GM and its Volt appear to be close to a new lease on life.
Friday night after the House Finance Committee hearing, Speaker Nancy Pelosi indicated that she had dropped her opposition to using Department of Energy retooling loans as a source of funding to aid the automakers.
She was insistent though that the loans be rapidly replenished stating “we will not permit any funds to be borrowed from the advanced technology program unless there is a guarantee that those funds will be replenished in a matter of weeks.”
It seems likely GM will get at least $8 billion and Chrysler $4 billion, which those companies CEOs said would be enough to get them through the first quarter of 2009. Ford has said it can make it on its own for now. The idea appears to be to allow the automakers to survive until the Obama administration is in place. Reuters is reporting the total amount of the loan will be between $15 and $17 billion.
It is expected that a vote will take place early next week in both houses of congress on a bill that will have to be crafted over the weekend.
The stark jobs report issued Friday showing a November loss of jobs greater than in the last 34 years, and bringing US unemployment up to 6.7% seems to have spurred the lawmakers.
There are reports that Ms. Pelosi communicated both with the Bush administration and the Obama transition team about the possible breakthrough.
What the final form of the bill will be and on whether it can muster the votes needed from Republicans still remains to be seen, although the latter appears increasingly likely.
All parties involved have indicated they will be working on it through the weekend.
Source (New York Times)
This entry was posted on Saturday, December 6th, 2008 at 6:57 am and is filed under Financial, Politics. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.
Dec 6th, 2008 (7:10 am)Quite frankly I just don’t see Chrylser making it.
If that were to be the case, what happens to their brands? Do they get sold, or simply tossed? It’s really too bad these companies didn’t start/continue perfecting battery technology a few years earlier. I listened to both hearings and the feeling I got from both is that Chrysler is expendable. Perhaps I’m wrong.
Dec 6th, 2008 (7:29 am)With the price of oil under $40.00/barrel customers don’t look at electric cars.
This past summer and fall with oil almost to $150.00/barrel I could have gone into any car lot and get a large car or truck at a very low price. Now with the oil price down the dealers in my area have an increase in sales of cars and trucks.
What needs to happen is more education to the public on alternate fuel cars.
I hope the Volt comes out on time cause my old car that I drive 52 miles a day to work will be used up my then, I’ll need to buy something and it will be “No Plug No Sale”
Dec 6th, 2008 (7:34 am)hi Brian #1,
“… continue perfecting battery technology…”
____________________________________________
The manufacture of small powerful batteries is key right now.
We have a race between dropping gasoline prices, better battery technology, and the will of the world population to get off fossil fuel. The world can’t afford another 10 year cycle of selling out to Big Oil, rising oil prices, and a dormant EV program. We need China and India to get involved in driving EV’s and E-REV’s big time.
Pump gas will hit $1.50 a gallon in a last ditch effort to move the collective mindset away from electric drive vehicles. The cell phone battery $100,000 EV isn’t going to swing folks away from oil. But the choice of three competitively priced E-REV models will.
Yes we can? http://garfwod.250free.com/Photos/Cruze%20E-REV.jpg
=D~
Dec 6th, 2008 (7:43 am)She was insistent though that the loans be rapidly replenished stating “we will not permit any funds to be borrowed from the advanced technology program unless there is a guarantee that those funds will be replenished in a matter of weeks.”
Is she even aware of what she is saying? Is this lady really in charge?
Dec 6th, 2008 (7:59 am)JEC
Replenished by Congress.
Dec 6th, 2008 (8:03 am)How does this help solve the structural problems of too many brands, unrealistic employee costs, too many dealers, etc. I would assume that is part of the negotiation.
On another note, the idea that the gov’t should get paid back first is unfair to all the existing bond holders, who loaned money with the understanding that if things went south, they get a % in bankruptcy court. Now, the government will take a cut, and then they’ll get their % in court. If it’s true that gov’t is cutting in line, I would expect bond prices to drop. An unstable regulatory environment is not helpful for pushing new investment….lesson learned from the 1930′s.
Dec 6th, 2008 (8:11 am)GM bond prices that is
Dec 6th, 2008 (8:25 am)#3 Dave K wrote:
“Pump gas will hit $1.50 a gallon….”
We briefly saw $1.49 a gallon gas on Thankgiving Day here in “Michiana”. As the Mumbai Terrorist Attack news unfolded, the gas retailers got the phone call order to bump the prices up to $1.75+ instantly. We’re now back down to the $1.50 – $1.60 range here.
I just checked “Gas Buddy” and see a few stations within the state of Indiana are now around $1.35
I just hope that GM can survive and rollout the Volt. We need it along with other efficient transportation options (Mitsubishi i-MiEV, Subari R1e, Toyota IQ…)
Dec 6th, 2008 (8:33 am)hi Cautious Fan #6,
“… the idea that the gov’t should get paid back first …”
________________________________
The trillion $ bank bail out was not just single signed law. It was a complete change in the way money flows in America. Everything from this point on will resonate off the signing of the bank bail out.
Yes, bridge loaning GM will help produce GM products for a few more months. But, as you say, the “loan” adds the element of investors not getting a fair pay back on stocks and bonds.
This is why I pitch natural gas exploration, battery manufacturing, and metal recycling. Natural gas will be needed to power the EV recharge grid. Batteries will store the electricity. And metal recycling will benefit in two ways. One being the push toward national rebuilding and the infrastructure ‘yes we can’ program. The other being the crushing of dinosaur SUV’s. Parts retrieval and precious metal reclamation.
BTW: the Ford CEO is smart to present himself as “not needing money right now”. This may sound stupid at face value, but this gives the buyer the confidence to drive Ford products. As Ford will most likely be standing after the dust finally settles on the Big 3.
Out of the box: I heard a surprisingly frank comment last Thursday. A friend said that if all these banks now have TARP money. Just have the TARP banks loan it to the Big 3. Why organize a Congressional meeting to GIVE more of the tax payers money away? Didn’t we just do this?
http://garfwod.250free.com/Photos/prius_volt_DC.jpg
=D~
Dec 6th, 2008 (8:45 am)This may be the one shot lawmakers have at really making us oil independent. Requiring hundreds of thousands of battery powered vehicles and biopowered cars by force may prove to solve it quickly if implemented correctly.
HOW ABOUT FORMER CIA DIRECTER WOOSLEY FOR CAR CZAR?
Dec 6th, 2008 (8:48 am)This agreement is really a mixed bag for the Volt. Positively, it keeps GM alive a little longer, a fundamental requirement and for that reason a good thing.
Negatively, it does so with the money that was earmarked for high-mileage cars such as the Volt. So Volt support has been diverted to survival of the corporation.
So taking positive and negative together, most likely GM will use the money to pay the daily bills required to survive for a while, but not to do much on the Volt.
Yes, Pelosi has said the high-mileage money would be put back real soon now. What that is likely to turn into is a rule that works the other way, sort of how a speed limit turns into a speed lower limit. That is, GM will move forward on the Volt when there is a new high-mileage incentive, but not do much before that. Maybe that will be soon, or maybe not, but GM’s commitment is reduced to zero until the congress does that.
Dec 6th, 2008 (9:11 am)I believe GM will continue with the Volt program with as much of there resources as is possible.
Two reasons for this belief. # 1. It has been my experience that upper management does not like meeting anybody that makes them the ones with their hat in hand. When you reach that level you have proven that you are in charge and other come to see you from a position of need.
#2. I think they all now know that business as usual is never going to get their Companies to the top of the competition pile again and that E-REV is the platform of the future.
I think that every automobile company in the world now knows that as do the oil companies. It will surprise me if big oil does not buy into the battery industry and the quick charging infrastructure. This time buying the patents won’t stop the flood of new battery technology that is even now being worked on.
Dec 6th, 2008 (9:17 am)If it is true and the amount is around 15 billion…which seems to be the consensus. One can assume they are going to put GM’s 4+4 ‘turnaround plan’ to the test.
GM said they needed 4 billion in December and 4 billion in January to survive through to the new administration, with an additional 2 in March…the caveat was the 6 billion line of credit they put in there. Here is the quote from the plan:
—
“a $6 billion committed line of credit from the Federal Government to ensure adequate liquidity under more severe U.S. industry conditions (a 10.5 million unit “Downside” industry sales scenario for 2009) or a more challenging near-term dealer order situation”pg.5
“This amount protects against liquidity needs should the Downside industry volume scenario materialize. As indicated in Table 2, assuming the further deterioration in sales rates as described by the Downside Scenario, GM would need an additional $5 billion in the first quarter (over the Baseline Scenario), bringing the total potential draw to $15 billion. This would include use of $3 billion from the revolving line of credit. At this moment, based upon near-term industry and sales order conditions, it is probable that this Downside Scenario would unfold for the first quarter of 2009.”pg.9
—
In english, 4 billion is to pay for what they are already short. 4 billion is to pay for what they lose between now and the end of January…and the 6 billion line of credit will be used if a Unicorn does not ride into the auto industry bringing with it our forecasted 12 million baseline scenario in DECEMBER and JANUARY.
When it is tabled, what we have to see for GM’s sake is basically a 4+4 draw, plus at least another 4-6 billion revolver. If they don’t get the revolver they will be in much worse shape when Obama gets in on Jan 20th, that they currently are now. Obviously, Ford is strong, so they are getting nothing (which almost makes no sense…but I digress), and Chrysler is getting at least their minimum 4.
If the number is 15 billion…I don’t see how they get there, at least not without us doing this dance all over again in 6 weeks.
Dec 6th, 2008 (9:25 am)#1 Brian Says: “Quite frankly I just don’t see Chrysler making it.
If that were to be the case, what happens to their brands? Do they get sold, or simply tossed?”
————————————————————————————–
This came up at the Senate hearing. Chrysler and GM want to merge, and were in talks to do so last summer. But with the fall banking crisis, GM decided to concentrate on staying alive.
The best scenario is that the government step in and help this merger take place, force the reduction of brands/dealers, and get the combined company in a competitive position. But it looks like all of that will have to wait until after Jan 20th. After that, you not only have a new administration, but also a very different congress.
So for now, I believe they will just give them enough to get by until then, with the understanding that more will come as the plans for restructuring mature.
Dec 6th, 2008 (9:28 am)Well I am glad this little dance is over. I sure hope everybody had a good time.
Take Care
Arch
Dec 6th, 2008 (9:32 am)#13 statik Says: “Obviously, Ford is strong, so they are getting nothing (which almost makes no sense…but I digress), …”
————————————————————————————–
This is obviously going to be a 2-step deal. Ford hasn’t asked for a loan – just a line of credit. They’ll get that next year.
The 2-step deal is necessary because:
a) There will be a new administration and significantly new congress next year.
b) Congress doesn’t have time to work out the details of oversight, restructuring, etc.
Dec 6th, 2008 (9:35 am)#4 JEC Says: “She was insistent though that the loans be rapidly replenished stating “we will not permit any funds to be borrowed from the advanced technology program unless there is a guarantee that those funds will be replenished in a matter of weeks.”
Is she even aware of what she is saying? Is this lady really in charge?”
————————————————————————————–
Obama is in charge, but not until Jan. 20th. So what she’s saying is that she’ll drop her opposition to raid the retooling loans for now as long as she knows Obama and the new congress will replenish them.
Dec 6th, 2008 (9:41 am)Like I said—-a nice little dance.
http://apnews.myway.com/article/20081205/D94S74LO0.html
Take Care
Arch
Dec 6th, 2008 (9:44 am)“There’s no need to fear!…
Unconstitutional and unlimited IOU nothing Fed fiat currency notes are here!”
(if you’re a friend of the Rothchilds or you have the lobbiests with campaign bribes.)
Coming to YOUR town next year…
http://en.wikipedia.org/wiki/Hyperinflation
sssshhhhhh, we’re hunting wabbits. heheheheheh.
Dec 6th, 2008 (9:44 am)#12 old man Says: “I believe GM will continue with the Volt program with as much of there resources as is possible. Two reasons for this belief…”
————————————————————————————–
I think Wagoner got a rude awakening about the average person’s hostility towards GM, and how that can lead to their demise.
If Wagoner stays in charge, which is not certain, he will hopefully understand that financial spread sheets don’t account for consumer sentiment. Sometimes the best decision is to take the financials with a grain of salt, go with your gut, and innovate. That’s how Apple was re-born.
Dec 6th, 2008 (9:53 am)I broke this up into two parts, because I think GM’s cash situation needs to be looked at to understand how quickly GM will be back.
————
According to ‘the plan’ and forecast (pg.9):
GM has 9.1 billion now. They assume a annualized rate of 12.5/11.2M cars for Dec/Jan.
Somehow they say they will have operating inflows in December (after restructuring actions…that we can only be sales of things they might now actually be able to sell.) bumping them to 10.1 billion..we will give them the benefit of the doubt for this case.
Then in January GM predicts to lose 4.2 billion…dropping them to 5.8 billion at the end of January 2009.
——
That is best case…out of GM’s mouth. With annualized sales of 12.5/11.2 million units…the current burn rate is 10.2 million. So for GM to hit its own benchmark we need the car market to increase by 20% THIS month. Onto GM sales specifically, they also ‘plan’ for GM’s share of this increasing environment to INCREASE. Wait? What?
Yupe, thats right. 12.5 million units in Dec and 11.2 in Jan, with GM’s share of that at 22.5%. In November there share was only 20.7….and they have the pesky problem of having shut down and/or putting on a production hiatus almost EVERY SINGLE plant right now, might be hard to increase their share seeing how they aren’t actually making cars.
In reality, the market is burning at 10 million units, GM is about 20% of that (and shrinking)…thats 2 million cars annualized. They are predicting in their plan 2.8 million in sales.
