Borrowing from Peter to pay Paul?

Why not, the white house has been borrowing trillions from the Chinese to finance a war. This is the reality of the ‘responsibility’ party. Ushering in a new era of personal responsibility, my a$$!

I demand a federal bailout for Disk based Hard Drive makers, they failed to invest into that new SSD based technology that by the end of 2009 will make all Disk based drives obsolete.

If we can give 700B to an industry that straight up f*cked stupid people, why cant we give 25B to an industry that has done nothing but try to improve in the last 5 years, especially considering the money has already been set aside for them in a different form (as stated in the article above). Where does that money go if the companies go under? back to the tax payers? HA yea ok

^exactly what i was going to say

Seriously, a couple 100 billion to AIG, and a 10th of that too 3 of the biggest world-automakers? Wtf Congress, wtf.

Rumor is the housing industry is coming next to the US Taxpayer feeding trough. The solution to the car manufacturers is not “business as usual” which is what the Big 2.000001 are essentially saying with some spin on matters. I have to give Nardelli credit as when asked about vehicular batteries is was honest and said they were not there yet. The spending habits of the US consumer regarding vehicles is not going to change overnight and probably not for years. Where does that put US car manufacturers in the coming year, and year thereafter? DC will probably make a good faith effort, but I doubt it will be enough. There are so many other newer and better industries that could actually make better use of the funds for a stronger America. The enthusiast automotive market will survive and prosper; the mass-market is going to take a beating as it is to competitive.

I hope my ‘lame duck’ Canadian government will follow suit as well. The US may be waiting for Mr. Obama to assume the throne but despite having a federal election of our own only 2 months ago there’s already been an attempt by the 3 opposition parties to overthrow the ruling minority Conservatives. Our Governor General dissolved Parliament until January 25th meaning any action regarding the automotive sector is unlikely until then. Both sides appear to be in favor of some level of support but we’re also having the same issues at the dealer level as the US with banks being unwilling to make credit available to bolster their inventories. The funniest thing however is that it hasn’t been a bad year up here, in fact among the top 3 ever with sales at 1.6 million and counting.

@johnnycanuck, word is that Congress is very close to approving the $15B. I do believe that you are correct, Ford might be the only one standing when all the smoke eventually clears a few years from now. A good time to make some quick money off day trading stocks and pull out as many will probably do; long term is a different matter.

I guess no more job banks… and the UAW will “NOT” get the $13.Billion form the Big 3 so they can put in there account for the so-called medical fund, I mean they did say they will do that, and don’t forget Volvo dose look to be more profitable then Saab now that both are on the open market, so Ford may not need some of that loan money…

But still $15.Billion for the Big 3, vrs. $700.Billion… for the banks & Wall St. … And with Government over-see, wear’s the the watchdog’s for the $700.Billion???

****ty move by Bush to cut the Big 3 short by giving his big “YES WE ARE IN RESECTION” speech and make it seem as if it was his top priority to help them out… and what a coincidence that the unemployment report was release before that very speech…. He made them all rush before they can get the numbers right, so they settled for 1/2 just to keep everyone “happy”…

Another Big Coincidence… the banks that have benefited the most of the $700.Billion, are the same banks that hold and insure the accounts of Exxon Mobile,(big-oil) the same oil company that the BUSH family own a part of… Huummm………

What did W. Bush had to say few weeks ago about the auto-loan, “they can work it out in there own”…
“The American tax payer dose not need to pay for the mistakes of top company exec.” but now he’s saying we are in recension and maybe that is what hurting the American economy…

I guess he didn’t what to be the one that let “everything” go to ****tt….

Don’t forget that CONGRESS (run by the Democrats) approved the $700 billion, so there’s plenty of blame to go around.

I see the necessity to provide Detroit with loans (with the exception of Chrysler, perhaps), but I still don’t understand why GM and Ford can’t go to the banks, who are flush with tax payer money right now. Chrysler should be receiving funds from their parent company.

Lastly, I hope Congress doesn’t micro-manage GM and Ford to death. Can you imagine Pelosi chiming in on the design of the next Corvette???

convince the world ethanol is the answer, make some jobs in that industry, be the #1 in ethanol exports, save the planet and the economy.

