GM & Chrysler Bailout

[Ford Prefect]

Personally, I'm very unhappy about the bailouts. I'm going to switch my allegiance to Ford or a foreign auto maker in response. Screw GM and Chrysler. Why should my tax money go towards rewarding failure. We're supposed to live in a free market, capitalistic society. If a company isn't viable without corporate welfare, then let it fail no matter how big it is. Sadly, many unions have gotten too big and too powerful and have hijacked the agenda, turning us into a quasi-socialist society rather than a pure free market society. Screw them too.

Flame away.

[Finny61]

Jim Balsillie understands the pain, he's going to bring a team to Southern Ontario and give those GM factory workers jobs as ushers, 50/50 ticket sellers, and hot dog salesman, the transition in qualifications would be seamless.

[Cowperson]

Originally Posted by HOZ

ObamaHarper Motors!!

Within hours of General Motors filing for Chapter 11 bankruptcy protection, the U.S. and Canadian governments announced billions in new funding to bail out the troubled automaker.
U.S. President Barack Obama confirmed Monday that his government will be giving GM another US$30 billion in investment cash while taking a 60 per cent stake in the company.
Meanwhile, Prime Minister Stephen Harper said the federal and Ontario governments will have a 12 per cent stake in GM, secured by an additional investment of US$9.5 billion.

I'm not a fan of bailouts, beyond rescuing financial institutions, but taxpayers might make out fairly well considering the large ownership position they're taking down in GM.

Governments will, after all, sell these things five or 10 or 15 years down the road.

Provided they stay out of the way - a big "if" I'll admit - taxpayers are buying a distressed asset at the lowest moment and will likely have a more advantageous spot to sell at some point in the future.

Would that recover all of the money that has gone into it, all factors considered including potential lost/viable tax revenues?

We'll see.

Meanwhile, pent-up demand is beginning to re-emerge.

http://www.msnbc.msn.com/id/31066233/

Cowperson

[Bill Bumface]

Originally Posted by BlackEleven

Such as?

I'm not necessairly disagreeing, I'm just curious to know which vehicles you're referring to.

Corvette ZR-1, possibly the fastest track car in the world.

CTS-V- M5 killer at a much lower price.

The new generation of CTS overall was one of the better GMs ever produced. It had by far the highest quality interior I've seen in a domestic.

The G8 GT.

New Camaro.

Opel Astra.

The Chevy Volt, which may be revolutionary to the way we travel if it ever makes it out.

[Flame Of Liberty]

Originally Posted by Cowperson

I'm not a fan of bailouts, beyond rescuing financial institutions, but taxpayers might make out fairly well considering the large ownership position they're taking down in GM.

Governments will, after all, sell these things five or 10 or 15 years down the road.

Provided they stay out of the way - a big "if" I'll admit - taxpayers are buying a distressed asset at the lowest moment and will likely have a more advantageous spot to sell at some point in the future.

Would that recover all of the money that has gone into it, all factors considered including potential lost/viable tax revenues?

We'll see.

Meanwhile, pent-up demand is beginning to re-emerge.

http://www.msnbc.msn.com/id/31066233/

Cowperson

I am afraid you are sugarcoating it.

If buing into GM at this "low" point was such a good idea, then why private investors did not jump all over GM? Maybe because it's not such a good idea? I too would be one heck of an investor using other people's money. Especially when I'd be long out of the office when this bailout turns out to be a dud.

In my opinion this bailout is a damn shame but it does not surprise me one bit that Obama is doing it. Being able to look like a savior who "at least is doing something to save the economy!!!11!!!1!" is the most important thing here. We live in the age of marketing and PR, where appearance is everything.

How pouring money into business that is creating losses, wasting wealth and carrying crapload of deadweight in form of unions/pension plans/etc. translates into "saving the economy" is beyond me.

[CaptainCrunch]

When a company starts getting government money and using it not to expand its workforce, or build another product line or invest in a new technology, but to survive day to day and fullfill their payroll, that company is a corpse that doesn't know its dead yet.

I'm inclined to deal with my friend Mr Liberty, if it was such a good investment over the long term, their share prices at.75 cents would be a bargin and people would be flocking to it.

I doubt that the taxpayers see any kind of payback until we're long dead and dust like GM should be.

[valo403]

Originally Posted by Flame Of Liberty

I am afraid you are sugarcoating it.

If buing into GM at this "low" point was such a good idea, then why private investors did not jump all over GM? Maybe because it's not such a good idea? I too would be one heck of an investor using other people's money. Especially when I'd be long out of the office when this bailout turns out to be a dud.

In my opinion this bailout is a damn shame but it does not surprise me one bit that Obama is doing it. Being able to look like a savior who "at least is doing something to save the economy!!!11!!!1!" is the most important thing here. We live in the age of marketing and PR, where appearance is everything.

How pouring money into business that is creating losses, wasting wealth and carrying crapload of deadweight in form of unions/pension plans/etc. translates into "saving the economy" is beyond me.

1. A lack of financing. Getting financing for anything is next to impossible right now, financing the takeover of such a distressed asset would be downright impossible.

