Saw this this morning.

 

So sad yet so true!! In this environment though, it's sad to say, that maybe the automakers should be bailed out so that investor confidence doesn't totally erode. However, when the economy picks up again, I'd let the freakin automakers go bankrupt. Coming out of it, hopefully, the unions will be abolished (not likely) so the costs are reasonable, and management will think before they make another crappy car!

 

Super Enzo!

 

Pretty well says it all .. i would hate to have to bail these clowns out . i sure don't wanna get stuck paying for the ridiculous mistakes executives made .. Fire all the execs and the union first. then we will talk

 

eddie (and i'm not singling you out for anything in particular btw so this shouldn't be taken personally, it's just that you raised a good point),
i know that like most people you mean well, and would like 2 help people by bailing out, but bad companies need 2 go bankrupt. things like CDS, changing leveraging rules and yes bailing out will only make problems worst.

if a company is mismanaged, it must meet its unfortunate end. there was no bailout for textiles or other industries. I'd much rather see the 3 go bankrupt and undergo a massive re-organization. the situation won't improve till all the bad debt, bad management etc is all out in the open and on paper, no more having the fed come in and change the rules all the time. socrates once said that for rules to have any impact/force at all, you can't keep changing the rules all the time. that is what the US is unfortunatly doing right now.



the bailout money? use it to give all the union workers 100,000$ severance and let that be the end of that. they can re-invest it, spend it on other things or just gamble it away, but its better than giving GM and the UAW more money to burn.

 

No worries bud. It's good to share our opinions. I totally understand where you're coming from and during normal economic conditions I totally agree. Let the bums that put us in this situation go bankrupt and deal with the problem themselves. However, the problem at this moment is investor confidence. The automakers have over $200 billion in bonds, and the equity that they have is now negligible, but still...there are investors in these companies (I don't know why I don't own any shares). However, if they go bankrupt, they tell us there may be 2 million people unemployed and there will be collateral damage to other industries as well since even more people will stop spending.

The main thing is this news is very unsettling to the markets, and since the Senate has rejected the deal because the freakin unions refused to take wage cuts in line with the Japanese automakers, it looks like a very bad day for the markets tomorrow. I know we didn't rescue the textile and many other industries for that matter...but when those companies started closing down, they didn't all close all at once. It took time and therefore the unemployment caused by losing certain industries didn't 'shock' the economy. And of course, the world economy wasn't in nearly as bad shape as it is now.

In my opinion, one of the biggest reasons we're in the mess that we're in today is that the US government didn't react nearly quickly enough. If they reacted sooner (for example guarantee new loans earlier and inject equity faster into lots of the companies), I don't think we'd be in such a mess now and we wouldn't necessarily have lost Lehman/Bear Stearns/AIG. Once you start deleveraging and losing investor confidence, you're basically starting a domino effect and freezing the credit system which is essential for businesses big and small to survive nowadays. Nobody in the industry would have ever thought that these 'blue chip' companies would be almost worthless and on the brink of bankruptcy. In addition, I'm not sure that people understand the complexities of the many types of credit they read in the news. In fact, I'm sure I don't understand them 100% and the executives at these firms clearly did not either.

Well...that's just my rant...I hope I'm wrong and that the Big 3 go bankrupt and restructure into good companies without causing too much damage to an already decimated economy. But I have a feeling, this will delay the economic recovery that everyone is just hoping for. In other words, I think this temporary bailout may be a necessary evil.

 

Just look at the quality of the German, Japanese, even Korean compared to American, the ones who invented the automobile. The are ugly (for the most part), put together with crappy parts using old technology. Imagine if you regarded a Chrysler with as much panache as you a BMW. And the unions are just making it hard for the auto companies to get anywhere. They need to go bankrupt, lose the unions, build cars that are in line with today's market, restructure and start again. Just my 2 cents.

By the way, this is not meant to offend people in unions. It is the unions that created the environment in which union workers can get away with murder. The workers are just a victum of their own circumstances. We don't need 5 people doing the job of 1. That is just idiotic.

 

It seems that most people forget that $700 billion to bail out the financial industry is a massive amount of money for industries that manufacture absolutely nothing, whereas balling out the (not so) big 3 for a measly $14 billion will actually create goods that will employ millions of people in many offshoot industries. Think of the lost tax revenues that throwing 2-3 million people who depend on the auto industry out of work would cause. If anyone thinks you wouldn't be affected somewhat by the collapse of the Detroit auto industry, you are sadly mistaken. Yes, they've been reactionary rather than progressive with their products. Yes, the executive pay packs have been grotesque. Yes, they need to be humbled. But now is not the time to make an example out of them by plunging the entire continent into a deeper and nastier recession...read depression.
My $.02

 

I am not sure anyone disputes what you are saying Phil. In fact, just putting that many people on unemployment insurance would cost us billions. I think the issue is that if we bail them out and then in 4 months, they are ready to file for bankruptcy again which is the prediction, then this is all for not. They need to make some fundamental changes. If they are prepared to do that and act upon them, I am all for the bail out.

 

The banks got 700 billion, if they thought that a bailout would be worth it, they would use the newfound government lines of credit to finance GM, probably in exchange for options at pennies on the dollar and then cash in on the recovery. But nope, it's not happening.

GM could just go to the banks but no one would touch em. They're cancerous right now and a limb is going to have to be removed to save the body.

 

I think Exxon, Shell, BP etc. should be the ones to bail out the Detroit 3. They get most of their profit through this channel, so they should kick in.

The reality of the matter IMHO is that these companies are failures. Years will be spent analyzing the roles that the union and bad management had to play in their fate, but the fact is they do not have a sustainable business model.

Their labour expenses are out of whack with the value of the work being performed. The distribution channels for cars is way too fat and has huge overhead that all drives up costs. The quality and selection of the products does not meet consumer needs or wants. And management capitulated years ago to the powerful unions that take absolutely no responsibility for the success of the businesses they are "partnered" with.

If we are going to put yet more of our tax dollars at risk, then I say we should have a complete reset on the automotive industry in North America. Public investment funds should be made available to manufacturers who will deliver quality low/zero emissions cars, with a focus on electric/hybrid. Billions in R&D to get us off of fossil fuel is needed to convert the existing infrastructure. I don't want to throw good money after bad management and unions. I'd rather look back in 20 years and say to my kids "see, we had some vision, and used this crisis as the opportunity to change the automotive world forever".

Of course, I still want the Porsche, Ferrari, and Lamborghini etc. to continue to produce "niche" cars for motorsport enthusiasts

 

I work in the auto industry and have dealt with the big 3 for ever (that's why I own a Porsche and an Audi!). Don't get me wrong they need to restructure and change the way they do business or they will be gone.
Here's what I don't understand. Why are the transplants not pushing for the bailout as well? They do not need the money but if one of the big 3 go bankrupt then the ripple effect through the supplier industry will cripple them as well. I understand that they are trying to distance themselves from this debacle but they have to be able to make their vehicles as well don;t they?

 

honestly, i'm sure someone at honda HQ japan has ran the numbers and if borgwagner or someone goes down with gm, they're all set to switch to denso or mitsubishi or another company who will be more than happy to pick up the slack

 

I'm just wondering if someone could explain to me how 15is billion will save the auto industry when their payrol is some 4B per month. This cash won't do much if anything. Am I missing something?

 

Nope, you aren't missing a thing. I can't validate your $4B/month claim (I have not heard the actual number before), but assuming you are correct, this is a bailout to nowhere. If they GM got the full amount they asked for, they claimed it would last them 4 months.