The specter of the financial crisis and the horrendously dismal state of the automotive industry continue to weight down heavily on GM.
On Tuesday February 17, GM is to submit to the government an update on how well it is achieving its viability goals outlined in its plan submitted in December. That plan has yielded $13.4 billion in loans to the automaker thus far. GM has to now prove to the government that it is viable, or able to achieve “net positive value.” The Obama administration will then rule on March 31st, if they agree, or if the loans already dispersed must be called back.
At this point, things aren’t looking very good.
Concession talks with the UAW have reportedly broken down, bondholders appear to balking at debt for equity swaps, and auto sales remains critically low. The Wall Street Journal citing anonymous sources said GM’s report on Tuesday will request an undisclosed amount of more funds from the government or offer as one alternative filing Chapter 11 bankruptcy, something GM had previously said was not an option.
Per the report “One plan includes a Chapter 11 filing that would assemble all of GM’s viable assets, including some U.S. brands and international operations, into a new company. The undesirable assets would be liquidated or sold under protection of a bankruptcy court. Contracts with bondholders, unions, dealers and suppliers would also be reworked.”
And now the latest round of high stakes poker begins, and once again the Volt may lie in the balance.
Source (Reuters)
This entry was posted on Sunday, February 15th, 2009 at 6:40 am 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.
Feb 15th, 2009 (6:49 am)Not much to say except market forces are at work… loans seems to beget loans, so perhaps it was just meant to be – adapt or die off. Alas the volt may have been just a little too late. i hope for all the readers here it is not and GM is able to get back on its feet and the volt is delivered on time.
Feb 15th, 2009 (7:04 am)After the last round of begging for money resulted in not enough concessions from GM and the Union, Bankruptcy may be the only thing that will actually be able to restructure GM and the Union into a viable company. Even in Chapter 11, the Volt will go on.
Feb 15th, 2009 (7:13 am)If GM goes Chapter 11, it may signal the end of GM. Most people won’t buy a car from a bankrupt company.
All the news outlets reported the UAW walking out on Friday, but few seemed to report the bond holders walking out on Tuesday. The UAW always said they would be willing to make concessions, as long as others at the table were making similar concessions.
Is there any other way for the government to apply pressure on the bond holders? Is Chapter 11 the only lever GM has?
If EREVs get the reputation of bringing down GM, then it may be a long, long time before anybody else decides to make one…
Feb 15th, 2009 (7:31 am)Chrysler entered into Chapter 11, was able to reorganize and return as a profitable company back in the 80′s. That means that many people bought from a company in bankruptcy, so I don’t buy that argument. It’s PR that makes the difference, but at the same time this is a particularly nasty economy that Chrysler did not have to cope with.
It remains to be seen how GM plays the cards that they’ve been dealt.
Feb 15th, 2009 (7:38 am)the obama administration must not be so merciless to GM. America has lost almost everything and only thing that remains is companies who promise good technology like GM.many part makers may also go bankrupt .obama please help GM by giving secons round of cah bailout so that GM makes the volt by 2010 and they will surely be viable.
Feb 15th, 2009 (7:45 am)We might see a new GM with only Buick, Chevy, and Cadillac brands in the US. This would be the leaner GM, and the UAW may have very little bargaining power once Chapter 11 is filed.
The delicate balance here is that labor helped elect the current Administration, so how does the Administration strike a balance that pleases the labor voters but also keeps GM afloat? This may mean that Chapter 11 may not be the best for the Administration, either.
The Volt program will survive, not only because it is so futuristic and efficient, but also because the new Administration is looking to reduce greenhouse gases, and plug-in vehicles are an excellent step in that direction.
Feb 15th, 2009 (7:47 am)This was their FIRST and BEST option BEFORE they begged for and received
corporate (un)wel(not)fare from corrupt politicians.
They WILL be back for more booty and they will receive it because they are “too big to fail”.
Feb 15th, 2009 (7:54 am)GSB = Government Sponsored Bankruptcy.
LJGTVWOTR
Cheers to Statik and Tagamet.
Feb 15th, 2009 (8:13 am)FLMan #4
In 1980 Chrysler got $1.5B in loan gaurantees from the government, avoided bankruptcy and paid back what money they did borrow.
As Lyle states, “the latest round of high stakes poker begins.” This is too true and we are in a difficult position to be able to separate fact from fiction (publicity). GM wants the government, as well as UAW and bondholders, to see the direst picture possible while at the same time they want shareholders and car buyers to see the opposite. GM also wants to appear they have done everything in their power to move toward viability. They want the government to believe this and are/will use publicity to try to get the public to believe this to help pressure the politicians.
The problem I see is their recent announcement of 10% pay cut for executives and 3-7% for the rest of the salaried workforce. This doesn’t appear to be enough of a haircut by itself and certainly not enough when they are asking bondholders to take 70% and UAW to take much larger reductions. If there were other cuts (retirement, etc) that weren’t publicized then GM did a poor public relations job. If not, why show this card? Seems kinda foolish either way, unless it was an attempt to “get the ball rolling” so to speak and there would be deeper cuts in conjuction with the other parties concessions.
I guess we’ll find out more of the story soon enough. I think it is time to see some leadership from the new administration on this issue. I’m not all that interested in seeing Pelosi/Frank spearhead the government’s position.
Feb 15th, 2009 (8:16 am)The heartbeat of the electric car industry is strong. A restructured GM could very well excell on EV and E-REV along with a modest fossil fuel division.
How about this picture?: The restructured GM uses 50% of it’s manufacturing capacity on EV and E-REV. The U.S. government supports this new lean and clean company with sizable instant rebates for tax paying citizens. One in every five households have a GM2 vehicle in their garage by 2015. If you don’t have a social security number or don’t currently pay taxes then either get legal or miss out.
I don’t see a downside.
=D~
Feb 15th, 2009 (8:19 am)I hope each current member ends up unemployed and picketing the company that has given them an unrealistically sweet deal for so long. After the UAW members get a non-union job at McDonald’s or WalMart some might realize how silly it was to be as inflexible as they have been.
In the current economy replacements could be trained and even at half the efficiency of their union counterparts still meet the current demand. Oh, and the unemployed non-union replacements may value having 1, a job, 2. benefits, 3. working for a viable, competitive firm,
The Volt will live on, the question may be if the UAW will be running that assembly line, or not.
Feb 15th, 2009 (8:21 am)The Bush loans only kicked the can down the road, and now it is time to face the truth. UAW legacy costs must be resolved, and new management installed, guys who understand the Escalade is an abomination, and will build vehicles that rank as some of the best according to Consumer Reports, rather than some of the worst.
The Volt is a wonderful concept, but the failure to allow independent drivers to evaluate its actual performance speaks volumes.
Feb 15th, 2009 (8:26 am)the obama administration must not be so merciless to GM.
_________________________________
Chapter 11 doesn’t mean death. It means being able to restructure to the need, not the want.
Some of us having begging for this priority change for many years, back when GM actually had the resources available and times were good. They chose not to. Now they are being forced as a matter of survival. The counterproductive attitude & delay was unfortunate, but at least the outcome of emerging as a solvent automaker that builds vehicles appropriate for our well being will finally happen. This change is loooooong overdue.
Feb 15th, 2009 (8:31 am)FLman @4
“Chrysler entered into Chapter 11, was able to reorganize and return as a profitable company back in the 80’s. That means that many people bought from a company in bankruptcy, so I don’t buy that argument. It’s PR that makes the difference, but at the same time this is a particularly nasty economy that Chrysler did not have to cope with.
It remains to be seen how GM plays the cards that they’ve been dealt.”
*******************************************************************************
It was a loan Chrysler got back then to avoid a bankruptcy. Similar situation as GM today.
Feb 15th, 2009 (8:33 am)#9 koz Says:
“…This doesn’t appear to be enough of a haircut…If there were other cuts (retirement, etc) that weren’t publicized then GM did a poor public relations job.”
I think it may have been the latter. GM announced on Oct 23rd that it would suspend benefits of its white collar workforce. This was BEFORE the Whitehouse approved any loans. Amongst the cuts, adoption assistance, tuition reimbursement, and 401k matching contributions. I enjoy all three benefits and would be particularly disappointed at losing my 401k match. Couple that with a wage decline and increased workload (that’s what happens when 14% of your colleagues are escorted out) and I’d argue that they are making some signifcant changes in the front office. Lets be clear, the current UAW membership hasn’t given up anything. The UAW agreed to allow NEW members–starting in ’10–to get lower wages. The existing members gave up zero! And when GM said “we need more’–check my facts–the UAW went on strike. This was Sept of 2007, a couple of months after the credit crunch had begun. I agree that GM has done a poor job of recounting this story.
Obama faces a tough question–turn your back on those who helped get you where you are, or, apply sound logic that not only helped you get where you are, but where you are going. Good luck!
Feb 15th, 2009 (8:34 am)It is too bad, but it appears that the only way that GM is going to get out from under the mountain of debt they have hanging over their heads may be to file for Chapter 11.
But the only way GM could then survive would be to do it hard and fast, so people would know which divisions are going to continue forward. If it takes two years, then no one will be willing to buy any car from any GM brand, as they would not know which would still be around for warranty and service.
However, lets not forget that there are real political situations at stake here. The new administration has debts to the unions, and there will be severe consequences if they do not come through to keep the unions afloat. On the other hand, the new President does not want to be known as the “one that let US manufacturing die on his watch”.
The next few months are going to be very interesting but also very scary.
But look at the bright side. The banks will get another trillion or so with no problem……………..
Feb 15th, 2009 (8:57 am)A lot of folks put their trust in President Obama and a lot of us didn’t. What the administration does might change some minds. I am hoping it is me.
Feb 15th, 2009 (8:59 am)UAW not capitulating?
GM’s first plan assuming 12.5 annual SAAR total BS/money grab?
Bondholders not agreeing to the debt swap?
GM tabling a plan for a ‘GSB’? (thats my acronym baby, woohoo!)
(cough) flawless (cough)
It is last november all over again, only this time we have a president who is looking to stay in office for 8 years…and not just kick the ball down the field for 8 more weeks with a last minute ‘raid the tarp’ play.