So if ‘best case’ is 5.8 billion left in cash…and the ‘reasonable and likely case’ is they are going to operate 40% below ‘baseline,’ that probably translate to more like 2-3 billion left in ‘pre-bailout bucks’
If there share of the 15 billion is 8, then they are underwater at 10-11 billion. If the government doles out 17 and they get 10, they are at 12-13 billion. Either way, they are in the same eminent danger of death scenario on Jan 20th.
Dec 6th, 2008 (9:54 am)What needs to happen is more education to the public on alternate fuel cars.
____________________________________
Too bad that’s even a struggle here still.
And considering it has been almost 2 years already, that doesn’t give much confidence. The enthusiasts should be pushing way harder than just daily blogging. Don’t expect the automaker to provide the education.
Dec 6th, 2008 (9:55 am)19 Tim:
Statik can weigh in on this because he is much more of an expert than I but…I am pretty sure hyperinflation is way off the table for right now.
The banking and mortgage collapse wiped out trillions of dollars…just *poof* gone, no longer existing. What we are experiencing is the exact opposite…it could almost be termed hyper deflation. Inflation might be a concern if the turnaround is faster than predicted but I don’t think it will.
Dec 6th, 2008 (10:02 am)#6 Cautious Fan Says: “How does this help solve the structural problems of too many brands, unrealistic employee costs, too many dealers, etc. I would assume that is part of the negotiation.
On another note, the idea that the gov’t should get paid back first is unfair to all the existing bond holders,…”
————————————————————————————–
These issues came up a lot during the Senate hearings.
Wagoner said GM should concentrate on 4 brands (Chevy, Buick, Cadillac, and GMC) and sell or scale down the rest (Pontiac, Saturn, Saab, and Hummer).
The UAW president said the union was also ready to negotiate as part of the bailout, and listed some significant concession possibilities, but he pointed out that labor costs were only 10% of GM’s expenditures.
Wagoner said GM’s plan includes reducing the number of dealers in urban/suburban areas, but said GM’s relatively high number of dealerships in rural areas was a strong point for future sales.
As for the government being first-in-line for repayment, that doesn’t seem negotiable. Most senators implied the taxpayers would accept nothing less, and said the bondholders would be in a much weaker position in a chapter 11 situation.
Another thing that was discussed – GM going chapter 11 would likely also require the government to make huge loans. Only a chapter 7 scenario gets the government totally off the hook for loans, but the economist on the panel said that would lead to “hundreds of billions” of taxpayer dollars in lost income taxes and unemployment benefits.
Dec 6th, 2008 (10:05 am)White House: Constructive auto talks with Congress
12/06/08 0935 EST
WASHINGTON – The White House says it has had constructive talks with congressional leaders on helping the ailing auto industry.
Press secretary Dana Perino says automakers must show they are willing to make tough business decisions before they can get taxpayer money. She says the White House is insisting that any money come from an existing fund set aside for the production of environmentally friendlier cars.
Perino made the comments in a statement Saturday before President Bush left Washington to attend the Army-Navy football game in Philadelphia. The White House and congressional Democrats are working to provide about $15 billion in loans.
_________________________________
Think the White House and Big Oil have something going?
Maybe I’m just being distrusting. They’ll be a few tax credit scraps left over for the Volt.
=D~
Dec 6th, 2008 (10:05 am)#23 Morgan said,
Tim, Statik can weigh in on this because he is much more of an expert than I but…I am pretty sure hyperinflation is way off the table for right now.
The banking and mortgage collapse wiped out trillions of dollars…just *poof* gone, no longer existing. What we are experiencing is the exact opposite…it could almost be termed hyper deflation. Inflation might be a concern if the turnaround is faster than predicted but I don’t think it will.
===============================
You don’t want that noise.
(=
/might send the readership into a coma as well
Dec 6th, 2008 (10:10 am)Statik (#21) is great a crunching the numbers.
Bottom line,
“You can’t make a silk purse out of a sow’s ear. Butt (he said butt heheheheh)
“You can make bacon from a pork belly.”
Let them reorganize under bankruptcy. The fat (UAW, Legacy Costs, Executive Perks etc.) will be rendered and many HUNGRY AND AGGRESSIVE privately funded domestic competitors (tesla, aptera, auto X-Prize companies etc) will spring up to hire the laid-off autoworkers at competitive wages and create REAL domestic competition which will produce innovation, reduce costs and improve quality.
http://www.progressiveautoxprize.org/
Taxpayer money will kill competition and keep this good from happening. Look at the quality of the old Soviet Union or Communist China goods & services. Do you WANT that here?
Change may be scary and painful, but it if often VERY GOOD!
It takes more courage to just say NO!
Dec 6th, 2008 (10:11 am)26 Statik:
I think you underestimate your literary capabilities
Dec 6th, 2008 (10:19 am)#6 Cautious Fan – “How does this help solve the structural problems of too many brands, unrealistic employee costs, too many dealers, etc. I would assume that is part of the negotiation.”
As you understand, obviously it doesn’t. It’s really not designed to. This is just a stop-gap measure designed to kick the problem down the road until the new Obama administration takes control. Bush is agreeable because otherwise Paulson would not be able to get his second $350B draw which he seems to want.
After January 20th further aid, which doubtless will be needed, will come from TARP. At some point – in the April or June timeframe – the process will move along and we’ll see a Czar or Board with benchmarks and standards along with the serious funding. Two or three companies will emerge from this non-bankruptcy bankruptcy with less capacity, competitive, and obligated to produce more fuel efficient cars.
If you’re interested in understanding how this would work, check out John Podesta’s think tank papers on the auto industry. They’ve been studying this for quite some time, and it’s been obvious that the Obama Transition team has been reading from their playbook (doesn’t hurt that Podesta is head of the transition and could be the next Secretary of Energy if he wanted to be).
All the parties in this process will take a haircut, just like they would in a bankruptcy. The UAW will take some more hits. Shareholders will get wiped out. As for bondholders, unsecured bondholders will probably get 20 cents on the dollar and maybe an equity stake. As for the secured creditors, they will have a preference, but stepping in front of them is par for the course in bankruptcy so that may happen as well. The current round of “the government needs to get paid back first” stuff is political posturing, and is not a big deal since the companies have collateral which they could use to securitize the debt as a political fig leaf (Since you do not want government involved in business decisions, hopefully the government will come out of this with no equity or a very limited equity position).
Dec 6th, 2008 (10:30 am)#13 Statik
“If the number is 15 billion…I don’t see how they get there, at least not without us doing this dance all over again in 6 weeks.”
- – - –
That is why they keep calling it a bridge loan. A bridge to the Obama administration. George Bush wants to have a perfect record on stupidity, so we have to wait for Obama.
This also explains Nancy Pelosi’s equally stupid remarks. as JEC pointed out “we will not permit any funds to be borrowed from the advanced technology program unless there is a guarantee that those funds will be replenished in a matter of weeks.”
Bush refuses to allow TARP funds, but says it is fine to use the advanced technology program. So Nancy is giving in and essentially saying fine for now, but as soon as this bum is out of the oval office, we are going to use the TARP funds to replace any money taken out of the Advanced tech program.
It still amazes me that house, senate or white house could possible look down on the auto industry. GM has about 10B in the bank, last time I checked the US is about 800B short THIS YEAR and 10 Trillion in the hole. Hows the old saying go? Those in glass houses…
Cheap oil is a mixed bag for the automakers. On one hand they have a better chance of unloading the SUVs and trucks. On the other, it makes alternatives like the Volt less attractive.
Dec 6th, 2008 (10:34 am)#21 Statik – “Either way, they are in the same eminent danger of death scenario on Jan 20th.”
That’s probably overly negative, but not by much. But that’s what this $15B is designed to do – a lifeline to January 20th when the new Treasury Secretary can use TARP funds. Then we’ll have another two to three months of funding while the real negotiations take place. “Take-out” financing – the serious money – will come in mid-year when everyone agrees to the haircut and there is oversight and standards in place.
This is more or less your government sponsored bankruptcy, just without the bankruptcy, just the threat of it, or perhaps with special enabling legislation that empowers a board or something to order the changes, just like a bankruptcy judge could do. Rather than government funding directly, we may see some of the financials which got TARP money provide the equivalent of debtor in possession financing.
For the timeline you can refer to Jeffry Sack’s testimony yesterday. For the substance of what the Obama Administration will be looking for, check out the white papers issues by the Center for American Progress, Podesta’s think tank. FWIW the plans submitted by the companies may be a starting point but they’ll have to be significantly revised.
Dec 6th, 2008 (10:35 am)Who saved the electric car? Nancy did!
Oh God, are we going to have listen to her saying how she saved the electric car like Al Gore said he invented the Internet?
Dec 6th, 2008 (10:40 am)This is FANTASTIC!
Peter Schiff on CNN Auto Bailout Intense Debate! 12/4/08 part 1/2
http://www.youtube.com/watch?v=-BmqthF1LVM
Peter Schiff on CNN Auto Bailout Intense Debate! 12/4/08 part 2/2
http://www.youtube.com/watch?v=3ah_Zr7DPTM
Peter CORRECTLY called this whole meltdown 10 years ago!
Dec 6th, 2008 (10:44 am)#24 Dave G
Great summary. Those who have been saying ‘let ‘em fail’ need to read the last part in particular.
By the way, Wagoner outlined the number of resources, including people, working on Volt and E-flex. My opinion is that a good portion of any government loan is offsetting those development costs. Development which will benefit all Americans in the form of cleaner air, cheaper gas (huh? electric will reduce demand and thereby price), energy independence, and exportable technology.
Conversely, WaMu failed and was acquired by JP Morgan. Bear Sterns, too. Wachavia was picked up in a fire sale. I don’t see the benefits from my tax dollars deciding that Citi should not be acquired by Comerica or that Goldman can be a bank holding company and get some of the cash buy GMAC (so far) cannot.
Dec 6th, 2008 (10:45 am)#30 D Lo – “This also explains Nancy Pelosi’s equally stupid remarks. as JEC pointed out “we will not permit any funds to be borrowed from the advanced technology program unless there is a guarantee that those funds will be replenished in a matter of weeks.””
It’s not stupid at all. She’s not talking about the companies paying it back, she’s talking about an appropriation which will replenish it. Here’s why she has to say this:
This entire chapter of political kabuki is all about which pot of money gets used. Bush doesn’t want to use TARP. He wants to use the money which is supposed to go to retooling for energy efficient cars. The Democrats want to use TARP, and the enviro wing of the party is opposed to using the retooling money because they got that in return for concessions they made earlier this year. (You saw this play out in the hearing yesterday). Pelosi blinked and now says the Dems will accept the retooling money. As a sop to the enviros she says they’ll replenish the money in January as part of the stimulus package.
The entire thing is silly because all plans for the auto industry use the funds and any restructuring plan that comes out under an Obama Administration will require more fuel efficient cars. No one every said politics was sensible.
Dec 6th, 2008 (10:50 am)To break the Congressional hearing down to it’s most simple terms. The members of Congress are our elected representatives. When they ran for office all of them said, “I want to represent you”.
Okay, what do We The People want?
1>Energy efficient cars.
2>Fair pay for quality work.
This short wish list indicates that a scale down of the auto industry (a restructuring) must occur. The remaining employees will receive fair pay for quality work. Employees who can not (or will not) abide by this quality code will be replaced. You will show up sober and strong, ready to do a good days work.
This also indicates that rather than a “bridge loan system” a TARP-like instant rebate system shall be installed. This being an instant rebate, after the signature, at the dealership level.
30 mpg = $3000 instant rebate
31 mpg = $3100
32 mpg = $3200
40 mpg Cruze = $4000
70 mpg Volt = $7000
This will create an instant buying rush on American dealerships. The order line phone operators at GM will be working 12 hour shifts to keep up. Truckers will be gassing up for $1.75 a gallon to deliver new cars. Workers will be asked for Saturday shifts.
Current example: 2008 Cobalt
Sticker price $14,400
Red tag price $13,800
33 mpg rebate – $3300
Post rebate price $10,500 (cost to you)
The Big 3 can sell 333,000 fuel efficient cars each during the first year and be turning a profit.
Cost 1,000,000 efficient cars X $3300 rebate = $3.3 billion
Each of the Big 3 WILL turn a 2009 profit at a cost of $3.3 billion. The good news is that the $3.3 billion will be going back into the pockets of the tax payers.
Why talk about throwing unprinted money on a chance it will help long term sustainability? Use real money to buy real goods. We all win.
Yes we can?
=D~
Dec 6th, 2008 (10:53 am)With taking the EPA money to bailout the the normal process, there will be none left for the R&D of alt fuel vehicles. This is why the automakers need to spend extra money to make the American public happy.
They make trucks ‘car like’ for the public then, when gas goes up, they spend billions on alt fuel and efficient vehicles. Now that gas prices are going down, for now, they no longer care. That damn American Me Me Me attitude. We need the Volt and vehicles for the future.
This is not a good thing, using the money slated for efficient vehicles, to bailout the automakers but, by all means let us give money to banks that will not do anything!!!
Whew!! I needed to rant.
Dec 6th, 2008 (10:59 am)On a related note: (pun intended)
Icelanders Storm Central Bank
“Tiny Iceland has seen its banks and currency collapse in just a few weeks while prices and unemployment soar — leaving a country regarded as a model of Scandinavian prosperity in a state of shock.”
http://www.unitedliberty.org/articles/icelanders-storm-central-bank
How many $TRILLIONS should we print and float in the world market while bailing out company after company, industry after industry knowing that the US $Dollar is ending as the world’s reserve currency and once those come notes come HOME payable in equity we will suffer the same fate as the Weimar Republic.
http://en.wikipedia.org/wiki/Weimar_Republic
If you think that can’t happen here, think again. (hint, they thought is could not happen there either)
WE CAN CHOOSE TO LEARN FROM THE MISTAKES OF OTHERS OR WE ARE DOONED TO REPEAT THEM.