If it assures the timely delivery of the new Camaro, $15 billion is a small price to pay.

how the monetary system really works: http://www.zeitgeistmovie.com
it’s really effed up

@yarddog82abn, I know you’re an enthusiast, so I am not worried as you will still have and be able to sell automobiles to the enthusiast. You have highlighted the biggest issue with funding the Wall Street—accountability. This will slow any other funds released, and it also shows how Washington was never designed to be a bailout entity.
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@DetroitWatcher, the fact that it is any politician, party affiliation aside, means that it is screwed-up!
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@howsmydriving, now, that’s funny, but I do want to see the Camaro make it.
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Here’s a great article (I do not not care who wrote it, and from which blog, as I like the article so please read it first then pass judgment): Saving the Big 3 for You and Me

Ford and GM can’t go to the banks for the same reason that 75% of the people on this board can’t qualify for a decent car loan right now – the credit markets are punishing anyone with average or below credit.

Right now, Ford is not taking any money unless GM and Chrysler go bankrupt – none of this $15 billion is actually Ford’s. So, no need to worry about them being micromanaged. As for GM and Chrysler, well… let’s just say I’m not optimistic that our government won’t micro-manage.

Although, I kind of just wish they’d shut down Chrysler gracefully or sell it off.

Robert: Agreed, but (wishful thinking) the fed should be strong arming them a bit to loan some of that $700 billion to the Big 3. I actually think that part of the reason Ford is not pushing to hard for the $$ is because they know that the Fed would try to micro-manange… which would be an instant death sentence.

Unless Cerberus funds Chrysler’s turn around, it should definitely go quietly into the sunset.

LLLL3: Correct… not trying to single out either party… just bitching equally about both.

So i heard on the news this morning that congress agreed on a rescue bailout. But, does anyone know how much they are giving?

whoever the congreeman or congresswoman vote for the bailout should be voted out of their job next term.

This is worse than communist China…..the free market is no more in the western societies. This bailout should be viewed as legalizing the corruptions.

@Comrade Elviososa

Comrade Elviososa there has never really been a free market anywhere. Just competing interests that have varying degrees of political clout. It’s the way of the world. In the West we have the Rich, the Bourgeois and the Poor. The Rich are the Commissars, The Bourgeois pay all the taxes and do all work and the Poor exist, as George Carlan (r.i.p) would say, to scare the Sh*t out of the Bourgeois class.

So be a good plebeian and drive what the Central Planning Committee (CPC) under the direction of Comrade’s Pelosi, Frank etc., offer us. If you don’t like what’s offered you can try and influence the CPC through various Special Interest groups that help formulate Official Party Doctrine/Dogma.

Official Party Doctrine changed to… from each according to their ability, to each according to their need (s)…awhile back. In closing, a word to the wise, don’t rock the boat and get with program Geez, I hope nobody overheard us 8-|

DB9

@ Lariat Luxury Locomotive Liner No.3
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“Here’s a great article (I do not not care who wrote it, and from which blog, as I like the article so please read it first then pass judgment): Saving the Big 3 for You ”

Mike Moore… /sigh

Honda and Toyota should get 30 billion

Let’s be a bit pragmatic. The reality is that if GM went bankrupt tomorrow, in all likely they would be completely closed in the next six months without government intervention. Their supplier base would be devistated because they are all already teetering on bankruptcy. Chrysler would probably already be gone if GM had to close. If GM takes out its supplier base, it is likely that Ford won’t survive despite the fact they are far healthier than the two. Any major suppliers left standing after GM goes down will come down with Ford.

Most GM and Ford suppliers also feed Toyota, Honda and Nissan plants. Those companies would be forced to pay billions of dollars to save critical suppliers. Stop production in the U.S. and shift it back to Japan at least for 6-12 months as they get their supplier issues sorted and in the meantime would have to lay-off thousands as well. Toyota’s profits will shrink $7-8B this year. Imagine if they had to dump an additional $7-10B in their NA operations just to keep the dealerships stocked. In all likelihood, those shockwaves would ripple in about 12 months and be directly or indirectly responsible for 1-1.5 million job losses around the nation. In an economy this fragile – that’s a death sentence. You might think that Toyota and Honda would recover quickly with traffic coming from the now bankrupt GM, but my guess is our annualized sales rate would drop around 30-40% for 6-12 months. Eliminating most of any bump they might have seen.

The government would likely lose an NPV of $250-300B in revenues by my estimates (calculated with some very rough assumptions about the time it would take the economy to recover after this and ignores debt costs completely due to unemployment insurance and health care, etc). The real total might be close to $500B when all is said and done, but that’s the high range. $350B sounds about right.