There is no one who doesn’t see the black hole here now, there is no where left to hide the reality.
Side note: And where the heck is the Q4/2008 report?…it was due days ago.
Feb 15th, 2009 (9:08 am)By the way, this is what was meant when Volt was originally called vaporware. The engineers could deliver a viable product, but economic realities were totally unrealistic.
Now, an opportunity presents itself… but have the enthusiasts prepared themselves for the changes that will result?
Feb 15th, 2009 (9:15 am)Real Question:
Who, if anyone, will buy up the part of GM with the Volt Program?
Statik….we look to you.
Feb 15th, 2009 (9:18 am)D Lo #15
“Obama faces a tough question–turn your back on those who helped get you where you are, or, apply sound logic that not only helped you get where you are, but where you are going. Good luck!”
No doubt Obama faces a no win situation situation, rather I should say a no short term win situation. GM cannot show net present value to qualify for the advanced vehicle loans and they are hard pressed to show viability for the continuation of the “bailout” loans. Bonholders and UAW have to give, a LOT. IMO, last time they needed to (and presently need to) sit the 3 parties together at a bargaining table with a government mediator that knows and understands the government’s definition of viability. The problem is one party is the bondholders is plural. Who sits for them? I believe there are a handfull of bondholders that hold ~70% of the bonds (I think Statik knows the details). If this is they case, then GM could feasibly reach agreements with the rest beforehand since they wouldn’t be able to get anything from those bondholders afterward. These minority bondholders would likely get more than the big guys in this scenario but the big holders would still be in a position to get more than they would from bankruptcy.
Feb 15th, 2009 (9:22 am)#4 FLMan Says: Chrysler entered into Chapter 11, was able to reorganize and return as a profitable company back in the 80’s.
————————————————————————————–
WRONG! This is just the kind of misinformation that makes people think Chapter 11 will work for GM now.
Most people won’t buy a car from a bankrupt company. This is why the government loan to Chrysler back in the 80s avoided bankruptcy.
Feb 15th, 2009 (9:44 am)#20 Biodieseljeep said:
Real Question:
Who, if anyone, will buy up the part of GM with the Volt Program?
Statik….we look to you.
=======================
lol
The short answer is…no one will. The Volt program only survives if a bankruptcy judge deems it as a essential and more importantly ‘potentially profitable’ entity.
There is a reason nothing ‘tangible’ has been done with the Volt since last november (other than cancellations and missed deadlines).
Similar to there is a reason GM was building a friggin’ ton of cars when they thought they were going bankrupt (800K+ stockpiling anyone)…then barely have build one car since they got the money in december (now trying to sell down…trying to repair the self-inflicted balance sheet damage that they didn’t car about before to put on a show for the gov’t).
The Q4 is a nightmare, plus self-inflicted gunshot wound…and it is time to ‘show the plan’.
People think Lutz (and the others) left just because ‘it was time’? Hehe…they left because there is nothing left, and they don’t want to face the heat.
/I give Wags points actually for hanging around for this. End of the day, Wags is a GM lifer…good or bad
Feb 15th, 2009 (9:56 am)Bob Lutz isn’t going anywhere until the end of this year.
He’s still there facing the heat. And working to complete the Volt.
Feb 15th, 2009 (9:58 am)GM must reorganize to have a chance for survival against leaner competitors like Toyota and Honda.Maybe a unit with Buick,Caddy and Chevy Volt could pull some venture capital even. Maybe they can place all their bad assets in some other unit and one of the surviving units can emerge from the reorganization. Hope so. If not somebody is going to get the Volt program really cheap.
All the GM bashers should sober up a little and try to realize that big industrials in the USA are handicapped by government interference in labor relations. I worked for a utility company and management was scared to death of the union. It was always easier to work something out rather than confront the problems. Big companies lose in court adn lose in arbitration and lose at the NLRB. Are we blind? Look at the landscape in the USA. Where have all the great Companies gone? There is almost nothing left.
We can all work for the gumminit. We can all join a service workers union. We can all say as they did in Soviet Russia, We pretend to work and they pretend to pay us”. We can all live in 600 sq ft grey tenements with gummint controlled electric,heat and AC , secure in the knowledge that we are protected by the smart grid and big brothers visage on every TV screen vacant wall.
The Bolsheviks united labor and government to form a workers paradise and I think I see another one coming.
Feb 15th, 2009 (10:00 am)*** 653 Day’s to go ***
Feb 15th, 2009 (10:03 am)#20
Who, if anyone, will buy up the part of GM with the Volt Program?
———————————————————————————
Do you mean the currently “unprofitable part of GM”? And no chance of profit until after “late 2010″…at least the Volt part anyways.
What is the Volt program? PR and…POSSIBLY a long term business plan. Government intervention and/or tech advances are required to level the playing field for EREV’s vs ICE only. Since more taxes on the ICE only vehicles are political suicide, tax credits are being used or proposed.
GM has chosen a luxury vehicle price point..even though it will be Chevy. So the Volt will not be the Model T of the EREVs/PHEVs…not Gen 1 anyways.
Feb 15th, 2009 (10:05 am)All the GM bashers should sober up a little and try to realize that big industrials in the USA are handicapped by government interference in labor relations.
______________________________
Look at the bailout, some is to be used to overcome those hurdles… but not all. Plans must also include intent to offer something worthwhile & competitive. In other words, pushing guzzlers is a dead end. GM must actually commit to hybrids. What types, how many, and when are the questions.
Priorities must be set. The hard decisions finally have to be made. It’s not going to be pretty. But that’s the only way to recover at this point without sacrificing the future.
Feb 15th, 2009 (10:17 am)In the Year 2010.. 2010,
If GM lasts till then,
If car sales bounce back when,
They may find….. (a VOLT)
Feb 15th, 2009 (10:24 am)We know “who killed the electric car” but did we expect the karma that was to come? “Who killed GM”?
If GM goes Chapter 11, Stock holders should file a class action suit against Rick Wagner, who walks away with allot of their money.
NPNS!
Feb 15th, 2009 (10:43 am)“Who, if anyone, will buy up the part of GM with the Volt Program?”
———————————————————————————–
I say all of us on Volt-Nation pool together the bucks to buy up the Volt program. Then we can finally get this car on the assembly line.
I am willing to become the treasurer. Please send all available cash to my Swiss bank account.
Have a nice day
Feb 15th, 2009 (10:55 am)I think IF GM has to declare bankruptcy, most people will realize that GMs products aren’t the MAIN factor that got them into this position. It was the GREED and incompetence of the people on Wall Street and other parts of the financial services industry. I saw a very informative documentary about this mortgage banking mess on CNBC called “House of Cards” a few days ago. It gives you a good idea about WHY the whole damn world economy is in this huge mess. You should look for it on your TV guide and DVR it.
http://www.cnbc.com/id/28993790
GM was in a weakened financial position before this huge mortgage meltdown, but it took something MAJOR to push them over the edge. GM is definitely NOT the only company in trouble either. Nissan and Toyota are feeling the pain now. I heard that Nissan is laying off 20,000 people and Toyota is offering buyouts, etc. The financial services industry and the auto industry are tied at the hip you know. If one is trouble, the other one will be too. Cars are big ticket items. Same thing with the real estate industry.
Feb 15th, 2009 (11:05 am)Here is the second test for Obama.
He already failed his first test with the Stimulus package. What a piece of dog dung.
Now if he doesn’t let GM go Chap 11, he will face this company again in less than 4 years.
Barry faces a question… if he wants to stick around for 8 years he better figure out that his enemy is in the house and senate.
If he wants to be chumy with Pelosi and Reid then he will be a one term president.
Feb 15th, 2009 (11:07 am)Hmm…I wonder if there is any chance Ford or Chrysler will buy the Volt program?
Feb 15th, 2009 (11:26 am)“He said fellas it’s been good to know ya”
-Gordon Lightfoot ‘Wreck of the Edmund Fitzgerald’
Feb 15th, 2009 (11:26 am)This is just another intimidation to President Nozama for more money, they know Nobama will NOT allow his UAW supporters to be left on the street with nothing. Here is central Florida, the largest 10 auto dealers (in terms of sales), Bill Heard Chevy was the only top 10 (no.9 to be exactly) in 2008, out of top 10, 6 were Toyota/Scion/Lexus dealers, as for the Chevy dealer, it went busted last October due to chapter 11 filing by parent company. I will list top 15 tomorrow!
Clearly, GM does not have a viable business, except in Midwest. In California, Detroit has a market share about 20-24%, depends on whether you include fleet sales or not.
Feb 15th, 2009 (11:36 am)No, this is for real.
GM has no plans to remain an American company.
They’re offering buyouts to ALL hourly (UAW) workers, regardless of what Obama says or does.
Salaried workers are on the chopping block as well.
This, coupled with the fact that GM is going to spend $1 Billion of the American Taxpayers money to build facilities in Brazil, tells me that GM will most certainly file for Chapter 11.
It should be any day now….
Good luck everyone.
_-=
Feb 15th, 2009 (11:38 am)If… (Small word with big meaning…)
Logic does not prevail, which it most certainly will not.
The big players are holding their cards closely to their vests. Statik notes that some of the GM players are folding their hands. A new player called socialism is in the game (No wonder the markets are down). The stakes are being raised…
Results in such events are typically unforeseen.
More possibilities…
GM no longer exists and is replaced by three separate corporations. Chevy, Cadillac & GMC, unencumbered the GM legacy costs. This would involve massive juggling to make the numbers good.
Nationalization of the, is one that may or may not make sense, Typically industries are nationalized to replenish government coffers, not deplete them.
Of course, everything could simply be shuttered…
Red HHR (Saw a great show on the US cars of the 50’s in Cuba this morning on HDnet)
Feb 15th, 2009 (11:39 am)Bailout fatigue is at a fever pitch in America now. I don’t see them geting any more money after the debacle of how all the other CEOs have spent their bailout money. I agree a chapter 11 reorg is looking like the only option at this point. Its probably the best thing for GM, they just need the stones to actually go through with it.