This is why only gold and silver are Constitutional real money and WHY we have the 10th Amendment!
Dec 6th, 2008 (11:11 am)statik once again pointed out the phrase “…a more challenging near-term dealer order situation”pg.5…” in GM’s paperwork
=====================================
Since the time you first lifted this phrase, I’ve been conducting an individual survey of GM dealerships to see how many cars are on the lot. I see just a tiny fraction of “normal”, usually a few cars lined up nose to tail along the front edge of the lot, and used cars or something behind them. Yesterday I talked to one dealer who said he had ordered a grand total of 2 vehicles for December. He said that with so few customers coming by the floor plan was too risky.
Projecting a sales increase under these conditions is easy — any sales are an increase. But thinking of a higher GM fraction of a 12 million rate, there’s going to have to be a dramatic change, of which there is as yet no sign at all. First, GM dealers will have to be sold, and that’s not going to be easy.
Bottom line –>Pretty hard to have a sales increase when there’s so little there for customers to see.
Dec 6th, 2008 (11:16 am)#30 D Lo said,
#13 Statik said, “If the number is 15 billion…I don’t see how they get there, at least not without us doing this dance all over again in 6 weeks.”
—
That is why they keep calling it a bridge loan. A bridge to the Obama administration. George Bush wants to have a perfect record on stupidity, so we have to wait for Obama.
————————
#31 DonC said,
“That’s probably overly negative, but not by much. But that’s what this $15B is designed to do – a lifeline to January 20th when the new Treasury Secretary can use TARP funds. Then we’ll have another two to three months of funding while the real negotiations take place. ”
=================================
What I mean is that the government is going to dole out this money expecting it to be enough to get GM through to the new administration, when they can sit down, take their time to work out a thoughtful plan that makes sense (to them), without all the media hulla-balloo…that they can also pass easily with the strength of their new powers.
What they are going to get is nothing like that…but exactly the same situation we have now.
They are going to come back from break with GM needing more ‘emergency funds’ immediately, and the media ****storm that goes with that. Under the media dark cloud and intense pressure they are either going to have to issue another ‘short-term’ bridge or offer up a hastily cobbled together plan…either option would be ill-advised and a PR nightmare fo them.
I guess my suggestion to them here (if they really have their hearts set on bailing these guys out) would be if they are only giving out 15-17 billion, is to call Chrysler’s bluff…or at least string them along a bit.
Instead of giving GM 8B and Chrysler 7B of the low end estimate 15 billion….give GM 14B and Chrysler 3B of the higher number 17 billion figure. That way if the ‘likely’ case (notice I didn’t say ‘downside’ or ‘worse’), proves true and GM only has 2-3 billion left (pre bailout bucks) at the end of January…the new modified payment structure tacks on 14 billion, giving GM 16-17 billion in cash, rather than the proposed numbers, which gives them 10-11 billion.
16-17 Billion in total cash on their balance sheet at the end of January doesn’t put them in the ‘danger zone’ of immediately needed funds as soon as the government comes back in January…but rather gives them enough to get through March. That gives the gov’t a couple months to craft the best ‘plan’ they can in relative peace, avoiding the media firestorm caused by GM not having to disclose their obvious hyper-accelerated burn rate in the deteriorating market.
/I think Cerberus would happily take their 3 billion and then bridge Chrysler with dreams of the next ‘bailout’ in their heads
Dec 6th, 2008 (11:31 am)We all seam to be pulling hard for GM to make it ,so we can live our dream to get our Volt. Well why not put a down on our volt . Say
$ 500. by way of a GM credit card . That money is good to be used as money to help purched any GM car . This will give GM 12.5 M if 25000 list people were to do it . Only an idea .
Dec 6th, 2008 (11:39 am)Tim 33 says,
This is FANTASTIC!
Peter Schiff on CNN Auto Bailout Intense Debate! 12/4/08 part 1/2
http://www.youtube.com/watch?v=-BmqthF1LVM
Peter Schiff on CNN Auto Bailout Intense Debate! 12/4/08 part 2/2
http://www.youtube.com/watch?v=3ah_Zr7DPTM
_____________________________________________________
Peter Schiff,……….when has that guy ever been right?
Peter Schiff Was Right 2006 – 2007 (2nd Edition)
http://www.youtube.com/watch?v=2I0QN-FYkpw
Dec 6th, 2008 (11:45 am)The three headed dog wants a GM-Chrysler merger to save their bacon. Chrysler doesn’t want it. GM will accept it because it is being pressured that way to get bailout bucks. The lobbiests are hard at work. It won’t help GM, but distract it.
Dec 6th, 2008 (12:00 pm)I like the Volt but… Am I the only one who remember Lutz saying the Volt would not make GM a profit for 4-5 years after it is first launched? Most Hybrid cars today cost more and take up to 10+ years to see a return on investment.
Like it or not, the only way car makers will make money until Hybrid cars are affordable for everyone, is to sell gas or diesel only vehicles. It sucks to say, but it sure seems to be the truth. So GM/Ford and them will make the vehicles want which is trucks and SUVs (for their families).
I welcome the day I can buy a Volt and I don’t lose money buying the car just to feel good (to buy a more expensive car and see no return on investment) and car companies can profit off of them.
Dec 6th, 2008 (12:01 pm)#39 RB
Since the time you first lifted this phrase, I’ve been conducting an individual survey of GM dealerships to see how many cars are on the lot. I see just a tiny fraction of “normal”, usually a few cars lined up nose to tail along the front edge of the lot, and used cars or something behind them. Yesterday I talked to one dealer who said he had ordered a grand total of 2 vehicles for December. He said that with so few customers coming by the floor plan was too risky.
Projecting a sales increase under these conditions is easy — any sales are an increase. But thinking of a higher GM fraction of a 12 million rate, there’s going to have to be a dramatic change, of which there is as yet no sign at all. First, GM dealers will have to be sold, and that’s not going to be easy.
Bottom line –>Pretty hard to have a sales increase when there’s so little there for customers to see.
==========================
That is it right there my friend. Dealers are frozen, scared, flat-out unable to buy, whatever. The credit freezeout/access to cash to the consumer and the dealers is the root of this problem, this bailout neither solves or addresses this…nor can it. The scope is too large, possibly even too large for any government program/bailout to address.
I want to touch on this comment you made,
“Projecting a sales increase under these conditions is easy — any sales are an increase”
Yes, it is easy to predict…but for sometime in the future, not right now. Unfortunately, you can’t make those sales increase projections until we come full circle and complete a calender year with a similar base foundation to improve on, basically comparing apples to apples. They are still up against numbers/conditions and programs that they don’t have now…and that they can’t hope to compete against.
Here is the calender of events (aproximate dates) that they have to get past to lessen the year over year comparisons and to eventually ‘gain’ sales:
June 2007: credit standards tightened, GMAC finances 43% of sales
July 2007: GMAC stops leasing, moves credit stardard to 700, GM moves discounts to cars to over $4,000 per unit sold
August 2007: GMAC changes dealer terms to 5%, balance due on new cars in 180 days
September 2007: GMAC severs relationships completely with select dealers forcing them to go elsewhere or die (think Bill Heard), floor plan future orders start to seize
October 2007: GMAC finances only 23% of sales
November 2007: GM nixes/delays incentive payments to dealers/closures of plants
December 2007: Credit standard for customers seeking financing moves to 770, only 6% of sales financed through GMAC, no ‘old orders’ before floor plan seizures are still in the pipeline
Future Events on the itinery that are a roadblock to them competing with past sales:
December 2008: 2 week+ hiatus on all plants
2009:
*multiple plant closures
*discountinuation of Saab/HUMMER (20,189 and 25,316 sales so far in ’08)
*reduction of Pontiac to ‘niche’ vehicle/’withdrawal of support’ for brand
*33% reduction in all production
*closure of a planned 1,750 dealers+whatever goes bankrupt (1,000 more?) meaning 25-40% of dealer base removed
*sale/termination of Saturn (GM has sold 175,434 units so far in ’07, -20.9%)
*likely discontinuation of Kappa platform, already future platform /R&D cancelled, just end of run left… (Sky/Solstice, 2 other international cars under Opel/Daewoo)
*likely discontinuation of the Holden/Aussie built G8, terrible sales and already shut down for all Dec and 24 days of Q1…along with the new mantra of not supporting Pontiac, it looks to be done
*abandonment of the Zeta platform (global rear wheel drive) in general (all future development was cancelled by GM in September)…likely only the Zeta platform assembly to survive will be in Oshawa (because they produce the Camaro)…and likely only the Camaro to be produced
Dec 6th, 2008 (12:10 pm)A GM-Chrysler merger would be bad for GM and sure hope it does not happen. My view is the Chysler will not make it unless it is purchase by another company and not GM or Ford. Maybe a Nissan or other. I believe that GM will recover and pay back the loans but do not see that with Chryler. Couple of reasons. First, one of the task of GM recover is to reduce brands, to much duplication. If GM purchased Chysler there would be more brands they would have to remove. Even Jeep which is strong brand would compete with other GM SUVs. This would be crazy business. Second, I live in Detroit area and know personally many Chrysler employee that have been layed off or taking retirement package. From them they say Chrysler is losing so many people they they will not be able to function as a business. Whole departments are being let go and when issue is questioned, the upper management just ignores it. So my view is I do not want Chysler to fail but I do not see if surviving and giving the loans to Chrysler will be a lose to US taxpayers. I am afraid that we need to accept that Chrysler is history and prepare for that lost. GM do NOT merge with Chrysler, it will just bring you down more. US focus on GM and Ford restructuring and provide loans for them to get through the restructure.
Dec 6th, 2008 (12:15 pm)#45 Statik – “The credit freezeout/access to cash to the consumer and the dealers is the root of this problem, this bailout neither solves or addresses this…nor can it. The scope is too large, possibly even too large for any government program/bailout to address.”
Right you are. Keeping businesses afloat when credit markets are frozen is pushing on a string. At this point everything other than unclogging the credit lines is secondary. However, that doesn’t make the secondary things unimportant. Cause and effect works both ways. You need stable credit markets for business to thrive, but for stable credit markets you can’t have huge employment losses.
The eight trillion credit bailout program is designed to deal with the credit markets. The one and a half trillion stimulus/manufacturing bailout is designed to deal with the second.
Dec 6th, 2008 (12:15 pm)hi carcus #42,
Thanks for the Peter Schiff Was Right 2006 – 2007 links. He has some big rocks and is fortunate to live in a country where free speech is allowed.
________________________________
I went online yesterday to find the best price on an HD LCD 1080 TV. I found the one I liked at the price I liked. I filled out the address form, my birth date, my MasterCard information and then clicked on “buy”.
A box popped up that stated: “Due to current economic conditions we are unable to take credit payments on goods, sorry hope you understand”.
________________________________
Oh well, it was an insured platinum card and my wife and I have perfect credit along with outright home ownership. Is everyone else getting these “we won’t sell to you” notices?
I went to a large local chain store and bought the LCD TV at a cost of $60 more.
=D~
Dec 6th, 2008 (12:21 pm)Who are they going to sell their cars to?
There will be FEWER car customers for the next 10 years because people have borrowed and spend MORE than they can afford or even pay back. It was DEBT caused by Fed “liquidity” washed down with easy credit that CAUSED this meltdown in the first place.
BUT, congress is known for doing the WRONG things so they WILL give MORE credit/debt to the “horribly run 3″ and anyone else who is “to big to fail”. Let the Peasants (you and I) STARVE because of the inflation created because of debt!
Who profited? Ask the World Bank who is forcing an Global fiat currency upon us so they can have UNLIMITED power over ALL governments and people.
The debtor is a SLAVE to the lender. Who do YOU owe money to?
Dec 6th, 2008 (12:46 pm)Finally i found Japaneese doesnot make small cars they make Big cars :
Problem is human height :
Average japaneese height :
- male – 170.8 cm (5′ 7.2″)
- female – 158.0 cm (5′ 2.2″)
Average American height :
below 20:
-male – 176.85 cm (5′ 9.6″)
- female – 163.34 cm (5′ 4.3″)
above 20 :
- male – 176.2 cm (5′ 9.4″)
- female – 162.5 cm (5′ 4.0″)
The cars will be roomy for japanees and americans try to fit in these big cars now and making them small.
Dec 6th, 2008 (12:48 pm)Dave K,
I agree a plan to spur demand, not address the lack of funds, is on point.
As much as I’ve read, I’ve missed something. Can you guys help me out? The Cruze has been delayed to 2011, right? Delta platform is to be used for the Cruze, and is in use for the Volt mule. The Volt mule is under the Cruze body. So, the only thing missing is the new 1.4L engine and we’d have the Cruze today, right?
Wagoner was asked if he could speed the Volt to market and offer some incentive for early adopters. He stated something to the effect that they have a huge waiting list (I’m assuming the one Lyle has created here) so demand isn’t the issue. Good answer
I guess I’m going to join the Dave K fan club and say the better question would have been, “why are you delaying the Cruze to 2011, when I see you pulling up in one–body and platform–today?
Dec 6th, 2008 (1:01 pm)hi D Lo #51,
“… why are you delaying the Cruze to 2011?”
__________________________________
It’s because of a lack of confidence. GM doesn’t want the plug-in Vue, the 2 Cruze models, and the Camaro to dilute the Volt. They are fearful of competing with themselves.
