We have to save the 3 largest U.S. auto companies, and we can.

But we need to have strict impositions on the terms and use of the money. The UAW must be reigned in so that GM, Ford and Chrysler are not saddled with much higher labor and benefit costs than their foreign competitors (who build cars in the U.S. also, even though the profits go out of this country).

If the Big 3 representatives don't have the cajones to speak truth to the union, and make real progress, this is the opportunity of a lifetime.

You all really do not want GM, Ford and Chrysler, along with many of their suppliers, as well as the businesses that depend on those employees (diners to shops to many, many other family owned businesses) to go under...

...even if talking heads on TV or in newspapers claim otherwise.

And look at it this way - GM, Ford and Chrysler are asking for A LOAN of 1/28th the size of the 700 Billion Dollar of the NON-LOAN that the likes of Goldman Sachs, JP Morgan, Citigroup, Morgan Stanley & the rest of the Wall Street Gang that Couldn't Shoot Straight have received. Think about that. Can you really say it's fair to abandon the big 3 after giving more than 2 trillion to Banks and over a trillion to walls street investment firms that gambled their money away on subprime mortgages and other toxic assets?

It really is a matter of perspective.

I do agree that GM, Ford and Chrysler need to restructure their labor pacts completely - and if they can't on their own, let Congress insist on it. They'll be better off for it and so will we.

Each GM car includes $3000-5000 in BLOATED UAW retiree benefits and pensions. Thats one of the MAIN reasons that GM (and Ford/Chrysler) is uncompetitive.

Their current UAW contract includes things like paying 8000-10000 workers for "make work"/do nothing positions.

The government should ONLY give them Bridge Financing, AFTER they have entered Chapter 11, torn up all those UAW contracts, cleaned up management, and gotten realistic.

BTW here is the article I was referring to in my earlier post:

This one talks about how many cars are out there and how the slowed rate of growth directly affects that shrinking number which the US Automakers will have to compete:

http://blogs.moneycentral.msn.com/topstocks/archive/2008/11/17/w...

Here is the article which states how much bonuses are due to the Chrysler CEO's:

http://blogs.moneycentral.msn.com/topstocks/archive/2008/11/14/c...

Shahhere

shahhere, the government bailed out Chrysler with a loan in the early 80s. It saved hundreds of thousands of jobs, Chrysler paid the loan back, and things worked out - but Chrysler was not faced with the systemic credit crisis the big are today.

Countries that lose their manufacturing base ultimately are reduced to shadows of their former mighty selves, no matter what those endorsing a 'green revolution' with unseen jobs and unseen production facilities (for the most part) claim.

Manufacturing is essential.

As far as the bankruptcy issue, it is pretty credible that few people would trust an auto warranty if the company backing it is in bankruptcy. So, I do not see how that would add a further, crushing blow to any car company's chance of survival.

I completely agree that the UAW labor pacts need to go. I'm just saying that there are ways to accomplish that short of bankruptcy, which won't let these companies survive to live to fight again.

JesseLivermore said: We have to save the 3 largest U.S. auto companies, and we can.

But we need to have strict impositions on the terms and use of the money. The UAW must be reigned in so that GM, Ford and Chrysler are not saddled with much higher labor and benefit costs than their foreign competitors (who build cars in the U.S. also, even though the profits go out of this country).

So you're for government help in Chapter 11 bankrupcy. Good, so am I.


JesseLivermore said:You all really do not want GM, Ford and Chrysler [to go under]

You are right, I do not want them to. Jobs will be lost and people will be hurt. But I would much rather get it done with now than to put them on life support in the hope that they MAY be able to stand on their own in the future. In the same sense, I've never wanted to go to war. But if I had been alive in the 1940's, I would have supported getting into WWII, not because I liked it, but because it was better than the alternative.

JesseLivermore said: And look at it this way - GM, Ford and Chrysler are asking for A LOAN of 1/28th

They already got loan commitments of 25 billion. So 1/14 in total.


JesseLivermore said:the size of the 700 Billion Dollar

Paulson has come out and said he doesn't want 1/2 of the total and won't give it out. If the next administration uses the money, it will most likely go to loan modifications, not to banks. So 1/7th.

JesseLivermore said:of the NON-LOAN that the likes of Goldman Sachs, JP Morgan, Citigroup, Morgan Stanley & the rest of the Wall Street Gang that Couldn't Shoot Straight have received. Think about that. Can you really say it's fair to abandon the big 3 after giving more than 2 trillion to Banks and over a trillion to walls street investment firms that gambled their money away on subprime mortgages and other toxic assets?

AIG was loaned money, at a very high interest rate originally if I remember correctly. It also depends on how you define loan. They bought perfered stacks in the companies, that in my understanding pay interest. They are similar to loans that pay interest, but don't have a maturity.