Feb 15th, 2009 (11:46 am)Statik@(pick any # under 300)
You always have an answer to the fiscal questions (right or wrong, you have an answer (g)), so fastforward to 2010 and help us know what you see re the US car industry. As with politicians, noone will really look back to today to see what you said *cough* not *cough*. An educated guess from someone with your standing on fiscal issues would provide some comfort (even if? it’s a dark future).
Please feel free to consult your fiscal, crystal ball(s).
Thanks and be well,
Tag
/waves to NZDavid
Feb 15th, 2009 (11:48 am)Now you all know why the volt program was started. In the begining
there was now plan to build it. As things got worse GM made a good show of the Volt. We will have to wait and see how GM plays this hand. I still do not think they GET IT! JMHO No aces showing anywhere.
Take Care
Arch
Feb 15th, 2009 (11:59 am)#34
Hmm…I wonder if there is any chance Ford or Chrysler will buy the Volt program?
————————————————————————————
With what? Monopoly money. Chrylser could offer GM their “gas guzzler” (Hemi) tech in exchange for the Volt program…similar to their Fiat deal.
A “grass roots” effort is needed to promote SUVs and big trucks to strengthen the economy…I’m just kidding. If the side effects of widespread oil use did not exist, the Volt program would not exist either. These Sunday morning commercials for oil companies are hilarious. They are not ads of the past…speaking of the open road in the performance vehicle of your choice. These “feel good messages” explaining their concern and actions to find the energy solutions for tomorrow are just so entertaining. Also, these oil ads speak of providing jobs and community services. Maybe they are attempting to apologize for $4-5 gas in the recent past.
Feb 15th, 2009 (12:02 pm)Amongst the 10 to 20 million illegals in this country we should be able to find replacements for everyone at GM, from janitors to engineers and CEO.
And they don’t have to be paid much.
Feb 15th, 2009 (12:04 pm)#24 PJ said:
Bob Lutz isn’t going anywhere until the end of this year.
He’s still there facing the heat. And working to complete the Volt.
==========
He is ‘working’ six more weeks (until March 31st), then he is a ‘senior advisor’…which translates to ‘still cashing the cheques if they are writing them—he is getting paid to do nothing but keep quiet and stay out of the public eye’
http://media.gm.com/servlet/GatewayServlet?target=http://image.emerald.gm.com/gmnews/viewmonthlyreleasedetail.do?domain=3&docid=51898
Feb 15th, 2009 (12:07 pm)It’s about time that GM execs quit going out of their way to
satisfy the pirates that is the UAW and demanded a free labor market. No wonder jobs get expoerted from this country – it’s the only place where free market labor exists – in this country the unions have the Dems to protect their thievery – they’re all bought, paid for, and delivered. Let’s see what Obama does to protect his tens of millions of campaign contributions from these bloodsuckers.
Feb 15th, 2009 (12:14 pm)#34 JB said:
“Hmm…I wonder if there is any chance Ford or Chrysler will buy the Volt program?”
========================
Chrysler is in the business of selling…not buying. Although, we could still see the mish-mash of some kind of cobbled together GM/Chrysler ‘Dodo bird’ company post GM-C11 and Chrysler C11/C7.
Ford 2009 is GM 2008. They are rolling down the exact same track with the bridge out that GM already fell off of.
Side note: There really isn’t a ‘Volt program’ to buy. It is more concept than reality still at this point.
Even if there was a program, (with things like a assembly line, engine plant, battery plant etc.) who is lining up buy product that still needs probably a billion dollars more investment, that doesn’t start to sell by the most optimistic of guesses for 3 years in any quantity of note…and when it does go on sale, it loses money?
Best hope for survival is that the government backs this program as a ‘national interest’
Feb 15th, 2009 (12:19 pm)To Statik #44
The link you mention confirms what I said earlier — Bob Lutz has NOT left GM as you said, but will continue to work until the end of 2009.
Feb 15th, 2009 (12:35 pm)#40 Tagament said:
Statik@(pick any # under 300)
You always have an answer to the fiscal questions (right or wrong, you have an answer (g)), so fastforward to 2010 and help us know what you see re the US car industry. As with politicians, noone will really look back to today to see what you said *cough* not *cough*. An educated guess from someone with your standing on fiscal issues would provide some comfort (even if? it’s a dark future).
Please feel free to consult your fiscal, crystal ball(s).
Thanks and be well,
Tag
/waves to NZDavid
======================
Morning Tag,
People always look back…nothing better than throwing something in someone’s face right? lol. And what is this ‘right or wrong,’ I’m still batting a thousand, hehe.
2010 guess for the US auto industry? That is pretty hard to even make a educated guess on (at least sales wise)…because it also involves pegging the entire economy. We could stab at what the landscape might look like going into 2010 I guess.
I would wager we are going to see a 2009 NA SAAR of about 8 million vehicles (even if GM was saying it was going to be 12.5 only a month or so ago, lol). Of that, the domestic share probably drops to around 40%. That leaves 3.2 million cars produced by traditional Detroit auto…down from a high over 8 million. There is no way three large autos can surive that, not even two.
Market economics (barring our friend big brother trumping them) dictate that going into 2010 we should have one large US auto maker sucking up the bulk of sales, and one smaller ‘lean and mean’ automaker…that could grow into a second ‘major’ auto when the market rebounds. Think something like a ‘Toyota/Honda’ and a ‘Subaru,’ if you will.
2009 is going to be the year of the ‘credit card/line of credit/corporate debt refinance’ crisis I think. Whether or not it pushes the US closer to a depression or we somehow can overcome it, is still very much up in the air. Makes the state of the industry impossible to call for 2010…at least without making a total WAG.
Feb 15th, 2009 (12:38 pm)If you want to know what the America of the future will look like, just look to the UK. IMO, it is exactly where we are headed. Larger government, higher taxes, more social programs, more government control of our lives and most of our industries owned by foreign companies.
If GM goes bankrupt, I believe that a foreign company will buy up the assets cheaply and recycle some of it. There is value there, it’s not all garbage. Depending who buys GM, will decide whether or not the Volt survives.
Feb 15th, 2009 (12:51 pm)How long will the recession last?
Here’s “Dr. Doom’s” take:
Inside Look – How Long Will the Recession Last? – Bloomberg
http://talesfromthefuture.vox.com/library/video/6a00fad68cf28b000501101807a95b860f.html
(for those in a hurry, fundamental problem summarized at 9:08)
Nouriel Roubini
http://en.wikipedia.org/wiki/Nouriel_Roubini
Feb 15th, 2009 (12:52 pm)#47 PJ said,
To Statik #44
The link you mention confirms what I said earlier — Bob Lutz has NOT left GM as you said, but will continue to work until the end of 2009.
===============================
I guess we define working/leaving differently. Technically he is still ‘employed’ for GM…but he is not working/facing heat, or working to complete the Volt.
He is going to work out next month, then he is on the payroll through the rest of the year to keep him quiet/ride out his contract. He doesn’t want to be there…and they aren’t too keen on having him, so they made a deal. He is like a old ballplayer or unwanted coach, being paid to stay away.
All the guys on the line at GM who take the ‘early retirment package,’ stop working and leave their jobs as well, but are still officially ‘working’ for GM and are ‘on the payroll’…until they hit their date. You could say they have not ‘left’ GM too I guess.
Feb 15th, 2009 (12:56 pm)#49 DaV8or said:
If GM goes bankrupt, I believe that a foreign company will buy up the assets cheaply and recycle some of it. There is value there, it’s not all garbage. Depending who buys GM, will decide whether or not the Volt survives.
===========================
That could be the scenario (at least in part) for Chrysler…but I think the chances that the government lets GM go C7 are very remote. GM will assuridly live on…just not as you see it now.
Side note: We are going to have a AWESOME thread going on tuesday.
Feb 15th, 2009 (12:57 pm)Ststik@48
Thanks for the educated guess (seriously), and I hope my posts here have never been seen as throwing anything anyone said “back in their face”.
Re your comment that “…’ I’m still batting a thousand, hehe.” Doesn’t a batting average omit the number of times the batter swung and missed entirely?
I’m pretty sure that they don’t count foul balls either, but that term better describes Moi (G).
Be well and thanks again,
Tag
Feb 15th, 2009 (1:00 pm)@ 49:
“If you want to know what the America of the future will look like, just look to the UK.”
Dead on. Maybe we should learn a thing or two from the former Empire. Bigger government with more control only means punishing its people and essentially losing its true power (worker class, drive, middle class, ingenuity, etc.). GM needs to survive this with as little assistance as possible from Uncle Sam. If that means Chapter 11, sobeit. As a shareholder, I may not forgive it. As an American, I may.
Feb 15th, 2009 (1:02 pm)What GM needs is a fair playing field.Make all car companies that do business in USA pay into a retirement fund for all auto workers.
Feb 15th, 2009 (1:05 pm)#53 Tag said:
Ststik@48
Thanks for the educated guess (seriously), and I hope my posts here have never been seen as throwing anything anyone said “back in their face”.
====================================
No, you don’t do that Tag, you have a lot more self control than I do. Although, I give you full permisson to ‘dance on my head’ when you get those July 4th, 2010 Volts. I’d be more than happy to get a few thousand ‘I told you so’s on that one. (=
/have a good one
Feb 15th, 2009 (1:19 pm)Bankruptcy reorganization is the only way.
Air lines still flew just as many people and are still flying today…yet even more people.
Now the strangle hold of the greedy UAW is gone.
Forever lifetime nurturing is gone.
Being competitive is born.
It had to be. End of story.
GM will survive this now and have a fresh beginning.
Just watch and see.
All the management naturally needs to get a job flipping burgers at Wendy’s since that’s all they have proved themselves that they are really worth.
They are an absolute Joke.
Continue with the Volt and it’s progression. Change the auto industry. Allow ZERO electrics for right now from non US firms in the country.
When Lutz retired you should have seen this coming loud and clear.
Chrysler should have been chopped off at the knees.
The good vehicles absorbed from them into GM.
The cash that went to Chrysler was and still is stupid but hey…when Quail and other US GOV. officials head the private company the rape of US tax payers is OK huh.
