RE: US Bailout Through First Stage
Thursday 11th December 2008
Senate: Final hurdle to bailout dealThe US government deal to bailout its car industry was voted through by the House of Representatives last night, but it still needs to overcome heavy opposition from the Republican party at the next stage.
US Bailout Through First Stage
Only Senate still stands in way of deal
Senate: Final hurdle to bailout deal
The Senate get to vote on the rescue package next, and Senate rules mean a sceptical Republican minority has every chance of blocking or killing the $14bn package agreed yesterday.
Reports from the US say Republican anger is growing – in spite of Presidential support – based on fears that the vast injection of taxpayer dollars will not resolve the underlying issues confronting the domestic industry.
The Republican view was expressed by Senator Richard Shelby in pretty bald terms: ‘This is an instalment on a huge bailout that will come later. This will not make Chrysler, General Motors or Ford competitive. This in only delaying their funeral.”
News of the Republican opposition caused US automotive share prices weaken even further, as GM and Chrysler need billions injected before the end of this month in order to survive.
Discussion
I thought the point of Chapter 11 bankruptcy in the USA was to allow companies that were fundamentally distressed to restructure whilst continuing to operate.
Won't the bailout just delay bankruptcy and then allow Chapter 11 - and wouldn't this additional debt/loan then be re-negotiated as a regular debt/obligation?
Won't the bailout just delay bankruptcy and then allow Chapter 11 - and wouldn't this additional debt/loan then be re-negotiated as a regular debt/obligation?
GTEYE said:
These companies are just the modern day equivalent of the British motor industry of the 1970's.
At the end of the day, you can't polish a turd - sad as it is these companies should just be allowed to die. They've had every chance to change their destiny...but squandered it.
Far to many jobs are dependant on these motor giants though. Not just production put suppliers too. At the end of the day, you can't polish a turd - sad as it is these companies should just be allowed to die. They've had every chance to change their destiny...but squandered it.
Major restructuring maybe lead by a government commity to ensure that the Billions given will not be use to just delay the dimise.
The Unions will put a major spanner in the works in any case. Maybe new laws to prevent any restructuring being sabotaged by the unions.
GTEYE said:
These companies are just the modern day equivalent of the British motor industry of the 1970's.
At the end of the day, you can't polish a turd - sad as it is these companies should just be allowed to die. They've had every chance to change their destiny...but squandered it.
Its not just a the big US 3 that need help, VW are in trouble and are seeking help from there goverment. Same with PSA.At the end of the day, you can't polish a turd - sad as it is these companies should just be allowed to die. They've had every chance to change their destiny...but squandered it.
There will still be plant closure's in the US even with the bailout.
It's a catch-22 situation.
They can either inject money into the industry in the hope that it stabalises through a goverment led re-structuring plan
OR
The government can give up on the industry all together and direct the injection towards dole payments for the millions made unemployed.
At least in option one, there won't be mass labour migration/civil unrest (for the time being).
They can either inject money into the industry in the hope that it stabalises through a goverment led re-structuring plan
OR
The government can give up on the industry all together and direct the injection towards dole payments for the millions made unemployed.
At least in option one, there won't be mass labour migration/civil unrest (for the time being).
Governments being governments this bail out will fail. Why? because no matter how much money they throw at these 3 big ailing car manufacters, it will not save the US economy as a whole. The goverment will only want to look good to its voters so it is meaningless .... The goverments and the people of this world need to realise now that the US and the UK are in massive debt, so throwing loads and loads of tax payers money at them them won't make a blind bit of difference. Leave them to die, the people loosing their jobs will survive in the long term. Harsh I know, but atleast they haven't got it as bad as other people living in 3rd world countries.
