Big 3 bankruptcy would cost taxpayers four times more than bailout

UAW doesnt get a bonus. They're getting laid off left and right.

Last time I checked I do not own the failing 3. So why do I owe them something for what they have done?

veyron,

every comment I've ever seen from you on this site is for lack of a better phrase, absolutely retarded.

(no offense to the mentally/physically challenged)

Shut up. Seriously, you're not even intelligent enough to debate with. You've never presented any tangible points in any of your arguments. You just don't like American auto companies, no matter what they do.

YOU DON'T OWE THE BIG 3!!!!!!

Get out of my country, you self serving maggot. Who won world war II? Well, according to the leader of the communist world (Joseph Stalin), "Detroit won WWII". Who gave millions of Americans their version of the American Dream? DETROIT DID

Who has taken care of the health care and pensions of millions of Americans? DETROIT DID AND STILL DOES

You don't have to worry about millions of retirees and current employees being a strain on your precious tax dollars because Detroit OVER took care of its workers.

Veyron1001, you are an ungrateful, ignorant moron. Once you graduate high school, maybe you can get a job yourself and understand the value of a strong AMERICAN economy.

Which is one time less than bailing them out, and then they still go bankrupt...

I'm just saying...

exactly. if big 3 are bailed out, theyll just go bankrupt again. bankruptcy actually saves companies. look at the airlines: one goes bankrupt, merges, then they dont go bankrupt again. bankruptcy forces companies to improve themselves

Please stop comparing a service provider with the auto industry.

You can't just merge GM & Ford (for example) overnight and think that things are going to be rosy. Each auto company on the earth has its own systems, powertrains, platforms, etc. Merging competing auto companies who are both huge is nearly impossible.

However, if GM were to get ahold of Chrylser, this could yield benefits, but the likes of which would be long term.

Short term could be worse.

Also, no one buys from bankrupt automakers. Big3 already have a public perception problem.

I see the bailout costing us even more now because it is just buying them time to live a few more months...they are destined to fail now, every customer I talk to says they have lost their trust in the big 3... they have dug themselves such a big hole they can not get out...The bailout will cost us tons and when they do go under we will be paying...so I say let them go under now so we don't have to pay twice...It is sad and I don't want that to happen but the BIG 3 are BIG LOSERS

Doesn't matter IF IT IS 100000x MORE expensive.

It is a matter of principle -- the FEDERAL GOVERNMENT DOES NOT BAIL OUT PRIVATE COMPANIES.

Its almost 2009 and we live in America.

Principle means nothing, especially when your principles subsidize asian economies.

Nuke the UAW and let the workers work for peanuts like those at the US Honda, Toyota, BMW and Mercedes manufacturing plants.

Just let me push the button :-\

Not too sure what side you are on with the sarcastic comment. Seems to me, the workers should be paid fairly... at what ever the market will allow. If someone is willing to do the same work for less, then the company should be allowed to hire the cheapest labor. When we want our roof done, we go out and get the cheapest quote...right?

The UAW is basically a legalized, government empowered extortion outfit that says the auto companies can't go outside to get competitive quotes. Consumers of the big 3 cars have been screwed by that for years.

honestly, If getting rid of the UAW would get funding for Loans, then I'd say no problem.

Trick would be to have the gov make sure that legislation requires that certain previous agreements are still honored, and a new worker's organization is created within each company to ensure safety and fairness. No more UAW factory rules (none of you know what that means anyways... maybe 1UAW... so please ask if you want to know)

Pension should be worker-run, with some sort of company contributions.

Just like has been done with almost all big businesses (including the Big3 salaried workers).

pretty ridiculous to compare the cost of chapter 11 (which should happen) to this little bridge loan. the $15 billion bridge loan only gets GM and chryler to february. and what miracle will happen to stop them from asking for another $15 billion in 3 months.? answer: nothing. this bailout is equivalent to shoveling money into a fire.

they should file for chapter 11 and have their labor contracts and debt restructured and management removed. only massive change in structure and strategy will enable a sustainable business model.

bankruptcy is the only long-term solution.

Long term bankruptcy for Big3 = no big3.

