GM is down to only days left of funding and we wait anxiously to see if and how the Bush administration will provide loans to keep them going, and keep hope alive for the Chevy Volt. It seems an answer will be coming very soon.
As of Late Monday Bush himself gave reassurance to the automakers saying, “We’re now in the process of working with the stakeholders on a way forward. We’re not quite ready to announce that yet.”
Even Vice-President Cheney confirmed these intentions noting “We’re on the downside of a recession that may be the worst since World War II. And if the automobile industry goes belly up now, there’s a deep concern that that would be a major shock to the system.”
Senator Carl Levin (D-Mich) thinks the deal the White House gives GM will mirror what the Democratic bill had offered, $8 billion for GM and have the Treasury Secretary acting as car czar. Levin also said an announcement could come as early as Wednesday.
Since there is only $15 billion conveniently left in TARP that would cover their immediate needs as well.
In any event time is running precariously short and Mr. Bush recognizes that noting “this will not be a long process because of the economic fragility of the autos.”
And the clock ticks on.
This entry was posted on Monday, December 15th, 2008 at 9:11 pm and is filed under Financial, Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
Dec 15th, 2008 (9:17 pm)Where’s Chrysler going to fit into the picture. We keep hearing about GM…..and Cerebus has plenty of money still, it’s just a question of whether they’re willing to waste it. Doesn’t seem fair to give them money since they’ve still got some. Of course it wouldn’t be fair to leave them out since it’s about jobs. Ahh the wonderful world of gov’t intervention.
I don’t get Bush. One day he promotes a free-market, let a thousand flowers bloom economic policy. The next day, he’s giving tax payer money to profit seeking corporations. Never mind, I think I do get him. More than anything, he’s a politician at heart. I wouldn’t want that on my reputation either, though it puzzles me why a public corporations failure should go on a politicians reputation.
Dec 15th, 2008 (9:25 pm)“If” seems to have been decided. Now it is details — how much, how soon, what conditions.
We all remember the saying about where the devil is.
Is this a situation where a small first step, done as a temporizing measure, becomes in effect a commitment to $100M to $200M over time? Each dollar committed makes it harder to walk away from the next one.
Dec 15th, 2008 (9:28 pm)I’m in love with my 76′ Cordoba and will find it hard to trade it in on a new car. Does the Volt offer seats trimmed in Rich Corinthian Leather?
http://garfwod.250free.com/Photos/1976ChryslerCordobaSportCoupe.jpg
NRCLNS
=D~
Dec 15th, 2008 (9:39 pm)#2 RB
Did you mean 100 – 200 BILLION.
Dec 15th, 2008 (9:43 pm)This may sound really partisan, but I’m glad that a Republican is working this rather than a democrat. Simply because they haven’t gotten all the donations from the UAW. They’ll be more impartial that way.
Just for some balance, I’d trust a democrat more if they say we need use force against someone. Conservatives love their JDAM’s.
Dec 15th, 2008 (9:45 pm)#4 Cautious Fan asks if I meant $100B, not $100M.
========================
Yes, does $8B become a commitment to $100B to $200B? (Thanks)
After so long of this million, billion, trillion all blurs together
Dec 15th, 2008 (9:47 pm)I think I know the reason Bush changed his mind on helping out the Detroit car companies.
I sent him an email about a week ago and asked him to do what he could to help our US automakers.
Well I guess he read my email and thats when he changed his mind.
Course he might have gotten and email or two and maybe a couple phone calls from others also.
But I think it was mine that did the trick.
Dec 15th, 2008 (9:53 pm)Bush does not want to add the bankruptcy of the Big 3 to his legacy, as if it could get any worse.
They will get the money, if just enough to get past mid January.
In fact, they might not even put much oversight on the bailout. Bush really does not care about the money, only that his reputation is not further tarnished. He will probably just put the same requirements that were already passed by the House. That way it looks like he is being tough but really they don’t have to do anything. At least this will give the Big 3 some breathing room. Perhaps they will still be willing to work with Obama on his grand plan, whatever that turns out to be. I’m thinking it will include some rail and hybrid projects that could use the Big 3’s help.
Dec 15th, 2008 (10:05 pm)What GM and Chrysler want is a loan and I don’t really get why our government is so hesitant in wanting to help. With any other country I’m sure that would not be the case. The Swedes are helping by giving GM 3.5 billions and we being a much larger nation, can not even give them a loan. If we lose the auto industry, we will be well on our way of becoming a third rate nation. GM has many great products with more to come and all they need is a loan to get them through this bad economy. GM’s new workers wages has been cut in half and in the future GM workers will be making a lot less money than the Toyota and Honda workers.
