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[iski]

If in fact there is any validaty to the fact this is a "loan" and not simply giving them money, I as a small businessman do have the ability to receive a loan through the SBA which may be pointed out is still in the business of supporting small business that presents a viable business plan to them.  My banker in fact is promoting these loans currently as the SBA is on a mini campaign to remind businesses they are still here even in these trying times.

No question about the Unions, big business and political contributions etc. however and no I am sure it isn't coinkadink

We are being told it is a loan, but.......

Would any banker in their right mind (business mind) loan these guys $16 bil + considering their track record?  They run their biz about as well as Cali runs their state government, and that bailout looms large in the not so distant future.  SBA requires collateral & good biz practices unless they have changed a lot.  These Big 3 guys can't get conventional financing so they go to DC.  Like Cali will eventually.

Big biz, big lobbies, big unions - all give money so when it's time, they can get greased.  Our tax $$ at work helping out pols & their buds.....biz as usual.


And I still like your original post - excellent!   

[SPIDERMAN]

I was watching HARDBALL and a couple other talking head shows yesterday and the subject I mentioned in my post several posts back was being discussed. Also being discussed was DELTA Airlines Chapter 11 reorganization as an example of how Chapter 11 not only saved DELTA, but produced a much leaner, profitable company. It would appear for once our elected officials are actually doing some thinking. Especially after the way Wall St hosed the taxpayers. Sec Paulson and the Bushies allowed that money to flow freely without regulations or restrictions and as we have seen, Joe Q Taxpayer got nothing. Even folks with high credit scores are seeing loan apps denied and credit lines dry up. We've already paid the piper to the tune of $250,000,000,000 to shore up the banking system and gotten nothing in return.Instead of putting the bailout money out on the street to consumers, Wall St used it to cover their asses.
  Something else I've figured out and this bears paying attention to. If you buy and sell and keep your portfolio in constant state of flux you gain the advantage of taking a loss in a down market as we are most certainly experiencing right now. But if you stay the course, ride out the storm and all the other beatitudes and platitudes the big boys chant at us small fry like sheep bleating, you only can take a loss if the value of your issues is less than what you paid originally. Now you pay capital gains every year based on the previous year's gain, but don't get the loss unless you sold the issue and reinvested.
  One final thought. If the market is so poor, why is the volume of trading so high ? For every seller there has to be a buyer. Who's buying and why ?
  Anyway, bottom line is I am not in favor of giving Detroit a single penny and plan on sending e-mails to my two US Senators today stating so. We need a revolution in this country to force corporations to operate with some sense of morality, decency and obligation to their employees and customers. If that means furthering this recession then so be it in my opinion. It would seem there's no better time than now to bring these self appointed Gods (CEO's) to the knees and chop off their greedy,immoral heads.

B B

[grc]

The problem I see with that approach Brian is that it won't be the CEO's and directors who suffer, it will be the employees and retirees just as it was with the airlines, steel companies, etc.  If Washington wants to come up with a way to force the companies to keep all their promises to the employees (pensions and health insurance for starters) in any bankruptcy filing, then perhaps that would work.  Unfortunately, I've never seen government or the courts show much interest in protecting the rights of the employees in any bankruptcy.  Tear up the union contracts, tear up the salaried employee benefit programs, but let the top dogs get "retention bonuses" to keep them from leaving.  Strange how the clowns who ran the company into the ground get retention bonuses, when they should have been summarily fired years ago for incompetence.

Jerry

BTW, in case anyone wants to know, yes I have a dog in this hunt.  I'm retired from FoMoCo, and if they were to file bankruptcy I could easily lose half my pension and all my medical benefits.  It's one thing to be in your 20's or 30's and have to start over; it's a totally different thing to be nearly 60 and not in great health when they cut you off at the knees.  I kept up my half of the bargain with my employer (and then some) for 35 years, and I don't think my government should help them avoid living up to their half of the agreement.

