Big Three Bailout?

[SGaynor]

What I don't really understand is why fire Wagoner now? GM has two months to negotiate extremely complex deals with multiple groups (union, bondholders, dealers, parts suppliers) and the lead guy, who all trusted and respected, is gone? Who's going to replace him and that good will in less than a month? Seems like GM is being set up to fail.

I'm also waiting for the shoe to drop on the gov't reason why GM can't continue. If it was due to too much debt, then that is an issue with the other parties not willing to give concessions (take less $, less benefits, etc), and can be solved in bankruptcy. If on the other hand, GM wasn't planning on making more "Green" or green enough cars (read: fewer trucks/SUVs), then this is just central planning; it will doom GM.

Finally, why not the tough love with the banking/finance industry? We've thrown $170Bln at one company - AIG - and the main people that wrote the CDSs are still in place (and getting bonuses), yet the auto industry (which employs more people), who has asked for what, less than $40 Bln (?), gets pilloried? Is it because cars don't fit the Green/liberal agenda?

 

[az_max]

Finally, why not the tough love with the banking/finance industry? We've thrown $170Bln at one company - AIG - and the main people that wrote the CDSs are still in place (and getting bonuses), yet the auto industry (which employs more people), who has asked for what, less than $40 Bln (?), gets pilloried? Is it because cars don't fit the Green/liberal agenda?

Because none of Obama's team or any member of congress is from the auto industry. They're all from high finance.

 

[Nomar]

http://www.youtube.com/watch?v=rAqPMJFaEdY

 

[MarkP]

What to do with all those vehicles pilling up ......


U.S. government to waste $285 million on 17,600 American-made autos

In yet another foolish attempt to stimulate the economy, President Obama says the Government Will Buy 17,600 American-Made Autos.....

“This is only a first step, but I will continue to ensure that we are working to support the American auto industry during this difficult period of restructuring."​

So the government will be buying up the inventory? Since I'm the taxpayer, how do I get one of these vehicles? Can I specify model, options, color and trim?

 

[Blue]

So the government will be buying up the inventory? Since I'm the taxpayer, how do I get one of these vehicles? Can I specify model, options, color and trim?

LOL....no thanks....I'd prefer to just donate mine and take the write-off.

 

[GotRovr]

So the government will be buying up the inventory? Since I'm the taxpayer, how do I get one of these vehicles? Can I specify model, options, color and trim?

New Government Lottery, to qualify, you need to be currently unemployed or currently making minimum wage. Be able to fill out 30 or so pages of census questions or have someone do it for you because you either can't read and write in the english language, are way too stoned from your daily early morning bong hit, or just plain don't have a fucking clue. Then wait in line with 800,000 supposively US citizens.

 

[MarkP]

DrudgeReport headline:

GM TO CLOSE MOST FACTORIES FOR SUMMER​

This is going to kill the subcontractors.

 

[az_max]

DrudgeReport headline:

GM TO CLOSE MOST FACTORIES FOR SUMMER​

This is going to kill the subcontractors.

9 weeks according to AP.

http://www.caymanmama.com/2009/04/22/gm-to-temporarily-close-most-us-factories_200904224529.html

but:

The exact date that the factories will close is not yet known, but the sources said it will likely occur near the normal two-week shutdown in July to switch from one model year to the next.

so an additional 7 weeks besides the normal shutdown.

 

[MarkP]

Your now the proud owner of Government Motors ...

Government, UAW To Own 89% Of GM In Restructuring
Start Thinking Right ^ | April 27, 2009 | Michael Eden​

Either GM dies a slow death like British Leyland or competitors are slowly sucked under as they have to compete with a company warped by government money.

Either way, not good.

 

[noee]

Another GSE. Hmmm, just what we need, especially since the two very prominent GSEs in the news lately are such effective models to emulate. Let's see, they bow to no regulators and they funnel money and prizes back to their Congressional-masters and UAW cronies. Yeah, sounds like a good plan. Maybe we can get some staffers or lobbyists to sit on the board.

Just like Fannie and Freddie, this will be just another cesspool of gov't corruption and fraud. Pathetic what has become of this country.

 

[SGaynor]

So, now that it has been announced that the UAW will own 55% of Chrysler, and 40% of GM, this raises the question:

How can the UAW represent labor AND management at the same time? Who will they pillory when they have to pay insurance premiums? get pay cuts? Can't blame the MAN, since they are the Man.

This should be interesting in the future to see the UAW justify any benefit changes (increase or decrease).

 

[mbrummal]

x2

opcorn:

 

[az_max]

So, now that it has been announced that the UAW will own 55% of Chrysler, and 40% of GM, this raises the question:

How can the UAW represent labor AND management at the same time? Who will they pillory when they have to pay insurance premiums? get pay cuts? Can't blame the MAN, since they are the Man.

