OT - Financial mess 101 ($700 billion bailout)
Moderators: Bill_Abner, ScoopBrady
It looks like some lawmakers grew a pair of balls, thank god.
http://news.yahoo.com/s/ap/20081211/ap_ ... ress_autos
WASHINGTON – Labor, the auto industry and lawmakers bargained in unprecedented private talks in the Capitol Thursday night, struggling to salvage a $14 billion government bailout of the Big Three carmakers.
"We're closer to agreement," Senate Majority Leader Harry Reid of Nevada said after several hours of talks, although he also said an accord remained elusive.
Officials said the negotiations centered on possible wage and benefit concessions from the United Auto Workers union as well as large-scale debt restructuring by General Motors Corp., Ford Motor Co. and Chrysler LLC.
http://news.yahoo.com/s/ap/20081211/ap_ ... ress_autos
WASHINGTON – Labor, the auto industry and lawmakers bargained in unprecedented private talks in the Capitol Thursday night, struggling to salvage a $14 billion government bailout of the Big Three carmakers.
"We're closer to agreement," Senate Majority Leader Harry Reid of Nevada said after several hours of talks, although he also said an accord remained elusive.
Officials said the negotiations centered on possible wage and benefit concessions from the United Auto Workers union as well as large-scale debt restructuring by General Motors Corp., Ford Motor Co. and Chrysler LLC.
Part of todays 200-point drop in the Dow attributed to the stalling of the bailout in the Senate.Rodster wrote:It looks like some lawmakers grew a pair of balls, thank god.
http://www.marketwatch.com/news/story/U ... 8D8D92B%7D
Late Wednesday, the U.S. House of Representatives approved a $14 billion federal loan package to the Big Three automakers in a 237-170 vote. But Senate Republicans were mulling alternatives, saying they couldn't support the bill in its current form. See full story on a deal for automakers.
"That the auto bailout is not going to go through, or at least not in its current form, is discouraging people a little bit today," said Ken Tower, market strategist at Quantitative Analysis Services.
- pk500
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Big Three bailout dies in Senate because UAW won't accept wage cuts until 2011 instead of 2009.
I'm ambivalent about this. The damn unions are up to their typical ass-covering bullsh*t, but why weren't such stipulations attached to the banking bailout? Why didn't Congress slash the pay of banking executives, whose industry received a bailout 45 times larger than what was proposed for Detroit?
The Dow will be a bloodbath tomorrow. I'm predicting a 400- to 500-point drop.
Take care,
PK
I'm ambivalent about this. The damn unions are up to their typical ass-covering bullsh*t, but why weren't such stipulations attached to the banking bailout? Why didn't Congress slash the pay of banking executives, whose industry received a bailout 45 times larger than what was proposed for Detroit?
The Dow will be a bloodbath tomorrow. I'm predicting a 400- to 500-point drop.
Take care,
PK
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Supposedly, a Bush admin. official told the GOP Senators that if this bill doesn't pass, they would be forced to pay out of the TARP funs, which Paulson doesn't want to do.
EDIT: Forgot to add, that if they had to loan the companies money out of the TARP, they wouldn't be able to attach as many stipulations to the companies and the UAW as they would in a separate bill.
EDIT: Forgot to add, that if they had to loan the companies money out of the TARP, they wouldn't be able to attach as many stipulations to the companies and the UAW as they would in a separate bill.
Good points Paul. WTF?pk500 wrote:Big Three bailout dies in Senate because UAW won't accept wage cuts until 2011 instead of 2009.
I'm ambivalent about this. The damn unions are up to their typical ass-covering bullsh*t, but why weren't such stipulations attached to the banking bailout? Why didn't Congress slash the pay of banking executives, whose industry received a bailout 45 times larger than what was proposed for Detroit?
The Dow will be a bloodbath tomorrow. I'm predicting a 400- to 500-point drop.
Take care,
PK
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http://apnews.myway.com/article/20081212/D95106M80.html
"Congressional Republicans have been in open revolt against Bush over the auto bailout. Senate Minority Leader Mitch McConnell of Kentucky joined other GOP lawmakers Thursday in announcing his opposition to the White House-backed bill, which passed the House on Wednesday. He and other Republicans insisted that the carmakers restructure their debt and bring wages and benefits in line with those paid by Toyota, Honda and Nissan in the United States.
Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. (TM) at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.
GM says its total hourly labor costs are now $69, ($69x40hr p/w x 52 weeks = $143,520
) including wages, pensions and health care for active workers, plus the pension and health care costs of more than 432,000 retirees and spouses. Toyota says its total costs are around $48. The Japanese automaker has far fewer retirees and its pension and health care benefits are not as rich as those paid to UAW workers."
I just am not feeling their pain. I say let them declare bankruptcy and renegotiate all their contracts including those with the UAW which got the auto industry into this mess. It's like the fat kid who wants to lose weight but doesn't want to give up his weakness for candy and junk food. Sorry, bitches it's time to put away the candy and hit the exercise machine.
"Congressional Republicans have been in open revolt against Bush over the auto bailout. Senate Minority Leader Mitch McConnell of Kentucky joined other GOP lawmakers Thursday in announcing his opposition to the White House-backed bill, which passed the House on Wednesday. He and other Republicans insisted that the carmakers restructure their debt and bring wages and benefits in line with those paid by Toyota, Honda and Nissan in the United States.
Hourly wages for UAW workers at GM factories are about equal to those paid by Toyota Motor Corp. (TM) at its older U.S. factories, according to the companies. GM says the average UAW laborer makes $29.78 per hour, while Toyota says it pays about $30 per hour. But the unionized factories have far higher benefit costs.
GM says its total hourly labor costs are now $69, ($69x40hr p/w x 52 weeks = $143,520