Again, poor judgment.
=D~
Dec 6th, 2008 (1:04 pm)There are a couple of things that come to mind after following the events of the past couple of weeks.
1) providing only bridge loans to Big 2.8 now will make if difficult to pass additional funding in the Jan/Feb time frame. This means that the auto makers will appear before congress every month (nov, dec, and jan) for more money. I think that this hurts their business as it underscores the company’s weakness to potential customers and keeps negative headlines in the news. It also promotes the viewpoint that the big 2.8 are destined to go bankrupt anyway, if they are constantly asking congress for money.
2) What about the dispersion of the 25 billion retooling money? Do the current projections/plans provided by the automakers take that into account. There should be money coming out of that program, if it remains in place, starting first half of next year.
I think that the domestic automakers are in a world of hurt hear. Frankly, any talk about a merger between Chrysler and GM seems to be pure folly. I don’t see much benefit from a product offering standpoint, besides mini-vans, what does chrylser add? not much
-Prosser
Dec 6th, 2008 (1:09 pm)Pelosi is doing what the people of San Francisco sent her to congress to do, be as liberal as she can, isn’t it great, San Francisco is running the country
Things are really getting bad I saw where Amsterdam had to shut down a bunch of brothels
And OJ finally got sentenced for murder. That was his murder trial wasn’t it ?
Bush, Pelosi, Obama and all the other nuts in Washington, * STOP THE MADDNESS GET THE GOVERNMENT OUT OF PRIVATE BUSINESS* let us take our lumps and get back to recovering
NO PLUG NO SALE, LJGTVWOTR, DBNGCMEMEV, (my house) =D~~~~(my volt
Dec 6th, 2008 (1:09 pm)#29 & #13 DonC & #30 D Lo:
Assuming that there is any TARP money left when the new Pres. comes in. A highly doubtful assumption, IMHO. I think that they will blow it all between now and Jan. 20.
#35 DonC:
“…any restructuring plan that comes out under an Obama Administration will require more fuel efficient cars.”
I sure hope so. If they can figure out a way to keep these guys on life support long enough for these more fuel efficient cars to materialize, that could be the great opportunity behind this whole hideous mess.
Dec 6th, 2008 (1:14 pm)#54 Casey:
Yeah, private business is doing such a great job.
Dec 6th, 2008 (1:15 pm)#53 Prosser
1 – No need for Congress to pass anything since TARP and 136 funding can provide all necessary funding without congress needing to act. That’s the crux of the argument that there is a bias towards financials — financials get the money while manufacturing has to do the congressional two step. Treasury and the Fed could have moved to help Detroit but choose not to. That will not happen come January 20th.
2 – The plans all submitted by the companies used the $25B in retooling money. While money could be used next year, the time frame is longer and those funds can’t be used for operations, which is what the these loans would be for.
All the disinterested economists and experts made your point that so much talk about bankruptcy was a negative thing. So yes, you are absolutely right.
Dec 6th, 2008 (1:23 pm)Well, if we don’t move away from oil as our SOLE energy form, this recession will look like nothing compared to the ones that follow. Energy costs are what made lower income people default on their risky morgtages. There was a reason all these people couldn’t make payments. They were stretched too thin, and another $4,000 a year in extra energy costs broke a lot of the little guy’s financial backs. Then it just spiraled from there.
Eventually we will half to learn as a society if we are to survive.
Dec 6th, 2008 (1:28 pm)The downturn in gas prices is only temporary. With Iran testing their first nuke next year, and Russia getting cozy with Venezuela this year, it’s only a matter of time before something sets off the next oil panic and prices skyrocket again. Let’s hope Obama makes it a national commitment to be energy independant in 8 years or less. We’ve put men on the moon and probes on almost every planet. We can do something about the American automobile. ‘Nuff said.
Dec 6th, 2008 (1:35 pm)If the gov. would give every man woman and child one billion dollars that would solve all the problems.
Noel Park, (IMHO) private business’s can do a better job than the government
NO PLUG NO SALE, LJGTVWOTR, DBNGCMEMEV, (my house) =D~~~~(my volt
Dec 6th, 2008 (1:38 pm)Hello #48 Dave K.,
“A box popped up that stated: “Due to current economic conditions we are unable to take credit payments on goods, sorry hope you understand”.”
_____________________________________________________
Must have been some kind of fluke, . . . . . .hopefully.
Are credit cards the next collapse ?
http://www.charlotteobserver.com/business/story/283001.html
Dec 6th, 2008 (1:44 pm)Noel Park,
it was Fannie Mae and Freddie Mac (both gov.) that messed up everything and started it all.
Dec 6th, 2008 (1:46 pm)Looking out on my 1/2 acre back yard full of free sunshine today. If I could only get a “bridge” loan I would install a $40,000 solar/electric system. Then I could purchase a $40,000 Volt with another “bridge” loan and be one happy camper.
Wonder where all of these bridges lead? To nowhere! Just like Alaska!
Cheap oil is the problem! Tax oil and pay for all of this restructuring. Humans won’t change without a reason. Trust me- I went through the late 70′s gas lines. Cheap oil changes attitudes and behavior. SUV sales are rising again on the back of cheap oil.
Doesn’t anybody see the problem? Tax oil when it is cheap to make the money to pay for change. Very simple yet Americans view taxes like the most evil thing ever. Funny, everyone likes their social security check and that is tax funded.
Dec 6th, 2008 (1:48 pm)@#49 Tim,
>> The debtor is a SLAVE to the lender.
>> Who do YOU owe money to?
I’m glad you asked (if only rhetorically). I’m completely debt-free, and have spent years saving over half my net income. But thanks to the foolishness of others, it looks like I’m gonna go down with the ship as well.
But I’m not bitter… noooo…. </sarcasm>
Edit/addendum:
Of course, I hear that intense solar radiation is already getting close to penetrating all the way to the Earth’s surface over the south Atlantic. This is due to the ongoing weakening of Earth’s magnetic field, pending a long-overdue spontaneous reversal of its poles which happens every couple of hundred-thousand-odd years. So I guess economic debating (and maybe a little fear and anxiety about it) may be little more than intellectual fappery anyway.
(Can you tell I’m not very optimistic this month?)
Dec 6th, 2008 (1:54 pm)#40 statik said “They are going to come back from break with GM needing more ‘emergency funds’ immediately, and the media ****storm that goes with that. Under the media dark cloud and intense pressure they are either going to have to issue another ’short-term’ bridge or offer up a hastily cobbled together plan…either option would be ill-advised and a PR nightmare fo them.”
==============================================
This scenario is the most likely one.
Dec 6th, 2008 (1:54 pm)#47 DonC said,
#45 Statik – “The credit freezeout/access to cash to the consumer and the dealers is the root of this problem, this bailout neither solves or addresses this…nor can it. The scope is too large, possibly even too large for any government program/bailout to address.”
Right you are. Keeping businesses afloat when credit markets are frozen is pushing on a string. At this point everything other than unclogging the credit lines is secondary. However, that doesn’t make the secondary things unimportant. Cause and effect works both ways. You need stable credit markets for business to thrive, but for stable credit markets you can’t have huge employment losses.
The eight trillion credit bailout program is designed to deal with the credit markets. The one and a half trillion stimulus/manufacturing bailout is designed to deal with the second.
===================================
Yeah, I don’t want to think/talk about it, lol. We know where it ends up when we start going down this road and the cost of the credit bailout program.
Dec 6th, 2008 (2:12 pm)On another related topic:
I don’t see anyone is drawing the conclusion…or thinks they are going to hit ‘benchmarks’ on fuel efficiency or become ‘greener’ because the gov’t is involved and they will ask them to do it.
If anything this downturn, has moved the ‘green shift’ farther out. Just common sense tells me that when GM announced all new projects in development for 2009/2010/2011 are cancelled or on indefinite hiatus means that benchmarks are now more likely to NOT be met, than the opposite.
Short of the government giving GM, Ford and Chrysler a big bag of extra money and labelling it, ‘not to be touched other than to make 50MPG / Tier II bin 5′ cars,’ it is not going to happen.
I good example is GM’s lumbering CXX (large SUV) platform, it was queued for a overhaul, getting small/more efficient, etc. With the recent economic crisis, the CXX will stand as it is…indefinitely.
Dec 6th, 2008 (2:12 pm)What caused the credit crisis?
a. The consumer
b. The lending houses
c. The government
d. Must be answered in essay form and include the words “CREDIT DEFAULT SWAP” throughout the essay.
I pick d.
60 Minutes: A Look at Wallstreet’s Shadow Market P2
http://www.youtube.com/watch?v=GT76vCHKzGM&feature=PlayList&p=011FA19216F28D9D&index=0
Dec 6th, 2008 (2:14 pm)#58.
Sir, that is the smartest thing I have heard in months. It was not the housing crisis that set this all in motion. It was the high price of Gas. Now if we could all get off of petroleum we will all be better off the next time there is a run up in the price of oil. Make no mistake, the next run up is only as far away as a small upturn in the economy that will increase demand.
Take Care,
TED
Dec 6th, 2008 (2:21 pm)Hey Lyle,
You need to offer Volt bumper stickers featuring a ghost Volt image topped with “Bridge Loan Me”.
___________________________
a definition: bridge loan
A bridge loan (‘bridging loan’ in the United Kingdom, and also known in some applications as a ‘swing loan’) is a type of short-term loan, typically taken out for a period of 2 weeks to 3 years pending the arrangement of larger or longer-term financing.
=D~
Dec 6th, 2008 (2:25 pm)#63 avatar says
“Cheap oil is the problem! Tax oil and pay for all of this restructuring. Humans won’t change without a reason. Trust me- I went through the late 70’s gas lines. Cheap oil changes attitudes and behavior. SUV sales are rising again on the back of cheap oil.
Doesn’t anybody see the problem? Tax oil when it is cheap to make the money to pay for change. Very simple yet Americans view taxes like the most evil thing ever. Funny, everyone likes their social security check and that is tax funded.”
======================================================
You hit the nail on the head as far as getting this country off of the imported oil nipple and into electric cars. As far as I can tell no one in Washington is willing to even suggest such a thing though. With gas prices lower than we have seen in a long time this is the perfect time to start ratcheting up the gas tax to help pay for the electrification of the automobile (technology loans, infrastructure, tax credits, whatever). People in this country never seem to take the long view on any issue, the only way to get them into electric cars or more efficient gas cars is to make it painful to keep filling up their SUVs and Hummers. I have only recently come around to this view and still have one gas guzzling SUV to get rid of, problem is it has no value in this economy. I will eventually get rid of it when I can get an E-REV but for now will have to keep supporting the Middle East oil countries, it’s simply to expensive to dump a perfectly good piece of depreciated capital equipment when the operating costs are so low at $1.60/gallon gas.
NPNS
Dec 6th, 2008 (2:42 pm)The government is actually directly responsible for the current disconnect between the US consumer and the lineup of cars being offered in the market…as well as the fact our MPG/emission standards are so poor and lag the world.
(They are not responsible for the Big 2.8 financial failures though…their inevitable financial failure was already pre-destined long before this crisis…and the fact that all cars are not selling right now)
This failure continues today.
Super-Bizarro and fabulously uninformed Congresswoman Maxine Waters attempted to put blame with the Big 2.8 at the hearings for being slow to act compared to foreign automakers, accusing them of refusing to build smaller cars…and a failure to adjust and adhere to legislated standards, that is just not the case. The ‘Big 2.8′ were in a competition against each other to deliver what their NA consumer wanted…big, fast, luxurious cars and SUVs. The ‘Big 2.8′ were chasing market demand, the demand of the American car buyer. That demand was caused by the US government.
While the rest of the world increased gas taxes (doubling US prices), and thereby reducing emissions, adding money to increase their transportation infrastructures, funding renewable energy programs and most importantly CHANGING THE DEMAND of the public for SMALLER, MORE EFFICIENT cars, America did nothing.
It is America itself, its elected leaders themselves who are to blame for domestic automakers building big, polluting, low MPG pigs. Big vehicles that obviously could not compete when held up against their foreign counterparts offerings based out of a much different environment.
Again, it is not the US gov’t fault that the ‘Big 2.8′ are going under, they were already operating virtually dead before this happened…and it is not like the foreign automaker’s smaller/more efficient cars are selling like hotcakes, everyone is down…just moreso in the case of Detroit auto.
If America wants to get real on MPG/emission standards, they have to look in the mirror…and tax the tar out of the gas. You can’t legislate good behavior, but you can punish bad behavior.
Dec 6th, 2008 (3:01 pm)#72 Statik:
Alas, too true.
Dec 6th, 2008 (3:03 pm)#72 statik says:
You can’t legislate good behavior, but you can punish bad behavior.
======================================================
Well said! Why can’t our elected officials see this and do something about it? Hmmm, maybe all that money from the big oil lobbyists… No our elected government representatives would never let campaign donations influence their decisions on what is best for our country would they? (insert sarcasm here)
Dec 6th, 2008 (3:12 pm)I was just speaking with a fellow local small business owner about this. He was furious over these bailouts. I interact with a lot of small business people, and “No one is coming to bail us out.” is a refrain I hear everywhere I go. “Bailout fatigue” is real.
I think that it’s already been mentioned here, but it’s worth repeating in this context. The CNN poll earlier this week found 60+% of the public opposed to the bailouts. So the new administration had better be extremely careful how this stuff is structured and presented. If we give several more tens of billions to these guys, never mind the banks, and then they collapse anyway, the political fallout could be substantial. When Statik invokes a “PR nightmare”, it’s actually a bit of an understatement, IMHO.