Although speaking as a total financial ignoramus (just ask my accountant!). If the US government just gave a lump sum to every household with the proviso that it must be spent on a 'domestic' car,would'nt that solve the problem? The whole industry-dealers,finance houses etc not just the manufacturers would benefit and the money people would otherwise have used to buy cars/trucks would then be washing around the economy in general.
infradig said:
Although speaking as a total financial ignoramus (just ask my accountant!). If the US government just gave a lump sum to every household with the proviso that it must be spent on a 'domestic' car,would'nt that solve the problem?
So then everyone would have to buy some massive gas guzzling car that they had no real use for.infradig said:
Although speaking as a total financial ignoramus (just ask my accountant!). If the US government just gave a lump sum to every household with the proviso that it must be spent on a 'domestic' car,would'nt that solve the problem? The whole industry-dealers,finance houses etc not just the manufacturers would benefit and the money people would otherwise have used to buy cars/trucks would then be washing around the economy in general.
And then what will they sell to the public next year if everyone got an extra car they did'nt need this christmas? Surely you don't expect them to continue buying more cars still with the prospect of job loss so close and with all the paranoia whipped up by the press?For those that think losing any of the big three (or all) is a god idea?
We will see the closure of
GM, Chevrolet, Opel, Vauxhall, Saab and Isuzu and AC Delco from GM, from Chrysler we see Chrysler, Dodge, Jeep and no more Viper! and from Ford we lose Fords, Volvo, Mazda.
Probably Bose and Kenwood audio systems will go along with most of the parts manufacturers tied into the OEM supply.
I doubt that any of the US tyre makers will do very well either with at least one of them going under probably two.
It will be a very bleak automotive outlook indeed. At least there wont be any gas guzzlers to complain about.
All the European and Japanese manufacturers will re-assess their business and models will be dropped left right and centre - if it doesnt sell in the hundreds of thousands then probably not worth making - so all the speciality marques and cars we love will evaporate.....?
It will also open the door for every crack pot scheme for car sharing, car tracking, speed limiting and anything else you want to name.
I certainly dont wish to see any car manufacturer go under at this time - if it is business competition then fair enough - but not on this scale.
I am also old enough to remember the british motorcycle industry going down the pan - all that happened was we lost skill, jobs, choice and pride- instead we are now a 'service economy' - that's banking to most - which got us into this mess in the first place!
We will see the closure of
GM, Chevrolet, Opel, Vauxhall, Saab and Isuzu and AC Delco from GM, from Chrysler we see Chrysler, Dodge, Jeep and no more Viper! and from Ford we lose Fords, Volvo, Mazda.
Probably Bose and Kenwood audio systems will go along with most of the parts manufacturers tied into the OEM supply.
I doubt that any of the US tyre makers will do very well either with at least one of them going under probably two.
It will be a very bleak automotive outlook indeed. At least there wont be any gas guzzlers to complain about.
All the European and Japanese manufacturers will re-assess their business and models will be dropped left right and centre - if it doesnt sell in the hundreds of thousands then probably not worth making - so all the speciality marques and cars we love will evaporate.....?
It will also open the door for every crack pot scheme for car sharing, car tracking, speed limiting and anything else you want to name.
I certainly dont wish to see any car manufacturer go under at this time - if it is business competition then fair enough - but not on this scale.
I am also old enough to remember the british motorcycle industry going down the pan - all that happened was we lost skill, jobs, choice and pride- instead we are now a 'service economy' - that's banking to most - which got us into this mess in the first place!
infradig said:
Although speaking as a total financial ignoramus (just ask my accountant!). If the US government just gave a lump sum to every household with the proviso that it must be spent on a 'domestic' car,would'nt that solve the problem? The whole industry-dealers,finance houses etc not just the manufacturers would benefit and the money people would otherwise have used to buy cars/trucks would then be washing around the economy in general.
And the value of used cars would instantly become: ZEROAnd if you did get a grant from the government - and it was defined as a domestic car - I think that would allow people (rightly) to go out and buy any US built car - which is a huge number (inc Toyota, BMW, etc) - after all that is still supporting US jobs and US investment (but yes teh profits go outside the US)
Other manufacturers, with a stronger business vision have succeeded in investing in production in the US and built cars at a competitive rate without the need for govt intervention. Let them go to Chapter 11, let them restructure and come out leaner and meaner. Has worked for plenty of other companies.