Dec 15th, 2008 (10:17 pm)#6 RB
You’re so right. Billion, trillion….whatever. It all ends with “illion” so I think it’s pretty close to the same think. It’s depressing.
http://www.brillig.com/debt_clock/history.gif
Check out this national debt link. It’s strange how the politicians who seem to talk about being “fiscally conservative” seem to spend the most. Though the recent debt SHOULD be different then the historical debt in that the gov’t will actually make a little bit of money here and, in theory, will pay it off. Of course the Chosen One has laid out a plan to drive it up another trillion (with a t).
Dec 15th, 2008 (10:20 pm)Treasury Secretary as “car czar”? I’d rather have a passionate “car guy” run the show–not an accountant. We don’t want a person who is ignorant the workings of the auto industry as a whole.
Dec 15th, 2008 (10:28 pm)#7 Redeye
LOL. Have you considered a career in lobbying? You’ve seem to have the knack . You’re dishonest, but funny, and you get results. Perfect fit.
Next time you send them an email, ask for money for your good buddy Cautious. He’s got 3 kids and has to ride his bike to work to make ends meet (sob sob). He could sure use some free money taken from some poor slob who didn’t hire a lobbyist….idiot.
Dec 15th, 2008 (10:44 pm)And now for something completely different. GM lead the industry in Patent Power. You’ve got to click on the automotive tab…sorry.
http://www.spectrum.ieee.org/patentsurvey2008
Ford is close behind in 4th. An Chrysler….barely made the list. It’s good to see American companies putting in for patents. That’s a long-term investment. Or sometimes just a public relations trick, but the study seems to account for low quality patents (I’m proud to have one of those babies.)
Note that it’s only for U.S. patents so this isn’t necessarily a knock on Europe.
Dec 15th, 2008 (10:52 pm)I’m bored tonight. Sorry if folks don’t like my links. Here’s a study done at Duke which concluded that plug-ins don’t beat out hybrids until gas is $6 / gallon, assuming no carbon tax (the study was pushing for one.) This would’ve been a great link for yesterday’s discussion on GM strategies, but I rarely read the old stuff and figure others don’t either.
http://www.greencarcongress.com/2008/12/study-finds-tha.html#more
Dec 15th, 2008 (11:00 pm)I am a loyal domestic purchaser, but there is something wrong when GM and Toyota sell roughly the same amount of units, but Toyota turns a profit and GM falls futher in debt.
Come on GM, don’t pull an early 70′s again. Bring us vehicles we want for a price we can afford like an affordable Volt (NPNS) and a diesel 1/2 ton and the Americans buyers will help you avoid bailouts!
Dec 15th, 2008 (11:02 pm)http://www.washingtonpost.com/wp-dyn/content/article/2008/12/15/AR2008121502397.html
Take Care
Arch
Dec 15th, 2008 (11:52 pm)Don’t loans have to be paid back ?
How long are we suppose to wait ?
Dec 15th, 2008 (11:54 pm)I herd he gives funds only for faith based organizations
Do Bush asked to restructure GM to be a Faith based organization ( faith = Christian for bush ) and run a CRUZADE with “CRUZE” against the buddist toyota and Honda ? or even the devil recession ?
.
Dec 16th, 2008 (12:55 am)Is the Volt viable? Let’s see:
Honda Insight will be released in 2009 and it should be more affordable, $19K. It delivers 45mpg.
Let’s say I drive the Insight and I spend 5 gal/week. In five year = 1, 350 gal. If gas is $3.00/gal., I would spend $4,050.00 in gas to drive my Insight.
Let’s say I use the Volt and spend total of $1,000 with electricity costs, $0 in gas costs.
In five year, the Insight would cost me $19,000+$4,050 = $23,050.
At $40K, the Volt will not be viable.
Dec 16th, 2008 (12:59 am)@john1701a 17
Yes, the loan is “Supposed” to be paid back. But here’s the kicker, they have up to 5years to start paying back the first payment, yup, “no payment till 2014″. So what happens if they get the 30billion and the market is still in the shits after 5 years? The Volt is expected to be sold at a loss for at least 3-4 years. That’s after 0ne full year has gone by because it is not expected out till 2010.
Get the picture? Don’t hold your breath for that first payment.
GM dead or alive, I just want my Volt.
Dec 16th, 2008 (1:14 am)Laura, that is true. This analysis just make me wonder the true agenda behind gm-volt.com and motivation to pump tax payer money that we do have into a solution which is not feasible.