Will it ever end. They all should be in jail.
Feb 15th, 2009 (1:21 pm)GM needs to acknowledge that there is a “new reality” in the auto industry. There’s no going back to their old ways of doing things anymore. GM is in a VERY tough spot right now. You know what good football coaches say about that? “When the going gets tough, the TOUGH get going”.
This is a really good article today from the Detroit Free Press today:
http://www.freep.com/article/20090215/COL14/902150388
I totally agree with this:
“GM product development must religiously follow what I think of as Lutz’ Two Commandments:
• Make the vehicles beautiful, inside and out.
• Develop every new vehicle to be the best in its segment in fuel economy, value, quality and overall performance.
Chisel the words in stone and hang them over the entrance to every GM design studio and engineering center around the world. They’re GM’s roadmap for survival. Any detour, any settling for less, is the route to ruin.”
Here’s something else that GM ought to chisel in stone somewhere in their buildings … an old salesman’s quotation.
“You can have everything in life that you want if you just give enough other people what they want.”
— Zig Ziglar
Feb 15th, 2009 (1:28 pm)No offense meant to any hard workers at Wendy’s
Feb 15th, 2009 (1:31 pm)The most realistic expectation is that there’s not going to be a lot of new cars sold over the next year or two. Not anything like the volume we’ve seen over the past 8 or 10 years.
Plus, even in the high volume times of the last 8 years, GM was losing billions anyway. The idea that the government can prop up GM until the economy turns around is a very bad idea and will continue to reveal itself as throwing good money after bad (especially in a long term recession).
Bankruptcy and massive reorganization/restructuring is the only logical choice.
Chapter 11 is in (the new) GM’s best interest as well as the U.S. taxpayer’s. If EREV technology is sound and viable, it will come to market. With or without General Motors.
Feb 15th, 2009 (2:02 pm)Statik@56 said in part:
“No, you don’t do that Tag, you have a lot more self control than I do. Although, I give you full permisson to ‘dance on my head’ when you get those July 4th, 2010 Volts. I’d be more than happy to get a few thousand ‘I told you so’s on that one. (=…”
No more self control that you, Statik. Just more meds (g). And even when I’m right about the Independence Day release, I seriously doubt that you’ll get any flack – we’ll all be out driving our new machine! (Like I said…. more meds.)
Be well,
Tag
Feb 15th, 2009 (2:04 pm)#62 Tag said:
No more self control that you, Statik. Just more meds (g). And even when I’m right about the Independence Day release, I seriously doubt that you’ll get any flack – we’ll all be out driving our new machine! (Like I said…. more meds.)
Be well,
Tag
=========================
Yeah, thats true.
Once I get my Volt…I’m ditching all you hosers. (j/k)
Feb 15th, 2009 (2:08 pm)It is too, too bad that the UAW milked the gravy train for so long, that they killed the future of the American automobile industry.
For all those who continue to say “it’s not what you earn, it’s what you negotiate” – take a good look at who ultimately pays – the retired elderly and their progeny without a future.
Feb 15th, 2009 (2:36 pm)statik & tag: There is an old saying that there are two types of financial analysts. Those who know they can’t predict the markets and those who don’t know they can’t predict the markets.
Predicting what politicians will do is actually much easier because they’re more predictable. This is useful because at this point the financials are no longer terribly important. My prediction is that when all is said and done, and after much sturm and drang: the bondholders will make concessions, the UAW will make concessions, GM will downsize to an appropriate size, and the Volt will survive.
That may involve a bankruptcy filing but most likely not, or if it does, along the lines of the option GM has laid out which envisions a bankruptcy proceeding for GM’s version of “toxic assets” or a legislative or pre-packaged bankruptcy. A regular bankruptcy is just too clumsy and slow moving given the complexity of the supply chain.
The immediate problem is that there is still no “cow, er, car czar” in place. That will push things off somewhat because it’s hard to make decisions when the person supposedly making the decisions has yet to show up.
My sole financial prediction is that Ford will also effectively go bankrupt as will many other car manufacturers around the world.
Feb 15th, 2009 (3:05 pm)DonC@64 said in part:
“…he immediate problem is that there is still no “cow, er, car czar” in place. That will push things off somewhat because it’s hard to make decisions when the person supposedly making the decisions has yet to show up. …
I’m not a big fan of the title OR role of a czar – especially in the US of A. Unless they mean changing the “C” in CEO to czar….hmmm, nope that doesn’t work either (g). Let the companies make the decisions (read not the Unions and not the government). Just my always humble opinion. OK, OK Usually humble opi…, er, well occassionally humble opinion.
Be well,
Tag
Feb 15th, 2009 (3:20 pm)Just do it!
Chapter whatever, do what you need to do to survive and adapt. The Volt is in fact GM’s savior provided the price is right.
I will stil buy the car from GM despite Bankruptcy status and even if they go under a year after I get my Volt. I will at least have my Volt.
I’ll take my Volt with No generator, No ICE, shaken not stirred.
Feb 15th, 2009 (3:27 pm)Does GM really think the union will give them a better deal after they come out of chapter 11. I would expect the union to do hard bargaining and strike if they don’t get exactly what they want. At this point I don’t think the union could care less about GM. They expect the government to be on their side of this issue and to force GM into a contract that is highly favorable to the union. And why not, that is what the democrats did to the banks over the last decade and a half. Forced the banks to make bad loans to stay in business writing home loans. Now the same people will force GM to submit to the union. If that happens, GM can hang it up. They won’t last two years.
Feb 15th, 2009 (3:35 pm)Dav8or #49 says,
If you want to know what the America of the future will look like, just look to the UK. IMO, it is exactly where we are headed. Larger government, higher taxes, more social programs, more government control of our lives and most of our industries owned by foreign companies.
If GM goes bankrupt, I believe that a foreign company will buy up the assets cheaply and recycle some of it. There is value there, it’s not all garbage. Depending who buys GM, will decide whether or not the Volt survives.
___________________________________________________
I couldn’t agree more. Obama gave it his all just to get the stimulus package passed, something that should’ve been a tee ball game for a major leaguer. He knows he needs to pick his battles very carefully because he’s already looking weak and this is still his honeymoon period. He stepped on enough toes for the stimulus package that borrowing more money from tax payers to throw down the swirling money toilet which is our automakers is just not going to happen. He might be able to swing something by borrowing more money from TARP again, but I think he’s smarter than that. He will recommend a GSB and probably just let them pay back the funds borrowed last November whenever things can settle down for them. Chrysler will certainly get divvied up among Nissan, Hyundai etc., and the really horrible Chrysler brands, like “Chrysler” will get chopped.
Feb 15th, 2009 (3:43 pm)If GM goes bankrupt, does it mean voltec technology is up for sale. If that happens i may still see a volt variant.
The only sad thing is that it happens on their 100th birth year.
Feb 15th, 2009 (3:43 pm)#11 D Lo
What do you mean when each member gets a non-union job at McDonalds? When they get there, a friendly union representative of the food employees union will come by and let each McDonald’s employee check off on the Card Check form and that McDonalds will be unionized. No campaigning by either party or no secret vote necessary. El Quicko Union will no be the law of the land. Just consider the possibilities of the Card Check law to the businesses in America. Union membership will double every year until there isn’t a functioning business in the country without a union. Productivity will soar? I don’t think we can count on that.
Feb 15th, 2009 (3:45 pm)To all my dear co-bloggers:
. For this reason along with the high quality of the U.S. college education, I decided to come to Virginia to study. Having said that, I just cannot stand to witness how this country’s industry is going down the hill for the power of the labor unions. They stubbornly keep asking for more and more benefits, and then they are the first ones to complain when their jobs fly overseas. Well, I got news for you, I don’t think the union leaders are so concerned about their coworkers labor conditions, but about their own retirement conditions, and that is what they are going to get (sooner and forced retirement, read: layoffs) if they keep fighting and don’t get to terms with the company’s managers.
I am a foreign who has admired and loved this country very much since the first time I came here to Disneyworld when I was only 6 years old
Now regarding us, the consumers, I just want to encourage you to please buy American. I am South American but I purposely bought an American car, a Chrysler Stratus (great car by the way). I understand that it does not make much sense to buy junk stuffs just because is American, but American cars are getting better every day and a little bit of patriotism will not hurt. I bet you the Japanese and Koreans were buying their own cars way before they became high-quality products.
Finally, I realize the U.S. carmakers’ management have done a lousy job over the last two decades, but they seem to be doing much better lately with better looking cars, with better quality. That is what I think that workers and consumers should now step to the plate. Instead of constantly complaining, some should start working harder without threatening to go to strike, and others may start buying more American cars.
Yours truly,
Alejandro
Feb 15th, 2009 (3:52 pm)Sorry, but I can not read any more of this. It is downright depressing. A lot of us have been saying a chapter 11 made sense if governed by the government with financing. That may be what happens. I, for one, am just going to wait until next week and see what happens. It is just too depressing to read any more.
Feb 15th, 2009 (3:55 pm)#71 Alejandro said:
Now regarding us, the consumers, I just want to encourage you to please buy American. I am South American but I purposely bought an American car, a Chrysler Stratus (great car by the way).
===========================
Um…not to nitpick, or blow holes in your story…but is there such a car as the Chrysler Stratus? I know there was a Dodge Stratus…and that the Chrysler brand had a ‘twin’ of it, the Cirrus.
Which also reminds me of this unrelated snippet:
“You do not talk to me like that!! I work too hard to deal with this stuff!! I work too hard!! I’m a Division Manager in charge of 49 people!! I drive a Dodge Stratus!!” -snl
Feb 15th, 2009 (3:55 pm)Last chance for all involved. Labor, GM, white collar, and us. CH11 will dramatically change GM. I believe the Volt will survive as profitable electric is the nearby future. If GM went CH11, Chevy, Caddy, and probably only 2 out of the following would survive GMC, Pontiac, and Buick. To be honest, Buick and GMC are the only ones who compete against other GM brands in theory (Buick-Caddy and GMC-Chevy).