[RJ749]

BTW, in case anyone wants to know, yes I have a dog in this hunt.  I'm retired from FoMoCo, and if they were to file bankruptcy I could easily lose half my pension and all my medical benefits.  It's one thing to be in your 20's or 30's and have to start over; it's a totally different thing to be nearly 60 and not in great health when they cut you off at the knees.  I kept up my half of the bargain with my employer (and then some) for 35 years, and I don't think my government should help them avoid living up to their half of the agreement.

Jerry,

I just got a PM from a site member whose bro-in-law just shuttered his dealerships.  I imagine all of his employees are having a tough go.  Currently the auto industry employs roughly 6m people in the United States.  I am told that one in ten jobs are auto related.

Not sure how the house of cards is built but it would/will is devastating the effect this financial crisis is having on everyone, especially certain segments of the economy.

Watch for another bank bailout if the dealerships go down all at once, their debt is unreal and would hammer the banks once again.

[SPIDERMAN]

The problem I see with that approach Brian is that it won't be the CEO's and directors who suffer, it will be the employees and retirees just as it was with the airlines, steel companies, etc.  If Washington wants to come up with a way to force the companies to keep all their promises to the employees (pensions and health insurance for starters) in any bankruptcy filing, then perhaps that would work.  Unfortunately, I've never seen government or the courts show much interest in protecting the rights of the employees in any bankruptcy.  Tear up the union contracts, tear up the salaried employee benefit programs, but let the top dogs get "retention bonuses" to keep them from leaving.  Strange how the clowns who ran the company into the ground get retention bonuses, when they should have been summarily fired years ago for incompetence.

Jerry

BTW, in case anyone wants to know, yes I have a dog in this hunt.  I'm retired from FoMoCo, and if they were to file bankruptcy I could easily lose half my pension and all my medical benefits.  It's one thing to be in your 20's or 30's and have to start over; it's a totally different thing to be nearly 60 and not in great health when they cut you off at the knees.  I kept up my half of the bargain with my employer (and then some) for 35 years, and I don't think my government should help them avoid living up to their half of the agreement.

Jerry
       I read your post and I see your point and I agree with everything you say BUT, there has to be something drastic happen to change the way GM,FORD and CHRYSLER do business. GM's headquarters looks like the Taj Mahal meets Buckingham Palace meets Trump Tower meets Billion Dollar Vegas Casino. You can't tell me the cost of that building is justified by it's function, nor can you justify the salaries and perks of everyone from newly hire floor sweeper on up to CEO. The auto industry salary/wage/benefit/perk levels need to be re-invented from the top down and the bottom up. Nothing about how these corporations do business should be beyond question. So how are you going to do that ?  Do you let the same pack of jackals who've been running Detroit for a century continue business as usual ? Do you simply give these two legged hyenas 35 -50 billion dollars to do with as they see fit ? Or do you somehow demand government oversight on salaries, perks, wages and benefits. Make the whole thing part of the GS pay scale system. Hell last time I checked POTUS only makes $250k a year. Ok so his perks are worth millions, in some cases beyond estimation. Of course we're told all of that is part of the demands of the job and I'll buy that. Air Force One certainly does make a hell of an impression on the locals in Zimbawe and other places of that nature. And the White House has been referred to as the greatest home court advantage in the world. Ok, I'm off track, but at the end of the day, we have reached a point in our history where our entire free market ecomomy isn't working and government intervention seems the only way out. So what would you do ? At what point do we draw the line at checks and balances ? Do we have GSA auditors in every business Congress bails out. Do we as I said before institute a GS system of pay ? It is the question of our lifetimes to date. At 55 certainly the most signficant issue in my lifetime. Adherance to a free market economy means we let those that would fail - fail. A socialistic approach means we take taxpayer money (as we have with the financial industry) and give it to private industry. With or without strings ? I ask anyone reading this to tell me, because I sure as hell don't know.

B B

As to those workers who put in their time and are now retired ?  You can't change the past and nobody should try to. Pension levels and benefits have to be left untouched or there is no integrity in the bargaining process for the future. I for one would never vote for any contract if I saw the company I work for go back and change past contracts as to retiree items. Once you do that, the entire collective bargaining process is dead.

