Let Detroit Go Bankrupt

With bad bailout-buzz in the air, Detroit's difficult-sell job has become even more daunting. Despite GM CEO Rick Wagoner's insistence to a Senate panel last week that "I'm not here today asking for any bailouts," that's exactly how many in Congress—and throughout America—saw it. The auto bosses would like to cast the $25 billion as something that should be a done deal since Congress authorized that financial assistance in last year's energy bill, which required automakers to increase the car's average fuel economy by 40 percent, to 35 miles per gallon, by 2020. The only problem: Congress never actually funded the $25 billion, which is what Detroit is desperately seeking before Congress adjourns Sept. 26. But a common view in Washington and elsewhere is that Detroit drove itself to desperation with its dependence on SUVs and pickup trucks. And now, critics say, the not-so-Big Three don't deserve federal help to overhaul factories from churning out gas guzzlers to make mileage misers.

i find this part of the article rather interesting seeing as they only produce what consumers seem to want to buy and if you ask me the American peoples are the ones who don't understand an SUV or Super Duty(haha i said duty) truck to go to and from an office job just doesn't work. you have to remember they wouldn't be making it if it wasn't selling.

"They're not too big to fail," Sen. Richard Shelby, the top Republican on the Senate Banking Committee, told CNBC last week. "I don't see [Detroit's woes] as a national problem. I see it as their problem."

i also find this to be absolutely hilarious to big to fall eh isnt that what they said about fanny and freddi or aig and this bugger is on the Banking Committee HA
NewsWeek

**Thank you anachryon & neonine**

anachryon, I think you may have a point about why GM wants the money. It would have to be an "open spicket" for all three companies, as far as I can tell. I mean they could turn around by some miracle and produce a product that everyone wants. It wont matter if banks arent giving out loans.

But I know I am preaching to the choir , or rather stating the obvious. I am trying my best to follow that darn white rabbit, and the money so that I can get a somewhat clear picture as to what the end result will be. Its tangled, convoluted, and mind numbing, but I it keeps me from feeling all "gloom & doomish" and makes me feel productive.

Of course only being able to share what info I find other than with the folks here on ATS is a bit frustrating! My family and friends circle either dont care, believe it cant be anything other than what they have read or seen on tv, or think Im crazy. Still, Im an optimist and I keep trying. (but only when they ask! )

reply to post by neonine


Good point neonine, about the too big to fail statement. I really dont believe in the whole to big to fail business and I am not sure there are many people who do believe that. What corporation has higher quarterly or yearly revenues than our government? The government is a big business, probably the biggest one of all, and it can be convincingly argued that it is currently on the verge of bankrupting itself.

There's nothing quite like seeing the "Big 3" arrive with $20,000 private jet rides to asks for a loan. How convincing can you be on cutting-costs and restructuring if you can't even take a normal flight over?

Originally posted by FX44rice
reply to post by Realtruth

 

That would be a Grand Scenario. However, that is not how the business world, and contract law works.

The issue is they owe massive debt which they have no way of repaying. To all suppliers, vendors, lenders, private capital, etc., etc.

The issue is repayment of debt. There is only 2 basic options at this point (as no Private capital has shown any interest in lending to any Big 3 for some time, raising capital in any way has failed over the last year for GM):Only Bankruptcy or Bailout.

Congress decided to adjourn and not vote on the Big 3 bailout
leaving them hanging in the wind.

www.breitbart.com...

I'd say bankruptcy is on its way.

If they want to be nasty about it they will do chapt 7, and
shift offshore under a totally different corporate charter entity
outside of US law.

No unions, cheap labor, and they just finished up their 2 new
plants in India and Russia.

Would not surprise me a bit, and it will a huge nail in the coffin
of the US economy.

The derivatives fiasco will dwarf it all though at a few 100 trillion.

reply to post by cognoscente


I take issue with one statement:

"the mortgage-backed securities fraud was the BIGGEST EVER perpetrated in human history. Nothing even compares to it."

I think this below has that beat by miles and miles:

theinternationalforecaster.com...

They have been hiding their toxic debt in derivatives in the
UNREGULATED and UNLISTED OTC market.

When this puppy blows, it will make all others look small.

