US rules out extra car industry bailout

US rules out extra car industry bailout

www.abc.net.au

The White House has ruled out a Democrat proposal for another $38 billion to help bail out the ailing United States car industry.

The Democrats want to shore up the industry using funds from the Government's bailout package.

White House spokeswoman Dana Perino says that plan would not require car makers to make the hard decisions needed to restructure.

"The companies would need to be viable in order to receive taxpayer dollars," she said.

"I think everyone can agree that you wouldn't want taxpayer dollars going to something that would not be a long time concern or something that could actually succeed in the future."

(visit the link for the full news article)

Why does the car industry need $25 billion in the first place?

It seems to me like they just want in on the economic bailout.

I don't understand why they want it. Why they need it. They are failing. Can't they just restructure their company like they are supposed to?
www.abc.net.au
(visit the link for the full news article)

[edit on 19-11-2008 by Frankidealist35]

it's going to mean a whole lot of out of work people but that is the plan
I don't want them to bailout the car industry they've been holding this country in the dark ages technologically and perpetuating slavery to oil and all the war and waste and pollution that goes with it maybe this will turn into a good thing

If the big three automakers go under, that is 3 million people instantly unemployed...

YTD 2008, we've lost about 1 million jobs... it would devastate the economy...

Yah, the automakers have been retarded for years... and we shouldn't reward them for it... but something has to be done...

after 3 million people lose their jobs, retail sales will plummet... from the retailers, manufacturing will drop... well, you do the math...

There really isn't a choice at this point unfortunately.

Originally posted by nj2day
If the big three automakers go under, that is 3 million people instantly unemployed...

YTD 2008, we've lost about 1 million jobs... it would devastate the economy...

Yah, the automakers have been retarded for years... and we shouldn't reward them for it... but something has to be done...

after 3 million people lose their jobs, retail sales will plummet... from the retailers, manufacturing will drop... well, you do the math...

There really isn't a choice at this point unfortunately.

uhmm ya your number is a little low. First you have to know the fact that the numbers game has been getting played on the true number of jubs lost since the begining of the year. This link below is the "official" job loss report for the first 10 months of 2008. It will show 1.2 million and thats not including all of the job losses in this month. Not to mention that I promise you that these number do not reflect the true number.

Government Site

Originally posted by nj2day
There really isn't a choice at this point unfortunately.

Sure there is. Refuse to spend taxpayer money on (more) broken businesses and force the autos into Ch. 11 so they can restructure.

The jobs are gone regardless; we just have to decide if we want to piss $25B+ into a sucking vortex.

reply to post by anachryon


not if they do it right... I like the idea of telling the automakers that they are giving them the bailout money... on the condition that they develop alternative fueled vehicles or something...

I don't think people realize how bad the economy will get when the automakers go under... it will spiral out of control...

I do agree with you on the numbers game, and true unemployment being much higher than is being reported... however, knowing the "prove it" attitude of most ATSers on here, I chose to run with the numbers I could confirm

Originally posted by nj2day
I do agree with you on the numbers game, and true unemployment being much higher than is being reported... however, knowing the "prove it" attitude of most ATSers on here, I chose to run with the numbers I could confirm

Fair enough. Here are some numbers for you.

GM is bleeding $2 billion per month cash just to maintain operations.
They will run out of cash in the next month or two.
Assuming a $25B bailout is granted, and assuming all the money goes to GM, that will buy them one year of continued operations at the current level with economic conditions identical to 3Q.
As both Ford & Chrysler are involved here, the amount given to GM would be much less, and would shorten its survival.

How would a company like GM stretch its share of $25B?
They'd have to cut spending so they aren't bleeding $2B/month. How does a company drastically cut spending?
Reduce payroll, maybe? Close plants? How else can you do it when your sales are plunging by 45%?

The jobs are gone no matter which way this bailout goes. They're gone. Whether the autos get a bailout or file for some form of bankruptcy, the jobs are gone.

Have'em go Chapter 11 reorganization.

Giving the bailout money to those same myopic buffoons who got the Big 3 into the mess to begin with would be a huge mistake, IMO.

GM is burning through 2 BILLION in cash a month now...what is this money gonna do? It's just pissing down a well, it will just delay the inevitable by only a few months anyway. Then they'll come begging for more. It has to end sometime. Unfortunately, the cold hard reality has to set in.

This is just the tip of the iceberg. It's going to get REALLY ugly soon.

TIME has a couple good articles about it.....

www.time.com...

www.time.com...

I like the idea of telling the automakers that they are giving them the bailout money... on the condition that they develop alternative fueled vehicles or something...

I think they already got 25B for that very reason.

I don't think people realize how bad the economy will get when the automakers go under... it will spiral out of control

Throwing a trillion dollars at the depression monster is out of control. This is not how our system is suppose to work. When you make bad business choices you lose your business. This allows other companies to step up and get some of the action. Why would we want to artificially prop up a failing business.

The bottom line is we are headed into a depression. The cost of goods including autos and housing has to take a nose dive. $40,000 and up for a truck and $250,000 for a new home is not entry level compared to the average wage. The problems can be found in the system. Too many people getting their cut. The solution is to fix the system, not to pretend we can create perpetual wealth.