No offense, but if you think GM can survive bankruptcy, you're not thinking clearly. November sales statistics prove this, 20-30% of new car buyers avoided the big3 solely based on the baseless and meaningless crap they saw in the media and in congress about the big3's quality, fuel economy and bankruptcy.

neutral:

the big 3 most certainly can survive bankruptcy. in fact, bankruptcy is the only way they can bring about the necessary restructuring of contracts with creditors and the UAW.

the government can play a role here by guaranteeing the warranties on cars so that consumers have the confidence to buy.

if not bankruptcy, how would you restructure the industry to enable a sustainable business model? i'm very curious to know.

If the gov wants to help in legal-restructuring issues, then they can pass laws to do so. They can pass a law that specifically allows detroit to make the changes it needs.

Essentially, they just just cut the parts of Ch11 they want and paste it into this new law.

Just have to say GM/Ford/Chrysler instead of creditor/debtor, etc.

Also, since the gov bailed out the banks, the gov has control to force new agreements with any bank/financial institution that holds big3 debt.

Essentially do the desired things that Ch11 does, without actually going into bankruptcy. What good would bankruptcy do once GM goes from selling 9.3 million in 2007 to 1 million in 2009. The company would go under.

Either way, the liquidity issue is present and pressing. The gov/big3 can restructure in the coming months, but they need a loan for right now.

Also, all the mindless bashing of the Big3 is really helping sales. Good thing we have an informed congress that came prepared to all of these meetings. its even better that the bobblehead media morons are even less informed.

"cut the parts of Ch11 they want and paste it into this new law"

are you serious?!? this would set a precedent that could wreak havoc across american industry. BAD IDEA.

chapter 11 has functioned well for years. no reason to change it.

I know it would be a bad precident, however un-conventional times call for un-conventional solutions.

CH11 would work fine if the public had no idea of it, but as we've seen, this is not the case.

Figure it this way... if you're 50/50 torn between an Infiniti G37 and a BMW 335, and lets say Infiniti is in tough financial shape and is in Bakruptcy, which are you going to buy? From a purely logical analysis, you'd get the BMW. (assuming they're both similarly priced).

So, Honda Accord or Chevy Malibu, assuming that GM is in Bankruptcy? The average consumer isnt an enthusiast, so they don't care. The average consumer doesn't care about warranty guarantees from the gov, don't care about supporting American industry, etc... All they want is to make sure their money isn't spent on a vehicle that could end up being a massive paper weight.

Then comes the argument that GM would have to have massive discounts lure buyers.... thus making little profits (most likely loosing money) and further contributing to the overall losses.

it's like a beggar tells you that if you don't give him a quarter he will make you lose 50cents.

or more

he may sneeze in your coffee. what are you gonna do?

Funny how when the banks ask for $700B all Congress asks if they want that in small unmarked bills. For the automakers it is the third degree. I think that they are doing a fair job of turning around now... a bit late but then again the American consumer was the one demanding all these huge SUVs for years and years. Now with the huge economic downturn almost every country with a large automobile manufacturing base is getting government assistance. I personally think it would be a tragedy to see our last large scale manufacturing go down the tubes.... which is a very real possibility if they end up in bankruptcy. Also if I am not mistaken the taxpayers will get the bill for health care and pensions for the worker who retired in the 50s, 60s, 70s, 80s, 90s, 00s... That is one of biggest costs they have that most other car companies don't. They have far fewer retirees (way smaller companies back then) no health care cost (govt pays it) and that reflects in the overall compensation that is reported on for UAW workers. Not saying the UAW is great either... paying idle workers to play checkers etc... is really stupid. Anyways I think they should look at doing something to avoid bankruptcy if a loan package/bailout could be structured with some sacrifices all around. Then again if the numbers we keep seeing on these pages keep up ... nobody will be buying cars anyways if we all go broke!

banks ARE the system. when banks collapse, ALL businesses and ALL consumer are destroyed. by providing liquidity to the banks, the government was saving our entire financial system.

saving businesses that have no viable business model is a different thing entirely. furthermore, GM has been on the brink of disaster for 20-plus years. they DESERVE the scrutiny. and they deserve chapter 11.