Feb 15th, 2009 (3:56 pm)#49 – DaV8or Says:
February 15th, 2009 at 12:38 pm
If you want to know what the America of the future will look like, just look to the UK. IMO, it is exactly where we are headed. Larger government, higher taxes, more social programs, more government control of our lives and most of our industries owned by foreign companies.
———————————————————————
This seems to be what the people of the U.S. want to happen, based on how they vote. For the life of me, I can’t understand this. The U.K. is a pale shadow of their former selves. Why do the lefties WANT this kind of future?
Feb 15th, 2009 (3:56 pm)#71 Alejandro
Thanks for the comment. It came right after I said it was too depressing to read any more comments. I saw yours and just had to read it. Thank very much and we are glad of your association with the U.S. You didn’t mention if you returned home after college, or are still in college or got a job here and became a citizen. Welcome, at any rate.
edited:
statik: I believe Alejandro was just referring to the corporation that builds the Dodge Stratus. Don’t get carried away being nit picking.
Feb 15th, 2009 (4:04 pm)#76 n riley said:
#71 Alejandro—Thanks for the comment. It came right after I said it was too depressing to read any more comments. I saw yours and just had to read it. Thank very much and we are glad of your association with the U.S. You didn’t mention if you returned home after college, or are still in college or got a job here and became a citizen. Welcome, at any rate.
edited:
statik: I believe Alejandro was just referring to the corporation that builds the Dodge Stratus. Don’t get carried away being nit picking.
========================
Yes, I’ll echo that…thanks for the comment and being loyal to the country you reside in Alejandro.
Side note to N Riley: I really just wanted to throw out the ‘I drive a Dodge Stratus’ quip, I can so infrequently use it…but it is fabulous!
Clippage (it is more light hearted than the thread, lol):
http://activitypit.ning.com/video/video/show?id=1981927%3AVideo%3A300096
Feb 15th, 2009 (4:15 pm)#76 N Riley:
Thank you very much!!!! for your kind words, and ….Yes you are exactly right, I was just refering to Chrysler because they are the ones who build not only my “Dodge” Stratus (green 99 model), but also the Jeep brand. Regarding my status here, I’ve been living here for almost two years now. I am a graduate student, doing my Masters in Government, and I am going to be graduating next May, God willing. After that, I will be returning to my home country Bolivia.
#74 Statik:
I am sorry if you took it personal, but I was by no means emphasizing the fact that workers should work harder, but only that they should be willing to give away some benefits in order to have long-lasting jobs.
Feb 15th, 2009 (4:20 pm)Statik has said several times that GM’s main issue is making the payments on its enormous debt. A few minutes with their balance sheet shows the same thing.
With that in mind, the critical issue now is what the debt holders do. Were most of them to exchange most of the debt for stock, GM has a fighting chance. Without that, the government is simply giving GM money to make the payments.
With the debt negotiations in mind, I see what is happening right now as a giant negotiating strategy being conducted privately and publically. Everyone is threatening the worst. So far that has been the best strategy, because the government has forked over the funds with few real concessions. Will it happen again? Probably so.
Feb 15th, 2009 (4:26 pm)#78 Alejandro
And Bolivia will be better for your return. We wish you much success and luck where ever you travel or reside. Bolivia, as with many countries (ours included), need good people. I believe, from your statements, you have a mind and can use it. Good Luck.
Feb 15th, 2009 (4:27 pm)#77 Statik
I knew you meant no harm.
Feb 15th, 2009 (4:31 pm)#78 Alejandro said:
#74 Statik: I am sorry if you took it personal, but I was by no means emphasizing the fact that workers should work harder, but only that they should be willing to give away some benefits in order to have long-lasting jobs.
===================
I think maybe you were talking to someone else? Or there was some kind of translation issue with my ‘unrelated’ snl clip, hehe. I’m all for them working harder for less…booyah!
/have a pleasant afternoon
Feb 15th, 2009 (4:32 pm)#79 RB
Yes, exactly. Hard ball negotiating is being carried out. Who will be the winners and losers, we won’t know for several days. I just hope President Obama does not leave any government negotiating to the likes of the leadership in congress. These dumb asses are what gave us this “stimulus” bill. Our children and grandchildren will be thanking them for it. A simple cutting the federal tax withheld by 50% would have been much more of a stimulus. That and giving incentives to purchase new cars this year. IMO, as always.
Feb 15th, 2009 (4:36 pm)#80 N Riley:
Thanks again!!! It is always refreshing to hear comments like that.
#81 Statik:
I am very glad there are no hard feelings.
Well guys, I think I will continue tomorrow, because I have a paper to write.
Feb 15th, 2009 (4:39 pm)I hope that before the treasury makes any bail-outs to the banks and financial institutions, they do some homework at each bank or institution. they need to determine just what the status is at each applicant before letting go any more money. Too many banks were forced to take money when they didn’t want any and others were given money with no strings or fact checking. We have “wasted” the first stage of the bail-out programs while allowing the institutions receiving the money to give large bonuses, throw lavish “get-togethers” and buy other banks, some not even in the U.S. The new administration needs to be very careful going forward. They don’t need to be wasting any more of our tax money. The stimulus bill is going to do that enough as it is.
Feb 15th, 2009 (4:41 pm)Ditto for me too. I have to go sit down and relax for a while.
Feb 15th, 2009 (4:45 pm)#78 RB…mentioning the bondholders
#21 koz said:
“The problem is one party is the bondholders is plural. Who sits for them? I believe there are a handfull of bondholders that hold ~70% of the bonds (I think Statik knows the details)”
#3 Dave G said:
“Is there any other way for the government to apply pressure on the bond holders? Is Chapter 11 the only lever GM has?”
============================
Sorry, I’ve been distracted I guess.
Currently there is a 10 member committee negotiating with GM (if they were actually still doing that, lol) . One of the major players PIMCO used to be in it too, but they back out after they stonewalled the GMAC debt swap.
There really is no way for the gov’t or GM to apply pressure to the bondholders, other than the thread of bankruptcy (that goes for the union too). As a bondholder or worker it is there right to hold the line on the terms of which they entered into a contract with GM.
The problem here is that the bondholders already called their bluff and basically said, “Go bankrupt, we think we get more value out of your dead bones than the deal you are offering us”…twice. They did it for GM/bailout round 1, and they also did it for GMAC…both times the bondholders held strong, both times the gov’t caved.
I don’t see why the bondholders would be anymore inclined to take a deal now than they were before. They want a gov’t backed 50 cents on the dollar…that is what it will take.
Feb 15th, 2009 (4:47 pm)I tune in everyday.
Have to tune out now.
So depressing
Too much statik in the air.
Feb 15th, 2009 (4:52 pm)Does anybody here think the union really has the workers’ best interests in mind? I’m not disputing that people can organize into a union. However, the original purposes of the union to protect workers from employer graft have been externalized to the government in the forms of OSHA, FLSA, and other laws. The union has simply become its own bureaucracy and wants to make sure it gets its cut of the wages, thus artificially driving labor costs up and competitiveness down. Socialism at its best.
I think the GM board should address the workers directly. The union agreement likely forbids this, so the mechanism would probably be through a public medium such as an open letter on the Internet or a video on television. The message should educate the workers that the union only looking out for itself and that GM looks forward to employing them with better wages and benefits without a union. Then offer the employees new contracts. Having a job is not necessarily better than not having one, but the workers would essentially keep their current job with pay and benefits. Only the union reps would be out.
If only it were a perfect world.
Feb 15th, 2009 (4:59 pm)Good news for hybrids. For U.S. truck manufacturers, not so much.
Evidence the Japanese are set to kick our azzes in another hybrid category.
Toyota Subsidiary To Make Hybrid Trucks That Save 2.5 Times as Much Gas as Conventional Trucks
http://gas2.org/2009/01/12/toyota-subsidiary-to-make-hybrid-trucks-that-save-more-than-double-the-gas/
Can that number be right? 2.5 . . . . 2.5?!!!!!
Most of the hybrid trucks I’ve read about (kenworth, peterbilt) are hoping for a maximum 20% to 30% gain [bigger category trucks I think, but still . . ]. I guess Hino’s been in hybrid truck development since 1993. You might expect them to lead the field.
Feb 15th, 2009 (5:46 pm)GM is just TOO big to remain viable in these lean times. Maybe a reorganization with 4 core brands is just what they need to cut expenses inline with sales. Or maybe just swallow their pride and cur production by 50% to lower expenses.
I’d still buy from them if they were a leaner more efficient company. People who say they won’t just buy into media spin too much.
Sadly this is a cruel told ya so fallout from having no alternative vehicles combines with an economic crisis. I hope the Volt isn’t in the too late category. EVs will come about simply because in the coming decades we will be forced to out of there will be no other choice for energy eventually. Not if they come out, but when, and to avoid more financial world meltdown, the when better be soon.
Feb 15th, 2009 (5:54 pm)#71 Alejandro Says: …I just cannot stand to witness how this country’s industry is going down the hill for the power of the labor unions. They stubbornly keep asking for more and more benefits, and then they are the first ones to complain when their jobs fly overseas.
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I’m not a big supporter of unions, but in this case, it could be that they are being used as the scapegoat.
The UAW has said consistently that they are willing to make major concessions as long as the other stakeholders are making similarly major concessions. When GM’s bond holders walked out of the negotiations last Tuesday, we didn’t hear much about it in the press. But when the UAW walks out 3 days later, all the major news outlets covered it.
The UAW has said that labor only accounts for 10% of GM’s costs, and nobody seems to be challenging them on that. The UAW also says that their workers direct hourly pay is about the same as Toyota or Honda workers in the U.S., around $30-$35 an hour. It’s only when you add in payments to retired workers and other benefits that the UAW becomes uncompetitive. Part of that is because Toyota and Honda don’t have many retired U.S. workers. They haven’t been here that long.
So while I agree that UAW workers are over-compensated, particularly in the area of health care benefits and retirement, I also think that the UAW is not the major issue here.