I just am not feeling their pain. I say let them declare bankruptcy and renegotiate all their contracts including those with the UAW which got the auto industry into this mess. It's like the fat kid who wants to lose weight but doesn't want to give up his weakness for candy and junk food. Sorry, bitches it's time to put away the candy and hit the exercise machine.

- pk500
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In theory, I agree with you, Rod. In practicality, the industry in which I work needs a solvent, functioning Big Three.
The practical side of the equation helps provide me with a paycheck, so that tends to overrule the theoretical side.
There must be some way to find strings attached to the bailout that can fit around the UAW. But again, why no such strings attached to the banking bailout?
Take care,
PK
The practical side of the equation helps provide me with a paycheck, so that tends to overrule the theoretical side.
There must be some way to find strings attached to the bailout that can fit around the UAW. But again, why no such strings attached to the banking bailout?
Take care,
PK
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400? pfff. I'm thinking 1000+ drop. Just in time for my 401k to fund this month, perfect.pk500 wrote:Big Three bailout dies in Senate because UAW won't accept wage cuts until 2011 instead of 2009.
I'm ambivalent about this. The damn unions are up to their typical ass-covering bullsh*t, but why weren't such stipulations attached to the banking bailout? Why didn't Congress slash the pay of banking executives, whose industry received a bailout 45 times larger than what was proposed for Detroit?
The Dow will be a bloodbath tomorrow. I'm predicting a 400- to 500-point drop.
Take care,
PK