Is all this motivation to save the Volt only to keep the foolish pride of an electric car made by Ameicans?
Dec 16th, 2008 (1:31 am)@abdula mulah
I see it this way, If I buy this car, and GM goes under, I not only have an EV/EREV but now I have a “Collectors Item”.
This car is merely a stepping stone to help “Feather” if you will, us from OPEC dependencies. Hydrogen is a “Fools Gold”, CNG or Hydrogen or Ethanolxx need infrastructure changes. The Volt needs nothing more but a Plug or Gas for the long haul. For my purposes, I will probably use the ICE in the Volt no more than once a week.
Dec 16th, 2008 (2:26 am)Thanks Arch #16
JC NPNS
Dec 16th, 2008 (2:30 am)#22
Well said, Hydrogen is really fools gold.
Go Plug!
Dec 16th, 2008 (2:55 am)laura #19
Lets say the GM workers were paid the same as the Japanese car makers cutting worker costs in half and lets say the costs to build a volt were cut in half as a result, and lets say the union agreed to this, you get a much better car that is more fun to drive at the same price as Japanese cars. Would this make the Volt viable ?
Besides drivers don’t automatically buy the cheapest car on the market, they buy the best for the money.
Dec 16th, 2008 (3:19 am)Finally, people realize that hydrogen is simply not viable yet, and may never be anytime soon. People are in such a dreamworld when it comes to hydrogen (even some of my fellow MechEngrs!). Before I learned anything about it I was the same way. Just because H2 vehicles work fine, people (including my past self) are fooled into thinking they are viable. That’s just like showing someone a golden car that is completely rust-proof, and them wondering why it hasn’t yet been adopted. Fuel cells simply require too much platinum to be economical and have a myriad of other hurdles to overcome, most notable of which are are H2 infrastructure and storage. E-REV has none of these problems- all it needs is battery size, weight, capacity, and price to fall in order to become widespread. This is much more promising! Even better, E-Flex gives you the ability to adapt if some of the promising “future fuels” actually become a reality (I’m banking on cellulosic ethanol a la Coskata). This way, we don’t have to commit to a potentially suboptimal technology before we consider all the options, and can gradually change ifrastructure if indeed we transition from petroleum to another fuel.
Dec 16th, 2008 (4:30 am)laura @ 19, yes the one that must be employed by Honda for making such a ridiculous comparison (i suspect abdula mulah belongs to the same group)
First off, you are simply ignoring the environmental concerns most people have which for many go beyond just the price – why on earth do you think we want this car? Cause it costs more?
Secondly, the class range of car you’re comparing the Volt to are poles apart. IF the Volt cost 40k, and the battery cost $10,000, then at the end of the day you are still getting a 30k car, (possibly with a tax credit of $7,500 if you’re in the US). You have not really presented a very good comparison.
Dec 16th, 2008 (5:07 am)hi Laura,
We love you. You drive a Prius because you want to. Most here want to drive a Volt. I believe the “Volt” crowd likes the first 40 miles for $1. And they like infrequent trips to the gas station. ‘Made in America’ is important to some. And 150 electric HP means not having to sacrifice fun to be ‘green’. The Volt also looks very good.
So, to each his own. Good luck with your Prius.
=D~
Dec 16th, 2008 (6:11 am)#19 Laura wrote:
Is the Volt viable? Let’s see:
Honda Insight will be released in 2009 and it should be more affordable, $19K. It delivers 45mpg.
Let’s say I drive the Insight and I spend 5 gal/week. In five year = 1, 350 gal. If gas is $3.00/gal., I would spend $4,050.00 in gas to drive my Insight.
Let’s say I use the Volt and spend total of $1,000 with electricity costs, $0 in gas costs.
In five year, the Insight would cost me $19,000+$4,050 = $23,050.
At $40K, the Volt will not be viable.
************************************************************************************
Yes Laura, you are perfectly right! How about this right back at you. I can buy a used Honda Civic for $10,000 and spend a little more for gas maybe $7,000 so my cost is only $17,000! To top that off I can sell the Civic for around the same price. You would have to take that brand-new-car hit. So, my used Honda Civic kicks your Insight‘s butt.
Even if what both of us said is true you are failing to look at what is truly important to people and even for our future. A future where oil is far more unstable that it is today. Let’s look at the following:
1) Very few people buy a car based on how inexpensive it is. If that were not true we would all be driving Geo Metros or their equivalent. We would also be living in tiny houses made of little more than cardboard.