B B

[Markum]

SPOT ON BB!!

[iski]

Real estate holdings have been devalued, bank assets in turn have been devalued - hell's bells even oil/gas has been devalued.  Now other industries are quite possibly facing similar devaluations, including one of the USA sacred cows, the auto industry.  Several other devaluations come to mind as well but currently the auto industry is on the media bubble. For some reason (pollyanna thought process) it is not popular to consider that as major devaluations occur, they do not operate in a vacuum.  The domino effect is not pleasant since it ends up affecting the bottom as well as the top.  The current as well as future administrations along with Congress (God help us!) are working in their way to prevent this, slow it down, or control it in what they perceive to be a reasonable manner (wasting vast amounts of our tax monies).  So far it has not worked.  You can blame the present administration for it, you can blame Congress, you can blame the future politicians who are pre-playing their game, and you can stick your head in the sand & yell until your mouth fills with sand, but the fact remains - markets correct when they require corrections.  Regardless.  That brings change - real change - and some will profit and others will not.  It's worldwide but each country is mainly worried about their own hide - understandable.

[SPIDERMAN]

Real estate holdings have been devalued, bank assets in turn have been devalued - hell's bells even oil/gas has been devalued.  Now other industries are quite possibly facing similar devaluations, including one of the USA sacred cows, the auto industry.  Several other devaluations come to mind as well but currently the auto industry is on the media bubble. For some reason (pollyanna thought process) it is not popular to consider that as major devaluations occur, they do not operate in a vacuum.  The domino effect is not pleasant since it ends up affecting the bottom as well as the top.  The current as well as future administrations along with Congress (God help us!) are working in their way to prevent this, slow it down, or control it in what they perceive to be a reasonable manner (wasting vast amounts of our tax monies).  So far it has not worked.  You can blame the present administration for it, you can blame Congress, you can blame the future politicians who are pre-playing their game, and you can stick your head in the sand & yell until your mouth fills with sand, but the fact remains - markets correct when they require corrections.  Regardless.  That brings change - real change - and some will profit and others will not.  It's worldwide but each country is mainly worried about their own hide - understandable.

iski
       I always look forward to reading your posts and have great respect for your writing,but as regards the above, you're talking like a politician amigo. You've said a ton but not said anything at all. Could you do this ignorant old fool a favor and boil this down to something I can understand ?

B B

[iski]

iski
       I always look forward to reading your posts and have great respect for your writing,but as regards the above, you're talking like a politician amigo. You've said a ton but not said anything at all. Could you do this ignorant old fool a favor and boil this down to something I can understand ?

B B

BB,

I enjoy reading your posts also, and consider you to be much smarter than me (most are smarter than me) as a result.  Your posts led to my post above - my train of thought must have left the track somewhere along the way.



Heartlessly condensed:  Let 'em go bankrupt.  All of the Big 3.  Allow the market to correct.  Now. Quit spending our great grandkids future tax monies on market prevention boondoggles. 

The alternative (bailout) is quasi-socialism & the inefficiencies that would saddle us with are worse than the bankruptcies that will follow the Big 3 auto bankruptcies.  Let their assets be devalued & be done with it.  Should have done the same with the banks.


That will lead to a large number of other assets which are currently over valued to also be devalued =  Bankruptcies aplenty.  Suppose my main regret here is realizing all the bankruptcy lawyers who will benefit, but they went to school for it & are well positioned.  I digressed, dammit. 

That's the way it goes down if the government does not step in.  The government will more than likely step in, so these devaluations (bankruptcies) will be moved on down the line for a while.  At some point, unless we revert to nationalization of business assets as govt. policy, the markets will correct. Better now than later is the question?

Do I like this scenario?  Hell no!!!  It sucks & people will be hurt that do not deserve it.  Not fair.  Currently some politicians are pretending we can wish this away but it ain't happening.

