$700 Billion Bailout

[Cknolls]

I'm starting to believe more and more that bankruptcy is the best for GM's long-term viability but that would f*** the workers over in the short term. They (GM) need to be slapped around a bit, it's just that it's everyday people who'd have to pay the price.

 

 

You are talking like the everyday worker is not part of the problem. These Fu**tards that run the unions knew full well what they were doing, as did the fu**tards that head the big three. This needs to sting on both ends. If the unions won't budge, bankruptcy will come calling and quick. And the pain from that will be far greater than giving now. Remember the Steel cos. How did they do? Why wouldn't you give in on healthcare premiums, co-pays etc. This is one area where huge savings could be made in short order.

[NorthSideSox72]

You are talking like the everyday worker is not part of the problem. These Fu**tards that run the unions knew full well what they were doing, as did the fu**tards that head the big three. This needs to sting on both ends. If the unions won't budge, bankruptcy will come calling and quick. And the pain from that will be far greater than giving now. Remember the Steel cos. How did they do? Why wouldn't you give in on healthcare premiums, co-pays etc. This is one area where huge savings could be made in short order.

I actually blame the executives at the Big 3, and just behind them the union bosses, more than the union membership as a whole. The union is there to push for stuff, that's their role. The role of the executives is to push back. The system is sometimes adversarial, but usually should result in compromise.

 

The problem is, the Big 3 execs are scared to death of actually calling a bluff. So, the unions run all over them, which is how we ended up with these unwieldy contracts that are crippling the companies.

 

But at this point, the union bosses should see the writing on the wall - their actions resulted in the scales being tipped too far in their favor, and the business is in danger of going under. Now is the time they should be offerring compromise. But they aren't.

 

Meanwhile, the everyday workers are getting screwed, when all they want is to work and get paid as well as they can, just like everyone else on earth.

 

[Cknolls]

I actually blame the executives at the Big 3, and just behind them the union bosses, more than the union membership as a whole. The union is there to push for stuff, that's their role. The role of the executives is to push back. The system is sometimes adversarial, but usually should result in compromise.

 

The problem is, the Big 3 execs are scared to death of actually calling a bluff. So, the unions run all over them, which is how we ended up with these unwieldy contracts that are crippling the companies.

 

But at this point, the union bosses should see the writing on the wall - their actions resulted in the scales being tipped too far in their favor, and the business is in danger of going under. Now is the time they should be offerring compromise. But they aren't.

 

Meanwhile, the everyday workers are getting screwed, when all they want is to work and get paid as well as they can, just like everyone else on earth.

 

 

Even more reason we need EFCA. More unions =GOOD!

[lostfan]

You are talking like the everyday worker is not part of the problem. These Fu**tards that run the unions knew full well what they were doing, as did the fu**tards that head the big three. This needs to sting on both ends. If the unions won't budge, bankruptcy will come calling and quick. And the pain from that will be far greater than giving now. Remember the Steel cos. How did they do? Why wouldn't you give in on healthcare premiums, co-pays etc. This is one area where huge savings could be made in short order.

Union boss =/= guy who just wants a job to pay mortgage/buy food/etc.

[southsider2k5]

You are talking like the everyday worker is not part of the problem. These Fu**tards that run the unions knew full well what they were doing, as did the fu**tards that head the big three. This needs to sting on both ends. If the unions won't budge, bankruptcy will come calling and quick. And the pain from that will be far greater than giving now. Remember the Steel cos. How did they do? Why wouldn't you give in on healthcare premiums, co-pays etc. This is one area where huge savings could be made in short order.

 

When you are talking about ginourmous legacy costs, and a $50,000 per employee cost disadvantage, this is why bankruptcy is the best option here. A cash infusion in this case does not solve the root problem.

[Cknolls]

Barney Frank's latest nonsense:

 

WASHINGTON (AP) — A Key Democrat says a House auto industry bailout would require that U.S. automakers immediately repay $25 billion in government loans next year if they can't show they're financially viable.

