Save GM

[Flash68]

Originally Posted by XcYZ

I still don't understand how Wall Street can get so much help, but when the Big 3 want a loan for a fraction of the amount, it's the most evil thing in the world. Look what AIG did after they got their billions handed to them - the executives went to some million dollar spa retreat deal...

Yes that was absolute BS. Unacceptable behavior I agree.

But unfortunately AIG could not be allowed to fail. The Big 3 argument is more debatable on that topic.

I think it's just a harder sell to Washington that carmakers need to be rescued, as opposed to some of the banks and financials that could have brought the domestic and global financial system to its knees if failed.

[Flash68]

Originally Posted by camcojb

I think what a lot of people are afraid of is the loan will be burnt through in a few months and they will be right back where they were, except with billions of our money gone.

If I try to get a business loan I have to prove my credit worthiness and ability to pay it back. So I think GM needs to show what changes they're going to make that satisfies the lender that they have a good chance of being re-paid. I don't think they've said a single thing they're going to do differently, and if true I see that as the problem.

I hope this all works out. I have many friends that work there, most on this board. Plus I'm a big GM guy anyway, and I realize that this reaches much further than just direct GM employees losing their jobs. But I think GM should be working on a plan to right the ship financially. If they come up with a viable plan I think the loan is there. Actually I think the loan will happen even if they don't change anything just due to the financial impact it'd have, but if the goal is to survive and compete with the other companies they need a new business model. You cannot keep doing the exact same thing and expect the results to change.

Jody

Herein lies the difference. The money given to banks/financials was not just to save them, but to stimulate further lending in our economy and to help keep this flailing economy moving. Some of them are accused of not using the money to actually lend, which is a big problem. But the automakers have no plans for getting back to profitability, and they didn't help their collective and individual causes with that poor showing in front of Congress the other day. They refuse to consider bankruptcy in any form? Why not?

[James OLC]

Underlying reasons for the crisis aside, I am really taken aback by the irony of a panel of rich, financially out of touch, fiscally irresponsible politicians looking down their noses and brow beating a panel of rich, financially out of touch, fiscally irresponsible capitalists...

At least the politicians learned something from the last round of loans that they doaled out... ask how the money is going to be used before signing the check (or in this case, printing the money).

[conekiller13]

Associated Press:


updated 1 hour, 10 minutes ago
WASHINGTON - Democratic leaders in Congress sidetracked legislation to bail out the auto industry Thursday and demanded the Big Three develop a plan assuring the money would make them economically viable.

“Until they show us the plan, we cannot show them the money,” Speaker Nancy Pelosi, D-Calif., said at a hastily called news conference in the Capitol.

She and Senate Majority Leader Harry Reid, D-Nev., said Congress would return to work in early December to vote on legislation if the General Motors Corp., Ford Motor Co. and Chrysler LLC produce an acceptable plan.

The decision averted a likely defeat of legislation providing $25 billion loans for the industry. Reid and Pelosi both said there was no plan in circulation that could pass both houses of Congress and win President George W. Bush’s approval.

While the decision headed off the defeat of one bill, it did not necessarily translate into passage of a different one.

As a result, the fate of hundreds of thousands of auto workers and even of an iconic American industry hangs in the balance.

The chief executives of the Big Three automakers appealed personally to lawmakers for the loans this week, and warned that their industry might collapse without them. In testimony, they said their problem was that credit was unavailable, and not that they were manufacturing products that consumers had turned their backs on.

But whatever support they found sagged when it became known that each of them had flown into Washington aboard multi-million dollar corporate jets. Reid observed that was “difficult to explain” to taxpayers in his home town of Searchlight, Nev.

Pelosi: Auto industry needs a plan
Nov. 20: House Speaker Nancy Pelosi says that the auto industry is an important part of the economy, but it needs a plan to help return to viability and accountability.

The automakers are on a tight timeline. Reid and Pelosi said their plan must be turned over to key lawmakers by Dec. 2 They said hearings were possible the first week of December, and Congress may return to session the following week to consider legislation.

Pelosi stressed that whatever the Big Three provided to Congress, it must show they had a plan for “viability and accountability,” meaning that the were transforming theoir industry in a way that it would become competitive, and that they were clear about how the federal loan money was used.

Even if lawmakers return to vote, they are likely to insist on numerous conditions on any loans. One possibility is to seek a partial ownership of the companies. Another is to limit salaries of top executives. A third is to prohibit use of the funds for any lobbying.