Mike

[miker]

You mean to let capitalism run its course!  Pshaw! 

And let all this posturing and indignant harummphing from pols go to waste?

[SPIDERMAN]

Neal
       I see you reading this thread and I seriously hope you're not thinking about locking it.  This is not politics, this is our daily lives we're discussing here. The future of our country and the impact of decisions made in Washington on all of us. I know you have asked us not to discuss politics, but I truly feel this thread to be more than a political discussion. The majority of us who post on the site regularly have a lot of pent up angst as to financial markets, our jobs. businesses, the ecomomy - - what have you. This thread is a great venue for us to vent some of that angst.

Hopefully I'm just flapping my jaws and you're reading here because you're as interested in all of this as the rest of us are.

B B

[RJ749]

 THE AUTO INDUSTRY BAILOUT
Agreement reached on $15 billion plan to rescue GM, Chrysler

Automotive News | December 9, 2008 - 11:00 pm EST

WASHINGTON (Reuters) -- The White House and congressional Democrats on Tuesday night reached an agreement in principle on a $15 billion proposal for bailing out U.S. automakers and forcing them to restructure or fail, officials said.

A Bush administration official and a Democratic leadership aide said the outline covered key points but final issues needed to be resolved and put in writing.

Democrats have arranged to have the House of Representatives vote on a bill as early as Wednesday and send it to the Senate for consideration.

President George W. Bush and President-elect Barack Obama were both urged by a key lawmaker to help rally support by Democrats and Republicans for the pending measure.

"Bipartisan hard work has paid off," said Democratic Sen. Carl Levin of Michigan whose home state headquarters General Motors, Ford Motor Co. and Chrysler LLC.

"I understand an agreement has been reached," Levin said in a statement.

The bailout is designed to allow GM and Chrysler to avert threatened bankruptcy through March with short-term loans. Ford Motor Co. is not requesting immediate help but would like a $9 billion line of credit in case its finances worsen.

The parties that negotiated the tentative deal agreed last week that the money would come from an Energy Department fund established in September to help Detroit make more fuel-efficient cars.

Proof of viability

The administration official said the negotiators satisfied the key White House concern in the talks that companies receiving aid obtain the necessary concessions and make other changes to prove they can survive and compete.

In addition to providing loans, the proposal would force automakers to answer to a presidentially appointed trustee -- or "car czar" -- and make the government their biggest shareholder.

The overseer will have powers to shape a restructuring of the companies, withholding further loans if progress toward a turnaround stalled.

A major provision would permit the czar to recommend a bankruptcy restructuring if companies borrowing money fail to obtain the necessary concessions.

Some Republicans wanted some sort of bankruptcy option included as an incentive for labor and other stakeholders to agree on givebacks.

The administration still opposes a Democratic bid to force automakers to drop lawsuits against California and other states seeking to cut auto emissions and other greenhouse gases. The administration official said it was his expectation the bill will not succeed unless that provision is struck.

Another issue raised by Republicans was the use of taxpayer money in the case of Chrysler, which is owned by private equity firm Cerberus Capital Management LP. During the talks, Democratic aides said the administration resisted a bid to hold Cerberus liable for repayment if Chrysler defaulted on any loan.

It remains unclear if that matter still needs to be clarified.

Filibuster scenario

Democrats control Congress and were expected to be able to muscle a bill through the House. But it was unclear if Republicans could stop a measure in the Senate with a procedural roadblock that requires 60 votes to clear.

"Ball is in the Senate Republicans' court," said Jim Manley, a spokesman for Senate Majority Leader Harry Reid, a Nevada Democrat. "There is no word yet whether they will give us consent."

A spokesman for Senate Minority Leader Mitch McConnell, a Kentucky Republican, said he would decline comment until he saw the bill.

An auto bailout has evoked competing emotions in Congress.

Lawmakers fear if automakers collapse, it would deepen the U.S. recession. But many say market forces, not a government saddled with a record deficit, should determine their fate.