2. Inability to quickly reconfigure/spin off assets and reap a quick return. This isn't going to be a quick spin off for profit, which is what most private investors are pursuing when they take on distressed assets. They get in, fix what they can, sell what they can't, and increase the value of the company before bailing out with no regard for what happens to any remaining entity, if there even is one. That's not an option here, the whole point of this is to preserve Gm and chrysler as part of the US and Canadian economy, if the government allowed corporate raiders to take over that would never happen.

As for your last paragraph, the need to save GM and Chrysler has to do with the astronomical impact that their complete demise would have on the economies of both nations. These are both companies whose tentacles spread far and wide, the effect would be exponential. There's obviously a need to cut deadweight, which the reorganization will do to at least some extent, but it's abundantly clear that letting them simply fall would be very bad for the economy.

EDIT: I'm not saying that this plan is perfect, I'm not sure there is a perfect plan, but I don't think letting the companies fall would be beneficial at all and would do more harm than even a relatively flawed bailout plan.

[ikaris]

It's seems interesting to me that we're bailing out the auto industry. Meanwhile all over the rest of the country thousands upon thousands of jobs have been lost in various industries who were employed by Canadian companies eg. Forestry, Oil & Gas, Telecommunications, Mining. etc.

This bailout has nothing to do with the economy. It's all to do with politics. If this was truly about saving jobs, the government should be investing in viable businesses with this money.



EDIT: I think that this picture is appropriate.

[Ford Prefect]

Originally Posted by ikaris

It's seems interesting to me that we're bailing out the auto industry. Meanwhile all over the rest of the country thousands upon thousands of jobs have been lost in various industries who were employed by Canadian companies eg. Forestry, Oil & Gas, Telecommunications, Mining. etc.

This bailout has nothing to do with the economy. It's all to do with politics. If this was truly about saving jobs, the government should be investing in viable businesses with this money.

Damn straight. We've been sold out by Harper to a protectionist-minded Obama & Co. without even getting any perks back. I read recently that Obama wants Canada to increase its commitment in Afghanistan. The US by and large abdicated its responsibilities in Afghanistan to go chase its tail in Iraq for a few years, now they want us to bolster our troop commitment when we were there shedding blood all along, PLUS help bail out a couple mismanaged, union coddling auto makers. And Harper just says "Yes sir" and ignores Canadian industries like telecomm and the resource sector. Obama could at least take us out to dinner and whisper sweet nothings in our ears first.

[Flame Of Liberty]

Originally Posted by valo403

1. A lack of financing. Getting financing for anything is next to impossible right now, financing the takeover of such a distressed asset would be downright impossible.

Well and that's pretty much it, no investor group thinks financing this particular takeover is a sound business idea. That's a red flag right there. We've seen many huge takeovers in the business world - when it made sense. Simply put, now it doesn't make sense. There's only one "investor" who can look past cost/benefit analysis and finance a dubious project - the government.

Originally Posted by valo403

As for your last paragraph, the need to save GM and Chrysler has to do with the astronomical impact that their complete demise would have on the economies of both nations. These are both companies whose tentacles spread far and wide, the effect would be exponential. There's obviously a need to cut deadweight, which the reorganization will do to at least some extent, but it's abundantly clear that letting them simply fall would be very bad for the economy.

First of all, let's not forget the astronomical impact of bailout billions that will no longer be in the real - wealth producing economy. These billions will be missing in other parts of the economy.

Second - the astronomical impact that their demise would have on the economy. Of course there would be impact but lets not forget:

No GM/Chrysler = more Honda/Toyota/Ford/etc = more business for their production sites/suppliers/dealerships

It's not like when GM's gone there'll be a huge black hole that will not be filled. Automotive industry is one of the most competitive ones out there, pie would be redistributed between remaining competitors and the void would be filled faster than we may think.

[valo403]

Originally Posted by Flame Of Liberty

Well and that's pretty much it, no investor group thinks financing this particular takeover is a sound business idea. That's a red flag right there. We've seen many huge takeovers in the business world - when it made sense. Simply put, now it doesn't make sense. There's only one "investor" who can look past cost/benefit analysis and finance a dubious project - the government.




First of all, let's not forget the astronomical impact of bailout billions that will no longer be in the real - wealth producing economy. These billions will be missing in other parts of the economy.

Second - the astronomical impact that their demise would have on the economy. Of course there would be impact but lets not forget:

No GM/Chrysler = more Honda/Toyota/Ford/etc = more business for their production sites/suppliers/dealerships

It's not like when GM's gone there'll be a huge black hole that will not be filled. Automotive industry is one of the most competitive ones out there, pie would be redistributed between remaining competitors and the void would be filled faster than we may think.

What privately financed "huge takeovers" have you seen in the current economic climate? I cant think of any, and certainly not of a distressed asset. Also convenient of you to ignore my second point, the one that was more than a sentence. Financing could be an issue, but it's not the big issue. The big issue is the inability for any private investor to treat this like a typical distressed asset.

GM and Chrysler have a much larger domestic presence than any of the others you mentioned with the exception of Ford, and they're not exactly poised to fill any voids. If you're counting on foreign companies to pick up the losses caused by the hundreds of suppliers put out of business you're sadly mistaken.

