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OT: Obama: 1, GM/Chrysler/Wagoner/UAW: 0User Forum Topic
Submitted by flu on March 30, 2009 - 4:54am
Wow. and I mean wow. I never thought I'd see Obama and crew reject the GM/Chrysler bailout request. This is is political suicide imho, but I have to hand it to this admin for having some balls to do this... What caught my attention was that this administration already decided who the survivor would be. "While the task force concluded that GM could be turned into a strong business, it decided that Chrysler cannot survive independently." "Even though it is Mr Wagoner who is unseated at GM, the company received a much better report card than Chrysler, whose cars were condemned as lacking in quality". Ouch..... The fine print: "However, both carmakers will be supported with working capital as they work to meet their new deadlines on restructuring and could end up with more funds than they had requested. Existing loans will not be recalled." http://www.ft.com/cms/s/0/a2ede9ae-1cc1-... The Obama administration refused on Sunday night to give fresh bail-out money to General Motors and Chrysler, telling the carmakers to come up with new plans or risk insolvency. GM has received $13.4bn in government aid and had asked for an additional $16.6bn. Chrysler has received $4bn and had asked for another $5bn. But both companies failed to meet targets on cutting their debt and reducing the cost of benefits paid to workers. White House ousts GM chief - Mar-30 The crisis talks between the companies and the administration’s auto task force cost the job of Rick Wagoner, chief executive of General Motors, who was asked to step down by the White House after 30 years with the carmaker. Officials said on Sunday night that Chrysler would be given 30 days and GM 60 days to reach agreement with debtholders and unions, with new tougher targets for cost cutting, or they would lose their last chance for a government bailout, almost certainly sending them into bankruptcy. “That’s going to mean a set of sacrifices from all parties involved: management, labour, shareholders, creditors, suppliers, dealers,” President Barack Obama said Sunday on CBS, before the details had been laid out. “Everybody is going to have to come to the table and say it’s important for us to take serious restructuring steps now in order to preserve a brighter future down the road ... They’re not there yet,” Mr Obama said. The task force, whose members include former investment bankers Steve Rattner and Ron Bloom, decided that the companies had failed to prove their viability and would not, therefore, receive the combined $21.6bn of taxpayer money they had asked for. However, both carmakers will be supported with working capital as they work to meet their new deadlines on restructuring and could end up with more funds than they had requested. Existing loans will not be recalled. Warranties on the companies’ cars sold in the US will be guaranteed by the government in a bid to prevent buyers from turning away from GM and Chrysler. US car sales have dropped from 16m a year earlier this year to a current trend of less than 10m a year. GM’s Frankfurt-listed shares dropped sharply, falling 11.6 per cent. Chrysler’s hopes for survival hinge on finalising a partnership agreement with Fiat, the Italian carmaker, which has offered to acquire 35 per cent of GM in return for technology. In a bid to prevent US taxpayer money going overseas, the task force has said it would offer up to $6bn in support to Chrysler but only with the agreement from Fiat to build new cars and engines in the US. If Fiat wants to lift its ownership above 50 per cent, Chrysler will first have to pay back the bail-out money. A senior administration official said the companies had failed to meet a number of benchmarks, including the requirement for GM to reduce its $27bn unsecured debt to $9bn. Bondholders in GM, who have railed against the administration and the company as the March 31 deadline for an agreement approached, are now faced with conceding to new, even tougher, demands for debt reduction or accepting the results of a court-supervised bankruptcy. The task force has made clear that it does not want to see the companies lapse into a traditional Chapter 11 bankruptcy from which they are unlikely to re-emerge, but would use a quick court-supervised process to restructure them forcibly as part of any final settlement. Even though it is Mr Wagoner who is unseated at GM, the company received a much better report card than Chrysler, whose cars were condemned as lacking in quality. While the task force concluded that GM could be turned into a strong business, it decided that Chrysler cannot survive independently.
