$700 Billion Bailout

[kapkomet]

What I can't believe is what so many people here are advocating, essentially going back on the word of a company who expected and received decades of loyalty from their employees in exchange for health benefits and a pension. It's sad that this is seen as unacceptable by so many here.

 

Toyota/Honda/Nissan's advantage? They don't have nearly a century of history behind them of building cars in the US and don't have those legacy costs. In 15 years, they will.

 

Chrysler got a bailout loan thirty years ago and it worked for them for quite some time.

No where in my post did I say that. I just said the business model that they have today doesn't work.

 

[southsider2k5]

What I can't believe is what so many people here are advocating, essentially going back on the word of a company who expected and received decades of loyalty from their employees in exchange for health benefits and a pension. It's sad that this is seen as unacceptable by so many here.

 

Toyota/Honda/Nissan's advantage? They don't have nearly a century of history behind them of building cars in the US and don't have those legacy costs. In 15 years, they will.

 

Chrysler got a bailout loan thirty years ago and it worked for them for quite some time.

 

In 15 years, they won't have those costs. The legacy costs are a direct product of labor pushing for and receiving concessions from the car companies in the 50's and 60's for things like full pensions and health care for life.

[mr_genius]

People just don't recognize the economic realities involved. I mean it's great that people all think UAW workers should have superior benefits to all other comparable industries; if you think this is the case you can at least buy American cars to show your support. It’s sad that people will still blindly support these unions merely for political reasons. Reasonable adjustments to benefits certainly seem appropriate right now, it's not some evil plan to destroy people. The Japanese business models are better, they will not be bankrupt in 15 years. The reality is that companies need to adjust retirement and benefit packages when they are losing money at this type of devastating pace. If not they go bankrupt and reorganize.

 

 

Doesn't matter though, GW Bush is going to go along with whatever before he gets out of office and pass this on to Obama.

Edited December 13, 2008 by mr_genius

[southsider2k5]

People just don't recognize the economic realities involved. I mean it's great that people all think UAW workers should have superior benefits to all other comparable industries; if you think this is the case you can at least buy American cars to show your support. It’s sad that people will still blindly support these unions merely for political reasons. Reasonable adjustments to benefits certainly seem appropriate right now, it's not some evil plan to destroy people. The Japanese business models are better, they will not be bankrupt in 15 years. The reality is that companies need to adjust retirement and benefit packages when they are losing money at this type of devastating pace. If not they go bankrupt and reorganize.

 

 

Doesn't matter though, GW Bush is going to go along with whatever before he gets out of office and pass this on to Obama.

 

You actually hit on my favorite part of all of this. We get to hear things like "why is it so bad that these guys make as much money as they do?" and all of the other class warfare type stuff that goes along with these debates, and the bottom line is that if people REALLY believed in these workers, they would be buying American cars. THAT is the one bailout that will actually work. If you don't care about American autoworkers, keep buying Toyota's and Honda's.

[Balta1701]

You actually hit on my favorite part of all of this. We get to hear things like "why is it so bad that these guys make as much money as they do?" and all of the other class warfare type stuff that goes along with these debates, and the bottom line is that if people REALLY believed in these workers, they would be buying American cars. THAT is the one bailout that will actually work. If you don't care about American autoworkers, keep buying Toyota's and Honda's.

As soon as they make a car that would actually interest me, I will. Assuming they don't go bankrupt and push us all in to depression that is.

 

And I believe the launch date for the first car from these companies that will actually interest me is what, 2010?

[southsider2k5]

As soon as they make a car that would actually interest me, I will. Assuming they don't go bankrupt and push us all in to depression that is.

 

And I believe the launch date for the first car from these companies that will actually interest me is what, 2010?

 

Which is funny. People say they won't buy an inferior product, so they buy Japanese cars instead. Yet we expect the government to take our money and support a product that no one seemingly wants. Sure, that makes perfect sense to me. If the auto companies are that important, buy a damned Chevy. Its BS that the expectation is that someone else pays for these auto-workers. If you want to buy a Toyota or Honda, that is your choice, but don't expect Congress to fix things when the country's decision making actually has the common sense results that come from it.

[Rex Kickass]

I'm actually excited about a couple cars in the GM lineup for 2010 - The Chevy Volt, which is the next new car I plan to purchase, and I think the upcoming Camaro is hot hot hot.

 

For all the people that want to place the blame solely on the UAW. Without the UAW giving certain benefits to its workers, how do you think things got as tolerable for non-union plant workers for foreign makes? If the UAW goes, working conditions across all US auto manufacturers will begin to disintegrate.