We should shoulder the burden ourselves and fix Social Security while we're at it. How can anyone be proud of the fact that we are setting our kids up for a total disaster? I think we have a clear view of "how bad it is".


[edit on 19-11-2008 by popeye0314]

Originally posted by popeye0314
I think they already got 25B for that very reason.

I think the 25 billion was intended to be a loan for developing these alternative vehicles... however, they hadn't received the funds yet.

I was under the impression that they were asking for their 25 billion on the already approved loan, and the ability to use it for more than what the loan was initially for...

I might be wrong though... I'll have to check... but it seems like thats what I heard somewhere.

I also agree with the fact that we are heading toward a depression...

However, when the bailout bill was passed, I got the feeling it was all or nothing...

The government decided to put their chips all in... They have to ride it out now...

Hopefully the gov't will go bankrupt, and we can fix all this mess in the future...

Originally posted by anachryon
They'd have to cut spending so they aren't bleeding $2B/month. How does a company drastically cut spending?

Hmm consolidation would be a good starting point . Discontinue the manufacture of the models and makes that are selling the least . Any future and current designs should geared towards export to the likes of China and India . Design more fuel efficient cars for the US market . Move aspects if not all the manufacturing aspects of GM that is aimed at overseas markets closer to those markets .

The US auto sector is to brain dead to implement any measures like this .

Originally posted by xpert11
Hmm consolidation would be a good starting point . Discontinue the manufacture of the models and makes that are selling the least . Any future and current designs should geared towards export to the likes of China and India . Design more fuel efficient cars for the US market . Move aspects if not all the manufacturing aspects of GM that is aimed at overseas markets closer to those markets .

The US auto sector is to brain dead to implement any measures like this .

Can they accomplish all this within ~6 months and turn into a profitable or just a break-even company? Because, according to GM's figures, that's as long as they'll survive even with a bailout.

A very telling statement was made during the hearings yesterday.
Link

Chrysler LLC CEO Bob Nardelli rejected suggestions that the automakers should seek Chapter 11 bankruptcy protection similar to airlines that later emerged restructured and leaner. "We just cannot be confident that we will be able to successfully emerge from bankruptcy," Nardelli said.

If they don't feel they can emerge from a restructure bankruptcy, how will they survive without the protections offered from said bankruptcy?

I have to say that I agree it needs to be done at this point to prevent such massive unemployment so immediately.

But...

There should be conditions.

1. It's truly transparent. None of this fiasco you've had with the TARP where they tell you at the start that you'll know where it's going, then they add more and refuse to tell the tax payer what it has been spent on.

2. They are committed to developing energy-efficient tech. They open their sites to true scrutiny to show what tech they have developed and have been holding back.

3. The bosses loose their obscene bonuses, monitoring of finances is truly open to public scrutiny for a specific period no less than five years.

If the public money is going to be given to these companies, they have a social responsibility and are answerable to the same public.

1 & 3 should also be applied to any and all financial institutions receiving from this bailout. Without being open to scrutiny, you can guarantee some senior staff are cashing in while they can and are ready to fly out if the SHTF. They've all spent the best part of the last ten years cashing-in, you can guarantee they won't suddenly become responsible.

Realistically the answer is most likely no six months would be a useful starting point to gear a company goals towards . It may be possible after the likes of CEO taking significant pay cuts and mass lay- offs mergers e.t.c . The powers that be neither have the guts or the brains to even take token measures towards saving the US auto sector .
The US auto sector will go down in history as one of the worst cases of mismanagement that dragged on a lot longer then it should have .

Originally posted by xpert11
Realistically the answer is most likely no six months would be a useful starting point to gear a company goals towards . It may be possible after the likes of CEO taking significant pay cuts and mass lay- offs mergers e.t.c . The powers that be neither have the guts or the brains to even take token measures towards saving the US auto sector .

*nod*nod*

This is exactly why I'm so against a bailout of any sort. The jobs will be lost regardless, huge cuts will have to be made, it's all going to hell no matter what. The least we can do is avoid pissing $25B or more of taxpayer money into the wind while it's happening.

Ch. 11 gives them a chance. A bailout gives them a few more months of survival before they come back looking for more.

Anachryon I have a question .

Do you think that the creditors would bother to do anything other then to sell GM assets in order to get some of there money back ?

The right sort of corporate cultural that is needed to run the US auto sector doesnt exist yet . I suspect that it is the end of the road for the US auto sector much like happened to Ansett on a smaller scale. Anyway I have to get some sleep .

Cheers xpert11 .

[edit on 19-11-2008 by xpert11]

I should add that this bailout has allegedly already been passed. Why don't the big 3 use funds from their previous $25 billion that they were given?

usnews.rankingsandreviews.com...

We already gave them $25 billion once. I guess the congressional Democrats do have a point. Will they make a positive profit? The first bailout didn't seem to help them did it?

Originally posted by xpert11
Anachryon I have a question .

Do you think that the creditors would bother to do anything other then to sell GM assets in order to get some of there money back ?

Depends on how the terms of any potential BK were negotiated. That could be avoided, at least for a time, if a solid Ch. 11 is in place.

Originally posted by Frankidealist35
I should add that this bailout has allegedly already been passed. Why don't the big 3 use funds from their previous $25 billion that they were given?

That money has strings - it has to be used in the pursuit of developing more fuel efficient vehicles. They want more money for general operations.