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FLU I am someone who has criticized the administration as well and I agree with your points. I am interested to see how this pans out, especially the negotiations between labor and GM in the next 60 days.
This is minor from a fiscal sense. It is the bankster welfare queens that are costing this country trillions. The carmaker bailout isn't even going to amount to $200 billion most likely. Pocket change really.
IMHO, small potatoes stuff like this is being done to distract clueless people like FLU from the immense looting that is being done by the banks.
Actually, as near as I can tell, FLU has always been in favor of massive welfare for the super-rich while focussing his ire on the relatively minor amounts of welfare going to the people in the form of food stamps, unemployment benefits, and the like. I find this ironic now that FLU is actually a ward of the state himself. It's quite hypocritical, but like most hypocrites he doesn't even realize it.
why are they giving them more time to come up with "new" plans? This is just an eyewash to appease the public by the crooked Obama administration. These auto companies have been coming up with new plans since last March and in the interim while they PLAN the government is going to give them billions in operating capital!!
Just let them fail already and be done with it.
Actually, as near as I can tell, FLU has always been in favor of massive welfare for the super-rich while focussing his ire on the relatively minor amounts of welfare going to the people in the form of food stamps, unemployment benefits, and the like. I find this ironic now that FLU is actually a ward of the state himself. It's quite hypocritical, but like most hypocrites he doesn't even realize it.
Giving rich people money allows them to create jobs. Giving people welfare checks when they don't produce ends up giving gives money to China for all the crap they spend at walmart and bankrupts credit card companies after those same people spend $2 for every $1 of welfare given. [/sarcasm]
Me, welfare. HA HA. Breeze you're losing it. I'm sure my work ethics far exceeds you lying bastard sales type. Software sales are the worst.
How's that soon to be 8.75% tax going to do for you Breeze? Lol....Just spreading the love
Just let them fail already and be done with it.
Well, to be fair, if GM can restructure in a decent way, it probably would be good for the economy and for this nation as a whole.
Although I'm not a big fan of GM, not all their lineup is crap. And for national security, it would be beneficial for this country to still have a decent manufacturing capacity if the need to arise to retool factories for war (aside from taking over the Honda/Toyota factories in the U.S.)
But it looks like Chrysler is definitely finished. Perhaps now UAW, GM management can get their act together.
But, part of me is sort of happy. Because Obama isn't as socialist as I thought he would be...Seems like he's a fair weather fan, playing to the mood for the american people. Not saying it's wrong, it's just interesting.
One thing definitely consistent. Obama talks ==> Market tanks.... -290 now that he is actually talking about the GM plan.
Giving rich people money allows them to create jobs.
So you are in favor of massive socialism for the super-rich! I knew it you commie, socialist POS!
I would prefer that people earn their money by creating useful things, but when there are so many commie socialists like you in this country I can only think that this country is doomed. Enjoy my taxes you hypocritical welfare queen. Maybe you should change your name to 'WF' for Welfare Queen.
Giving rich people money allows them to create jobs.
So you are in favor of massive socialism for the super-rich! I knew it you commie, socialist POS!
I would prefer that people earn their money by creating useful things, but when there are so many commie socialists like you in this country I can only think that this country is doomed. Enjoy my taxes you hypocritical welfare queen. Maybe you should change your name to 'WF' for Welfare Queen.
Dude, you need to learn how to read "[/sarcasm]". Someone definitely needs to get laid.
And this country is doomed, the moment Obama and crew's budget is approved. Enjoy being a slave to china.
After arraya suggested I watch Crude Awakening the car company days are numbered anyway unless the really put their heads down and think of some other means to operate a vehicle besides oil -- and biodiesel isn't going to cut it either.
FLU: Don't agree with Breezie. He's an idiot. He is completely incapable of parsing facts and, when backed into a corner (which happens quite frequently), he'll either resort to strawman arguments or ad hominem attacks (such as referring to you as a welfare queen). I'm as conservative as they come, but he now calls me a bleeding heart liberal.
