Posted on 12/04/2008 12:46:12 AM PST by Thorin
Here’s an interesting bailout rheead from last night. It addresses how Paulson (D) threatened members of congress to vote for the naionalization of banks etc, with martial law, riots before the election.
We are in the middle of a coup by socialists
“But with respect to future debt; would it not be wise and just for that nation to declare in the constitution they are forming that neither the legislature, nor the nation itself can validly contract more debt, than they may pay within their own age, or within the term of 19 years.”
—Thomas Jefferson, letter to James Madison, 6 September 1789
a) Car buyers are simply tapped out. Higher credit requirements, dried out HELOC, and a generally subdued market confidence and primary concerns, simply mean that demand is muted.
b) High legacy costs that are thoroughly soaked into the wool of the company. GM has a negative 60b in its bal simply due to retirees alone. Sure, it has a pension fund that has done quite well, and the UAW is apparently making it easier to hold of certain payments, but those legacy costs are tremendous. It gives them a unique competitive disadvantage compared to their competitors.
c) Add to this bleeding cash like someone had tapped into an open fiscal vein.
Those 3 things together (there are more, however those are the main ones) are killer! The issue with Detroit is not their cars ....sure, they made some DAFT moves in regards to the vehicles they built in the past, and there is huge persistence of negative perception (e.g. due to the nightmares experienced with Detroit vehicles in the past, there are still many who will not give them a chance). However, that is the problem that started all this. It is NOT the problem that will kill them ....what will kill them is the three issues I've listed.
At this point it is probably a foregone conclusion that AT LEAST ONE of the Big 3 will go down (most probably GM, then Chrysler unless they get an internal bail-out from the private equity firm that could assist them if it felt like risking more billions, and then last Ford if the downdraft caused by the collapse of GM drags them down). However, that is not my question. My question is as follows:
Even if GENERAL MOTORS receives the money, will it not be a simple stay of execution? Those 3 issues are not going away, and sooner or later that money will be finished (and finished before people start buying cars enmasse again, and with legacy costs still present no matter what concessions the UAW agrees to, and with cash outflows still perilious). What then?
I would not have a big problem with Ford getting money ....yes, it may be a bailout (I have issues with that), but at least Ford could get on its feet with some assistance. However, GM is part of the Walking Dead.
How would you tackle those 3 issues?
For the first time today, the auto industry is mentioning something I have been talking about for more than a month: A government assisted Chapter 11 bankruptcy. Under this plan, the government will provide all of the necessary debtor in possession financing and insure the warranties. This would remove two of the major hurdles folks who are against chapter 11 are concerned about.
Cutting taxes for everyone will put more money in buyers hands.
Allowing for the interest deduction to return would spur people to buy.
Stop bailing out companies and give the money BACK to the people. It’s our money.
Exactly, these GM execs bet the whole ball of wax on getting this bailout.
“You leftists posting here should go back to DU. I’ll bet you still support Bush and McCain and hate Palin.”
You must be a libertarian. But know whom you are responding to before you spout off. I’ve been on this web site since 1998. And you? Funny how I’ve lasted on this web site for 10 years by being a leftist DU’er. Fool.
Not true!. A loan is when you give money to a company who has the present ability to pay it back. GM is insolvent and has no present ability to pay the money back. Its a bailout pure and simple. Packaging it as a "loan" just demonstrates the dishonesty present in the entire program.
The one example of a gov’t loan given to a car company was Chrysler 30 years ago, and they paid it back plus some.
All of the people who brag about how Chrysler paid the loan back ignore one thing. In the 1970's, Chrysler, For and GM enjoyed nearly 90% of the American market. Today, the have a market share well below 50%.
Consider what might have happened if the government had declined Chrysler's request. The unions would have got the message 30 years earlier. Management of GM and Ford would have got the message 30 years earlier. Many of the structural problems that is killing GM and Ford would not be here.
The truth is the American automobile industry has been in decline for 30 years. They have consistently lost more than they made. The Chrysler bailout sent the wrong message and now the situation is 100 time worse.
The amount of time you have been here has no bering on what you believe or the agenda you push.
The FACT that you support SOCIALISM says it all. If I had only signed up yesterday it wouldn’t matter if I support conservativism and you support Republican Socialism iy still makes you a SOCIALIST.
Thanks for letting we conservatives here see who you really are, socialist.
“Privatize Fannie and Freddie and repeal the CRA Law, close the 4.5 PERCENT ACORN gets for EVERY mortgage, stop the 100 million dollars to ACORN in the bailout bill.”
P.S., on this paragraph of yours I agree.
BTW- over 71 percent of voters OPPOSE the bailout. Only hard-core socialiats are supporting nationalizing the auto industry.
So you know the group you belong to. I’ll bet you also think those opposed don’t understand the issues and congress should pass it anyway.
The legal actions from when they closed Oldsmobile are still ongoing and have already run into the BILLIONS.
For years I always drove an Oldsmobile. When they eliminated Olds, I stopped buying GM cars. End of message.
I purchased a Jeep and have been satisfied to a point. My next vehicle will be a Honda.
Only hard-core socialiats are supporting nationalizing the auto industry.
Giving the auto industry a loan is not nationalizing it, in case you can’t figure that out. We didn’t nationalize Chrysler when we gave them a loan 30 years ago. It is still a private company. And your libertarianism is showing.
By agreeing with that paragraph you should also be against the nationalization of the auto industry.
I will send you a link about NAZI Germany and how they nationalized industry. I think we probley hold the same views, but for a little more information.
“Thanks for letting we conservatives here see who you really are, socialist.”
You are so full of it, and you ain’t no conservative, you are a libertarian. It shows through glaringly. So for every name you toss at me, I am fully capable of tossing one back. However, I will just chalk you off to being one of those types who reacts emotionally rather than rationally to any debate, just like Dems do. All emotional reaction, no logic or rational thinking. So sad.
Wrong, as usual. "Crashing" is a free-market operation; failure is an essential organ of healthy economics. "Dysfunctionality" (man, I hate that overused, meaningless term), whatever that means, will be cured by the operations of the free-market. Painful? Yeah. Ultimately healthy? You bet!
Here is the link. I’ve posted this several times over the years. I think all will find it educational.
http://www.freerepublic.com/focus/f-chat/2021415/posts
It is very interesting in light of current events.
“I will send you a link about NAZI Germany and how they nationalized industry.”
You don’t have to tell me what I already know. If and when our auto industry is actually nationalized and taken completely over and run by our gov’t, then I will agree with you. Until then, I won’t. And the detrimental affects of leaving the auto industry go down the tubes vastly outweighs giving them a loan at this point in time, when to not do so could toss us into an even deeper recession because of the large ripple effect it would have throughout the economy.
If GM were credit-worthy, banks wouldn't hesitate to loan them money. Investors would be buying the stock, and it's value would be much higher. But GM is NOT credit-worthy. So why is it that some think that MY taxpayer dollars should be loaned to a company that has a snowball's chance in hell of paying it back?
This so-called loan is a bailout. It is the theft from the producers that pay taxes to support a dying company and its overcompensated union employees and retirees. I'm against it as I am against all the other bailouts that the government has done or considered doing. I carry my own weight in life through my own blood, sweat, and tears. I shouldn't have to do so while carrying the lyers, cheaters, congressmen, senators, and the rest of the deadbeats on my back.
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