Why was there practically no scrutiny of those bank loans? That is what I was pointing out, not that they were made. They are even paying out fairly nice bonuses this year... after they got the bailout money. From what I am seeing on the news and hearing from business owners they have not seen capital being freed up either. If anything they are saying it is getting even tighter with stricter requirements and credit lines being withdrawn or the interest rates going up to 29%. And this is in businesses that have been going on for %+years and are doing relatively ok... but are now in a real crunch.

Here is nice example from the AIG insurance company bailout
http://www.bloomberg.com/apps/news?pid=20601087&sid=aKIvmgvNl6zA&refer=home

and from the banks
http://www.guardian.co.uk/business/2008/oct/17/executivesalaries-banking

valhallaley is correct about pensions,

but lets look long term... we as a nation will "survive". But what will we do? Just be a nation of bankers and paper traders?

-Hundreds of billions to the middle east
-Hundreds of billions to china
-Hundreds of billions to Japan already, and extra hundreds of billions going to Japan/Korea once we LET our industry die...over 34 billion dollars (the US government spends $2-3 trillion a year.. don't bitch about 34 billion... most of what the government spends is wasted anyways.... ie Iraq).

One of the problems of the financial crisis is that a bunch of wall st. guys were essentially printing money. As we have seen, that crap doesn't work. You actually have to produce something. Time to defend AMERICA for the long term. We need a ban on Japanese imports for 1 year, its not fair, but neither is foreign health care or pension plans. Then again, what can Japan do? They'd have to build more plants in the USA!

Not like Japan can retaliate, its not like they let us sell anything there anyways. Also.... we could remind the Japanese of how much the US TAXPAYERS are paying to keep the Chinese military at bay.

Americans need to get back into American cars now that the Big3 have been making good cars. No more subsidizing asian economies.

You all must be wondering why I single out asia... quite frankly.. if you want to spend $100,000 on an S-class, be my guest, we don't compete with Germany too much. The average american can only make bad decisions with $30,000 rather than the $100,000 required to buy an S-class, Maserati, or 7-series.

and by the way.. if i had tons of money to waste, besides an Escalade, CTS-V and ZR1, I'd be right in line for an S63 and Maserati GranTurismo S.

Sorry Michael Moore (moron), this consumer wants those vehicles you claim no one wants.

" its not fair, but neither is foreign health care or pension plans."


so you blame foreigners for NOT BEING as BULLHEADED and downright STUPID like our congress (collectively all of us) REJECTING national health care? as for pension plans, we have a (weak) version in soc. security, for which avg. joes pay FAR MORE proportionately than the fat cats in our society.

"Then again, what can Japan do?"

they can stop SUBSIDIZING u.s. gov't debt. who do you think is BUYING all the u.s. bonds sold to float the nat'l debt?


"Also.... we could remind the Japanese of how much the US TAXPAYERS are paying to keep the Chinese military at bay."

sure, we've been protecting them from Martians too!!!

find me one japanese that thinks the chinese will come pouring into their country if not for us!

americans have been propagandized for decades into believing in "threats" that are minor to non-existent.

why do we spend more on "defense" than the rest of teh planet combined? who the hell will even THINK of invading us? they'd much rather just trade with us.

if we weren't flushing billions down the toilets that connect direct to INFLOW for the 'defense' industries, not only could we EASILY AFFORD to bail out detroit. the money circulated among regular folk would even result in MORE SALES of cars so there won't be need for future bailouts.

obama has the right idea, to pull outa iraq asap without causing undue long term damage. we should also CLOSE ALL overseas military bases. and 1/2 of the ones within the country too.

our whole set of national priorites has been screwed up under GOPpy misadministrations.

the Big3 are constantly bashed about their costs, everyone points fingers at them telling them they have to be competitive, yet in other economies (Japan/Korea/Europe), the massive healthcare costs and retirement costs are no problem of companies.

And you tell me why is it that we keep 1 or 2 aircraft carrier battle groups right close to China/North Korea? Sure, theres only a 0.001% chance either one of those countries will cause any military problems, but if there is a problem, we can't get caught un-prepared (search Pearl Harbor on Wiki).