You're wasting your breath. He doesn't know how to argue intelligently and you'll soon find yourself going down the rabbit hole with this clown. As my old man used to say, "Never teach a pig to sing. It wastes your time and annoys the pig". My advice is to quit throwing sheet music at Porky, he can't carry a tune.
Wait, who was it again that killed the electric car?
What's so special about electric car? If your argument is MPG, I'd say, turbo diesel is where it's at. Check out this link. 70MPG for $7k.
Speaking of electric cars.
Tesla, me thinks, is finished.
The Model S looks impressive.
http://www.teslamotors.com/models/index.php
However, I can't fathom anyone that would put a deposit down on that car when the company doesn't even have a production factory yet, nor is your deposit put into an escrow account. (Seems like customer's deposits are being used to pay older customer's car that are in the queue.)
Once upon a time I entertained the idea that if Tesla built a sedan that was more affordable, I might consider the purchase.
Still, this seems like one big ponzi scheme
Can you say, the next tucker?
http://valleywag.gawker.com/5189513/is-e...
My point is that if a company doesn't embrace future technologies -- and in fact actively moves to bury them -- then they will become obsolete and be surpassed by those companies who do embrace new technologies. It doesn't matter if we're talking about electric cars or horse drawn carriages, this has been a truism of industry for eternity. Adapt or die!
Staying out of the politics of this since I'm traditionally a liberal, but not thrilled with how Obama's been handling things...
But, I have to comment on how funny this one statement is, FLU...
Obama was EVERYWHERE last week pushing his new bail-out-the-banks plan... Lots of speeches, town halls, lots of Tee-Vee, Leno, 60 minutes... You couldn't hide from the man. The market went up last week (until Friday.)
Correlation does not equal Causation. He talks, the market goes up...
...or it goes down.
He stays quiet, the market goes up...
... or it goes down.
I don't think you can make a strong case for Obama speaking being the sole reason for the market swings.
Oh... one more thing... On the GM bailout, Wagoner resignation. Barry Ritholz had the best take on the whole thing.
http://www.ritholtz.com/blog/2009/03/how...
Can you imagine what we might get if we threw $200B at Tesla Motors, ZPM, EEStor and a few other alternate technology makers? Maybe nothing, or maybe we could really start to reduce non-north-american oil dependence. But it's always safer to go with what you know than to take a chance on something new. At least then you can't be criticized for failing.
I would almost prefer that we took the $200B and gave it directly to the newly unemployed workers after we let those terrible car companies simply dissolve, than waste it completely by giving it to their management, virtually all of whom are incompetent. Let the individuals use it for retraining, to move out of Detroit, or to build their bunker in the hills. But don't squander it by giving it to management.
Evidently people have a short memory. The TARP was given to both healthy and ill banks at the same time so as to make it less likely that there would be a 'run on the bank'. This also makes it harder to tell the healthy from the sick.. Because of the restrictions that were added on after the fact, many of the good banks are now trying to pay the money back. As for BofA, they were going to step out of the purchase of Merrill Lynch, but were forced to the alter via a $20Bil shotgun (otherwise BofA would not do the deal - I am amazed about how many people get this one part wrong.... I wonder if BofA now thinks $20Bil was enough to complete it). BofA is looking at starting repayments as early as this April, possibly paying it all back by fy2010/2011.... Can GM/Chrysler do the same?
Obama was EVERYWHERE last week pushing his new bail-out-the-banks plan... Lots of speeches, town halls, lots of Tee-Vee, Leno, 60 minutes... You couldn't hide from the man. The market went up last week (until Friday.)
.
Yes, yes. This was a tongue and cheek. I am fully aware of the lack of correlation. But it's just kinda funny that imho, Obama got this one right, and sort of the reaction from it.