[HOZ]

Originally Posted by Cowperson

I'm not a fan of bailouts, beyond rescuing financial institutions, but taxpayers might make out fairly well considering the large ownership position they're taking down in GM.

Governments will, after all, sell these things five or 10 or 15 years down the road.



http://www.msnbc.msn.com/id/31066233/

Cowperson

This is Canada! When those big bad unions in Ontario and Quebec stick their voting block claws in.....we the tax payer will be sucked in deeper and deeper.

Yes a bit gloomy on my part...but.....It's Canada! This is CBC/Air Canada 2.0

[Dion]

[4X4]

So where's Ford in all of this? Not alot of talk about what kind of bailouts they've requested/been granted. I'm sure they got a few bucks, but I haven't heard a word about the government actually taking stock in the company.
The reason I bring it up is because if governments are buying into auto companies, it would stand to reason that they'd more or less exclusively buy from the companies they have shares in. And if that's the case, that means Ford stands to lose a fair share of business. Simply on principle, that pisses me off.

[Dion]

With Chrysler and General Motors floundering for financial stability, the Ford Motor Co. is poised to cash in on a wave of good will from some American car buyers.

"I feel bad for the GM and Chrysler dealers, but we do feel blessed. We had a great month last month," Ray Garraffa, president of Chapman Ford Sales in East Petersburg, said Monday.

"We've gotten a number of customers who said they're buying a Ford because Ford didn't take any bailout money from the government. We've seen that countless times," Garraffa said.

"We also have people who are afraid their GM or Chrysler warranty won't be any good down the road."

http://articles.lancasteronline.com/local/4/238305

[HOZ]

Originally Posted by 4X4

So where's Ford in all of this? Not alot of talk about what kind of bailouts they've requested/been granted. I'm sure they got a few bucks, but I haven't heard a word about the government actually taking stock in the company.
The reason I bring it up is because if governments are buying into auto companies, it would stand to reason that they'd more or less exclusively buy from the companies they have shares in. And if that's the case, that means Ford stands to lose a fair share of business. Simply on principle, that pisses me off.

Hope this helps

Ford Motor Company (NYSE: F) now stands alone as the sole American automotive company out of the "big three" that has not filed for bankruptcy. Ford CEO Alan Mulally made moves starting years ago to ensure Ford would dig itself out of many legacy problems, and it paid off.

[Dion]

"Ford has things going for it on the image front," said John Wolkonowicz, an automotive analyst with IHS Global Insight in Lexington, Mass. "And in the car business image is everything. The other two are on the public dole. And a lot of people are very angry about that."

Ford on Tuesday reported its strongest sales for the United States since July, 2008 and its highest market share in that country in three years. In Canada, the automaker nabbed second spot in the sales rankings behind GM, recording its seventh-consecutive month of market share growth.

Ford shares closed up 4.6% to $6.41 in trading on the New York Stock Exchange.

Positive reviews for its vehicles in Consumer Reports will help Ford because those are worth more than advertising, observers said.

http://www.vancouversun.com/business...011/story.html

[lucky1]

Originally Posted by Ford Prefect

Personally, I'm very unhappy about the bailouts. I'm going to switch my allegiance to Ford or a foreign auto maker in response. Screw GM and Chrysler. Why should my tax money go towards rewarding failure. We're supposed to live in a free market, capitalistic society. If a company isn't viable without corporate welfare, then let it fail no matter how big it is. Sadly, many unions have gotten too big and too powerful and have hijacked the agenda, turning us into a quasi-socialist society rather than a pure free market society. Screw them too.

Flame away.

haha, this is Canada, you realize that right?? Canada is considered a Quasi-socialist country due to our social programs...such as healthcare, EI, old age pension....and there has always been a history of Govt involvement in business (CRTC, Air Canada, NEP).
A true capitalistic society simply cannot exist, as their are to many greedy people out there that take advantage of non-regulated or poorly regulated business.....Bernie Madoff anyone??
How about The Flames management approaching the city/provincial govt telling them that they want $$$$ to build a new arena.....to me that has socialist overtones......asking for govt intervention in a privately held company.

Ford is a great automaker, had some great management that allowed to barely skirt this mess, but I think that they would be right beside GM/Chrysler if this recession continued or we went into a depression....I'm sure that they were not far off...
Besides, all cars look the same with the hoods up

[4X4]

Originally Posted by lucky1

Besides, all cars look the same with the hoods up

Funny, that's where they all look different to me.

[ucalgary2000]

Originally Posted by HOZ

Hope this helps

Ford Motor Company (NYSE: F) now stands alone as the sole American automotive company out of the "big three" that has not filed for bankruptcy. Ford CEO Alan Mulally made moves starting years ago to ensure Ford would dig itself out of many legacy problems, and it paid off.

Funny how this is all a trend reversal from a few years ago. At the time, GM was the largest automaker in the world with little to no competition. Fast forward to today, and it seems like its stalling at the end of the pack. Ford, on the other hand, has reinvented itself a great deal--previous reliance on big SUVs and pickups still exists, but new and upcoming models help it cast off that old stale image.