 

 

WTF is he talking about. Hey Barn dog, they are already in dire striats financially, but lets give the Dem constituebcy a $25 billion payback for campaigning. Briiliant.

Edited November 18, 2008 by Cknolls

[mr_genius]

Barney Frank's latest nonsense:

 

WASHINGTON (AP) — A Key Democrat says a House auto industry bailout would require that U.S. automakers immediately repay $25 billion in government loans next year if they can't show they're financially viable.

 

and with what money are they going to pay it back with, Barney?

 

this guy is a complete joke.

 

 

 

 

 

[Soxy]

Interesting article on the Detroit bailout by Mitt Romney.

[southsider2k5]

Interesting article on the Detroit bailout by Mitt Romney.

 

I don't now that I have ever said this before, but I agree with Mitt Romney. You can't fix Detroit without fixing the underlying problems. I think he is the first person I have seen that took to task BOTH management AND employee compensation. Great Op-Ed. If they can fix those problems, then i don't mind the bailout. Without it, we will be back here again in a year or two with the exact same problem, much like the airlines.

[lostfan]

I saw today that that $72/hour figure or whatever it was is actually going to come down to about $44/hour in 2010 which is on par with the foreign companies in the US, but that GM needs a bridge to get there or the whole thing will collapse.

[kapkomet]

I saw today that that $72/hour figure or whatever it was is actually going to come down to about $44/hour in 2010 which is on par with the foreign companies in the US, but that GM needs a bridge to get there or the whole thing will collapse.

Why? Did you pick that up (the reason why) as well?

[southsider2k5]

Why? Did you pick that up (the reason why) as well?

 

I'd be curious about that as well!

[lostfan]

Why? Did you pick that up (the reason why) as well?

I can't explain in detail because I didn't hear the whole thing and I was on my way out the door this morning when I heard it but it has to do with a deal that the UAW recently made with GM, and something to do with retirement healthcare costs that are going to change (I don't remember how) which is currently why the number is so high.

[lostfan]

I can't explain in detail because I didn't hear the whole thing and I was on my way out the door this morning when I heard it but it has to do with a deal that the UAW recently made with GM, and something to do with retirement healthcare costs that are going to change (I don't remember how) which is currently why the number is so high.

The UAW is taking on retiree healthcare costs from GM. That's what's costing GM so much and skewing the number.

Edited November 19, 2008 by lostfan

[kapkomet]

I can't explain in detail because I didn't hear the whole thing and I was on my way out the door this morning when I heard it but it has to do with a deal that the UAW recently made with GM, and something to do with retirement healthcare costs that are going to change (I don't remember how) which is currently why the number is so high.

I know that they were working toward some of that. Have you ever heard of Medicare Part D? That's a boondoggle too, and I could see the Big 3 making a boatload off of that...

 

[lostfan]

I haven't. What is it?

[kapkomet]

I haven't. What is it?

It's a fund that's set up (it just started last year) where the government will reimburse for certain retiree benefits to companies who apply for it. Mostly it's in the arena of prescription drug costs, IIRC.

 

It has to be a boatload of money flowing back into these companies.

[southsider2k5]

The UAW is taking on retiree healthcare costs from GM. That's what's costing GM so much and skewing the number.

 

Wow. I had totally missed that. I think it was about the auto companies where I had read that if every single employee were to work for free, the legacy costs they had would still have the company losing money. That is a huge difference. It also changes the palatability of a bailout, because all they have to do is survive 2009 and their cost structure changes dramatically.

 

I am guessing it is only a matter of time before the UAW figures out a way to pawn off the retirement costs on to the government.

[lostfan]

I've been on the fence as far as universal/socialized insurance is concerned and I still am, but I've been saying that this UAW/GM situation is probably good ammo for the "pro" people.

[lostfan]

Wow. I had totally missed that. I think it was about the auto companies where I had read that if every single employee were to work for free, the legacy costs they had would still have the company losing money. That is a huge difference. It also changes the palatability of a bailout, because all they have to do is survive 2009 and their cost structure changes dramatically.