Let’s say you give GM and Chrysler $15B now and maybe $15B later so that you’ve pushed their failure off to at least 2010 and maybe GM can squeak it until 2011 before their debt overwhelms them. The result is you’ve spent $30B to delay a failure that would cause massive cascade effects in the industry. It gives Ford, Toyota and Honda time to shore up their supplier base and isolate themselves from a GM bankruptcy. Chrysler will likely be sold off and split up by 2010 (imo). A GM failure will still hurt an economy that is recovering, but not nearly as much as an economy that is set to experience GDP declines as high as 2.5% in Q1. There is also a chance that GM will be able to continue operating because they’ll get better support from the private banking sector. My best estimates for max lost value is $75B (assuming no more Chrylser and GM continues operating at 1/3 its current size). For the price of $30B, we’ve saved ourselves $275B. That’s a 9x return.

Personally, I don’t care if GM is going to go under anyway or if Chrysler will get sold. What I do care about is causing a string of massive job losses that will push our recovery out from Q409/Q110 to Q111/Q211. That’s even worse than throwing away $30B of taxpayer money – because we’ll lose much more than $30B.

Of course, I don’t expect anyone to understand this logic. People think very short-term, individualistic and not in the grand scheme of things. GM should go bankrupt right now. It will allow innovation, of course. Capitalism always works (ignoring the last 3 months). Well, let me tell you that the elimination of 3 major competitors in a space won’t help competition and GDP growth in the range of -4 to -6% won’t allow for much funding for new automotive start ups (that are cash intensive). Capitalism works if it isn’t teetering on the brink of destruction. I suppose I could be completely free market and hunker down with my beans and wait for my pink slip… but I’d rather be pragmatic than unemployed.

@Mutant@DCX, that’s why I prefaced it as such. I read a wide swath of articles so content is more important to me than author. I can take or leave Moore’s endeavors.

@Robert

For a person with such a normal name compared to the rest of us, you’ve got the right idea. My question: Doesn’t Congress and the rest of the US Gov’t KNOW this?

@Robert, I get your gist, but in reality you are supporting a failed system for the sake of jobs that might be temporarily saved, and at best lost eventually to the realities of the marketplace today. All this is simply a stopgap measure being paid for by the taxpayer versus starting to move on and face the choices that have been made formerly, the economy as it is today, and the future. There are many other areas of employment that will now be asked to pay for this when they are not be affected, and this will build a resentment. Our country’s founding principles were never to do what it is being asked to do today—this holds true for the financial sector too; it simply creates more problems than it resolves.

fair enough, hehe, sh!t, when I finally get the boot, i`ll prolly get into making biased documentary movies like mike. Film tax credits in Michigan ftw.

You already know by now that for every lie that you made, you have to make 10 more lies to back it up. This bailout is actually the second lie that backing the first lie (bailout of the wall street). So..we are going to see more lies in the coming days. The next will be….well…you can fill in the blanks.

@Lariat

I understand your statement in principle, but I can’t think of another industry that is as closely connected – in fact, dependent upon its competitors, especially in rough economic times, through suppliers and such – and employs as many people.

For example, the C7 bankruptcy of an airline would probably lay off 10s of thousands. But that’s about the end of its impact. American Airlines does not depend on anything United to operate. American does its maintenance in-house. It’s not like they both share a third-party maintenance supplier that would go down with United and force thhem to stop flying. They both buy planes from Boeing, but if Boeing went bankrupt, it actually wouldn’t ripple significantly through for about 5-8 years (the timeframe of the order books).

Our country’s founding principles actually didn’t mention anything about what is going on today. The government cannot forcibly remove property without certain cause and compensation (imminent domain), but GM’s not being forcibly taken over, and we, as a country, have a precedent of IRS collecting our money for the operation of our government and its activities (as decided by our elected officials). Please don’t bring in a talking point full of patriotism but lacking substance.

Again, if GM is truly going to be uncompetitive forever, if this bailout will not actually allow them to change and respond in the marketplace, then they will eventually go under. I’m not suggesting a long-term investment in them. I’m suggesting we prop them up until other sectors can recover and absorb the blow. I realize fully that it might simply wash away $30B in taxpayer money. But it will likely save our government $300B in return. That’s $300B they won’t have to come requesting (requiring) from us or borrowing from China.