Also, you say we need to cut back our military presence around the world eh? I agree and disagree, depending on the situation, but you want all US forces back in the US. That screams of isolationism.... so we should only buy cars from the Big3 then too..... we wouldn't want to be too reliant on foreign countries.

Next time China/N.Korea conducts missile tests towards Taiwan or Japan, watch and see the US military reaction. We send a battle-fleet to the area and guess what---- no more missile testing!!

I think it's high time we send Japan/S.Korea a bill.

i don't even know where to start....so i'll skip it.

you sound like the leader of north korea. i'm glad you have no impact on our industrial and economic policies.

yeap, the leader of N.Korea.

Glad I have no impact on our industrial or ecomomic policies eh.

if you actually read my many posts on the subject matter... why bother... you haven't and you wont

And you act like our "industrial" & economic policies are good?!?!? Thats right, those same economic policies that landed the whole world into recession, shrank the middle class (into the lower class), and invite any foreign company to come and compete in America on an un-level playing field.

Those same industrial policies that are more based on what makes good P.R. vs what reality is?

Stop it already.

And just like people buying SUVs that get poor mileage,

No one is forcing foreign nations to buy our debt. They WANT to own our debt, it makes them money in the long term and it means that they got us where it counts.

I say get the hell out of iraq and use that is being wasted there to give the Big3 a loan/stockbuy. Give em 100billion wasted iraq-war dollars on condition that restructuring goes well. If all goes well, the Gov just holds non-voting shares of the company. If stupid things start happening (ie the pontiac aztek), government can demand payment on loans.

neutral

Having expressed your opinion on Iraq AND the Big 3 bailout, I must say this......

"Two wrongs don't make a right!!"

So you support being in Iraq (and its trillions its costed the US taxpayer with NO return) but dont want to give a loan (worth less than half of 1% of what we sent to iraq) to one of the last vestages of US industrial might?

Just when Detroit seemed to have things under control.... oil has to wildly spike and the financial world collapses. B.S. if I've ever seen it.

This is my solution. The Big 3 think they will lose sales if they go bankrupt due to lack of confidence in
their products(warranty claims....) The big 3 spend about 5 million per year on warranty claims. What if the government set aside 75 million for the next 5 years of warranty repairs. Take the remaining money thay are asking for and try to buy out as many pensions as they can. They need to reduce the legacy cost on each car they build. File for bankruptcy restructure their product line and union contracts. I think they could get through this a leaner and more profitable Big 3

Hey, if I seriously thought Bankruptcy would be the best route, then I'd be all for it. But this is a special case...

Also, Im pretty sure they spend a LOT more than 5 million on warranties per year. The big quality gains are as much a drive to lessen warranty costs as a desire to make good cars so people would buy them for their reliability. I haven't looked this fact up, but theres something like 200+million cars in the USA... 5million per Domestic per year seems low.

check out this link http://prod.gm.gmgssm.com/corporate/investor_information/docs/fin_data/gm07ar/content/financials/notes/notes_13.html

Also, lets just be real here. If the government wants restructuring of debt, they can get it (hell, $700billion buys a lot of banks, doesn't it).

Why should the government be shelling out money when if done properly, all the government has to do is give a loan.

These senators who oppose the loans are jerks. They don't want to see detroit succeed (contrary to what they say). It's not in their state's interest (alabama). They pretend that theyre "protecting the taxpayers". If they were really protecting the taxpayers, they would look at the costs of not providing a loan. Retardation at its worst.

Glad they were protecting the taxpayers when:
-We invaded Iraq
-We spend 750billion/yr on military
-Outsourced everything
-Government "stimulus" checks (wasted money)

Give me a break.

Gov should force the banks to restructure GM's debt. Gov could also finance the UAW/Pension VEBA agreements so the retirees are taken care of, GM wouldn't have to pay for X number of yrs, and the taxpayers wouldn't have millions more people on medicare/medicaid/welfare.

This can all be done outside of Ch11. Ch11 is something to be avoided at all possible costs.

Scare tactics; I don't buy it one bit. The Big 3 need to reinvent themselves or go out of business. If Joe Public doesn't support their products why should they be permitted to use our taxpayer's money to continue business as usual?