 

I am guessing it is only a matter of time before the UAW figures out a way to pawn off the retirement costs on to the government.

Yeah, like my last post. Although it's obviously going to mean higher taxes, really the corporations are going to have to pay for it either way.

[StrangeSox]

Wow. I had totally missed that. I think it was about the auto companies where I had read that if every single employee were to work for free, the legacy costs they had would still have the company losing money. That is a huge difference. It also changes the palatability of a bailout, because all they have to do is survive 2009 and their cost structure changes dramatically.

 

I am guessing it is only a matter of time before the UAW figures out a way to pawn off the retirement costs on to the government.

 

It's been in the news for a couple of weeks and that's one reason GM is using when pleading for this money. They will be in much better shape, both employee cost wise and model lineup wise, in 2010 if they can make it that long.

Edited November 19, 2008 by StrangeSox

[Balta1701]

I've been on the fence as far as universal/socialized insurance is concerned and I still am, but I've been saying that this UAW/GM situation is probably good ammo for the "pro" people.

That's what we've been saying since companies like Toyota started deciding to put their manufacturing facilities in Canada rather than the U.S. because it allowed them to save boatloads on their health care costs.

[Balta1701]

I think I presented what strikes me as the best argument in favor of the auto bailout a few days ago...that right now the companies simply can't get normal bankruptcy financing because of the banks, and so they have no other lender other than the government.

 

I think this example is probably the best counter-point that you could give to that. They understand the importance of the bailout for their companies, they understand their books, they even understand symbolism well enough to have the head of Ford show up in a Fusion hybrid yesterday...and yet they can't seem to understand how it's a bad idea to fly your company's private jets to D.C. for the hearings. After all, executive perks are really free, aren't they?

[Balta1701]

A fascinating point is made here.

GM currently has about $38 billion in outstanding debt. The Depository Trust and Clearing Corporation reports that on that debt, there are currently about $65 billion in credit default swaps outstanding...meaning that there are a lot of people who stand to gain a lot of money if GM goes down, and potentially a lot more insurance damage, of the sort that brought AIG to its knees, which will hit if GM goes down.

 

Frankly, that's a big point in favor of the bailout. Who wants to bet that AIG probably holds $10 or $20 billion worth of credit default swaps covering GM? In other words, we might well be paying this bailout EVEN IF we let GM et al. fail.

 

And I really wonder if anyone who happens to hold some of those CDS's on GM or the other auto companies might be sending their lobbyists in to casually lobby against the bailout to their representatives.

[NorthSideSox72]

A fascinating point is made here.

GM currently has about $38 billion in outstanding debt. The Depository Trust and Clearing Corporation reports that on that debt, there are currently about $65 billion in credit default swaps outstanding...meaning that there are a lot of people who stand to gain a lot of money if GM goes down, and potentially a lot more insurance damage, of the sort that brought AIG to its knees, which will hit if GM goes down.

 

Frankly, that's a big point in favor of the bailout. Who wants to bet that AIG probably holds $10 or $20 billion worth of credit default swaps covering GM? In other words, we might well be paying this bailout EVEN IF we let GM et al. fail.

 

And I really wonder if anyone who happens to hold some of those CDS's on GM or the other auto companies might be sending their lobbyists in to casually lobby against the bailout to their representatives.

Yet again, we have someone who knows a little, but not enough, about swaps (the author). People are undoubtedly making money on trade differential on these swaps, as well as cash flow for covering. The problem is, if there are $65B in CDS on GM debt, that means that if GM goes bankrupt and defaults on the debt... the Receiver holder on the swap will get "called" on the swap. Who is on the receiving side? Because those parties will suddenly have to PAY $65B to the Pay side holders. If they can, at the very least, they'll be out a ton of money. If they can't then the Receiver is screwed. Either way, there is going to be $65B worth of screwing going on with some IB or trading firm or whomever.

 

This is why the swaps market needs regulation. The downstream effect of defaults could be staggering.