[NorthSideSox72]

Another frustrating aspect of this is the punishment of success. Look at Ford. Note that these bailout discussions are all about GM and Chrysler, because Ford doesn't need it (at least not nearly as badly). Ford was in a bad way about 5 years ago, and look what they did:

 

--Leaned their staff numbers

--Beat the other American car companies to the hybrid market

--Put themselves, now, at the TOP of the quality lists, right there with Toyota and Honda

 

Now, I am sure it hurt along the way for Ford. People lost jobs, etc. But they struggled their way out, and are now much more successful than the other 2 of the Big 3.

 

And what do they get? They get to see their competitors given an advantage by the government that they never got.

 

[NorthSideSox72]

Another frustrating aspect of this is the punishment of success. Look at Ford. Note that these bailout discussions are all about GM and Chrysler, because Ford doesn't need it (at least not nearly as badly). Ford was in a bad way about 5 years ago, and look what they did:

 

--Leaned their staff numbers

--Beat the other American car companies to the hybrid market

--Put themselves, now, at the TOP of the quality lists, right there with Toyota and Honda

 

Now, I am sure it hurt along the way for Ford. People lost jobs, etc. But they struggled their way out, and are now much more successful than the other 2 of the Big 3.

 

And what do they get? They get to see their competitors given an advantage by the government that they never got.

And sure enough...

 

$17.4B from the TARP fund will go to GM and Chrysler in the form of loans. They need to show viability by March 31, or will be forced to repay immediately, which is of course a joke because then they couldn't pay for it anyway.

 

Ford gets nothing.

 

[Balta1701]

And sure enough...

 

$17.4B from the TARP fund will go to GM and Chrysler in the form of loans. They need to show viability by March 31, or will be forced to repay immediately, which is of course a joke because then they couldn't pay for it anyway.

 

Ford gets nothing.

Like it or not this was the right thing to do. This one is arguably significantly more important of a step than the bailout of the banks.

[southsider2k5]

Like it or not this was the right thing to do. This one is arguably significantly more important of a step than the bailout of the banks.

 

These two things aren't even in the same universe. Without the banks, the auto industry would have failed anyway. Heck it was the problems in the banking industry that really were the last straw for the US auto companies. I know that three million employee figure keeps getting thrown about, but if the banking industry collapsed, the three million autoworker related jobs would have been a very small part of the people thrown into unemployment.

[Balta1701]

These two things aren't even in the same universe. Without the banks, the auto industry would have failed anyway. Heck it was the problems in the banking industry that really were the last straw for the US auto companies. I know that three million employee figure keeps getting thrown about, but if the banking industry collapsed, the three million autoworker related jobs would have been a very small part of the people thrown into unemployment.

My issue with this statement is that the longer we go on after having passed TARP, the more the data comes out showing that not only was the "crisis" dramatically overstated (the consumer lending markets were no where near "frozen" as we were told), but on top of it, the TARP funds have been so badly wasted by the Treasury Dept. that it's hard to believe that if there had been a real crisis they would have made a difference.

[southsider2k5]

My issue with this statement is that the longer we go on after having passed TARP, the more the data comes out showing that not only was the "crisis" dramatically overstated (the consumer lending markets were no where near "frozen" as we were told), but on top of it, the TARP funds have been so badly wasted by the Treasury Dept. that it's hard to believe that if there had been a real crisis they would have made a difference.

 

I don't think we are reading the same things because I still see problems lending money all over the place. I keep seeing companies and projects frozen because of lending problems.

[NorthSideSox72]

My issue with this statement is that the longer we go on after having passed TARP, the more the data comes out showing that not only was the "crisis" dramatically overstated (the consumer lending markets were no where near "frozen" as we were told), but on top of it, the TARP funds have been so badly wasted by the Treasury Dept. that it's hard to believe that if there had been a real crisis they would have made a difference.

You keep talking about the TARP funds as a banking bailout, as if it were about saving the banking industry. That way, you can compare it to, say, the auto industry. But that is not the case, and that key difference is what you seem to be missing. That difference is that the US could survive with the auto industry in serious distress. The US economy could NOT survive with the financial industry in the same level of distress, because the entire economy is predicated on its strength.

 

They are just not remotely the same.

 

[ChiSox_Sonix]

Like it or not this was the right thing to do. This one is arguably significantly more less important of a step than the bailout of the banks.

 

 

Fixed.

 

These two are not even remotely related.

[StrangeSox]

I don't think we are reading the same things because I still see problems lending money all over the place. I keep seeing companies and projects frozen because of lending problems.

 

Every day on NPR is a story about how great rates are right now but how you need a 750+ score to qualify. I've also noticed significantly less CC junk mail the past several months.