Small amounts of it are leaking out now, but the avalanche
has yet to ensue.

Originally posted by Oscitate
There's nothing quite like seeing the "Big 3" arrive with $20,000 private jet rides to asks for a loan. How convincing can you be on cutting-costs and restructuring if you can't even take a normal flight over?

That is the crux of the problem with the decision making process by many in the automotive sector . . . while thinking they're doing something good, their own stupidity makes it an abomination.

Take, for example, their decision to 'globalise' the supply sector by moving manufacturing off shore and buying parts and other inputs from sources in countries that make the stuff cheap due to low labour costs, and less government constraints with respect to the environment, health and safety and the like.

Very good idea to save money . . . but a very bad idea not to have dealt with those issues at 'home' . . . the ever-growing cost of labour, the ever-growing list of 'rules' by which all employers and employees must live, the ever growing list of environmental constraints (some good . . . some not so much).

Instead, and like most of society, the automakers have taken the path of least resistence . . . the easy road . . . the quick fix to deal with issues as they arose.

In this regard . . . a bailout is a short-term, quick fix to this problem that may see the Big Three thorugh the middle of next year (based on the industry currently bleeding about $4 billion a month, how long does $25 billion last . . . you do the math) . . . the bailiout is the easy road, the 'what did you do for me today' fix . . . it does not resolve the ills in the industry.

Morphine may take the pain of a brain tumor away for a while, but unless you deal with the cause of the pain rather than treating the pain, the patient will die.

To me, a bailout is the opiate of the weak . . . a restructured industry whether through bankruptcy or some other means, will build a strong viable industry going forward.

reply to post by StargateSG7


Sorry to dissapoint you but all your "smart" people are not as smart as you think they are. I fully accept that there are people who think as you do and would like the scenarios you suggest to occur, but they wont. Nobody is going to escape what is coming including yourself. Yes the elite will last longer but the outcome will be the same. You will understand this perfectly in a few months.

reply to post by HunkaHunka


And ... then you woke up?

reply to post by tdubz


that's kind of an ignorant out look on things all cars have to meet a standard. they meet one before there made, while there being made, and after they roll off the line. you cant go judging the qualitly of a car just because you read in a magazine that someone had a problem with such and such or your buddy only got 20,000 miles out of his car/truck and stuff started going wrong. its all about how you take care of your car. what makes an even bigger difference is where you live climate wise. if theres snow what do they use on the roads salt or chloride.

so its ignorant to say that one manufacturer or once brand is superior to another because there really not at all. the cars life depends on the owner nothing more nothing less.

i still dont think ever here is getting how extremely huge these companies are. let me use ford as an example.

Ford Motor Company
Ford of Australia
Ford of Brasil
Ford of Britain
Ford of Canada
Ford of France
Ford of India
Ford ofPhilippines interesting tid but about ford to they are mazda

heres something else you might be interested in
AMG
auto alliance international also in Thailand
Plants in china
Jiangling Motors
Volvo ford also makes parts for Volvo

o yea and don't forget about turkey
turky

so now is it starting to sink in on how much of an influence just this once little part of a company is on the rest of the work. picture it like a kid on the monkey bars(big 3) at school and for every finger he lets off a factory closes. i don't think i have to tell you what happens next.

this is just ford to i mean think about it they do tractors transmissions mass transit you name it and there's still 2 more companies i haven't even covered. i think we all need to think twice before we give them the axe.



[edit on 20-11-2008 by neonine]

I've said earlier that I believe poorly run companies should be allowed to fail. I would however like to speak to the quality of American cars since I've been an adult. I think that the quality of American cars is unfortunately a perception thing. I'm 32 and I've bought four new cars in my life: a 95 Ford escort which i got almost 200,000 miles off of before I wrecked it, an 03 Chevy Cavalier which I still drive and have just under 100k miles on ( had to replace a fuel pump around 60k), and an 08 Dodge Calibre. I bought a used mitsubishi w/60k on it and got up to nearly 200k before trading. I can't really complain about the quality of American vehicles. I think it's a perception thing from the eighties and early nineties that never went away. However the only reason I went American with the Cavalier and Calibre is that their were more favorable financing terms from the American auto dealer than Toyota or Honda.