2) We need to get off of oil and wean ourselves from our addiction. Seventy five percent of people drive less than 40 miles a day on average. If you imagined our entire fleet of cars as EREVs then you can get the picture very clearly.
3) Americans have pride. Mainly guys. They want a cool American car that is technically superior. We will pay extra for it. When have us guys ever made any sense?
Thus, driving is a lot more romance than finance. Man, did I just make that up? Much more heart than brain. Heck, if us guys were really smart we would go directly to college taking a major that has the best chance of making the most money, get the highest paid job we could, work 2 extra jobs and on weekends, live with our parents, take the bus, don’t use a cell phone or cable TV, use the library, conversation with friends and play sports for our entertainment, date nice average girls that understand the value of a dollar and invest every dime in a well managed diversified portfolio (when the economy starts to crash move all investments to secure areas – even if that means your back yard!).
Thus, if we were smart we would do something of that nature (unless we were really smart and started a business that made money). Doing so would put us on a great path towards wealth and early retirement where we wouldn’t have to work another day of our lives yet live in complete luxury. So, I think I have made my point. We are not smart. Most of us think with body parts that do not include our brains. So, enjoy your new Insight and remember not to reason with basic economic theory.
Dec 16th, 2008 (6:43 am)#10 Cautious Fan said “You’re so right. Billion, trillion….whatever. It all ends with “illion” so I think it’s pretty close to the same think. It’s depressing.”
===============================
Thank you for the interesting link.
One wonders where the curve goes.
Dec 16th, 2008 (7:13 am)#14 Cautious Fan said ” Here’s a study done at Duke which concluded that plug-ins don’t beat out hybrids until gas is $6 / gallon, assuming no carbon tax (the study was pushing for one.) ”
===========================================
Thanks for the great link! The author is a fan of a carbon tax, but there’s a lot of interesting information whatever.
Dec 16th, 2008 (7:24 am)#29 Texas says “..driving is a lot more romance than finance.”
==========================
Texas, even though I often disagree with you, I have to admit it ->
That phrase is a great way of explaining what car buyers do!
Dec 16th, 2008 (8:34 am)#29 Texas -
haha really well put.
But instead of ‘car’ you should have said ‘truck’. At least up here, most of the ‘alpha male’ crowd wouldn’t be caught dead in a mere ‘car’. It has to be a 3 ton tank to offset any worries about the perceived size of their certain bodily parts lol.
Dec 16th, 2008 (9:17 am)Sorry this is long;)
I for one am tired of the bailout crap. GM won’t change, UAW won’t change…we’ll be back to this mess a few weeks down the road! Here are my reasons for coming to this conclusion. GM….I have friends and family in various automotive industries. My cousin for one, works writing programming language and subroutines for robotics in the manufacturing process (Contract). He said it’s amazing that he sees more foreign cars in the parking lots around GM factories then domestic…interesting! Then he tells me that most of the folks he’s worked with are getting their FAT bonuses (Not him…he’s NOT union) and cashing them in like mad….tell me that make sense of a company trying to cut back spending. UAW…He tells me horror stories about some laborers there….example, this guy was working on the assy. line and a repair team was reinstalling an overhead trolley crane….the impact guns they were using disturbed the guy running the assy. line….he walked off saying he can work in these conditions!….what a joke…and yet they get paid more than folks at my work who turn wrenches rain, snow or shine outside for 23/hr on multi-million dollar aircraft for the military/civilian world and don’t get a quarter of the benefits…hmmmm. Companies rise and fall everyday, what makes this any different….autoparts industry will still provide parts (Most are from foreign nations anyway), and mechanics will still have cars to repair, and suppliers will still deliver goods…how is this 2.5 million job lost?…..more like maybe 750,000…and even that’s a stretch! Rant over:) Oh…and I drive nothing but domestic autos….I love my ’02 Chevy S10 Blazer…wouldn’t trade it for anything. Just believe a company should be no different than anyother…there is no such thing as “Too Big To Fail”! Not in a free market society…or are we?
Dec 16th, 2008 (9:51 am)To add one last thing….you would think Mr. G of the UAW would understand that MOST folks would rather take a small paycut to ensure their viability/future in the workplace, vs being kicked out on the street with nothing…makes you wonder…..
Dec 16th, 2008 (11:08 am)Sort of off-topic, but what if congress passed a law making the entire USA a “right to work state”? Or what if Michigan alone became a right to work state?
I realize it probably won’t happen since democrats get lots of bribe money from the UAW, and in exchange they manipulate laws that provide lots of power and wealth to the UAW. Ironic that that’s OK, but selling Obama’s senate seat is not. Anyway…
It seems like right-to-work in Michigan would help Detroit tremendously while not costing tax payers a dime. Yet I’ve never heard that mentioned. Opinions?
