Big Three Bailout?
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More Hope and Change
Boortz: A LETTER FROM A DODGE DEALER
Nealz Nuze ^ | May 20, 2009 | Neal Boortz
Roughly 2000 dealers (GM + Chrysler) that must liquidate both vehicle and parts inventories. Post bankruptcy the courts will. I doubt the new government run "companies" will honor warranties.
The 'new' GM and Chrysler are dead.
Boortz: A LETTER FROM A DODGE DEALER
Nealz Nuze ^ | May 20, 2009 | Neal Boortz
My name is George C. Joseph. I am the sole owner of Sunshine Dodge-Isuzu, a family owned and operated business in Melbourne, Florida. My family bought and paid for this automobile franchise 35 years ago in 1974. I am the second generation to manage this business. ....
.....On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.
Our facility was recently totally renovated at Chrysler's insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.
HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN? .....
.....On Thursday, May 14, 2009 I was notified that my Dodge franchise, that we purchased, will be taken away from my family on June 9, 2009 without compensation and given to another dealer at no cost to them. My new vehicle inventory consists of 125 vehicles with a financed balance of 3 million dollars. This inventory becomes impossible to sell with no factory incentives beyond June 9, 2009. Without the Dodge franchise we can no longer sell a new Dodge as "new," nor will we be able to do any warranty service work. Additionally, my Dodge parts inventory, (approximately $300,000.) is virtually worthless without the ability to perform warranty service. There is no offer from Chrysler to buy back the vehicles or parts inventory.
Our facility was recently totally renovated at Chrysler's insistence, incurring a multi-million dollar debt in the form of a mortgage at Sun Trust Bank.
HOW IN THE UNITED STATES OF AMERICA CAN THIS HAPPEN? .....
Roughly 2000 dealers (GM + Chrysler) that must liquidate both vehicle and parts inventories. Post bankruptcy the courts will. I doubt the new government run "companies" will honor warranties.
The 'new' GM and Chrysler are dead.
I'm still trying to figure out how the Exec Branch can take over an industry without Congress saying a word....
You know, I was one of the many screaming about Bush overstepping Constitutional authority and pushing the bounds of Exec Branch power, but now I look around, and all those that were there are now nowhere to be seen or heard from.
Is everyone that was riding Bush's ass about his perpetual executive power grab just a complete hypocrite? Where is the outrage?
You know, I was one of the many screaming about Bush overstepping Constitutional authority and pushing the bounds of Exec Branch power, but now I look around, and all those that were there are now nowhere to be seen or heard from.
Is everyone that was riding Bush's ass about his perpetual executive power grab just a complete hypocrite? Where is the outrage?
noee said:
Because there is only one party in power and the other isn't much different than the one in power?
Much more interesting is the short end of the curve and Geithner's trip to China. They laughed at him when he said the plan was to bring debt down to Bush era levels, hence no interest in the long end.
MarkP said:
Yes, my guess is what the Obama Admin did to the bond holders of Chry and GM will not be lost on the Chinese (meaning, the law no longer matters to this administration). It is no secret that they have been transitioning out of the long end to the short end and that is why we have Pelosi/Reid and now Geithner over there begging, literally, for them to get back in. It's slipping away, everybody who opens their frickin' eyes can see it. At this point, I really hope they tell us to go fuck ourselves. This madness has simply got to end.
Why are we calling this a bankruptcy?!?
Why do we allow the media to use this term and then piggy-back upon it?
In a bankruptcy, companies are restructured and/or assets sold to satisfy creditors ACCORDING TO RULE OF LAW.
This is a government takeover/bailout that is being referred to as a bankruptcy.
The losers are both creditors and taxpayers. The winners are the UAW presumably counterparties to CDS.
And who is buying Hummer and why is it being kept a secret?
We are in very dangerous, Orwellian territory here...
Why do we allow the media to use this term and then piggy-back upon it?
In a bankruptcy, companies are restructured and/or assets sold to satisfy creditors ACCORDING TO RULE OF LAW.
This is a government takeover/bailout that is being referred to as a bankruptcy.
The losers are both creditors and taxpayers. The winners are the UAW presumably counterparties to CDS.
And who is buying Hummer and why is it being kept a secret?
We are in very dangerous, Orwellian territory here...
This is nothing terribly new, it happened in Great Britain in the 70's. Previously, the many failing auto companies were merged with the few strong ones into a big giant company because of increasing international competition (sound familiar?). When this company became insolvent (also familiar?), they asked the government to take them over. The British gov DID, and it basically turned a quick death into a long slow bleeding painful death that ended up costing British taxpayers BILLIONS of pounds.
I understand the importance of maintaining a manufacturing base here in the US, and the desire to keep GM and Chrysler in business, but how is this takeover going to be any different? If this company couldn't hack it on its own, how is being run by the government going to be any better? There have been state-run car companies that have been successful in the past, but they pretty much concentrated their efforts on one or two things that they did WELL, and kept it to that. Simplicity. GM's (and the British car company) business model is so horribly convoluted with different brands and models and demographics (most of which are outdated, poorly designed, and poorly built), that unless they scrap most of that and live with the Chevy Volt and start making K9 blazers again, I think they're sunk!
I understand the importance of maintaining a manufacturing base here in the US, and the desire to keep GM and Chrysler in business, but how is this takeover going to be any different? If this company couldn't hack it on its own, how is being run by the government going to be any better? There have been state-run car companies that have been successful in the past, but they pretty much concentrated their efforts on one or two things that they did WELL, and kept it to that. Simplicity. GM's (and the British car company) business model is so horribly convoluted with different brands and models and demographics (most of which are outdated, poorly designed, and poorly built), that unless they scrap most of that and live with the Chevy Volt and start making K9 blazers again, I think they're sunk!
http://www.gregpalast.com/grand-theft-auto-how-stevie-the-rat-bankrupted-gm/
While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders ? led by Morgan and Citibank ? expect to get back 100% of their loans to GM, a stunning $6 billion.