Dec 6th, 2008 (3:22 pm)Seems as though the Dems are on;ly interested in saving jobs for those union workers who have provided tens of millions in campaign contributions. I note that the unionized national media is strangely silent on the outrageous wages that the unions are determined to maintain. throwing a few billion to the detroit automakers ain’t gonna do nothing in terms of solving their problesms. Anyone who thinks so is obviously doing the union’s dirty work. Don’t you just love to see Pelosi and her cohorts inventing all kinds of reasons why
govt subsidies for union workers is good for the country? Funny how all those millions of non-union workers thrown out of work
aren’t seeing a penny of govt money to save their jobs.
Dec 6th, 2008 (3:35 pm)There are many good suggestions listed on this thread. We “regular guys” generated all these cost effective repairs in just 8 hours time.
I believe a combination of the listed ideas would stabilize this sick patient. And revive a fiscally hunkered down public.
a summary:
The (government) manufacture of small powerful batteries.
Increased natural gas exploration, battery manufacturing, and metal recycling.
All these banks now have TARP money. Just have the TARP banks loan it to the Big 3.
Have the government step in and help this merger take place, force the reduction of brands/dealers, and get the combined company in a competitive position.
Wagoner said GM should concentrate on 4 brands (Chevy, Buick, Cadillac, and GMC) and sell or scale down the rest (Pontiac, Saturn, Saab, and Hummer).
Let them reorganize under bankruptcy. The fat (UAW, Legacy Costs, Executive Perks etc.) will be rendered and many HUNGRY AND AGGRESSIVE privately funded domestic competitors (Tesla, Aptera, auto X-Prize companies etc) will spring up to hire the laid-off autoworkers at competitive wages and create REAL domestic competition which will produce innovation, reduce costs and improve quality.
A good portion of any government loan is offsetting those development costs. Development which will benefit all Americans in the form of cleaner air, cheaper gas (huh? electric will reduce demand and thereby price), energy independence, and exportable technology.
Rather than a “bridge loan system” a TARP-like instant rebate system shall be installed. This being an instant rebate, after the signature, at the dealership level.
They are only giving out 15-17 billion, is to call Chrysler’s bluff…or at least string them along a bit.
Why not put a down on our volt . Say
$ 500. by way of a GM credit card . That money is good to be used as money to help purchase any GM car .
GM do NOT merge with Chrysler, it will just bring you down more. US focus on GM and Ford restructuring and provide loans for them to get through the restructure.
What about the dispersion of the 25 billion retooling money?
No need for Congress to pass anything since TARP and 136 funding can provide all necessary funding without congress needing to act.
Tax oil when it is cheap to make the money to pay for change.
You can’t legislate good behavior, but you can punish bad behavior.
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Congress better have someone assigned to research the latest news.
=D~
Dec 6th, 2008 (3:54 pm)Oh goodie! Let us go suckle at the teat of Big Government.
Baaaaa Baaaaa Baaaaa
Dec 6th, 2008 (4:08 pm)#72 Statik
While the rest of the world increased gas taxes (doubling US prices), and thereby reducing emissions, adding money to increase their transportation infrastructures, funding renewable energy programs and most importantly CHANGING THE DEMAND of the public for SMALLER, MORE EFFICIENT cars, America did nothing
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I’ve been dying to disagree with you on something over the last few weeks, finally got a chance
IMHO, it’s not the gov’t job to modify my demand for something. If there are external costs that aren’t applied, that’s fair, but the taxes need to be tied to the cost as directly as possible. Like the the gas tax and roads. The more you drive, the more damage you cause to the roads. A flat gas tax is the most efficient way we’ve found to apply these costs. That’s fair. Taxing gas to subsidies other sources of energy or to pay for public works projects is unrelated to the costs which gas incurs on society and is equivalent to a sin tax. Gov’t shouldn’t have the power to tax “sins.” Some gov’ts think unrestrained internet access is a sin.
In summary, I like the idea of alternative energy, but I don’t support gas taxes which are unrelated to their costs because gov’t should not have this power. It’s too risky. Gov’t should not have the power to tell me what I should or shouldn’t do, beyone ensuring that “commons” costs are appropriately allocated.
Dec 6th, 2008 (4:13 pm)“News of a “breakthrough” in the Congressional hearings is reportedly a long planned political misdirection. According to Senate sources a deal to guarantee bank loans to the big three automakers has long been fixed and ‘has been given the limelight so as to distract attention from the $700 billion bailout grant to banks, mortgage lenders and bankrupt government agencies Fannie May and Freddi Mac.’” ap newswire December 6, 2008
Just goes to show. Congress and its leaders trying desperately to shift attention from their own financial debacle by indicting the automakers. Pathetic!
Dec 6th, 2008 (4:52 pm)#35 DonC
The inefficiencies of the bureacratic process are indeed a marvel to behold, especially in contrast with a remorseless self-interested free market. Clearly, politicians incentives are in many ways not aligned with the public’s good, and yet we just keep intrusting them with it. What’s the definition of insanity again…
Just trying to get a jab in
Dec 6th, 2008 (5:02 pm)#80 Real News:
No s**t!
#81 Cautious fan:
So the remorseless self-interested free market has given us Lehman Bros., Bear Stearns, AIG, Countrywide, Citibank, WaMu, and !@#$% near any other bank of any size in the country sucking up to the Bush/Paulson free money honey pot? Brilliant.
Dec 6th, 2008 (5:04 pm)#72 statik “You can’t legislate good behavior, but you can punish bad behavior.”
I respectfully disagree. My field has been in the business of “encouraging good behavior”. Our operating philosophy has been “Don’t make the wrong thing hard, but make the right thing easy”. It’s worked well for us, we find we get much better results.
To use public transportation policy as an example, you could encourage people to use transit by “punishing the bad behavior” — raising parking fees, “congestion pricing”/tolls, eliminating parking; or you could “encourage the good behavior” by making transit frequent, cheap, easy to use, and available everywhere people want to go.
Granted, how you _pay_ for column B might also require some from column A … but without the “carrot” of good transit service the “stick” might not get any results.
Anyway… we’re not talking about public transit, but I hope the analogy makes sense.
The rest of your post I completely agree with. There’s been plenty of arguably well-intentioned intervention in the auto market by Congress which has distorted the industry in ways that are exacerbating our current situation.
Dec 6th, 2008 (5:11 pm)#79 Cautious Fan said,
#72 Statik
While the rest of the world increased gas taxes (doubling US prices), and thereby reducing emissions, adding money to increase their transportation infrastructures, funding renewable energy programs and most importantly CHANGING THE DEMAND of the public for SMALLER, MORE EFFICIENT cars, America did nothing
_________________________________________________
I’ve been dying to disagree with you on something over the last few weeks, finally got a chance
IMHO, it’s not the gov’t job to modify my demand for something. If there are external costs that aren’t applied, that’s fair, but the taxes need to be tied to the cost as directly as possible. Like the the gas tax and roads. The more you drive, the more damage you cause to the roads. A flat gas tax is the most efficient way we’ve found to apply these costs. That’s fair. Taxing gas to subsidies other sources of energy or to pay for public works projects is unrelated to the costs which gas incurs on society and is equivalent to a sin tax. Gov’t shouldn’t have the power to tax “sins.” Some gov’ts think unrestrained internet access is a sin.
In summary, I like the idea of alternative energy, but I don’t support gas taxes which are unrelated to their costs because gov’t should not have this power. It’s too risky. Gov’t should not have the power to tell me what I should or shouldn’t do, beyone ensuring that “commons” costs are appropriately allocated.
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Don’t get me wrong, if I had my choice there would be no tax right across the board/all over the world…but that is not reality. So all the countries have drawn their own ‘lines in the sand’ on the issue.
I am merely saying that the rest of the world moved, while the US chose its own path…and there is nothing wrong with that, they made a decision. In truth, it gave the US a big advantage for a very long time (and in some ways, it still does), in a lot of fields and in a lot of ways, manufacturing, transportation, overhead costs, standard of living for its citizens, etc.
So I think your going to have to wait longer to disagree with me, heeh.
Basically my point was that the US (as lead by our elected officials) chose to take a path not chosen by the rest of the world…and when the economic circumstances changed very quickly to tip favor away from the US model, the government in this particular case is the party that has to take the brunt of the responsibility for the fallout. As this recession deepens and oil looks to trip into the 30s, this stance actually is coming back into vogue…although, I think we will see more moderation to the worldwide norms by the US in the future to avoid such a bumpy ride.
/so I think we still agree on our personal stances? I just failed to clarify it before I made my post–my bad. I don’t know…you tell me.
Dec 6th, 2008 (5:14 pm)We could tax vehicles by weight as the heaver they are the more damage they do to the roads. Judging by the condition of the roads we need some big taxes on heavy vehicles. That would be fair and encourage the use of smaller (hopefully more fuel efficient) vehicles. Has the large SUV rebate been repealed yet, or would that be considered a tax increase?
We could also have a carbon tax, the more carbon you spew the higher your tax.
We also need to stop subsidies for trucks which encourages less efficient modes of transportation. Rail is more efficient, but the subsidies make trucks cheaper.
Dec 6th, 2008 (5:14 pm)#80 Real News
“According to Senate sources a deal to guarantee bank loans to the big three automakers has long been fixed…”
Perhaps. The Bush administration has said from the start that Congress could use the $25B from the green car bill, which he already signed into law, but hasn’t been made available yet. The press certainly knew that.
Further, Ms. Pelosi and the press kept pretty quiet when the press nailed our guys for coming in on private planes. Nowhere was it reported that Ms. Pelosi also uses a (read, taxpayer funded) private plane as well! Harry Reid doesn’t use a private plane, nor did Ms Pelosi’s predecessor.
fwiw.
Let’s just get the Volt back on track.
=D~~~~
Dec 6th, 2008 (5:25 pm)#81 Cautious Fan – “Clearly, politicians incentives are in many ways not aligned with the public’s good, and yet we just keep intrusting them with it.”
True enough. I put this in the same category of democratically elected government. It’s bad but the alternatives are worse.
Interestingly enough in the current crisis the politicians have all the inventive to do nothing but posture. From a voter standpoint the winning line would be “let them fail”. Luckily we have more responsible members. Perhaps this is only because they have safe seats, but whatever works.
Dec 6th, 2008 (5:35 pm)#84 Static
As this recession deepens and oil looks to trip into the 30s, this stance actually is coming back into vogue…although, I think we will see more moderation to the worldwide norms by the US in the future to avoid such a bumpy ride
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I agree. In the 1970′s the U.S. made huge gains in GDP/barrel efficiencies, in large part because people started pricing in price volatility to their buying decisions after the embargo. Interestingly, most did it to to save themselves money and not because the gov’t forced them to. I believe we’ll see this trend again in the next decade, though I’m sure the gov’t will spend billions and try and take the credit.
This is why I love the Volt. The story combines venture capital start-ups, high technology, and grass-roots demand. Notice gov’t wasn’t involved (wasn’t). And it’s an absolutely beautiful concept, so much better then all the gov’t supported initiatives combined, and motivated by nothing else then sweet sweet profits.
Dec 6th, 2008 (5:38 pm)#83 Lurtz said
#72 statik “You can’t legislate good behavior, but you can punish bad behavior.”
I respectfully disagree. My field has been in the business of “encouraging good behavior”. Our operating philosophy has been “Don’t make the wrong thing hard, but make the right thing easy”. It’s worked well for us, we find we get much better results.
To use public transportation policy as an example, you could encourage people to use transit by “punishing the bad behavior” — raising parking fees, “congestion pricing”/tolls, eliminating parking; or you could “encourage the good behavior” by making transit frequent, cheap, easy to use, and available everywhere people want to go.
Granted, how you _pay_ for column B might also require some from column A … but without the “carrot” of good transit service the “stick” might not get any results.
Anyway… we’re not talking about public transit, but I hope the analogy makes sense.
The rest of your post I completely agree with. There’s been plenty of arguably well-intentioned intervention in the auto market by Congress which has distorted the industry in ways that are exacerbating our current situation.
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I hear you 100%, and I can’t argue that my opinion is more valid that your own…because there is a lot of different circumstances that could arise that might lend more creedence to your philosophy over mine.
In truth both your way and my way will get the job moving in the right direction, we could argue which is the best/fastest/most efficient route, but ’6 of one…half a dozen’ of the other.
Although to split hairs I didn’t say that you couldn’t encourage or incentivitize good behavior to get what you wanted done (like you suggested in your field of business). I said that you could not just legislate good behavior and it would happen.. that unfortunately is human nature. The ‘what is in it for me attitude’ rears its ugly head…even in your scenario, you are catering to that basic instinct.
ie) If you passed legislation that said it is the duty of all Americans to buy 33% less gas because it is the right thing to do (gets us off foreign oil, good for he environment, etc), people would largely ignore it because it would inconvenience their daily lives, but if you pass legislation that doubles the price of gas, the end result is met instantly because the punishment is greater than the sacrifice.
I guess at the end of the day, I believe most people are basically evil and are looking out for number one (especially when times get tough)…you probably/maybe believe people are good at their core.
/glass half full
Dec 6th, 2008 (5:39 pm)#70 Dave K
“…pending the arrangement of larger or longer-term financing.”. That’s the part I’m not comfortable with. If congress is going to demand long term viability, then GM wouldn’t need longer-term financing. If they will need longer term financing, for goodness sake, lets get the credit line approved (they don’t have to draw on it immediately) and be done with it.