FLU I need to retract my approval of this move by OB... it is pending further review. In essence I was hoping that OB was forcing all parties involved, (especially labor) to give in and concede to the fact that they were essentially strangling the company. After listening to the exact way OB worded things in his speech today I no longer think that is the case. I think that in some bizarre way he is wanted a reorg of the company and that the burden of the reorg will be somewhat selective.
I think we will coin a new term called Barrackruptcy. So Barrack gets to pick and choose who gets wiped out.
Like I said, pending further review.
KickSave,
I agree, there are so many layers of wasteful management positions at GM that suck up this money....
Obama said:
What more do you want him to say?
After my run-in's with Breeze I concluded the Breeze probably suffers from Bi-Polar disorder.
He called me a welfare queen and I have worked 10-12 hours a day for as long as I can remember and still do.
Breeze: Please put the crack pipe down.
The market reacted badly because the late rejection and kneejerk action on Wagoner is basically bankruptcy with management decision performed by public polling.
The administration has also telegraphed that they will basically interfere with tradition bankruptcy reorganization.
afx what I want him to say is that the government will take a hands off policy and let GM figure out what to do on its own. No aid, no tarp money, no bailout, no government running the company. Government can barely run itself.
I want him to let the company reorganize, sell of assets, and let all the creditors, bond holders, labor unions, and everyone else involved to use the infrastructure we have to move forward. This is what bankruptcy is for and this is CLEARLY a case where a company CANNOT compete.
Yes I hear the painful concessions but what scares me more is what I did not hear. I did not hear him say that no tax money will be sent to the labor unions.
So what I want him to say is that NO TAXPAYERS MONEY will be sent to GM, will be sent to gm creditors, shareholders, bond holders, or labor unions. That is what I want him to say.
I think we will coin a new term called Barrackruptcy. So Barrack gets to pick and choose who gets wiped out.
Like I said, pending further review.
Diego M posted this picture a few days ago. I thought it was hysterical.So funny, yet so sad at the same time.
http://piggington.com/ot_auto_industry_b...
To be fair.... as far as I know Ford has not taken a dime from the tax payer.
You guys are clueless. The auto bailout is nothing! It amounts to peanuts and yet you let yourselves be distracted by it.
What is much more concerning from a fiscal perspective is the bank bailout. The banks are still ripping off the taxpayers massively and you Piggs have let the government and the MSM distract you from it. I posted the following in another thread:
It's the banks (Citi, JPM, BofA, Goldman, Wells Fargo) that are going to bring this country down, not the automakers.
And anyone who thinks that Obama's dealings with the automakers somehow shows he is less 'socialist' has no idea what is going on. The automakers are still going to get their money, but the Obama administration is pulling this political stunt to distract everyone from the looting that the banks are doing. For every taxpayer dollar that the automakers get, the banks get 20-30 times that much.
Ok folks. It's even better now....
http://finance.yahoo.com/news/GM-to-make...
Following Hyundai's lead, Ford and GM are now offering to pay for your car payments if you buy a Ford/GM and lose your job.
----
General Motors says it will make car payments for some customers who lose their jobs.
The automaker's new CEO Fritz Henderson says under GM's new "Total Confidence" program, the company will make up to nine car payments of $500 each for customers who have lost their jobs through no fault of their own.
Customers must qualify for state unemployment to be eligible for the program. The program starts April 1 and runs until April 30.
The news comes hours after rival Ford Motor Co. said it would take over customers' payments of up $700 for a year in the event of job loss.
Henderson, formerly chief operating officer of General Motors Corp., replaced Rick Wagoner who stepped down Monday at the government's request as the Detroit automaker seeks more federal aid."
------------------
Translation...
Dear Comrade Taxpayers,
(Those of you who still have income and are paying taxes....)...At your earliest convenience, please subsidize your soon-to-be-unemployed neighbor's GM new car purchase! Heck, you're already subsidizing their underwater mortgage, what's another car payment to ya? Forget about saving for your own home or car purchase, spread some of the wealth and help your neighbor obtain the american dream before you do.
LOL.....