My whole goal is to, as you put it, temporarily save jobs, because right now, things are so tenuous, that temporarily saving jobs that will eventually be lost is better than letting the system crash on itself all at once. Those are called economic shocks and can be devistating (there were two of them that drove the Great Depression). We haven’t had a recession this bad in a while and all the factors are there for a deep and prolonged downturn (ie – 2-3 years of true recession economics and probably 3-4 years of slow recovery). If GM goes down while we are at our weakest (Q109 will be the true bottom with our largest YOY GDP drop by my estimates, with Q2-Q3 still technically recessionary), it will hurt a lot more than if we’re recovering and it goes down. It will slow our recovery, but credit will be available to healthy businesses, jobs will be growing in other sectors, etc. The point is: we cannot absorb a GM failure (and its related consequences) right now. That’s simply pragmatic economics – not theoretical or textbook in anyway (ie – all hail the free market and shun dead-weight loss, etc etc).

This, of course, ignores the question of whether GM could eventually be viable. You imply it never can be But to that, I disagree. I say they can be. All the indicators are there. The product line is getting overhauled. The financial mess was being cleaned before the car market shrunk 30% in 6 months. They aren’t nearly as far along as Ford, but Ford brought in someone from the outside to turn it into the world’s best automaker (and, frankly, he just might). I suspect that if GM gets a bailout, Wagoner will be very closely watched and cut loose the instant he missteps – he’s run out of second chances (that’s assuming they don’t require his resignation to get the money). There’s no reason an inefficient company can’t become nimble and competitive, but your statement assumes that they can never transform, and I don’t share that sentiment, because the evidence is slightly (although not 100% convincingly) contrary.

So while I believe some job loss is inevitable from GM (bailout or no), I do believe that it would stave off something much worse for our economy. And although economics teaches us that dead-weight is bad, sometimes in a global marketplace it is better to eat some of that loss for long-run socioeconomic and political stability (given that we’re probably going to see even more dead-weight when our government loses $250B in tax revenues and continues doing stupid things).

You are a dumbass, robert. Don’t forget about Boeing who makes the planes for airline companies. Having 1 less airline company as a customer is a huge hit, which will lead to more layoffs. Think before you talk.

@ crackerhemi

With a backlog of over $200B in orders, the bankruptcy of an airline will do nothing to hurt Boeing’s bottom line right now. Their backlog takes some of Boeing production schedules into 2015 and options into 2018. About 20 airlines with major orders with Boeing would have to go bankrupt to affect them immediately.

Facts are killers, aren’t they?

Alternate Plan A: $15 Bil
Replace vehicle that are 15 years or older that do not obtain at least 20 mpg and that do not meet the latest EPA polution standards by having the government assist the general public to purchase a vehicle from Chrysler, Ford and GM at the manufacturers cost plus $5000.00. The individual would be responsible for the $5000 over a period of 36 months.
This would give the U.S. manufacures the money to then pay their suppliers and recoup their labor costs for the vehicles that they have already produced and keep the system intact to then develop new more fuel efficient and alternative vehicles. The older inefficient vehicles being removed from the system would then reduce the amount of imported oil needed and polutants exhaused. The inventories of the U.S.car manufacturers would be reduced by approximately 0.5 to 1.0 million vehicles and maybe make the general public more receptive to helping with further funding by the new congress in January 2008.

Then what happens to all the left over cars? Build more junkyards?

Once again, robert, you are wrong. Most of that 200Billion backlog is not for commercial planes, but from military contracts. Think before you talk, robert.

Logic is killer, isn’t it?

Oh, for *** sake:

737 backlog: 1500 units (~$100B)
777 backlog: 350 units (~$75B)
787 backlog: 900 units (~$100B)

Of those, the largest order of all U.S. carriers is American at 80 737s in the next couple years, 6 777s in 2012-2014 and 50 787s in 2012-2018. Barely a blip and certainly a blip that won’t affect them until maybe 2012-2014.

Any questions?

so…Boeing will be the next in line to ask for the bailout?…Cool…they will claim the fall of Boein will affect the defense and the safty of the U.S.A……ok…after that…who is next?? Any big shipping company???

Sorry Robert, some people are just to thick and plain stupid ^ to understand what you’re saying. They’ve made up their mind, and it won’t be opened for anyone.