I'm guessing that there are more stipulations this time because...
1) Banks and finance are more important than cars (yes, the big 3 support a ton of jobs, as do the industries that also feed off of that industry, however if a carmaker goes belly up, it's not going to be armagedeon like it would be if our entire banking system went belly up.)
2) With each bailout, they're getting more stingy and learning from it...\
The first time your adult kid asks you for money, you just hand it out lovingly. The second time they ask, you might ask them what it's for, when it will be paid back, etc... The third time, you're writing up a notarized promissory note and showing up at the bankruptcy hearing when he tries to screw you.
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We agree with each other more than you think. I don't for a minute realize that family and industries will be hurt. What I do think is that the auto industry would be better served with a temporary level of chaos and a smidgen of being scared to death they'll be out of business. It's not so much that I want to see the car companies out of business as my livelihood is also greatly impacted because I repair cars and auto dealers are in my parts supply line.pk500 wrote:In theory, I agree with you, Rod. In practicality, the industry in which I work needs a solvent, functioning Big Three.
The practical side of the equation helps provide me with a paycheck, so that tends to overrule the theoretical side.
There must be some way to find strings attached to the bailout that can fit around the UAW. But again, why no such strings attached to the banking bailout?
Take care,
PK
But dammit I have had enough with the UAW and how they have crippled and sucked the life out of the auto industry which is a hhuge reason the Big Three have made business choices where they are no longer at the top when selling cars in the US.
Lawmakers rightfully so brought in the UAW so they can at least help out. They gave America a nice f**k you, don't touch our salaries. So again it's business as usual just hit up Washington when we need more cash in 4 months. I say hell no i've had enough because it gets to the point we can't keep printing money.
I was against the bank bailout in it's current form as well, even though it would impact families as well. But we've seen how well the bank bailout has worked. Wall Street is still unstable, AIG partied with our money at a California retreat, and they came back for more.
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All good points, Jon.
My biggest quibble is that the excesses of the banking industry, at least on the surface, seem more severe than those in the auto industry. I think the American auto industry is grossly inefficient, but from what I've read, the American banking industry seems borderline corrupt.
Another thing that Congress has learned -- or should I say, remembered? -- the second time around is how to pour on the theatrics during a televised hearing. While the question about how the Big Three execs traveled to D.C. for their first hearing made for great theater, it also reeked of a bit of a cheap shot. I don't recall a similar question being asked of banking executives, whom I doubt flew stand-by on Southwest to Washington.
Take care,
PK
My biggest quibble is that the excesses of the banking industry, at least on the surface, seem more severe than those in the auto industry. I think the American auto industry is grossly inefficient, but from what I've read, the American banking industry seems borderline corrupt.
Another thing that Congress has learned -- or should I say, remembered? -- the second time around is how to pour on the theatrics during a televised hearing. While the question about how the Big Three execs traveled to D.C. for their first hearing made for great theater, it also reeked of a bit of a cheap shot. I don't recall a similar question being asked of banking executives, whom I doubt flew stand-by on Southwest to Washington.
Take care,
PK
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- pk500
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Completely agree. I think the Big Three are inefficient, but they're not the morons that many believe. The UAW is an albatross that few companies could bear.Rodster wrote:But dammit I have had enough with the UAW and how they have crippled and sucked the life out of the auto industry which is a hhuge reason the Big Three have made business choices where they are no longer at the top when selling cars in the US.
Take care,
PK
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Again we agree, one word Saturn cars. Detroit is capable of building some kick ass cars, need I mention the 32V Northstar engine, and GM's Onstar.pk500 wrote:Completely agree. I think the Big Three are inefficient, but they're not the morons that many believe. The UAW is an albatross that few companies could bear.Rodster wrote:But dammit I have had enough with the UAW and how they have crippled and sucked the life out of the auto industry which is a hhuge reason the Big Three have made business choices where they are no longer at the top when selling cars in the US.
Take care,
PK
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WHy do so many think it will be mass chaos if 1 or 2 of the "big 3" file for bankruptcy? People will still buy cars, just not their cars. Parts stores and manufacturers, dealerships, and auto mechanics will still be around. They'll just have to transition to dealing with the auto makers that are left. Sure, there will be some short term pain, but handing these crooks billions now will not solve s**t. In 6 months they'll be back at the trough for more.
I hate to see anyone lose a job. The problem is, people like me who have no direct connection to the auto industry are losing thier jobs without a peep from anyone in Washington to try and help us. Why should certain industries be propped up with our tax dollars after they willfully and knowingly screwerd up, while people like me get outsourced or eliminated like it's not a problem?
Screw them all.
*Screw the government for turning a real crisis into a theatrical show and for thinking throwing money we don't ahve (but can print) is going to solve anything.
*Screw the banks like AIG for blowing billions and then coming back for more. It's business as usual for them. The ones at the top will find a way to still get theirs, no matter how much earth they scorch along the way.
*Screw the big 3 for their theater as well. They got called out on the jets, so the next trip they take hybrids to the party. And their best cost cutting suggestions are to sell a few jets and give themselves $1 annual salary (which means they'll still get their $14-$25 million in bonuses).
*Screw the UAW for being just as greedy as the auto execs.
*Screw Paulson for being so free with the $700 billion. Nothing has changed for the everyday people this was supposed to help.
*Screw the government again because they won't do a d**n thing that's right and just in order to help the people who elected them.
Yes, I am a little bitter right now
Edit: As long as I'm at it, screw the Yankees for signing CC.
I hate to see anyone lose a job. The problem is, people like me who have no direct connection to the auto industry are losing thier jobs without a peep from anyone in Washington to try and help us. Why should certain industries be propped up with our tax dollars after they willfully and knowingly screwerd up, while people like me get outsourced or eliminated like it's not a problem?
Screw them all.
*Screw the government for turning a real crisis into a theatrical show and for thinking throwing money we don't ahve (but can print) is going to solve anything.
*Screw the banks like AIG for blowing billions and then coming back for more. It's business as usual for them. The ones at the top will find a way to still get theirs, no matter how much earth they scorch along the way.
*Screw the big 3 for their theater as well. They got called out on the jets, so the next trip they take hybrids to the party. And their best cost cutting suggestions are to sell a few jets and give themselves $1 annual salary (which means they'll still get their $14-$25 million in bonuses).
*Screw the UAW for being just as greedy as the auto execs.
*Screw Paulson for being so free with the $700 billion. Nothing has changed for the everyday people this was supposed to help.
*Screw the government again because they won't do a d**n thing that's right and just in order to help the people who elected them.
Yes, I am a little bitter right now

Edit: As long as I'm at it, screw the Yankees for signing CC.