The real issue here seems to be GM’s bond-holders. They don’t seem to be willing to make any compromise. And when negotiations fail because of the bond-holders, the UAW takes the blame…
Feb 15th, 2009 (6:26 pm)Oh boy. (speaking of bondholders)
Here’s another reason why the Government (and by government, I mean Treasury Dept) won’t want GM to fail:
From BusinessWeek: (p. 1, next to last paragraph):
” But Lache says some of them have insured their bonds with credit default swaps, which pay out the principal if GM can’t pay the premium.”
MORE Credit Default Swaps, . . you can’t get away from these things.
I presume a bankruptcy of GM ( or any major U.S. corporation, for that matter) may mean continued peril for the nation’s financial institutions because they could be forced to cover Credit Default Swaps they wrote but didn’t really have the backing for. Great.
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Winning Over Bondholders: Key to GM’s Survival
http://www.businessweek.com/bwdaily/dnflash/content/feb2009/db20090212_106451.htm?campaign_id=rss_daily
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In this giant financial mess, it seems that all roads eventually lead to Credit Default Swaps.
Feb 15th, 2009 (6:41 pm)Credit Default Swaps explained clearly in five minutes
http://www.youtube.com/watch?v=jHVnEBw93EA&feature=related
Feb 15th, 2009 (6:43 pm)Chapter 11 will come. The unions will be forced to take less. Obama will provide funds but only for a couple of years. If the Volt fails, then GM is basically gone. The foreign makers are eager to take what they can from the US economy.
Feb 15th, 2009 (6:48 pm)Could GM work out a form of Ma Bell and Baby Bell system? Two smaller companies with one focusing on hybrid/plug ins and the other EV and Votec. We may see even see a Warren Buffet jump in to corner the future of E-REV’s. But as far as more bail outs, the tax payer will become more bitter yet. Better to go the road of bankruptcy and have a chance at regrowth. You can’t get blood from a turnip.
=D~
Feb 15th, 2009 (7:05 pm)The main thing a chapter 11 means is that contract discussions for everything, labor, debtors, etc, will not just be between the original parties as much, but between them and a judge in order to mitigate and alleviate unintended additional losses that would be far more widespread for all involved parties.
While that might be viewed by many as probably not an indicator of future functionality, it is likely that that is precisely what it is, an indicator for future functionality.
Where there had been financial pressures to produce large vehicles which used to sell, (especially prior to the last national “election-year” gasoline money-grab apparently constructed by speculation or by buyers), the view of chapter 11 here might be considered as necessary for the green evolution to actually cause the production of the Volt and other Voltec-equipped vehicles also.
For those who are more knowledgeable than I regarding stock values, would not a financially-streamlined GM make the best sense? I wouldn’t hesitate a second to buy a Volt no matter what, since GM part numbers for the Volt are likely to be mostly “off the shelf” and already in abundant supply anyway.
Dan Petit Austin TX
Feb 15th, 2009 (7:06 pm)RB #79
“So far that has been the best strategy, because the government has forked over the funds with few real concessions. Will it happen again? Probably so.”
That was certainly true for the “bank” bailouts but for the carmakers it was different. The problem was that the concessions were put off untill now. That’s why the propraganda is ramping up all over again, and I believe handling what is basically the same situation the same way again will produce the same results. Nothing earth shattering in that prediction. Problem is, kicking the can down the road another 3-6 months just wastes more money. Time to rip the bandaid off NOW. That is why I say get the parties to meeting and try to make a deal that works. If they can’t do that now then there is no point wasting more money on a non-tenable situation and these parties don’t deserve to be the beneficieries of taxpayers assuming their risk.
Satik wrote:
“Currently there is a 10 member committee negotiating with GM (if they were actually still doing that, lol) . One of the major players PIMCO used to be in it too, but they back out after they stonewalled the GMAC debt swap.
There really is no way for the gov’t or GM to apply pressure to the bondholders, other than the thread of bankruptcy (that goes for the union too). As a bondholder or worker it is there right to hold the line on the terms of which they entered into a contract with GM.
The problem here is that the bondholders already called their bluff and basically said, “Go bankrupt, we think we get more value out of your dead bones than the deal you are offering us”…twice. They did it for GM/bailout round 1, and they also did it for GMAC…both times the bondholders held strong, both times the gov’t caved.
I don’t see why the bondholders would be anymore inclined to take a deal now than they were before. They want a gov’t backed 50 cents on the dollar…that is what it will take.”
I have to agree with most of what Statik wrote and thanks for sharing the bondholder details. True the government only has bankruptcy in their but that is a pretty good card, they just haven’t figured out best to play it yet. Time to use it to get GM, UAW, and bondholders to come to a bargaining table to “get ‘er done”. I think they could even get PIMCO to the table too. It would be irresponsible of them not to participate and perhaps actionable if GM (not much if withou t gov loans) goes bankrupt leaving PIMCO with significantly less than what is being offered now. There really is no good reasonfor PIMCO not to come to the table. GM will have presented the current state of their plan, UAW will bring their info, the bondholders will bring demands,and the government will bring the conditions under which they are willing to continue with the loans. Like any negotiation, the government has to be willing to walk and allow bankruptcy. The government could add credibility to their bankruptcy play if they have a potentiality in place that would allow for a GSB that is a quick dip through bankruptcy that sheds debt quickly and doesn’t affect operations or bankrupt suppliers. Looking at it from my 40,000′ perspective, the “big stuff” that the parties need to resolve is not that complex. I think the government should be playing up the real financial picture right now to ruin public sentinment for continuing loans without concessions. Yes, this would risk losing support for loans under any conditions but that is already a risk that is just playing out in slow motion. There are several eventualities that the situation is careening towards. The best one for the bondholders, UAW, government, and GM is to reach a viability agreement now. It only gets worse in time or in bankruptcy.
Feb 15th, 2009 (7:47 pm)It seems that the best thing I can do for GM is to refuse to sell stock at Less than 25 dollars per share that in and of it self will save the company but by myself that does little right ?
The shortstop is the week link in any baseball game so at least we can load the bases before the slugger gets up to bat .
Go slugger go.
God Bless
Feb 15th, 2009 (8:14 pm)Statik has said several times that GM’s main issue is making the payments on its enormous debt. A few minutes with their balance sheet shows the same thing.
——————————————————————-
The statement that GM’s main issue is making debt payments is a reasonable statement, because that is what has the potential to catapult GM into Chapter 7, or put them in a position where they have no choice better than petitioning for Chapter 11.
But to think that is the only problem is to lose site of the cause of this enourmous debt. GM is hemorrhaging cash, billions per month. They are simply uncompetitive with the Japanese owned companies, especially the US-based, Japanese owned plants. Wiping out their debts (and plunging the bond holders into bankruptcy) will not change this fact.
Feb 15th, 2009 (8:21 pm)The UAW has said consistently that they are willing to make major concessions as long as the other stakeholders are making similarly major concessions. When GM’s bond holders walked out of the negotiations last Tuesday, we didn’t hear much about it in the press. But when the UAW walks out 3 days later, all the major news outlets covered it.
The UAW has said that labor only accounts for 10% of GM’s costs,
===========================================
Based on their own statements, you would have to conclude that the UAW is behaving responsibly, and 100% of the problems lie with management. But the reality is, an hour of UAW time costs the companies $72, while an hour of non-union time costs the US-based Japanese owned producers, $48. If labor accounts for 10% of GMs costs, which I am not ready to believe just because the UAW says so, that would still make labor plus fringes equal to about 25-30% of GM costs. Furthermore labor and fringes are the factor where the GM cost is significantly higher than their foreign owned competition.
In short, self serving statements by UAW public relations flacks should not be used as proof points in discussions.
Feb 15th, 2009 (8:24 pm)#93 carcus1
Credit Default Swaps, them things again?
So we the taxpayer will pay no mater how this is resolved…
I say toss the folks in jail that contrived this mess!
Red HHR (Am I being harsh?)
Feb 15th, 2009 (8:29 pm)The first time I heard of a credit default swap, I likened it to applying the brakes after driving off a cliff…
Red HHR (No ABS)
Feb 15th, 2009 (9:05 pm)God. Please deliver us from this thread.
If not God, perhaps Lyle is feverishly working on the next topic….please!
Feb 15th, 2009 (9:06 pm)#102 Red HHR
I actually have no idea how much of a threat “triggered CDS’s” will be if GM bankrupts. I don’t know that anybody does. I’ve found several news pieces where it’s mentioned, but none that put a dollar value on them.
Total value of all Credit Default Swaps written have been estimated at anywhere between 30 and 60 trillion. An absolutely staggering amount. Almost as much as the whole world’s GDP.
It’s criminal – like selling insurance without having funds to pay for a claim. But I doubt if anyone responsible is going to jail. Even if they did, they’d just get an ankle bracelet and a curfew until the pardon comes.
Feb 15th, 2009 (9:07 pm)#33
“Here is the second test for Obama.
He already failed his first test with the Stimulus package. What a piece of dog dung. ”
____________________________________________________
In a couple of polls taken in recent days a majority of people supported the “stim” as passed. So your view is in the minority.
We shall see, won’t we? And as a registered Republican, I believe my party’s strategy (?) has an equal chance in the 2010 midterm elections of furthering the debacle of the 2008 elections.
Feb 15th, 2009 (9:11 pm)financial news:
U.S. markets are closed Monday for Presidents Day. On Tuesday, Obama plans to sign the stimulus bill in Denver. He is then scheduled to outline his mortgage-rescue proposal on Wednesday.
Also this week, General Motors Corp. and Chrysler LLC are expected to submit plans to the government to meet a Tuesday deadline for showing how they can repay billions in loans and become viable, even as automobile sales are falling.
GM already has borrowed $9.4 billion and would receive another $4 billion if the Treasury Department signs off on its viability plan. Chrysler has borrowed $4 billion and is seeking another $3 billion.
Investors are worried one or more of the companies could have to declare bankruptcy if they don’t win additional financing. Ford Motor Co. is the only one of the Detroit automakers not taking government loans.
=D~
Feb 15th, 2009 (9:37 pm)America’s economy is in bad shape … but things COULD be worse … like they are in Japan.
http://www.nytimes.com/2009/02/16/business/worldbusiness/16yen.html?ref=worldbusiness
“The sharp downturn is exposing the vulnerability of Japan’s export-driven economic recovery. The dismal figures also place Japan firmly among the worst-hit in the global crisis, dwarfing economic declines in the United States and Europe.”