When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what's left. That's the law. What workers don't lose are their pensions (including old-age health funds) already taken from their wages and held in their name.
But not this time. Stevie the Rat has a different plan for GM: grab the pension funds to pay off Morgan and Citi.
Here's the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replaced by GM stock. The percentage may be 17% of GM's stock - or 25%. Whatever, 17% or 25% is worth, well ... just try paying for your dialysis with 50 shares of bankrupt auto stock.
Yet Citibank and Morgan, says Rattner, should get their whole enchilada - $6 billion right now and in cash - from a company that can't pay for auto parts or worker eye exams.
So what's wrong with seizing workers' pension fund money in a bankruptcy? The answer, Mr. Obama, Mr. Law Professor, is that it's illegal.
In 1974, after a series of scandalous take-downs of pension and retirement funds during the Nixon era, Congress passed the Employee Retirement Income Security Act. ERISA says you can't seize workers' pension funds (whether monthly payments or health insurance) any more than you can seize their private bank accounts. And that's because they are the same thing: workers give up wages in return for retirement benefits.
Which leaves us to ask the question: is the forced bankruptcy of GM, the elimination of tens of thousands of jobs, just a collection action for favored financiers?
While GM workers are losing their retirement health benefits, their jobs, their life savings; while shareholders are getting zilch and many creditors getting hosed, a few privileged GM lenders ? led by Morgan and Citibank ? expect to get back 100% of their loans to GM, a stunning $6 billion.
When a company goes bankrupt, everyone takes a hit: fair or not, workers lose some contract wages, stockholders get wiped out and creditors get fragments of what's left. That's the law. What workers don't lose are their pensions (including old-age health funds) already taken from their wages and held in their name.
But not this time. Stevie the Rat has a different plan for GM: grab the pension funds to pay off Morgan and Citi.
Here's the scheme: Rattner is demanding the bankruptcy court simply wipe away the money GM owes workers for their retirement health insurance. Cash in the insurance fund would be replaced by GM stock. The percentage may be 17% of GM's stock - or 25%. Whatever, 17% or 25% is worth, well ... just try paying for your dialysis with 50 shares of bankrupt auto stock.
Yet Citibank and Morgan, says Rattner, should get their whole enchilada - $6 billion right now and in cash - from a company that can't pay for auto parts or worker eye exams.
So what's wrong with seizing workers' pension fund money in a bankruptcy? The answer, Mr. Obama, Mr. Law Professor, is that it's illegal.
In 1974, after a series of scandalous take-downs of pension and retirement funds during the Nixon era, Congress passed the Employee Retirement Income Security Act. ERISA says you can't seize workers' pension funds (whether monthly payments or health insurance) any more than you can seize their private bank accounts. And that's because they are the same thing: workers give up wages in return for retirement benefits.
Which leaves us to ask the question: is the forced bankruptcy of GM, the elimination of tens of thousands of jobs, just a collection action for favored financiers?
Jeff,
What he's saying is, that bankruptcy law is being circumvented in these cases (GM and Chry), therefore, calling it such is a misnomer. One example is the way the bond holders are being taken out. According to bankruptcy law and the law concerning these holders, they are "first in line" to be repaid. The .gov (Obama admin) threw this out the window, in both cases, basically told them to "fuck off."
These "structured bankruptcies" are really nothing more than the takeover by the gov't with the equity players, bond holders and taxpayers being corn-holed. Same thing that has happened with the banks.
SCSL, I don't mean to put words in your mouth.
What he's saying is, that bankruptcy law is being circumvented in these cases (GM and Chry), therefore, calling it such is a misnomer. One example is the way the bond holders are being taken out. According to bankruptcy law and the law concerning these holders, they are "first in line" to be repaid. The .gov (Obama admin) threw this out the window, in both cases, basically told them to "fuck off."
These "structured bankruptcies" are really nothing more than the takeover by the gov't with the equity players, bond holders and taxpayers being corn-holed. Same thing that has happened with the banks.
SCSL, I don't mean to put words in your mouth.
Everyone repeat after me...Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt, Chevy Volt......
noee said:
No worries. You nailed it. Though I would have been less diplomatic in stating that these "pre-packaged bankruptcies" are nothing less than the elimination of rule-of-law and the confiscation of wealth by government diktat. Such actions will have varied and unpredictable consequences on the behavior of investors for decades to come.
The chickens will then come home to roose for "taxpayers" (that's us... formerly sovereign Americans until the 14th amendment determined we were 'citizens', or more currently 'taxpayers').
One example -- look at the state of California. Bankrupt. Insolvent. What can they do? Well, they can raise money in the capital markets, but how many investors are likely to step up given how they were treated in the auto fiasco? California will also have its stealth bail-out. While unlikely a direct Federal transfer, California's bonds will be backed (by your future earnings).
It is in this manner, Mike, that you in Virginia will pay for some Californian's state-subsidized day care, or the pension of some retired dog-catcher in Bakersfield.
SCSL said:
There is a pattern now.
First it was laundering taxpayer money through AIG to the big banks. The distraction was the Millions in bonuses to AIG executives while the real story was the Billions in TARP provided to AIG that was then transferred to the big banks.
Now we have the GM and Chrysler "bankruptcy" that will also transfer pension funds to the big banks.
So "Change" is simply Crony Capitalism with roots in Ivy League schools.
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