-Matt
The futures were showing a huge drop before the market opened.
Then the White House reportedly said they may pay out of TARP and the futures improved somewhat.
Market watchers are saying the economy is too fragile to play a game of chicken.
Toyota of all things reportedly said bankruptcies by the Big 3 would exacerbate a difficult market situation in the US.
Problem is, the Republican Senators have a bug about the UAW. They're not asking the executives to take the same compensation as Japanese auto executives, like they're asking the UAW workers to take the same compensation as the Japanese auto workers.
Oh and there's still a lot of TARP money which hasn't been disbursed yet. So there's no reason they can't impose conditions when they give out that money.
Senator Bob Corker claimed that the UAW would not agree to the "date certain" within 2009 for "competitive" wage concessions. So the Treasury could certainly demand a "date certain" for the banks receiving TARP money to start lending.
The problem is, the economic outlook is so bad that it may not be justified to lend money in this climate.
Then the White House reportedly said they may pay out of TARP and the futures improved somewhat.
Market watchers are saying the economy is too fragile to play a game of chicken.
Toyota of all things reportedly said bankruptcies by the Big 3 would exacerbate a difficult market situation in the US.
Problem is, the Republican Senators have a bug about the UAW. They're not asking the executives to take the same compensation as Japanese auto executives, like they're asking the UAW workers to take the same compensation as the Japanese auto workers.
Oh and there's still a lot of TARP money which hasn't been disbursed yet. So there's no reason they can't impose conditions when they give out that money.
Senator Bob Corker claimed that the UAW would not agree to the "date certain" within 2009 for "competitive" wage concessions. So the Treasury could certainly demand a "date certain" for the banks receiving TARP money to start lending.
The problem is, the economic outlook is so bad that it may not be justified to lend money in this climate.
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An Oldsmobile Intrigue was the best vehicle I've ever owned, even better than the outstanding Toyota RAV4 SUV I'm driving now.Rodster wrote:Again we agree, one word Saturn cars. Detroit is capable of building some kick ass cars, need I mention the 32V Northstar engine, and GM's Onstar.
The Oldsmobile story illustrates a lot of what's wrong with GM, in my opinion. GM released two world-class, cutting-edge sedans in the mid-90s through its Olds marque, the Aurora and the Intrigue. They were every bit as good as -- if not better than -- most of the imports in their respective classes and price ranges. Outstanding motor vehicles, and the reviewers and owners said so.
So what does GM do? Pulls the plug on Oldsmobile, and continues to build the abomination known as the redesigned Chevy Caprice Classic. Did anyone buy those cars other than police agencies?
Take care,
PK
Last edited by pk500 on Fri Dec 12, 2008 10:43 am, edited 1 time in total.
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Bankruptcy does not mean death. It means restructuring and rebirth. The Big Three needs that more than a bailout. I remember back in 1980 when I get my first new car. The news said US auto makers costs for union benefits exceeded the cost of materials for the car for the first time ever. The unions have been bleeding car makers. That held back development keeping quality inferior to Japanese and German cars for years. I'm surprised they lasted this long.
The more money the auto makers fork over to the workers, the more money the union makes. They need to make all states "right to work" states. Many workers belong to unions because they have to in order to get the jobs. The union forces itself upon american workers. At one time the unions were necessary, but now they are the downfall of many businesses. Unions are a thing of the past and should be discarded just like yesterdays garbage.
Giving the Big Three a bailout only buys them 6 months at best. They will declare before 2011. This bailout would throw money into a corrupted system. UAW's Ron Gettelfinger and many Dems refuses to acknowledge the truth, even though they all know that the UAW has helped bring the Big Three to their knees. They think Detroit should go on forever conducting business as usual with regards to the UAW. I want to hear Dems in Congress tell the truth about the UAW instead of sucking it off.
Barney Frank and many Dems have it twisted. Corporate greed is killing the working class in this country. Giving the Big Three a bailout is just another nail in the coffin.
The more money the auto makers fork over to the workers, the more money the union makes. They need to make all states "right to work" states. Many workers belong to unions because they have to in order to get the jobs. The union forces itself upon american workers. At one time the unions were necessary, but now they are the downfall of many businesses. Unions are a thing of the past and should be discarded just like yesterdays garbage.
Giving the Big Three a bailout only buys them 6 months at best. They will declare before 2011. This bailout would throw money into a corrupted system. UAW's Ron Gettelfinger and many Dems refuses to acknowledge the truth, even though they all know that the UAW has helped bring the Big Three to their knees. They think Detroit should go on forever conducting business as usual with regards to the UAW. I want to hear Dems in Congress tell the truth about the UAW instead of sucking it off.
Barney Frank and many Dems have it twisted. Corporate greed is killing the working class in this country. Giving the Big Three a bailout is just another nail in the coffin.
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Unions are cults, plain and simple. I have relatives in various trade unions, and some of them could only find work six to nine months per year, yet they pledged their undying loyalty to the union "that has their back."
OK, sure.
It amazes me that UAW line workers don't look at their fully employed counterparts at foreign plants down south and wonder why such a state of affairs has evolved. It's probably because the UAW has brainwashed them into thinking that the current financial strife suffered by the Big Three was created exclusively by the suits in Detroit. The UAW had nothing to do with it.
OK, sure.
Take care,
PK
OK, sure.
It amazes me that UAW line workers don't look at their fully employed counterparts at foreign plants down south and wonder why such a state of affairs has evolved. It's probably because the UAW has brainwashed them into thinking that the current financial strife suffered by the Big Three was created exclusively by the suits in Detroit. The UAW had nothing to do with it.
OK, sure.
Take care,
PK
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Exactly and as long as they hold on to that mentality we'll get no where and why i'm so against the auto bailout. I don't understand why more lawmakers in Washington don't bring this up. IMO both sides are responsible for this mess but the UAW at times acted like Somali Pirates and held the Big Three at gun point until they got their way.pk500 wrote:It's probably because the UAW has brainwashed them into thinking that the current financial strife suffered by the Big Three was created exclusively by the suits in Detroit. The UAW had nothing to do with it.
OK, sure.
Take care,
PK