I’m not sure if any of the big three suggested it, but using TARP funds for special financing, say zero percent, would also be better than handing over cash to the company. The real issue is demand, not labor costs. Cutting leadership salary to a dollar, eliminating the (no) jobsbank and selling planes while well intentioned, doesn’t do anything to spur demand.
Dec 6th, 2008 (5:39 pm)#67 Statik – “If anything this downturn, has moved the ‘green shift’ farther out. ”
You haven’t been reading the white papers from CAP. The Obama Admin is going to drive a hard bargain on this, though see below.
#72 Statik – on the price signals
This is going to be very tricky for Obama with the economic situation and the historical opposition to gas taxes but you’ve hit the issue dead on. There has to be a better way to smooth out the price swings. We go into oil shock, forget about it when the price drops, and then go into shock when it goes up again.
Lutz described CAFE as giving people free food and then telling pant manufacturers that they couldn’t make pants with a waist size over 36″. I love Lutz but we can understand why they haven’t been letting him out in public much.
#79 Cautious Fan – “If there are external costs that aren’t applied, that’s fair, but the taxes need to be tied to the cost as directly as possible.”
Oh yes, those pesky externalities. So you support cap and trade? Just curious.
On the gas front, without running any numbers, my guess is that if you added the health costs attributable to particulate pollution and the costs of keeping the oil supply lines open, gas would be at least $10/gallon. Not sure many would go for that.
Dec 6th, 2008 (5:42 pm)#88 Cautious Fan
This is why I love the Volt. The story combines venture capital start-ups, high technology, and grass-roots demand. Notice gov’t wasn’t involved (wasn’t). And it’s an absolutely beautiful concept, so much better then all the gov’t supported initiatives combined, and motivated by nothing else then sweet sweet profits.
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Exactly, I could not have expressed it better myself. That is the way the revolution should happen. Too bad we got tripped up a little bit with this recession/depression, I think it is going to delay all this good/innovation/capitalism stuff by several years.
Dec 6th, 2008 (6:06 pm)I wonder how much Congress will tack on to this bill for other things not related to the auto industry ?
Dec 6th, 2008 (6:13 pm)statik #92
“I think it is going to delay all this good/innovation/capitalism stuff by several years.”
I hope it doesn’t delay this stuff too much because we to keep innovating to get out of this recession/depression. I always noticed that big technological advances are necessary to pull out of recessions providing the new jobs are in NA.
Dec 6th, 2008 (6:28 pm)Didya notice how there were few, if any, questions by either Senators or Congressmen asking what they could do to ENCOURAGE the business climate? Granted I didn’t hear every word of testimony (something about me having to work for a living), however the only thing I recall asked referred to the silly multiple emissions and fuel standards the automakers have to deal with. Each of them STRONGLY supported a national standard, even if it was the CALIFORNIA one.
It makes sense, so it probably won’t work.
Dec 6th, 2008 (6:37 pm)The problem I see with totally free capitalism is just this kind of situation. Capitalism would doom the Volt along with all of our domestic car manufacturers. Without any dampers capitalism just swings from rail to rail. When the last of the oversight and regulation was removed it promptly headed for one extream, now it is headed for another. Unregulated capitalism allows the greedy to take advantage of the stupid with no limits.
I like the concept of free markets, but it is fairly evident that we not only don’t have one, but all the talk about free markets is a smoke screen to cover the manupulation that is going on makes the playing field less than level. As long as it is tilted in your direction it is great.
Dec 6th, 2008 (6:47 pm)There has been a lot of talk of greedy unions and I personally don’t have much use for them, but to be fair I don’t recall too much hue and cry about those greedy wall street guys. You can bet the boys at Citigroup, Goldman Sachs, AIG et al, were making more than $75 an hour including pension and health benifits. I would say the guys putting the lug nuts on are more skilled labor than the wall street boys, just judging by the results. Financial Engineers, what a joke.
If Congress had listened to the people neither would have been bailed out. I am not smart enough to know what would have happened. Maybe better, maybe worse.
Dec 6th, 2008 (7:30 pm)In a thoughtful comment, #79 Cautious Fan said
“IMHO, it’s not the gov’t job to modify my demand for something. If there are external costs that aren’t applied, that’s fair, but the taxes need to be tied to the cost as directly as possible. Like the the gas tax and roads. The more you drive, the more damage you cause to the roads. A flat gas tax is the most efficient way we’ve found to apply these costs. That’s fair.”
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In a basic philosophical way I agree with you. The question is thus what are the external costs of using a great deal of imported petroleum. There are the direct costs of roads and bridges, which at the moment are underfunded, but there are more.
Although I don’t agree with much of what I see as overheated rhetoric about military costs and Iraq, which are multifaceted situations, it also is true that US foreign policy is influenced significantly by the need for imported oil, and there are considerable associated costs.
And, while complete energy independence is unrealistic, the USA would be much stronger financially if it had less need to purchase so much oil from other countries. That’s been a big change over the last 50 years.
Taken as a whole, I agree with the concept of using external costs as a benchmark. IMHO so doing justifies a considerably higher federal gas tax than exists today, probably several dollars a gallon. It would be too much to do in one step, but it could be done on a schedule, and people would respond rationally if they had a planning horizon. CAFE mandates just don’t do the same thing.
Dec 6th, 2008 (7:53 pm)Notice how Congress and the banks have successfully redirected attention from THEIR colossal failure of Fannie and Freddie? No one even bothers to consider the BAD management by the Congressional oversight committees. They want to whine all day long about private enterprise while the MAJOR financial failure – dwarfing the auto biz – is that of the Federal Government and its mortgage loan debacle.
We do not hear about this much GREATER, stupefying mess in the Fed mortgage racket because the Fed has their fat a*s covered by a press corpse of ninnies!
Dec 6th, 2008 (8:11 pm)I could support a higher gas/diesel tax at the pump if we can devise a plan that would protect our working poor. Maybe something like a tax refund card issued by the gov and accepted at the gas station.
I know fraud, but something should to be done to ease the burden for those who are barely making ends meet now.
A tax that represents 1-2% of my income but 5-say 8% of a poor persons income would be annoying to me and devestating to them.
Dec 6th, 2008 (8:20 pm)The WSJ says about the bailout “The actual funding level remains to be set, but is expected to come in the range of $14 billion to $15 billion, an amount the companies suggested Friday would be sufficient to carry them into March of next year.”
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Extending that calculation, if $15B gets to March (3 months), it takes $60B to go one year, $120B to go for 2 years…. I don’t see what is going to get better.
How much is enough? Doesn’t there have to be some limit?
Dec 6th, 2008 (8:21 pm)Dave K
The Big 3 can sell 333,000 fuel efficient cars each during the first year and be turning a profit.
Cost 1,000,000 efficient cars X $3300 rebate = $3.3 billion
Each of the Big 3 WILL turn a 2009 profit at a cost of $3.3 billion. The good news is that the $3.3 billion will be going back into the pockets of the tax payers.
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Then we have 3 Non Profit Organizations. $3.3 billion earned, $3.3 billion returned to taxpayers.
Dec 6th, 2008 (8:28 pm)This just makes me hope GM goes out of business.
It is bad enough when lefty liberals stick their hands out continuously asking for a hand out but now the people who are supposed to be straight up business men are starting to play by these sleezy methods.
No thanks.
I hope the whole economy goes into depression mode and people finally learn this government give away is just a scam perpetrated to steal your money through inflation and steal your liberty.
Dec 6th, 2008 (8:41 pm)____________________________________________________
A bailout/loan proposal of GM from VOLT fan CDAVIS:
I’m apposed to a taxpayer backed bailout/loan of GM.
The slippery slope of taking money from the many tax payers to provide aid to the smaller number of needing individuals and needing private industries is not a new challenge to American politics as illustrated in my previous Davey Crockett post (#102): http://gm-volt.com/2008/10/09/as-gm-goes-so-goes-the-nation/
I also recognize that the current political and economic circumstances are such aligned that some form of bailout/loan of GM will happen. Therefore the question becomes what is the least objectionable method to provide taxpayer backed aid to GM.
If you boil down the GM pleadings for taxpayer backed assistance, GM states that they acknowledge that they have in the past made mistakes in terms of running their enterprise but that most of those mistakes have been corrected and that if not for the current challenge of individuals unable to finance the purchase of a GM cars, that GM would have been able to successfully execute the plan it had in place to reform itself. In other words, the problem for GM today is that individuals are not able to finance the purchase of a GM car. This being the case, then the most obvious way to apply taxpayer assistance to GM would be for the government to facilitate, (under reasonable credit terms) consumers car loans. This should be easy for the government to facilitate because of the massive financial capital injection the government has recently provided several banking institutions of which those institutions could be charged with the job of issuing consumer car loans using the money already earmarked to provide new consumer loans. Giving GM access to a taxpayer backed loan does not address the issue of consumers not purchasing cars due to the tight credit market. If the politicians also want to affect the type of cars (i.e. high mileage green cars) that consumers purchase with the taxpayer backed loans, then the politicians should allow car loan interest tax deductions for cars that meet a certain mileage threshold
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Dec 6th, 2008 (8:53 pm)It seems to me that the Detroit 3 are always going to need government bailouts if they hope to compete with Asia otherwise they’ll go under. We can’t compete with even moderate Asian wages. unless the unions are willing to accept a lot less which is not their mandate.
A lot of bailout money is recouped in taxes. The taxes to make a domestic car are huge when you add up revenues from income and various sales taxes.
If the auto industry disappears these revenues will no longer be forthcoming to the various levels of governments and the auto workers will at best be working at much lower paying jobs or on public welfare. So I think its better to save the auto makers rather sail into uncharted waters.
Dec 6th, 2008 (9:06 pm)Let GM stand in the same way as it is, so they can survive another 12 month, then it drop dead. This is irresponsible but the best way in short-term, the best way out is to go through chapter 11.
I hate Michigan and will NEVER buy their crap!!!
Dec 6th, 2008 (9:11 pm)#91 DonC said,
#67 Statik – “If anything this downturn, has moved the ‘green shift’ farther out. ”
You haven’t been reading the white papers from CAP. The Obama Admin is going to drive a hard bargain on this, though see below.
==================================
I have a inherent distrust of any plans that do not call for serious change within the first 12 months…the same way I have a distrust for any leader who promises future innovations/benchmarks farther than the term of his presidency. I’m not saying Obama is not full of good intentions or there won’t be 1 million EVs on the roads in America by 2015…but there won’t be, lol. And his hiding in the weeds while all this auto bailout nonsense was going on, did nothing but reinforce my opinion.
I think CAP’s proposal for 4% increase in fuel efficiency standards starting in 2010 (?- depending) I think is stupid, natural market inertia is moving the standard at that rate currently. I do like the tax credits incentives for standard renewables solar/wind/geothermal.
If the government wanted to get serious about fuel efficiency standards and also didn’t want to ‘punish’ the people with a gas tax to make it happen overnight, all they would have to do is ease up on the crash standards/tariffs that are keeping all the Euro-spec models out of the country.
It is ridiculous that I bought a SMART cdi (turbo diesel) in Canada in ’06(stream green color–wife loves it…I would have preferred black) and you couldn’t buy one in the US because the impact zones where a few inches off. Tell me that was really a safety issue that kept them out of the US and not just red tape put up by lobbyiests to keep out super cheap/efficient foreign compact cars off the roads. The fact it has gotten me a REAL WORLD 70.1 MPG over two years makes me skeptical…but that is me.
Side note: The new USA-spec 2008 models are a disgrace (no more cdi here in Canada now either), wieghts 10-12% more, only 7 inches or so longer…OBLY has the higher output gas ICE running on PREMIUM gas rated 70HP/68lb-5spd, can’t get the 40HP/73lb-6spd turbo diesel at all anymore. MPG dropped from 70 to 36.
Dec 6th, 2008 (9:16 pm)#72 Statik says
If America wants to get real on MPG/emission standards, they have to look in the mirror…and tax the tar out of the gas. You can’t legislate good behavior, but you can punish bad behavior.
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I say, why stop there? Tax the hell out of cars, tires, even spark plugs, in addition to gasoline. Why? To finance a rail system similar to London’s -a rail system that would serve EVERY community, small and large. This would, for most people, replace the private automobile. It would operate on a hub-and-spoke system, like a wagon-wheel. Light rail would serve small communities and towns. High speed rail would serve in the place of interstate highways. C02 would be reduced dramatically. And walking to the train stop might encourage some much needed weight loss in overweight America.
Private ownership of a car and truck would have to be justified by the government on a case by case basis, and it wouldn’t be cheap. Cars (such as the Volt) could be rented from the government on an as-needed basis, provided you can demonstrate that you have a reasonable need for a private car. Most cars and jet aircraft would become museum pieces.
Only Congress members would have unlimited access to cars and aircraft, as they possess the intellect to determine, on their own, if the car or aircraft use is truly justified. American citizens have proven, time and time again, that they cannot be trusted to make such decisions on their own. Even now, Americans are buying big SUV’s again. Don’t they ever learn ? If ever we needed Obama, it’s now. Maybe Obama will put America on the right track – the track with clean, energy efficient trains running on them.
Imagine what could be done with all that real estate, currently covered by interstate highways. The homeless could be housed, the hungry could be fed, endangered wildlife could be sheltered. Or we could keep buying SUV’s, invalidate the 2008 election, and put another Bush in the White House instead of Obama. I hear Jeb Bush hasn’t had a chance to be President yet ! (groan)
Dec 6th, 2008 (9:24 pm)Hmmm… Doesn’t anyone see the fix is in for the Fannie and Freddie $700billion bailout for Congress and the two Fed agencies that are totally irredeemably BANKRUPT? Congress and ahem, a certain majority party ran these two mortgage lending agencies into the ground while taking salaries that rival if not beat the automakers’.
