking cow may be going away. But a restructured GM can live on and be successful.
=D~
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Dec 9th, 2008 (11:47 pm)#117 Dave K. =D~
“a restructured GM can live on and be successful.”
No concerns about the people that GM owes money? American Axel had to get millions from GM to end a strike that was affecting other automakers as well. Yeah, GM will be fine, but everything else around them will financially collapse, too. I guess the ripples don’t reach California?
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Dec 10th, 2008 (1:59 am)Off the subject – here is another reason why we need these electric cars….. see CNN.com article
http://ac360.blogs.cnn.com/2008/11/21/nothing-but-death-wafted-in-the-toxic-smelling-air/
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Dec 10th, 2008 (5:49 am)hi D Lo #118,
“No concerns about the people that GM owes money?”
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We live in a risk/reward world. GM took the risk of making gasoline guzzlers because each unit turned a higher profit than a Cobalt or Aveo does. And now history shows they made a bad bet. Tax payers shouldn’t subsidize for gambling losses. It’s time to clean the slate and rebuild. And as many others have mentioned here. We have all been out of work at a time in our life. And we struggled for a few months. But, we eventually found new work and life continues on.
At one point in my life I lived in a rented closet ($125 a month) and had $200 in my pocket. I took 2 months of employment compensation dollars from the government (2002). I now have a wife, a son, a home (now owned outright), 1 car, 1 truck, and a Ninja.
Do you want me to bail GM out? And who will I bailout next month, Amtrak?
=D~
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Dec 10th, 2008 (6:52 am)#120 Dave K says
At one point in my life I lived in a rented closet ($125 a month) and had $200 in my pocket. I took 2 months of employment compensation dollars from the government (2002). I now have a wife, a son, a home (now owned outright), 1 car, 1 truck, and a Ninja.
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Same here. Although my home will be owned outright two months from now. I grew up poor but learned to stand on my own two feet. I don’t ask anyone for anything.
Who will bail me out if I get into trouble? I assume no one will.
So I stay out of trouble.
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Dec 10th, 2008 (12:00 pm)#37 Jackson –
True, but GM has since sold EMD (though not that long ago). I wonder if they still have enough knowledge in-house to get back into rail?
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