Dec 16th, 2008 (11:24 am)#35 Rabid
The UAW has a long history of getting it their way. They see no reason to change. When the congress is seated and Obama is the President they will have even greater influence in congress and the administration than ever before. They will get what they want regardless of what happens to GM an Chrysler. They know the new congress will not let the auto companies fail and will provide what ever funding is required to meet the bills. Nothing about this is good for the average taxpayer, but what do you do? The new congress will only listen to their special interest parties and we are not part of any special interest. They only care about the average citizen when it is time to lie enough to him to get his vote.
Dec 16th, 2008 (11:31 am)#36 Paul-R
More likely congress will pass a law banning right to work laws. They have tried it a number of times and have failed. I suspect they will try again. This new worker choice or card check law the democrats are promising the unions it will pass and Obama is promising to sign it will just about make the right to work useless. Once 50% + 1 checks off saying they think they want a union at a plant, the union is automatically installed. No organized vote process where the worker gets to vote in private and can vote the way he feels. Once the union is installed, the members will pressure the other non-union members to join or quit. They will also deduct union dues from all workers, even those not agreeing to the union. Dues is what all of this is about. Dues pay for high living style for the union national bosses and hundreds of millions of dollars go to Democratic candidates each election cycle. It seems I read somewhere that unions spent over 250 million dollars this election cycle supporting democrats. Very little was spent supporting non-democrats.
Dec 16th, 2008 (1:53 pm)So can we just go ahead and change the name to the U.S.S.A.? I mean if this is what the people want (socialism, because the free market hurts too much when huge poorly run companies fail), then we should at least be honest with ourselves about it.
Dec 16th, 2008 (2:23 pm)N Riley, thanks for the feedback.
So if I understand you correctly, the democrats are trying to create an hourly working class that is powerful enough to bring any major industry to its knees. These industries will become dependent on the government for their very survival, thus making government all the more large and powerful (nationalized industries, nationalized health care, socialism, etc) as it grants that survival. Sadly, it seems like its working.
Has anyone here read the book “Atlas Shrugged”? It’s a great fiction (written over 50 years ago) by a brilliant author named Ayn Rand in which she predicted this exact scenario:
http://en.wikipedia.org/wiki/Atlas_Shrugged
And there are so many obvious ironies today as the USA approaches socialism. Some democrats (like Michael Moore) publicly state socialism is great, while others (like Obama, during the election) state the socialist label is an attack on their character. And the average US citizen today is so uninformed/misinformed, that they don’t even know what socialism is or why it’s bad. Case in point:
http://www.howobamagotelected.com
Dec 16th, 2008 (4:39 pm)Folks, Atlas Shrugged WAS written in 1957. How do you analyze Japan? Korea? China? Taiwan? Are they Socialist? Are they Capitalist? What are they? What are we?
Then there is the huge gulf between what Obama and main-stream Democrats are proposing and socialism when it comes to how they think the markets should operate. It is only Socialism to people who think that only 19th century/early 20th century-style lazzaie-faire capitalism counts as capitalism. Lazzaie-faire capitalism has failed, repeatedly, over the last 20 decades.
‘Freefall bankruptcy in the next few weeks would throw the broader economy into chaos, costing the economy 2.5 million jobs at its peak impact in summer 2010 and pushing the unemployment rate to a depression-like near 11%.’
— Mark Zandi, chief economist for Economy.com
Dec 16th, 2008 (6:10 pm)No amount of money will save GM.
GM is rotten from from the core. Rick, Lutz, Fritz, and all the idiots at the top who destroyed GM over the years need to be fired ASAP. With no golden parachute.
Giving money to these boneheads is like giving crack to a crack whore.
Dec 16th, 2008 (8:41 pm)Texas #29:
You could not be more wrong.
Your idea that people do not buy products – and cars – based on cost is absurd. What we are discussing here is not about driving a Prius, it is about saving GM using the argument that the Volt could avert GM’s course.
If cost does not matter when buying a car why don’t you buy a Tesla and just abandon the Volt for good?
Moreover, just wait until the Asians start the competition against the volt selling plug-in cars under $25K and your bailout money to GM will be lost for good.
Dec 17th, 2008 (4:11 pm)So the car czar is Paulson……. Yikes!!
Aug 23rd, 2009 (12:15 am)great post, thanks for providing so much. Keep up the good posts.! http://www.hoover-f5914900.com