If Detroit gets a government bailout, I will never buy another Detroit branded car as a matter of principle.

reply to post by jefwane


jefwane its bad outlooks on things like that that got this country into this mess in the first place. that industry had been with us since the beginning of the industrial age and your say we should just say the hell with it??? that's like saying the hell with the what we stand for. sure they have done things wrong and made poor choices but now is our chance as a American people to force them to change not just give up. why is it always the easy way out for every one

ever notice the over use of pyramids on car dealership buildings? well i think the auto industry had insiders who intentionaly make it outrageous to buy a new car. Whats even more sad is that people are blind to it. i got scammed on a used car from a dealership i now have no car and a repo bill because the car was a lemon and the dealership never honored the warranty. Oh and im paying over 300 / month for about 5-8 years for a car i no longer own, so this to me is not any pain at all. maybe we should look into magnetic motors, hydrogen, and perhaps electrogravity?

reply to post by mastermind77


lol sorry about you luck mastermind, kinda sounds like it was more of an impulse buy rather than something you shopped around for.

reply to post by neonine


I'm not in the market for a new vehicle anytime soon. However I am perfectly within my rights as a consumer and American to say to hell with Detroit. As I mentioned I don't have a problem with their quality, and I've purchased exclusively American brands as new cars in my adult life. I do have a problem with them robbing me at gunpoint (via taxations) to continue their ineptness. For example I mentioned I bought a '95 Ford Escort as my first new car, I was in the Army at the time and needed a fuel efficient reliable car so I could make it home, explore the east coast, and generally have a good time while on pass/leave. It was an excellent vehicle that Ford chose to quit making to focus on SUVs and trucks in the late ninetees and early 00's. That business was unsustainable while the Japanese makers continued to make fuel efficient cars and ate Detroit's lunch while they looked at the profit from SUVs.

I'm serious about if they get a bailout I'll never buy a new Big 3 branded vehicle again in my life. Toyotas are made in Texas, Hyundais in Alabama, Kias will soon be made basically in my back yard, Honda has plants in the US I can't remember where. Why should I subsidize the exorbitant UAW wages that are doing as much to bring the Big 3 down as their incompetent management?

reply to post by jefwane


your still completely missing the point they are one of the last big influences in the world we cant just let them slip away into the darkness not like this. we have them by the balls so to speak. at this point they'll do anything so whats you point in giving up. reform the company, cut the UAW. start from scratch. your not understanding how many peoples pay checks are on the line here. and I'm not talking about people that work for the big 3 ether and I'm not just talking about Detroit nor am i just talking about Michigan. there are at least a million people that get a paycheck in the US that work for smaller companies that are contracted to do work by the big 3. so your saying that they all need to pay for the mistake of 3 company's

I am amazed Detroit has not learned anything about Kaizan and Kanban[specially demand driven supply] since the oil shocks of the 70's...They had it coming, if there will be a bail out it should be conditional and the big 3 should restructure the whole industry more demand [stream-line]driven, which also results in massive dismissals...I quess it could be a good move of SAIC or Dongfeng buying GM and gettings those teqnologies, although i havent encoutered a decent sophisticated V6 engine in the past decades made by one of the big 3's....

[edit on 20-11-2008 by Foppezao]

What if the United States did with the Big 3 what the Italian courts did to Automobilli Lamborghini what it filed for bankrupcy?

The courts appointed CEOs to operate it and help it limp along. Maybe a new set of eyes is needed in the American Auto industry. That way, people will still have jobs (ummm... The people who WORK anyhow) and the upper crust movers and shakers who have done little but drain the marrow of our heritage and line their bank accounts, will get the boot.

Originally posted by Jkd Up
What if the United States did with the Big 3 what the Italian courts did to Automobilli Lamborghini what it filed for bankrupcy?

The courts appointed CEOs to operate it and help it limp along. Maybe a new set of eyes is needed in the American Auto industry. That way, people will still have jobs (ummm... The people who WORK anyhow) and the upper crust movers and shakers who have done little but drain the marrow of our heritage and line their bank accounts, will get the boot.

WHat do you mean?, Lamborghini was completly taken in over in '98 by a foreign company: Audi..