Anyone watching Ron Gettelfinger's press conference right now? 
Nothing like watching a guy lick the balls of a President his union never supported. Please MR Bush,save our corrupt asses in the name of THE AMERICAN WORKER.


Nothing like watching a guy lick the balls of a President his union never supported. Please MR Bush,save our corrupt asses in the name of THE AMERICAN WORKER.



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No but let me guess.JackDog wrote:Anyone watching Ron Gettelfinger's press conference right now?
Nothing like watching a guy lick the balls of a President his union never supported.

"We have given up all the concessions without impacting any further our members which are still hurting from the last negotiations with GM".
You're talking about long-term changes.JackDog wrote: Giving the Big Three a bailout only buys them 6 months at best. They will declare before 2011. This bailout would throw money into a corrupted system. UAW's Ron Gettelfinger and many Dems refuses to acknowledge the truth, even though they all know that the UAW has helped bring the Big Three to their knees. They think Detroit should go on forever conducting business as usual with regards to the UAW. I want to hear Dems in Congress tell the truth about the UAW instead of sucking it off.
Barney Frank and many Dems have it twisted. Corporate greed is killing the working class in this country. Giving the Big Three a bailout is just another nail in the coffin.
The problem right now is very much short-term, the need to have enough cash to keep going.
GM reported 41% drop in sales in November and at least that much in October.
You can talk about UAW contracts and bad design decisions but right now, the biggest factor is the economy falling off a cliff and cutting sales of all cars for all companies.
The Europeans will bail out their companies and there's no doubt the Japanese and the Korean govts. will bail out as well. If sales continue to be at 50% of normal levels, the Japanese brands will be hurting too.
The people saying bankruptcy is a great thing are only interested in getting UAW concessions, as if that alone will fix the long-term problems. That might make certain people feel better ideologically and politically, but it won't solve the problem by itself.
The Republican Senators set the wages of the non-union workers at the Japanese companies as the benchmark. But the point is, if sales continue to lag because of the economy, the Japanese companies will suffer as well.
Then what, try to cut the wages of the non-union workers as well?
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I don't know of anyone that has said bankruptcy would be "great". Better than a 6 month bailout, yes, but not great. UAW concessions would go a long way to fixing their long-term problems. It won't solve all their problems, but it is something that needs to happen in order for them to get back to being competitive. What will change if they get a bailout (or two, or three)? Nothing.wco81 wrote:The people saying bankruptcy is a great thing are only interested in getting UAW concessions, as if that alone will fix the long-term problems. That might make certain people feel better ideologically and politically, but it won't solve the problem by itself.
-Matt