This should be interesting in the future to see the UAW justify any benefit changes (increase or decrease).

I've been saying that for a while. If the UAW thinks they can run the factories better, they should buy it. Now's there chance.

 

[EJB90]

The Foxwoods Casino employees are part of the UAW. Tell me how that works... I don't know.

Now the Indians are running the car companies too.

 

[MarkP]

Appears taxpayer bailout money is now 100% lost in the bankruptcy and the Obama administration is trying to railroad their solution.

New Allegations Of White House Threats Over Chrysler
Business Insider

Creditors to Chrysler describe negotiations with the company and the Obama administration as "a farce," .....

....One participant in negotiations said that the administration's tactic was to present what one described as a "madman theory of the presidency" in which the President is someone to be feared because he was willing to do anything to get his way. The person said this threat was taken very seriously by his firm. .....​

Chrysler: Now We're Cooking

"either agree to this or the IRS will crawl up all your orifices!"​

The bondholders are multi-faceted, from teachers to firefighters to investment funds.

Also read that the UAW pensioners are organizing to defend their pensions.

 

[SGaynor]

WaPo Editorial (highlights mine):

Road Hazards Ahead

President Obama may call them 'speculators,' but the economy needs private investors.

Thursday, May 14, 2009

DESPITE a massive infusion of government cash, General Motors is slowly and almost assuredly limping toward bankruptcy. The company's stock has been hovering just above the $1 mark for the past few days, and chief executive Fritz Henderson has signaled that bankruptcy court may be the best -- or perhaps only -- venue in which the company can come to terms with its creditors. GM -- and its partner, the U.S. government, which could get as much as a 50 percent equity stake in the company -- have set themselves a deadline at the end of this month to decide what to do.

And therein lies the potential danger. The government's intervention in GM's financial affairs tilts the scales so dramatically in the company's (read: government's) favor that it risks shutting out the legitimate interests of some creditors in favor of politically connected players who are owed much less and have less of a claim to the company's money. GM bondholders, for example, are being pushed to accept a 10 percent equity stake in repayment of their $27 billion in loans to the company. The United Auto Workers, on the other hand, is being offered a 35 percent equity stake in exchange for its claim of roughly $10 billion -- a claim that would typically be wiped out in bankruptcy. It is hard to blame bondholders for refusing to cave in to the government's pressure, especially because some of them bought insurance against a possible GM bankruptcy; that insurance would pay them more than $2 billion in cold, hard cash -- instead of in potentially worthless stock should the company file for Chapter 11 protection.

There is reason for GM creditors to be uneasy, especially after the government's hardball tactics in the recent Chrysler bankruptcy. In that case, hedge fund investors who refused to accept the government's low-ball offers were demeaned by the president as "speculators" and all but blamed for driving the automaker into insolvency. Once in bankruptcy court, these creditors fared no better, in large part because the government's decision to provide operating funds for Chrysler gives it an outsized power to shape the reorganization. While the hedge funds are likely to receive less than 30 cents on the dollar, a health-care fund controlled by the UAW is being handed a 55 percent ownership stake in Chrysler. If bankruptcy rules had been strictly followed, the union would have been entitled to little, if any, return.

Extraordinary times call for extraordinary measures, and it was with this thought in mind that we endorsed the federal government's decision to pump billions of dollars into the automakers. But the spectacle of creditors being stripped of their legal rights in favor of a labor union with which the president is politically aligned does little to attract private capital at a time when the government and many companies need these investors the most. Investors' fears will only be compounded if the administration follows a similar blueprint with GM.

 

[MarkP]

An investor would be insane to go near anything that smells of government involvement.

Senior means nothing.

The other impact will be significantly higher risk premiums.

 

[MarkP]

So much for investors ....

GM bankruptcy plan eyes quick sale to government
Reuters
Tue May 19, 2009

...plans include a quick sale of the automaker's healthy assets to a new company owned by the U.S. government...

...plan also called for the government to forgive the bulk of $15.4 billion emergency loans...

...include giving stakes in the new company to GM's union and bondholders...

...In addition, the government would extend a credit line to the new company...

...new company ... is aimed at reassuring consumers who might not be willing to make a major purchase...​

I was joking when I said GM was Government Motors. Well ...... appears the plan IS government motors.

GM is dead.

 

[noee]

Said it before or read it somewhere.........

GM, along with Chry become just another GSE. The model works so well, why not continue to implement it?

The great thing about a GSE is, amongst others, the fact that you have no regulations to deal with. Oh, and you get political parties to sit on the Board so that when you get nailed for FASB violations, there's always someone there to run the gauntlet.

Party über alles.

 

[Blue]

An average of about 12% of US workforce is unionized today, down from about 36% in the 1940's. About 7% of private companies are unionized. About 17% of California workers are unionized and about 37% of government employees are unionized. Anyone see any connections to current events?