Xerox was huge (still quite big) - faced Japanese competition once their patents expired, didn't receive govt help, nearly went Chapter 11, market forces pushed them to restructure, they came out and competed, survived and stabilised their market position.
Texaco - went Chapter 11 in 1987
United Airlines - in 2002
Pacific Gas and Electric Company - in 2001
All still about today in revitalized form (or at least, still going)
(dreaded wiki link: http://en.wikipedia.org/wiki/Chapter_11_bankruptcy...
There is an interesting counter-view at: http://www.nytimes.com/2008/11/24/opinion/24abraha...
Other manufacturers, with a stronger business vision have succeeded in investing in production in the US and built cars at a competitive rate without the need for govt intervention. Let them go to Chapter 11, let them restructure and come out leaner and meaner. Has worked for plenty of other companies.
Xerox was huge (still quite big) - faced Japanese competition once their patents expired, didn't receive govt help, nearly went Chapter 11, market forces pushed them to restructure, they came out and competed, survived and stabilised their market position.
Texaco - went Chapter 11 in 1987
United Airlines - in 2002
Pacific Gas and Electric Company - in 2001
All still about today in revitalized form (or at least, still going)
(dreaded wiki link: http://en.wikipedia.org/wiki/Chapter_11_bankruptcy...
There is an interesting counter-view at: http://www.nytimes.com/2008/11/24/opinion/24abraha...
Edited by plg101 on Thursday 11th December 16:20
Robinlarge said:
For those that think losing any of the big three (or all) is a god idea?
We will see the closure of
GM, Chevrolet, Opel, Vauxhall, Saab and Isuzu and AC Delco from GM, from Chrysler we see Chrysler, Dodge, Jeep and no more Viper! and from Ford we lose Fords, Volvo, Mazda.
Probably Bose and Kenwood audio systems will go along with most of the parts manufacturers tied into the OEM supply.
I doubt that any of the US tyre makers will do very well either with at least one of them going under probably two.
It will be a very bleak automotive outlook indeed. At least there wont be any gas guzzlers to complain about.
All the European and Japanese manufacturers will re-assess their business and models will be dropped left right and centre - if it doesnt sell in the hundreds of thousands then probably not worth making - so all the speciality marques and cars we love will evaporate.....?
It will also open the door for every crack pot scheme for car sharing, car tracking, speed limiting and anything else you want to name.
I certainly dont wish to see any car manufacturer go under at this time - if it is business competition then fair enough - but not on this scale.
I am also old enough to remember the british motorcycle industry going down the pan - all that happened was we lost skill, jobs, choice and pride- instead we are now a 'service economy' - that's banking to most - which got us into this mess in the first place!
Um, how does keeping ailing companies alive enlargen the market for new cars? Long-term the pie isn't going to get any bigger than natural demand, you're just making tax payers fund companies continuing taking a part of the pie that would otherwise belong to a competitor that doesn't need government help. The market determines how many jobs there will be in the automotive industry, not the number of companies active. We will see the closure of
GM, Chevrolet, Opel, Vauxhall, Saab and Isuzu and AC Delco from GM, from Chrysler we see Chrysler, Dodge, Jeep and no more Viper! and from Ford we lose Fords, Volvo, Mazda.
Probably Bose and Kenwood audio systems will go along with most of the parts manufacturers tied into the OEM supply.
I doubt that any of the US tyre makers will do very well either with at least one of them going under probably two.
It will be a very bleak automotive outlook indeed. At least there wont be any gas guzzlers to complain about.
All the European and Japanese manufacturers will re-assess their business and models will be dropped left right and centre - if it doesnt sell in the hundreds of thousands then probably not worth making - so all the speciality marques and cars we love will evaporate.....?
It will also open the door for every crack pot scheme for car sharing, car tracking, speed limiting and anything else you want to name.