Hmmm …. things might be worse at Toyota, Honda, and Nissan than people think. The people working in the foreign car plants in the South are about to feel the same pain that Detroit is. Wall Street greed has screwed up the whole WORLD’S economy. It makes you want to have public hangings for some of these Wall Street bankers.
Feb 15th, 2009 (9:45 pm)For all the people who work at GM, it is going to be another difficult week. A few people will make some important policy choices, but most will be doing their regular jobs under difficult circumstances, hoping that things work out OK for themselves and their families. That includes the Volt people and all the others. When events go on for a long time in the way this drama has done, it is tough on people. They all have my sympathy.
Feb 15th, 2009 (9:54 pm)#104 JEC said”
God. Please deliver us from this thread.
If not God, perhaps Lyle is feverishly working on the next topic….please!
================================
This would be a good time to take a mini-vacation JEC.
I feel sorry for everyone not ‘into’ the finance threads, who come for their ‘Volt-fix’…unfortunately these type of threads (I think) are going to be the order of the day again for a little bit. This hurdle certainly has to be resolved before anything else moves forward on the Volt.
Feb 15th, 2009 (9:56 pm)Don’t blame statik for this news. He’s just the (very informed) messenger.
Feb 15th, 2009 (10:02 pm)hi GM Volt Fan #108,
“Wall Street greed has screwed up the whole WORLD’S economy”
_______________________________
Financial institutions lending to unqualified buyers tore the bottom out of an economy that had been weakened by the pounding of excessive Big Oil profits and needless war spending.
“Wall Street” is a place to gamble your money (if you wish to do so). It is not the problem.
Big Oil is the villain.
Home loan officers are the minions of misleading financial institutions. What were they thinking, “Let’s drink another Miller and worry about it tomorrow.” Well tomorrow is now here.
The stupid people who bit on the unrealistic home loan offers are the driving engine.
Congress is the leverage being used to multiply losses.
Promises made to voting bodies are what is draining courage from our few honest elected officials.
TARP = cancer
=D~
Feb 15th, 2009 (10:20 pm)#112 Dave K.
Lots of mistakes. Lots of blame.
But the role of Wall Street and the lack of regulation from Washington can not be understated. I think everybody should watch this video.
The Bet That Blew Up Wall Street
http://www.cbsnews.com/stories/2008/10/26/60minutes/main4546199_page2.shtml
Feb 15th, 2009 (10:20 pm)Ahhh…Statik you are killing the very small, optimistic portion of my soul. And these fancy financial jibber-jabbering threads are indeed depriving me of my engineer-fanboy fix.
Oh well, maybe it is better if it just dies…
Feb 15th, 2009 (10:45 pm)#65 Tagamet says “I’m not a big fan of the title OR role of a czar”
Seems like you’ve won. There isn’t going to be a Car Czar after all. They had some guy lined up, not sure what happened there. Anyway, rather than a Czar they are going to have a Task Force. (I love the terminology. Task force is another name for a committee, but it definitely has this connotation of the fleet steaming into the harbor taking fire from shore batteries. Lights. Camera. Action!).
In any event, I don’t think the committee is going to be up to speed by Tuesday, especially since two members of the committee are Geithner and Summers and they have the banking business to attend to.
Feb 15th, 2009 (10:48 pm)#64 DonC
“My prediction is that when all is said and done, and after much sturm and drang: the bondholders will make concessions, the UAW will make concessions, GM will downsize to an appropriate size, and the Volt will survive.”
- – - – - – - – -
I think so too. The Dems are not going to let all those union jobs be replaced by non union jobs. Chapter 11 is not going to happen. Tuesday will come and go, and GM will still be limping along.
yea-ish.
Feb 15th, 2009 (11:03 pm)#111 Jackson
Best post of the day, lol.
————-
(mumbles) friggin’ Bob Lutz (mumbles)
Side note: #114 sorry ccombs
Feb 15th, 2009 (11:28 pm)#116 George K said:
I think so too. The Dems are not going to let all those union jobs be replaced by non union jobs. Chapter 11 is not going to happen. Tuesday will come and go, and GM will still be limping along.
======================
Your right tuesday will come and go…however GM can’t keep limping along.
The problem is they have to show the carnage of Q4 2008 and the fact they have absolutely nothing left of all the gov’t money already (9.4 billion). The short case is, GM needs another 4 billion minimum in 6 weeks…or they are done.
If the gov’t want to keeps the ‘status quo’ alive, they are looking at:
4 billion/month for GM/Chrysler
2 billion/month for Ford (by June)
2 billion/month for suppliers who need a SAAR of 16 million to break even (on top of the 25 billion they want up front)
+25 billion to parts makers up front
+20 billion to cover GM commitments to UAW/Delphi
+10 billion-ish to cover notes coming due from ‘Big 2.451′
+10 billion in misc I don’t want to get into
Thats 160 billion MINIMUM to get them just through the year. You think Obama has the juice to pony that up? That is a lot of coin to save maybe 150,000 union jobs.
If he does…the country is in trouble, because that is a idiotic amount to spend with so little to show for it, he is doing no one any favors anywhoo. We need a lean, mean and competitive machine that can compete on the world stage…not a bloated albatross on dialysis.
Feb 15th, 2009 (11:38 pm)It is being reported on CCTV news in China that GM has declared bankruptcy .
I think the Volt is finished , over , done . Vapor ware. Sorry about that news. Feb 15 2009.
I saw it with my own eyes. That is what they are saying.
Feb 15th, 2009 (11:44 pm)#101 Tom Harwick Says: …the reality is, an hour of UAW time costs the companies $72, while an hour of non-union time costs the US-based Japanese owned producers, $48. If labor accounts for 10% of GMs costs, which I am not ready to believe just because the UAW says so, that would still make labor plus fringes equal to about 25-30% of GM costs.
————————————————————————————–
No. Total labor costs (as in $72 per hour) account for only 10% of GM’s costs. Remember that GM is in debt big time, so their payments to bond holders are big.
The difference between $72 and $48 per hour is mostly retiree health care and pensions. In other words, the UAW has a lot of retired people who get pay checks and health care benefits for not working, so that’s going to make the GM’s average hourly wage quite high. Toyota and Honda have much lower retiree health care and pension costs, because they haven’t been employing people in the U.S. that long. If you take payments to retired workers out of the formula, then GM and Toyota pay their assembly workers about the same.
So the real issue with the UAW is old retired people that don’t work any more. That’s what’s making the UAW non-competitive. Management should never have agreed to such high lifetime benefits. This is the area where the UAW must make the most concessions.
But how can the UAW force retired workers to give up much of their income and benefits without having similar concessions from the bondholders? You’ve got to share this kind of grief or it will never fly…
Feb 16th, 2009 (12:02 am)#120 Dave G – How dare you throw around actual numbers that clarify the role of the UAW? Don’t you know that we are supposed to blame unions for the demise of American manufacturing? You, my friend, need to listen to AM radio, start using words like “Nobama”, and for god’s sake stop using non-partisan logic and facts. What are you… like, educated or something?
Feb 16th, 2009 (12:11 am)Today I saw with my own eyes that GM is cashing out. Where, you ask? Why, at the Pittsburgh Auto Show. If you think GM sees EREV as the future of the company, then you were not at the Pittsburgh Convention Center this weekend. No EREV concepts. No Volt. No nothing. Just 50% trucks and SUVs, and the only two GM vehicles on high-visibility rotating displays were an Escalade and a new hardtop Solstice. It is the first time in my life I ever left an Auto Show so absolutely depressed. Fuck. These guys are toast…
20 years of owning good reliable GM vehicles. Looks like my next purchase will be a Ford.
Feb 16th, 2009 (12:16 am)hi carcus1 #113,
I viewed the video. It verifies what I had said in post #112.
If a person chooses to NOT get involved in the gambling on Wall Street then they don’t get damaged. I was very careful and can report that my balance sheet stands “unchanged” from a year ago. Can you say this? Or did you bite on the possibility of making fast money and lose?
In 2006 woman takes a home loan which cost her $3000 a month to pay. Her income is $4000 a month. Fuel cost then triple from $250 a month to $750 through the excessive profit scheduling of Big Oil.
The lady can’t pay the bank which foolishly and greedily made the shaky loan.
The bank then begs Congress for billions in TARP and gets it.
Then Congress realizes that war costs have drained the tax coffers.
Citizens want to buy new cars, but find that their 401k bets and rising fuel costs have drained their nest eggs.
GM begs for TARP, and gets it.
You see where this is going? The cancer needs to be cut out.
Sound and honest dealings are needed to encourage new growth. I suggest this be started by having an immediate $4000 instant rebate on all American assembled vehicles which average 30 MPG or better. With the rebate increasing by $1000 for each 5 more MPG average. Up to a total of $7000 maximum rebate. This will “cost” the government $3 billion for the first 500,000 vehicles sold (more or less).
Dealerships will again be moving product. Suppliers will receive orders, Mr Goodwrench will have huge future business opportunity, insurance companies will be selling more full coverage policies…ect. All the support people, now making real money, will spend and generate tax revenue to offset the invested $3 billion in stimulus.
So you end up with a net gain of robust financial activity at little cost. You may even turn a profit being that would-be unemployment collectors will be working rather than collecting.
This puts the money back in the pocket of the working people. Not in the pockets of special interests. Or the pockets of the loudest beggars. Or in the pockets of gamblers who made bad bets.
Am I right, or am I crazy?
=D~
Feb 16th, 2009 (12:17 am)Everyone, please stop referencing Statik’s posts. I sense that his head is about to explode ;D Plus, he’s depressing me.