There also is reluctance to provide another federal rescue in the wake of the voter backlash against Congress for its passage of a $700 billion bailout for Wall Street in October.

At the same time, many argue that if Congress provided relief for millionaires in the U.S. financial industry, it should also help blue-collar autoworkers facing unemployment.

A poll by CBS News conducted last week found Americans split on whether taxpayer funds should help automakers.

But more than 65 percent said in exchange for any aid, the government should have a say in the automakers' management and require more fuel-efficient cars.



PRINTED FROM: http://www.autonews.com/apps/pbcs.dll/article?AID=/20081209/ANA02/812099953/1197&template=printart

[grc]

...
As to those workers who put in their time and are now retired ?  You can't change the past and nobody should try to. Pension levels and benefits have to be left untouched or there is no integrity in the bargaining process for the future. I for one would never vote for any contract if I saw the company I work for go back and change past contracts as to retiree items. Once you do that, the entire collective bargaining process is dead.

B B

Unfortunately Brian, the mover's and shaker's in business and government don't seem to put much credence in that idea.  Promises mean nothing, even those made in signed contracts.  Don't forget, we have the Me generation running things in this country, and doing the right thing is not part of their mantra.  If anyone needs a reminder of how greedy and amoral the leaders in this country have become, check out the front page of just about any newspaper this morning and be amazed at the blatant abuse of power in Illinois.  I hope no one believes that is just an isolated situation.

Unless and until government forces big business to fully fund pensions and benefits, and then change laws to eliminate their ability to raid those funds and dump the responsibility on the PBGC by going bankrupt, every person with a defined benefit pension and/or medical benefit is at risk.  In the past it was steel and the airlines, now it will be the auto companies, next it will be ??  If the auto industry is allowed to fail, there surely will be many more to follow.  It's easy for those not directly affected (at least for the moment) to just say let 'em fail.  The problem I have with that, other than my previously disclosed self interest, is that the vast majority in the industry who will be heavily impacted are not responsible for the problems of the industry.  They are victims of poor management and poor government policy, and guess who doesn't suffer in a bankruptcy.

Oh well, we won't solve the problem here so I'll move on.  I would just remind folks who are quick to throw anchors instead of flotation devices that just because they are personally fortunate enough to not be immediately affected themselves doesn't mean that will always be the case.  Even if they work for themselves, odds are a major economic collapse will dump them right in the mess with the rest of us.  When we are all circling the drain, the anchor throwers will probably be singing a different tune.

BTW, buy American, while you still have that choice! 

Jerry

[iski]

You mean to let capitalism run its course!  Pshaw! 

And let all this posturing and indignant harummphing from pols go to waste?

Sometimes I dream the impossible dream......

[iski]

THE AUTO INDUSTRY BAILOUT
Agreement reached on $15 billion plan to rescue GM, Chrysler

Automotive News | December 9, 2008 - 11:00 pm EST

WASHINGTON (Reuters) -- The White House and congressional Democrats on Tuesday night reached an agreement in principle on a $15 billion proposal for bailing out U.S. automakers and forcing them to restructure or fail, officials said.

A Bush administration official and a Democratic leadership aide said the outline covered key points but final issues needed to be resolved and put in writing.



In addition to providing loans, the proposal would force automakers to answer to a presidentially appointed trustee -- or "car czar" -- and make the government their biggest shareholder.

The overseer will have powers to shape a restructuring of the companies, withholding further loans if progress toward a turnaround stalled.

A major provision would permit the czar to recommend a bankruptcy restructuring if companies borrowing money fail to obtain the necessary concessions.

Some Republicans wanted some sort of bankruptcy option included as an incentive for labor and other stakeholders to agree on givebacks.

Gee, I hope this new "car czar" will be as effcient as the gummint drug czars have been

and

after the gummint blows $$??? billions, the 3 auto companies may get to go bankrupt anyway.


When oil companies failed in the 80's, the USA population was not interested in bailouts.  Same deal with the textile industry mass failures as well as other entire industries.  Times have changed.....