I certainly dont wish to see any car manufacturer go under at this time - if it is business competition then fair enough - but not on this scale.
I am also old enough to remember the british motorcycle industry going down the pan - all that happened was we lost skill, jobs, choice and pride- instead we are now a 'service economy' - that's banking to most - which got us into this mess in the first place!
You can bolster demand for new cars short-term with government incentives (disguised as 'green' measures - since when is rampant consumerism 'green'?) but in the longer term this will only be at cost of the aftersales/aftermarket business which has much more profit and job providing potential.
The Chapter 11's listed are all very valid reasons to restructure a business in light of competition, particularly when that competition is either unexpected or particulalry severe - no arguements there.
However you just cant proceed with a re-structuring of the entire car industry, the parts supply industry and the associated markets - not altogether in the face of the same problem in every country.
These are not normal markets in normal times.
Finance and business are built around certain rules and expectations and cerain fundamental systems.
Right now the underlying systems of finance have stopped working.
Looks not particularly hopeful for car drivers in general to be honest!
However you just cant proceed with a re-structuring of the entire car industry, the parts supply industry and the associated markets - not altogether in the face of the same problem in every country.
These are not normal markets in normal times.
Finance and business are built around certain rules and expectations and cerain fundamental systems.
Right now the underlying systems of finance have stopped working.
Looks not particularly hopeful for car drivers in general to be honest!
Robinlarge said:
The Chapter 11's listed are all very valid reasons to restructure a business in light of competition, particularly when that competition is either unexpected or particulalry severe - no arguements there.
However you just cant proceed with a re-structuring of the entire car industry, the parts supply industry and the associated markets - not altogether in the face of the same problem in every country.
These are not normal markets in normal times.
Finance and business are built around certain rules and expectations and cerain fundamental systems.
Right now the underlying systems of finance have stopped working.
Looks not particularly hopeful for car drivers in general to be honest!
I respectfully disagree.However you just cant proceed with a re-structuring of the entire car industry, the parts supply industry and the associated markets - not altogether in the face of the same problem in every country.
These are not normal markets in normal times.
Finance and business are built around certain rules and expectations and cerain fundamental systems.
Right now the underlying systems of finance have stopped working.
Looks not particularly hopeful for car drivers in general to be honest!
9/11 was a terrible event (and a non predictable, market changing event) , and challenged many airlines - and they have similar, massive supply chains to car manufacturers.
It did, in part, reshape the industry, but did force some into Chapter 11 ultimately.
(edit) - sorry - reread your note - and recognise that you were agreeing in part...
Edited by plg101 on Thursday 11th December 17:01
Edited by plg101 on Thursday 11th December 17:02
Its oversupply right now, never a good idea for the producers if they want margins.
Wonder what would happen if they halved volume in 3 months?
The jap manufacturers would take up the slack (more jobs) and GM etc would make a profit, but can they trim the fat economically and stay ahead of the shrinkage curve, not always behind as now?
Wonder what would happen if they halved volume in 3 months?
The jap manufacturers would take up the slack (more jobs) and GM etc would make a profit, but can they trim the fat economically and stay ahead of the shrinkage curve, not always behind as now?
clarencegi77 said:
infradig said:
Although speaking as a total financial ignoramus (just ask my accountant!). If the US government just gave a lump sum to every household with the proviso that it must be spent on a 'domestic' car,would'nt that solve the problem? The whole industry-dealers,finance houses etc not just the manufacturers would benefit and the money people would otherwise have used to buy cars/trucks would then be washing around the economy in general.
And then what will they sell to the public next year if everyone got an extra car they did'nt need this christmas? Surely you don't expect them to continue buying more cars still with the prospect of job loss so close and with all the paranoia whipped up by the press?I never meant it seriously ,but if these are the only arguments against-- just call me Mr Maynard Keynes!!
Gassing Station | Motoring News | Top of Page | What's New | My Stuff