Also, Fed injections are very short term loans, IIRC.

You are also making a very bad assumption - that everyone that is against bailing out the big three were for bailing out the financials. Many people are against both. Your whole argument righ here, in my opinion, is completly selfish. One wrong (the first bailout) does not justify another another (the second).

JesseLivermore said:I do agree that GM, Ford and Chrysler need to restructure their labor pacts completely - and if they can't on their own, let Congress insist on it. They'll be better off for it and so will we.

Once again, that is basicly what Chapter 11 is. I'm glad we agree.

Braney Frank this morning on NPR said that $25B is just a loan with us as a number 1 creditor so that we ar first when payback time comes.
Then he said that we want to give auto industry $25B in loan instead of Bankrptcy chapter-11. By March of 2009 they need to come back with plan. If plan looks viable then we will throw more money at them other wise they need to give back those $25B.

Mr. Barney Frank fails to realize that in March Auto industry can file for Bankrptcy keeping out $25B and there is nothing we can do about it.

Tri is ina ahole of -$60B and everyone knows that 25B is not going to change anything.
Executives would take those money in bonuses and they will still lay off workers if not now then in few months down the road.

American people are frustrated and I think Revolution is the only answer as our govrnment is not listening to will of the PEOPLE.

From Cato blog I found this interesting Reuters article. Honda opens new U.S. plant as Detroit seeks bailout.

"The rest of the country may have been debating the possible bankruptcy of America's iconic automakers on Monday, but in southeast Indiana more than 1,000 U.S. workers were cheering the opening of Honda's newest assembly plant."

"But for the Honda workers here, their jobs -- with a starting wage of $18.41 an hour -- are just as much part of the U.S. auto industry as those at their imperiled Detroit competitors. They just don't get as noticed."

"According to 2007 figures compiled by the Center for Automotive Research, foreign automakers including Honda, Toyota and Nissan employed some 113,000 workers in the United States, about half of the 239,000 employed by Detroit's Big Three."

"Cooper said it is too simplistic to say a bailout of Detroit is bad for the Japanese automakers -- because they, too, rely on suppliers that may go out of business if one of the Big Three fails. Besides, she said, the transplants seem to cope well even when the playing field is not level."

tazzy531 said:
P.S.
By the way, bankruptcy reorganizations can be enormously expensive. I was previously involved in a reorganization of a well known company in which just my firm's legal fees in connection with our representation of the lead lender in DIP financing exceeded $1MM (plus another $1MM in legal fees to structure exit financing). In another reorganization that I was involved in we once had a legal bill of about $700,000 after just ONE MONTH. In 2006 United Airlines paid about $100MM to its law firm, which was both its lead bankruptcy counsel and the aircraft-lease counsel. Delta paid about $45MM to its lead counsel and another $25MM to its aircraft-lease counsel. The primary counsel for the Delta Pilots’ Pension Preservation Organization billed over $1MM.

Thats another problem! Lawyers.

Just so I'm clear:

1) The Treasury & Fed Reserve have already injected 2 trillion into commercial and investment banks and brokerage firms, in one form or another, despite the advertised '700 billion bailout of Wall Street,' and that figure is certain to rise.

2) There is ZERO question that the Union's death grip on the Big 3 needs to be broken, forcibly.

3) There is ZERO question that the Big 3 needs to retool their plants to build vehicles that consumers desire, and that have improved quality. Ford and GM have improved their vehicle quality, IMO, but have a ways to go.

4) There is ZERO question, to be fair, that because of their already precarious balance sheets, the Big 3 were much more vulnerable to the credit crisis and economic downturn than their foreign competition. We can argue about fault now, but it's too late to do that if we really are interested in helping to save millions of jobs and a critical (IMO) American Industry.

5) There is ZERO question that the goals of a bankruptcy filing can be achieved without that course being taken, as long as conditions are imposed on the loans given, and that the effects of bankruptcy filing will be even fewer buyers because of warranty issues.

6) There is ZERO question that at least 3 million, and as many as 5 million jobs will be lost if we lose these three companies, and that will mean worse economic conditions for all, and less competition for American Consumers.

Perspective. After doling out 2 trillion to banks and Wall Street, with part of that taxpayer money being hoarded or used to pay bonuses and high executive compensation at the recipient entities, a lot of jobs can be saved and a lot of constructive good for the American Economy can be achieved with a fraction of that sum allocated as a loan to the Big 3, even if 2 of these companies survive (Ford and GM, for example).

FWIW, Ford's on the best track so far, and Mullaly is the most competent CEO of the three at the table.

Just an FYI - if these companies file for bankruptcy protection, *everything* under their financial contracts and obligations are up for grabs. Including pensions, salaries, work contracts, retirement benefits, etc...