But let’s not have to face the facts that the Federal government oversight of these two agencies led to the largest bailout in human history. Let’s just put that in a corner by the fat elephant over there – we call it government malfeasance.
Dec 6th, 2008 (10:01 pm)#72 Statik says
If America wants to get real on MPG/emission standards, they have to look in the mirror…and tax the tar out of the gas. You can’t legislate good behavior, but you can punish bad behavior
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This statement is stupidity squared. Most people have to rely on thier automobiles to get to work and to function in the type of society we have today. Not everyone lives in NYC or other areas where their is some type of decent mass transit. The idea that we punish bad behavior is idiotic. Who is going to define bad behavior? If I take a Sunday drive with my family to visit some nice places is that bad behavior? What is bad behavior, Statik? Please define it if you can.
This Statik always seems to have the dumbest comments on this site.
Dec 6th, 2008 (10:36 pm)If 4 Billion is needed for GM to survive through the year then what are they going to do Jan – Mar to survive next quarter – Sell Cars? Not likely with the jobs situation – I’m not sure they could sell the Volt for 20k right now if they had it. I haven’t heard anything that points positively towards survival until the Volt comes out.
Dec 6th, 2008 (10:59 pm)#2 Tom C says,
With the price of oil under $40.00/barrel customers don’t look at electric cars.
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I agree for the most part. It hasn’t happened to me though. I still hate the people that are trying to kill us and I still hate supporting them by buying oil and gasoline.
For me….No Plug, No Sale.
Dec 6th, 2008 (11:04 pm)#110 Truthguy,
You are out of touch with reality. Yes, it is nice to have lower gas costs for us from a wallet standpoint. But if we continue to consume more gas and oil, the only thing we do is help the people who are trying to kill us.
We need off of oil. The only way to do that is to tax it heavily. I hate the thought personally and don’t want the heavy tax. But it is necessary to effect change. I believe this to be very unfortunate, but true.
Dec 6th, 2008 (11:07 pm)#108 Vector256.
Wow, I had to read that twice. Shocking thoughts indeed.
I’m curious, do you really trust our government that much?
It sounds way to controlling for the bunch of collective idiots in Congress to handle.
Dec 6th, 2008 (11:59 pm)I actually invested some time and watched both of the Senate and House barbecuing of the CEOs; but only after I read all the Plans cover to cover. Much more than most Congress critters did.
I enjoyed the ritual. A ritual much like a bull fight. Stick them with the lances, wave the cape and then skewer them for cheap points.
Some things did come out, though. Coming in 2010 the union wages will equal the transplant wages and the legacy costs are essentially gone then too. The 2007 contract agreed to that but the Companies have paid about half the money they agreed to contribute to get out from under and owe another $25 billion or so in 2010. That will be turned into preferred stock and pushed out. You could even say that the cause of this near bankruptcy liquidity crisis is two fold. The credit freeze and the Union legacy buyout, hitting at the same time.
Statik thinks this bailout is all there is. He is far from correct. Some real changes, a ‘non-bankruptcy’, bankruptcy is coming, and some big dollars are in the mix. What happens next week is merely a tide-me-over until post January 20. Mr. Bush is letting Mr. Obama have full choice and is merely holding feet to the fire to negotiate a better deal for the government and make the car companies/car unions and car creditors to get serious, without doing anything to tie Obama’s hands. He has done this adroitly, yielding brilliantly, IMHO.
Depending on how much Congress provides now, it will be until March 1st or March 31st when the big things will have happened, and the restructuring essentially shaped. The Balance Sheets of all need restructuring and it will come. Bondholders will get shaved, and converted to equity, at $.30 on the dollar, or so . The Union has gotten reasonable. Dealer networks are being rationalized, and shrunk enough to allow the remaining ones to be profitable, and provide good service.
Statik is correct about the credit freeze. But that is traced to stalling by TARP and typical government bureaucratic do-nothingness. The Ford, and Chrysler Credit organizations have been trying to be declared ILCs as Toyota and Nissan’s finance arms already are. GM wants a full commercial Bank status for GMAC, and that may be too much, but ILC status is certain. As soon as the statuses are regularized, as ILCs, essentially needing only a phone call by Treasury and/or the Fed, and that happens, they will line up for $12, $12 and $5 billion to reliquify those credit facilities and auto financing and more important reinvigorated wholesale financing for the dealers will return.
That alone will produce an increase in sales of about 20% as that is the current turn-away rate of would-be buyers when no financing can be arranged, as reported by Dealers.
So $30 billion of TARP money will go to the finance arms. That $30 billion in addition to the $34 the automakers want as working capital. Add in the replenished “improved mileage pools” of $25 billion, and some amount of money, like $34 billion for working capital and essentially DIP financing as ‘non-bankruptcy’, bankruptcy restructuring proceeds. So the total is about $80+ billion or so. Enough to do the actual job, and not a band-aid.
Other interesting things is that 80% of the GM job of moving its dealer network has been completed. Eighty percent of Pontiac, Buick and GMC sales came through troika dealerships in 2008. That’s much further along that is thought. Ironically bad times are forcing dealer closures/consolidations, and weeding out the weaker ones, so the remaining ones will be stronger. Which is what the automakers and the remaining Dealers both desire.
Nancy Pelosi is adamant that her pet financing pool for higher mileage will be replenished, and it will come from new appropriations. The auto makers ALSO want the principle established, and looking back should have fought for it back in the early Seventies. Instead the idea got started that the politicians could just demand anything they wanted and not have to pay for it. They just said the automakers had to pick up the tab for their “wishes”. It also encouraged and led to lots of irresponsible behavior by the Green demagogues. Now the new principle represented by the government paying for its demanded improvements is something dear to the hearts of the automakers.
When Congress has to actually pay for its new programs, there is some modicum of discipline, (not much) in the process. But getting it “for free ” by demanding that the US automakers develop it and then require them to give it away to others at minimal licensing fees was a very damaging precedent. Back then there were no transplants, so foreigners were only required to utilize the technology developed “for free” by the US automakers.
The US makers have been bled for over $100 billion for things like developing the catalytic converter, continuous tuning for emissions, closed loop feed back systems, better pollution controls, etc. The same applies for safety systems. Zero pollution PZEV, ICEs are only possible because the US makers paid for it “for free”. Mean while they were constantly condemned by the idle wacko politicians, who never had to govern or to chose. All they had to do is throw a temper tantrum, denounce the unconscionable automakers, and wail that they wanted something and not next year, but yesterday, as Cost was no object.
We ended up with the cleanest air and water in the world, so it was a nice thing to have. Clean air is accomplished now, by and large, but the irresponsibility bred is still there. Even if you believed that GHG and AGW was a problem, it isn’t something that is immenent and going to occur in less than a hundred years, so there is no sane reason to demand things be done this year or next, when five years from now is still 45 or 95 years sooner than really needed. That is if you actually believe that the H20 and CO2 are really bad; unlike the undisputed toxic effects of CO, SOx, or NOx, and think it’s nonsense and not needed at all, if you read modern Science and not enviro propaganda. But its certainly unnecessary as a crash program, at the cost of a major industry. Electic auto will provide the all the reduction ever needed anyway.
Irresponsibility was evident in the House grillings. Ms. Maloney D Manhattan NY, Ms. Speirs D Haight -Ashbury and Maxine
Waters D California were self-evident ditzes of an unprecedented scale. Mr. Barney Frank actually had to silence Ms. Spiers and terminate her time as she complained that amid the discussion of bankruptcy in a few weeks, why was it that the automakers were not going to meet the 2020 laws for emissions by 2015 and Why Not? Thereafter Maxine Waters, amid the testimony that ALL the auto dealers could not get financing to wholesale their vehicles, and CEO appeals to get the government to treat the finance companies as some of the rescued banks, insisted it was a racist plot to ruin Black dealers in particular. It never dawned on Waters that the people stalling IFC status essentially worked for Her; and she was the one with the authority to get the bureaucrats off their collective asses and do something with the ILC applications that they were sitting on.
I only wish these DINGBAT clowns were visible to their constituents. and next election they would be laughed out of Office. Barney Frank rolling his eyes as if to say “Why me?” as he shut up one of these idiots said it all. Even if they are fellow Democrats, he had to suffer the fools. Not that all the mentally challenged were Democrats. The Republican from Illinois was certain that facts were not as they were. His pre-conceived and erroneous ideas had closed his mind.
OTOH, There were some genuine Stars. Senator Corker R TN, cut directly to the chase. His grilling and ideas shaped the Senate ideas on both sides of the aisle. Even Democrats in the House were singing his praises, and he deserved them, IMO. He forced the CEOs to confront the need for balance sheet restructuring, even if they will swing to enormous profitability in good times. An unexpected contribution came from Sen Bennet of Utah; He confronted the need to find a domestic merger for Chrysler and actually drew out both Mr. Nardelli of Chrysler and Mr. Wagoner of GM as to what the benefits were of the proposed merger in both views. When it was ascertained that both thought a merger was a good idea, only stopped due to the press of the liquidity emergency, he offered to require the merger as an amendment in the bridge loans, when it would save the government some $10 billion dollars, over a few years.
GM actually wants Chrysler, ironically. And its even clear why. Coming down to four brand and three distribution Channels. Chevy, PBG,and Caddy leaves some areas to be filled. They have no real comprehensive Jeep off-road brand with smaller vehicles, as Hummer giant SUVs disappear. Saab probably goes to GM Europe where it naturally belongs, and Saturn could be the import dealerships for Opel/Vauxhall. Pontiac is being killed, and will becomes a sub-brand to fill out the offerings for PBG dealers. Pontiac gets either small cars or sporty ones. PBG dealers want a volume seller and the Dodge lineup slots in for Pontiac pretty well, provides the high volume Minivans unique to GM. Dodge also augments GMC trucks at the low end and in the Commercial truck business as well. A Ram 1500 instead of a Ciera distinguishes GMC from Chevy trucks. GMC heavy duty trucks are superior to Dodge but Dodge has the Cummins connection and GM has cancelled the small truck diesels. The CAB chassis business helps commercial GMC, too.
Jeep logically goes to Chevy, I suspect. GM really doesn’t have a full line-small and mid-size off-road ID. GM revealed that absorbing Chrysler would give them savings and added income of about $10 billion a year in normal times.
Dec 7th, 2008 (12:14 am)Rashiid @114 – I think Vector was just being sarcastic.
CD @104 – Nice idea, won’t work. We’re down over a million jobs in the last three months. Good financing deals will not get sales volume up enough to save Detroit.
Statik used the word “depression.” Not singularly, but as a possiblity. Not the first time I’ve seen that one today. If we were using the pre-Clinton method of calculating unemployment, then you would probably be hearing it even more. BTW Statik – the last time we had real national unity was the Great Depression/WWII. So if hard times brought people together, does that mean people are basically good, and the glass is half full?
Dec 7th, 2008 (12:46 am)#98 RB
The problem with factoring in costs other than direct costs, is that lobbyists and congressman will work hard to include their pet project. At that point, ANYTHING will be considered an indirect cost. Once you cross that line, it becomes a meaningless standard and the winner is the best lobbyist. Also, in your opinion, you think we’d be stronger if we were free of oil, and I agree. But neither of us can really calculate all the economic benefits from burning oil. The stuff has high energy density, low volatility, not corrosive, etc. It’s not easy to replace economically. Which is why we should leave it up to individuals to decide when to move away from it. I’d trust an individual to behave in the own self-interest before I’d trust Pelosi or Bush to behave in mine.
Dec 7th, 2008 (12:47 am)#91 DonC
You’re reaching there on the costs, ignoring the benefits, and ignoring the costs of alternatives. But on the Cap & Trade, the concept is excellent and is the type of system that is most efficient. But no I don’t support it because:
1) The direct costs are EXTREMELY debatable. Even believing the worst case scenarios, you’ve got to ask what the effect is of your pollution.
2) The money is simply taxes and not allocated to repair damage from the warming. Let’s face it, the European C&T is a sin tax. The money is not saved or spent on repairing damage from global warming. It disappear into the coffers.
I would support the C&T if the actual costs were better known, and if the money was spent to pay for the damage. At that point, it’s a classic “commons” problem.
So I keep throwing my philosophy out here…..I’m waiting on yours.
Dec 7th, 2008 (12:55 am)#115 Stas
Coming in 2010 the union wages will equal the transplant wages and the legacy costs are essentially gone then too.
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My understanding is the 2007 contract specifies that NEW EMPLOYEES will get the lower wages. Existing employees get the same wages & benefits (as of the last contract). Considering that there won’t be new employees for a while, legacy costs certainly aren’t gone and are effectively unchanged.
Open to correction here…..
Dec 7th, 2008 (12:57 am)WOW. If we could just capture all the gas in this thread, we wouldn’t NEED a Volt.
Be well,
Tag
LJGTVWOTR!! NPNS
Dec 7th, 2008 (1:33 am)In the meanwhile, once the auto industry is corrected then the hatchet men can begin work on Fannie Mae and Freddie Mac. Government funding will be withheld unless the 35% bad mortgage loans are called. This means that hundreds of thousands of families will be thrown out of their homes. But, they will all be repatriated to government housing units on the following basis:
2 parent i child – 650sq ft one room unit
2 parent 2 child – 800sq ft one room
2 parent 3 child – 1000 sq ft two room unit
Single parents will be given the 650 sq ft units regardless of number of children. In the northeast government housing will be centralized through the Fort Dix Federal Housing Authority in the southeast it will be Fort Benning and Stewart. In the west all relocation housing is coordinated through Fort Pendelton.