___________________________________________________
#64 DonC
My prediction is that when all is said and done, and after much sturm and drang: the bondholders will make concessions, the UAW will make concessions, GM will downsize to an appropriate size, and the Volt will survive. That may involve a bankruptcy filing but most likely not, or if it does
_________________________________________________
Could you clarify your projection here. Sounds like a prophecy that’ll come true no matter what happens. If I were a bondholder or UAW worker (thank goodness I’m not either,) GM has absolutely ZERO leverage over me, and the gov’t lacks all credibility to make threats to play a game of chicken. I’m proud to be in company with Statik here (I think) and say I just can’t imagine anything besides Chpt 11 really succeeding.
My prediction, Chpt 11, with the gov’t backing up the warranties. BO HAS to throw the union guys a bone.
Feb 16th, 2009 (12:18 am)As a non US person i dont have a comment but have a opinion :
Govt should act more smart than just giving money and asking viabilty plan.
It should understand what are the problems GM face : one , i think is health care and retire health : Govt should take care of them and need to have a common heath care policy – like Canada.
Second : GM should be allowed to go through a controlled chapter 11., where they will be allowed to keep the core elements they want and rest all should be liquidated.
Second is UAW should be controlled and work as in a caplialistic place. As essential health taken care by GOVT and set a base min pay for hour, there is no much need to unionize.
Thrid : Attaching strings : Govt should make GM to make products in US than importing ( excempt Canada please – we are nice ), apart from the profit aspect till they payoff money they ate. This is done as a step by step that making sure they bring back the manufacturing sector.
Feb 16th, 2009 (12:32 am)#122 Jim in PA
Take heart. If the Volt makes economic and engineering sense, all of us here think so, then GM’s dismemberment won’t kill it. Just postpone it 1 year. If GM abandons or baby, someone else will do it. We’ll just have to wait a little longer. I’d wager all the automakers are working on the technology.
Feb 16th, 2009 (1:13 am)Dave G says “No. Total labor costs (as in $72 per hour) account for only 10% of GM’s costs.”
Actually the $72/hour figure is more bogus than that. The basic $48/hour (or whatever it is wage rate) includes benefits. So benefit payments are counted and accrued. That should be the end of it. But the guys who want to blame everything on the workers count it a second time when GM actually pays the benefits. Neat trick. Pay once and count it twice. Sweet. But definitely bogus.
No doubt union workers make more than non-union workers. It’s just that the difference isn’t anywhere near the numbers you see thrown around. It’s also very obviously not the main cause of GM’s financial problems. Toyota could pay its workers another ten bucks an hour and it would still be fine, at least in more normal years.
If you want to know why GM is in a fix just look at a parking lot. Nothing can fix bad product. The lineup is much better now but GM has really produced a lot of poor cars over the last thirty years.
And yes, you’re right, management should never have agreed to the medical benefits. Interestingly enough they did this even though the UAW preferred national health care. Why? Because they thought national health care smacked of socialism. Good thinking. In an effort to fight socialism they managed to make the Detroit automakers wards of the state. Gotta love the irony.
Feb 16th, 2009 (1:20 am)Ok, I warned GM months ago, but instead of listening the VPs went their merry way. Now China will be coming out with the BYD electric car THIS YEAR.It will sell for less than $20,000 and will be sold in the US before the Volt. It also has better styling, longer range and can be charged on a 220 outlet. It can attain a 50% charge in 10 minutes with a fast charge option.Top speed? 100mph. Range 62 MILES. GM could have done this easily but they had to screw around.How about some laws banning golden parachutes when the GM management loses their jobs?
Feb 16th, 2009 (1:29 am)#122 Jim in PA Said:
Today I saw with my own eyes that GM is cashing out. Where, you ask? Why, at the Pittsburgh Auto Show. If you think GM sees EREV as the future of the company, then you were not at the Pittsburgh Convention Center this weekend. No EREV concepts. No Volt. No nothing. Just 50% trucks and SUVs, and the only two GM vehicles on high-visibility rotating displays were an Escalade and a new hardtop Solstice. It is the first time in my life I ever left an Auto Show so absolutely depressed. Fuck. These guys are toast…
20 years of owning good reliable GM vehicles. Looks like my next purchase will be a Ford.
—————————–
That isn’t GM cashing out…that is the Pittsburgh Auto Show sucks. For some reason they put it up against the autoshow in Toronto, which is running this week. (which is number #3 by attendance).
We have all the E-Revs here…and the Mitsu i-Miev, and the Toyota/Chrysler/Ford twirlly stuff.
/I can send you some pics if you like
=====================
=====================
#124 Cautious Fan said:
Everyone, please stop referencing Statik’s posts. I sense that his head is about to explode ;D Plus, he’s depressing me.
——–
No worries, I’m just widening the door jams at my place.
Feb 16th, 2009 (1:34 am)Monday February 16, 12:13 am ET
Oil steady amid OPEC talks of more output cuts
AP: Oil hovers above $37 in Asia as OPEC says it may cut output further next month
SINGAPORE (AP) — Oil prices stayed above $37 a barrel Monday in Asia as OPEC members talked up more production cuts over the weekend amid weakening global demand for crude.
=d~
Feb 16th, 2009 (5:37 am)Sun Feb 15, 10:26 pm ET
WASHINGTON – President Barack Obama plans to appoint senior administration officials — rather than a single “car czar,” as had been discussed — to oversee a restructuring of the auto industry.
http://news.yahoo.com/s/ap/20090216/ap_on_go_ca_st_pe/obama_autos
=D~
Feb 16th, 2009 (5:58 am)It’s a shame that so much money was wasted into GM… it will all be air in a year i think.
All those billion’s could have been invested properly…. sigh*
Feb 16th, 2009 (7:29 am)a company should be competitive.but why the hell must its workers have a competitive wages. all americans wake up. dont buy japanese bastards .we supported the japanese for so long and now those bastards are responsible for bringing our life standards down.
Feb 16th, 2009 (9:39 am)#123 Dave K.
“In 2006 woman takes a home loan which cost her $3000 a month to pay. Her income is $4000 a month. Fuel cost then triple from $250 a month to $750 through the excessive profit scheduling of Big Oil.
The lady can’t pay the bank which foolishly and greedily made the shaky loan.”
___________________________________________________________________________________________
You’re missing the point.
In your scenario, gas prices are merely a catalyst (plus, what’s she driving, a kenworth?) I’m talking about the primary cause.
Before Credit Default Swaps and the like were developed, this lady could never have gotten a $3,000/mo loan on her income. (especially with little or no money down, which would probably be the case here). It would be way too risky for the “bank”.
Many of those mortgages were financed through mutual funds and hedge funds. These fund managers sold the funds to the buyers under the false security that “hey, these things are virtually risk free, home loans have traditionally been very safe and they’re backed by AIG” (the Credit Default Swap, sometimes called mortgage related assetts, or CDO’s.). CDS’s and the like made the availability of easy credit possible. Easy credit fueled the housing bubble. Once the bubble finally burst, the whole humungous ponzi scheme came down like a house of cards, and now we’re watching history play out.
Feb 16th, 2009 (10:48 am)#134 add,
Calling Credit Default Swaps the root cause of the financial meltdown is too strong. I should have said they are the #1 contributing factor, as I see it.
On a top 4 list, I’d rank them like this:
#1. Credit Default Swaps (greedy, sneaky, wall street guys)
#2. Over reaching home buyers/ speculation.
#3. Central banking policies that encourage too much lending/borrowing.
#4. Lack of government oversight (failure of attorney general, SEC, congress to recognize the impact of Commodities Reform Act of 2000)
Feb 16th, 2009 (11:14 am)hi carcus1 #134,
I stand with the simple explanation I presented. Don’t let the talking TV heads pollute your understanding.
=D~
Feb 16th, 2009 (11:18 am)re #64 DonC comments
I think so too. The Dems are not going to let all those union jobs be replaced by non union jobs. Chapter 11 is not going to happen. Tuesday will come and go, and GM will still be limping along.
#118 Statik said
“Your right tuesday will come and go…however GM can’t keep limping along….”
- – - – - – - – -
Statik, good comments and they make sense. I didn’t mean GM would go on forever. Just that Tue. will come and go, and we still won’t have a direction.
I’m not sure what will happen. To me, chapter 11 would be the cleanest solution.
Feb 16th, 2009 (4:41 pm)#135 carcus1
I would suggest that you add to your list the requrement that the goverment makes of banks to make loans to people that can not affford them.
http://online.wsj.com/article/SB123457562896186709.html
Red HHR (I pay my loans!)
Feb 16th, 2009 (6:26 pm)To those recommending Ch11 as the answer, wouldn’t that further destroy consumer confidence in GM, and destroy the assets of all those who have invested in GM (triggering a slew of new bankruptcies), and destroy the GM supply chain (triggering a supply chain reaction of bankrupties), and possibly collapse the entire US auto industry (including Honda and Toyota that depend on the same supply chain)?
If so, that seems like recommending suicide as a cure for cancer.
Please help me understand what I’m missing. Thanks.
Feb 17th, 2009 (3:00 pm)Greed is alive and well in America! Not only on Wall Street up home towne USA. The UAW’s greed to force GM into bankruptcy and keep thier ill-gotten gains safe on the backs of the tax payers.
Unfortunatly Obama looks like he will not let that happen and fund the UAW via GM in unprofitability mode just to keep them directly off the tax payers books. This does not look good for product quality or competitiveness or a future for GM.
Maybe some UAW members will contact thier union officials and ask them save the jobs of it’s working members and just maybe it can be a great organization again.
Feb 17th, 2009 (3:34 pm)GM should do it. Just sell Chevy and Cadillac brands. Buick — gone. Pontiac — gone. Saturn — gone. GMC truck — gone. Unions — gone. A $40k Volt is too much money, unless it includes the installation of the next generation EV powerplant.
Feb 17th, 2009 (6:57 pm)Breaking News Alert
The New York Times
Tuesday, February 17, 2009 — 6:11 PM ET
—–
G.M. Increases Federal Loan Request by $12 Billion
General Motors told the federal government Tuesday that it
needs another $4.6 billion in loans within weeks and an
additional $12 billion in financial support in order to stave
off bankruptcy.
Feb 17th, 2009 (8:16 pm)I hope GM burns to the ground. Let Toyota take over!
P.S. they make least realiable vehicles on the market (after chrysler, dodge and jeep)