 

I have to agree with everyone who is saying that the auto industry is an entirely different animal than the auto industry. If the US banking system failed, I'd imagine it would quickly spark a deep, world-wide depression.

Edited December 19, 2008 by StrangeSox

[kapkomet]

Every day on NPR is a story about how great rates are right now but how you need a 750+ score to qualify. I've also noticed significantly less CC junk mail the past several months.

 

I have to agree with everyone who is saying that the auto industry is an entirely different animal than the auto industry. If the US banking system failed, I'd imagine it would quickly spark a deep, world-wide depression.

I'll tell you what, it really pisses me off that I just lost my job and have to verify income. If not, I would be refinancing because I have a damn good credit score and the value on my house to back it up. I would LOVE a 4.xx% note.

 

[mr_genius]

And sure enough...

 

$17.4B from the TARP fund will go to GM and Chrysler in the form of loans. They need to show viability by March 31, or will be forced to repay immediately, which is of course a joke because then they couldn't pay for it anyway.

 

 

Also, there is no precise definition of what 'viable' is. Basically, no matter what they do or how much money they lose they are going to get a score of 'viable'. this bailout is just another bad decision within an epic string of bad decisions by Bush.

Edited December 19, 2008 by mr_genius

[jasonxctf]

I don't think we are reading the same things because I still see problems lending money all over the place. I keep seeing companies and projects frozen because of lending problems.

 

 

no doubt about it.. in commercial lending (businesses, non-profits, munis, etc) you've got 2 things going on at the same time..

 

1) bank lending rates are going up, and will go up even higher post 1/1 with the FDIC insurance program 100bps charge going into effect. businesses still think they can borrow at prime or prime + 150bps. Not anymore. If you are a business and can get a loan (requiring 20-30% down) for less than 6.50%, you're fortunate. It will be 7-7.50% by mid Spring.

 

2) lending restrictions are tighter than ever... its not just credit score. its revolving debt, debt/equity ratios, % avail, etc.

 

I can tell you that in the past 30 days, I've had numerous customers declined for lending with personal credit scores exceeding 720. One was a plastic surgeon who was taking $350k a year out of his practice as personal income. His problem, over $250k of revolving credit card debt. No one would touch him with a ten foot pole. He was looking for $125k for a tech upgrade for the practice.

 

Also, personal credit scores are starting to go down for no fault of your own. Banks are re-evaluating home equity lines of credit. If the bank gave you a LOC for $100k, and you've got a $35k balance, they may re-evalute, due to the loss in value of your home, and drop the line down to your current balance right away. Thus you are instantly maxed out. That kills your score too.

[Balta1701]

The AP has spent some time doing some digging in to where the hundreds of billions of dollars spent on bailouts so far has gone. Their answer? Aside from some chunk going in to $1.6 billion in executive bonuses, no one seems to have a clue or is willing to say.

The Associated Press contacted 21 banks that received at least $1 billion in government money and asked four questions: How much has been spent? What was it spent on? How much is being held in savings, and what's the plan for the rest?

 

None of the banks provided specific answers.

 

"We're not providing dollar-in, dollar-out tracking," said Barry Koling, a spokesman for Atlanta, Ga.-based SunTrust Banks Inc., which got $3.5 billion in taxpayer dollars.

 

Some banks said they simply didn't know where the money was going.

 

"We manage our capital in its aggregate," said Regions Financial Corp. spokesman Tim Deighton, who said the Birmingham, Ala.-based company is not tracking how it is spending the $3.5 billion it received as part of the financial bailout.

[mr_genius]

The AP has spent some time doing some digging in to where the hundreds of billions of dollars spent on bailouts so far has gone. Their answer? Aside from some chunk going in to $1.6 billion in executive bonuses, no one seems to have a clue or is willing to say.

 

 

"JACKPOT!"

[NorthSideSox72]

The AP has spent some time doing some digging in to where the hundreds of billions of dollars spent on bailouts so far has gone. Their answer? Aside from some chunk going in to $1.6 billion in executive bonuses, no one seems to have a clue or is willing to say.

I really wish that the TARP funding would have required that this money be specifically tracked for its use, to see how it made them any different than they were pre-funding.

 

[Flash Tizzle]

As soon as they make a car that would actually interest me, I will. Assuming they don't go bankrupt and push us all in to depression that is.

 

And I believe the launch date for the first car from these companies that will actually interest me is what, 2010?

Which concept car is this, the Camaro?

 

 

 

 

[mr_genius]

Which concept car is this, the camaro?

 

[Balta1701]

Which concept car is this, the Camaro?

The Volt.