The failure of the low income housing program illustrates the inability of federal agencies to manage the taxpayer’s money. Not only have hundreds of thousands lost their homes – the taxpayers are obligated to pay off the banks Fannie and Freddie forced to provide credit – and hold the bad paper. That paper may one day regain some value – much lower than face – .15 cents on the dollar.
The auto loan guarantees total around 20 billion. The bankruptcy of Freddie and Fannie has cost the Treasury $$700 billion. And there are no products forthcoming from the treasury or the defunct agencies to sell. It’s a real bailout. Money you and I will never see again. Thank you Congress, Treasury and Fed Agency managers.
WAKE UP Volt nuts! Your government just hosed you while you were looking at the shiny car keys.
Dec 7th, 2008 (2:58 am)#118 Cautious Fan
I don’t think I know enough about C&T to have a real opinion. Probably not all that different from where you come out, except for thinking it’s unnecessary to use the tax to repair the damage. For example, the health costs from auto pollution are not that squishy — the studies indicate that the pollution causes more deaths than auto accidents. Taxing gas to cover those costs should deter the use, and hence the harm, regardless of whether the taxes go to the health department or somewhere else.
Being able to connect a specific harm with a specific victim is important in legal proceedings — they involve remedies — but doesn’t seem relevant for prophylactic purposes.
Dec 7th, 2008 (2:58 am)Cautious Fan #119
good points
Dec 7th, 2008 (3:19 am)#115 stas peterson
Pretty well nailed it, even down to the timeliness. A couple of quibbles:
1. Jeb Hensarling from Texas is as annoying stupid as Maxine Waters. Well maybe not as annoying but close. DVRs with fast forward do have advantages.
2. The legacy costs are still a big issue which will have to be addressed. The wage rate gap will still exist even in 2012 — it will just be minimal. (Some people think think this is a big deal, I think the work rules are more important). But the health and pension costs will still be there for retirees.
3. I’m not sure brother Bennett deserves the credit you’re according him. He was lobbied very very hard by Cerberus, and his merger points are in line with what that private equity firm has been advocating. I’d be reluctant to sign on with a wad of cash for those guys. They need to take their lumps.
Dec 7th, 2008 (5:31 am)hi Bob McGovern #102,
Dave K
The Big 3 can sell 333,000 fuel efficient cars each during the first year and be turning a profit.
Cost 1,000,000 efficient cars X $3300 rebate = $3.3 billion
Each of the Big 3 WILL turn a 2009 profit at a cost of $3.3 billion. The good news is that the $3.3 billion will be going back into the pockets of the tax payers.
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Then we have 3 Non Profit Organizations. $3.3 billion earned, $3.3 billion returned to taxpayers.
____________________________
I think you missed my point. The odds of the Big 3 paying the bridge loan back are not good. By implementing the instant rebate plan the Big 3 can sell their efficient cars at near full value. So the Big 3 will make a profit on as many as they can manufacture. The instant rebate replaces the money the Big 3 are asking for. So, if the Big 3 want money, they will need to manufacture a lot of efficient cars.
And, as I mentioned before, the tax paying public will own efficient cars at a very low price. This plan is a sure bet, wherein the bridge loan is high expectations with no benefit to the paying (and losing) tax payer.
=D~
Dec 7th, 2008 (6:03 am)Well a deal to January gives a couple more months development on the Volt, so its got to be good.
/Looking for the proper pre-production Volt mule to arrive.
Dec 7th, 2008 (9:07 am)The lowest I’ve seen gas in the last several years was $1.83 (in washington state).
I just started driving 2 years ago, and I was so excited to break my record of cheapest gas I ever bought (used to be like $2.40, now it’s like $1.88). I even kept the receipt in my car, lol.
Dec 7th, 2008 (10:08 am)#115 stas says,
“Statik thinks this bailout is all there is. He is far from correct. Some real changes, a ‘non-bankruptcy’, bankruptcy is coming, and some big dollars are in the mix.”
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I haven’t mentioned it lately, and my criticism in this thread is to do with actually underfunding this ‘bridge’ not that I disagree with the bridge itself or that it is the last thing to happen.
Actually the opposite is true. I have been saying (and making up terms) like “Government Sponsored Bankruptcy” is the only viable alternative left for GM for a very long time…long before it was popular, or even mentioned:
Here is my post from 3 weeks ago…before the ‘plans’ were issued, the bailout was in doubt (still looking for that extra 25 billion…not raiding the ‘retooling’ billions) and Wagoner was still yelling, “bankruptcy is not a option”
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#30 Statik says
November 18th, 2008 at 11:12 pm
C11 thoughts.
In my mind it is NOT feasibly possible to do it right now in any traditional (or way it was intended) sense, as you say credit is unavailable. Actually, it is remotely possible that most decently healthy companies will be swallowed whole by this economy, so thinking GM can pull off a C11 is dellusional thinking…at best.
What needs to happen here is a government sponsored bankruptcy, which sounds like a official, real entity…but it isn’t, I made that up.
Basically, the check list goes like this, (at least in my mind), the government gives GM some cash out of the ‘its just a retooling loan…no wait it is a bridge loan’ fund. (Look for the real deal to be tabled friday-ish and the money to go out 15 days later, lets pencil in December 5th or 8th lightly in our calenders)
With this money and another few billion from Cerberus it takes over Chrysler (which also scored a touchdown of billions from the US gov’t). It quickly streamlines the management and other random things it can still do on its own. Then it enters C11 (with a predestined/gov’t approved plan) where it cuts brands, dealerships, covers the union in pwnsauce, destroys lots of the suppliers who don’t make critical parts (retains/supports the ‘good/major’ suppliers from the artists formerly known as GM & Chrysler)…and unfortunately, totally oblivates you (if you are still around) and various other debtholders.
After it does all the twirrly things C11 can do, the government strolls up to the bankruptcy judge and plunks down another 25 billion or so, gives him the wink, and it is abnormally accelerated out of C11. (Ideally, a 3 month process…which would be unprecedented, but this is 2009ish and the gov’t is pretty much doing whatever it feels is necessary…so never say never).
GM/Chrysler is reborn as a debt free, with a product deep and rich, with employee costs per hour the envy of all its peers. At which point, the economy could be in a depression and it goes under…or things have levelled off and we get another glorius 100 years of summer buying our American made/America proud cars.
source thread for quote:
http://gm-volt.com/2008/11/18/auto-company-ceos-testify-before-the-senate/
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So lets go over the checklist. I think I nailed this fairly well, even before the parties themselves knew what they were going to do.
Gov’t gives GM money?: check
Gov’t does not give them a new bailout package?: check
Gov’t raids the ‘retooling’ loan?: check
Gov’t calls it a ‘bridge’?: check
Dec 5th or 8th for approval of bridge?: check
Plan to cut dealers? check
Plan to cut brands?: check
Plan to cut down unions?: check
Plan to obliterate debt holders?: check
Plans to take gov’t cash and eventually merge with Chrysler? Now talked about
Plans to get cash out of Cerberus for taking Chrysler? Being discussed still
Plans to have the government backed bankruptcy? Not specifically. But plans to get all the things done that would be done in bankruptcy by putting a ‘drop dead clause’ that puts GM into bankruptcy if all parties don’t agree to capitulate.
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Stas, (other than the part about me, lol), I enjoyed your post very much, I agree with almost everything you said, thank you for taking the time to write it. You have a very broad perspective on things, which I think is invaluable to being able to assess the situation.
(I don’t connect the credit freeze with the stalling by TARP and typical government bureaucratic do-nothingness…but that is only semantics at this point)
/thanks for the read
Dec 7th, 2008 (10:23 am)#110 truthguy
#72 Statik says
If America wants to get real on MPG/emission standards, they have to look in the mirror…and tax the tar out of the gas. You can’t legislate good behavior, but you can punish bad behavior
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This statement is stupidity squared. Most people have to rely on thier automobiles to get to work and to function in the type of society we have today. Not everyone lives in NYC or other areas where their is some type of decent mass transit. The idea that we punish bad behavior is idiotic. Who is going to define bad behavior? If I take a Sunday drive with my family to visit some nice places is that bad behavior? What is bad behavior, Statik? Please define it if you can.
This Statik always seems to have the dumbest comments on this site.
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Thanks for the shout out.
/drive a smaller car
Doubling the price of gas does not render everyone to travel on foot. It makes everyone drive much smaller, more efficient vehicles (trucks included)…it forces technology to increase faster to meet the needs of the people.
Your Sunday drive with the family is now done in a Cruze rather than a G8. Costs you the same…you still get there…we use half as much foreign gas…we pollute less.
If you drive a new Cobalt now and you can’t afford the gas as it stands, you have to buy a couple year old Cobalt to lessen your payments. If you already drive a beat up, small, fuel efficient car and you can’t make the payments, you are already on the fringe of society, and probably you shouldn’t drive a car at all and you should be living in the city were there are more services/infrastructure to assist those who can’t help themselves.
/slanderous insults cast you in a bad light and also devalue what you are saying…regardless if you are right or wrong
Dec 7th, 2008 (10:54 am)#114 Rashiid Amul and #116 MarkinWI
Al Gore is the one who said ICE’s are the biggest threat to the planet Earth, and it appears Statik is willing to follow his example. Statik says Gov’t MUST punish bad behavior, especially in Canada. It doesn’t take that much foresight to see what the next step is. As risk of being redundant, I will repeat myself from #108:
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“Private ownership of a car and truck would have to be justified by the government on a case by case basis, and it wouldn’t be cheap. Cars (such as the Volt) could be rented from the government on an as-needed basis, provided you can demonstrate that you have a reasonable need for a private car. Most cars and jet aircraft would become museum pieces.
Only Congress members would have unlimited access to cars and aircraft, as they possess the intellect to determine, on their own, if the car or aircraft use is truly justified. American citizens have proven, time and time again, that they cannot be trusted to make such decisions on their own. Even now, Americans are buying big SUV’s again. Don’t they ever learn ?”
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Most people don’t think beyond “What wine goes with Marinaded Chicken and Artichoke Hearts?” Congress members don’t have to worry about mundare matter like that. This frees their minds to contemplate weightier issues, like global warming, and the enviroment – Things most people take for granted. Yes, they are smarter than the average person – you can be sure they would NEVER take their own private jet, to hold out a tin cup asking for bailout money. It called THINKING, people – it’s that they do.
Don’y worry – once the gov’t controls health care, people who disagree with Congress would be diagnosed as self-destructive, which is a mental illness. They would receive appropriate treatment, until they can no longer remember why they questioned the wisdom of Congress. Then, they would be cured, and could safely reenter society.
Now, what are the names of those opposing the gov’t bailout again? Those poor, sick people need help !
Dec 7th, 2008 (5:28 pm)Yep. It’s a good thing that disagreement with government and it’s ability to plunge two of its own agencies (Fannie and Freddie) into bankruptcy to the tune of $$$700 billion taxpayer dollars – makes the crooks err, government shout: “He’s crazy!!”
Dec 8th, 2008 (12:01 am)What some people here fail to grasp is Gm’s plan is a load of bulltish. It makes a wild asumtion on the number of cars the market will bare in the next 3 to 5 years. What if the market drops to 7-8 million sales, what does that do to their plan? Toast? What if new vehicle ownership has reached saturation point? What if the recession lasts 2 years? Its not a very good plan.
Hang’em I say, hang’em high!
Dec 8th, 2008 (8:27 pm)Auto makers being at a critical moment in History are needing us to help them make the most extreme changeovers on behalf of the requirements of the environment that even the most skeptical are no longer denying. This requires LOANS that are in the most appropriate sizing and duration and low interest. Public discussion as read in these responses are very helpful for the various parties to more closely conform not only to the public expectations (with respect for past frustrations) but also in the way that commentary progresses to lesser and lesser “heat” and greater and greater “light”.
We are all part of those incredible and historical changes right this very second. Our commentaries are all very helpful in the determination of all our futures and our own future adaptability.
That the Auto Makers seriously and sincerely need help in these transitions in not at all to their discredit, but absolutely to their credit, your credit , and the future potential for the survivability of your kids, nephews, nieces, and those of everyone else.
Your participation, skepticism voiced, ideas, technical contributions, listings on the Volt “waiting list”, are each a critical small decision which will greatly impact future generations for the better, as I am completely convinced.
GM is the company where, through its bold sharing of the developments of the Volt, absolutely gains my deepest respect (and my business to buy one), because this sort of outrageous courage and distinctive honesty is the way that all businesses should to business. Otherwise, if you could not be able to see the “goings-on” of all the new technologies which must be researched for the Volt, hardly anyone would understand what they are purchasing, and how it works.
There are many dozens of other technical reasons why I hold GM in the very highest of esteem, but there is not enough space here to list others of them. Instead, I will hope to be able to continue to contribute posts exclusively regarding the Volt as the topics of the articles become available to me and you.
Dan Petit Austin, TX
Dec 10th, 2008 (12:07 am)Dave K is onto something with the rebate idea. Instead of throwing money at the problem, put an incentive out there for all to participate in the manner desired Consumers to buy (and finance) fuel efficient cars, car manufacturers to make (profitable) fuel efficient vehicles, and the country as a whole reducing oil dependence and improving air quality. Also eliminates all the nonsense of a czar (perfectly socialist sounding, no doubt) paying executives $1 (how hard would you work if your salary was reduced to $1? how long might you stay in that job?) and other ridiculous provisions proposed by pompous hypocrites.
US Debt = $10 trillion. How about Nancy Pelosi take a salary of $1 and Barney Frank, too? Oh, and while we are at it, lets appoint a Czar to watch over government expenditures over $25 million. I hear the King of Cartoons is available.