[Flash68]

Originally Posted by conekiller13

“Until they show us the plan, we cannot show them the money,” Speaker Nancy Pelosi, D-Calif.

What she said!

[conekiller13]

By Tom Curry
National affairs writer
msnbc.com


WASHINGTON - One thing professional politicians are expert at judging is public relations.

The bipartisan consensus here at the Capitol Thursday was that the Big Three auto executives had failed spectacularly in their testimony this week to House and Senate committees. And by flying to Washington on private, corporate jets they created a monumental public relations fiasco.

In the wake of this disaster, it would have been political poison for the Democratic-controlled Congress to hand them a $25 billion subsidy to stay afloat.

Senate Majority Leader Harry Reid knew he did not have the 60 votes needed to overcome a likely filibuster against the bailout.

He also knew that any "bailout" is likely to be unpopular right now. The $700 billion bailout, or rescue plan, for financial firms has become even more unpopular than it was when Congress passed it last month.

There are some members of Congress, such as Sen. Roger Wicker, R-Miss. who won their elections Nov. 4 partly because they voted against the Wall Street bailout. Sen. Saxby Chambliss, R Ga., was forced into a runoff election partly because his vote for the bailout gave his Democratic opponent, Jim Martin, a stick with which to beat him.

Risk of rejection
Reid did not want to put the proposed $25 billion loan to a vote and have his colleagues reject it because that would have further spooked the stock markets. As it was, the stock market tumbled Thursday after congressional leaders announced the bailout vote had been delayed.

“We don’t need to go through a bunch of votes here that fail,” Reid told reporters. “The stock markets, the credit markets are having a lot of difficulties. What kind of message do we send to the American people by having a bunch of failed votes here? We do not have the votes.”

Alluding to the PR fiasco, Reid summed up the obvious: “What happened here in Washington this week has not been good for the auto industry.”

Executives flying to the Capitol on corporate jets to seek a loan “doesn’t send a good message,” he said.

What the Big Three leaders utterly failed to do this week, said Senate Banking Committee chairman Sen. Chris Dodd, D-Conn., was to give “any willing admission of their own culpability in the situation they’re in.”

But while Democratic leaders wanted to be tough on the CEOs, that inevitably entailed hurting workers as well.

The Democrats didn’t want to appear as if they were shrugging their shoulders in indifference about the jobs at stake in Michigan and other states. “We are here to help," said Reid. "We are not against the auto industry. We want to help those people keep those jobs.”

So Reid reverted to the practical rule in politics: “When in doubt, delay.”

How to define 'viability'
Reid and House Speaker Nancy Pelosi insisted in a joint press conference that executives of Ford, General Motors and Chrysler must present a business plan after Thanksgiving.

On Dec. 2, Democratic leaders will begin hearings to judge those plans. The buzzword that Reid and Pelosi kept using as they faced a horde of reporters Thursday was “viability.”

Reid said it would be up to Dodd and House Financial Services Committee chairman Rep. Barney Frank, D-Mass., to judge what “viability” was and whether the automakers had it.

When a reporter asked Dodd if he and Frank had a common understanding of how “viability” could be determined, Dodd joked, patting his heart, “It’s all right here.”

Dodd said the plans that will be submitted by the Big Three would be analogous to a firm approaching a venture capitalist and presenting a business plan. The taxpayers are the venture capitalists, Dodd said. “They are coming to us to submit a plan on what they’re going to do if we decide to invest,” he told reporters.

But how to define “viability”?

Dodd replied, “Well, I don’t know; that’s a great question. Obviously those are the important issues and we’ll have to sort that out ourselves.”

Asked whether GM for example, would have to tell Congress what product lines it would phase out and what new models it would unveil over the next few years, Dodd replied, “Certainly we want to hear about retooling and reorganization. There will be some detail to this. We are going to want to get as much of a sense (as possible) of where this industry is heading.”

But the decision by Democratic leaders to insist on the auto industry executives proving viability raises this question: if most members of Congress found the Detroit executives so unskillful in their presentations this week, are these really the men whom Congress trusts to chart the future of their firms?

If they cannot manage PR, can they manage retooling, market strategy and all the other challenges of competing with Honda, Toyota and Hyundai?

Those questions will be waiting when Dodd and Frank return to the Capitol after Thanksgiving.

© 2008 msnbc.com

[TonyL]

Originally Posted by conekiller13

If they cannot manage PR, can they manage retooling, market strategy and all the other challenges of competing with Honda, Toyota and Hyundai?

Those questions will be waiting when Dodd and Frank return to the Capitol after Thanksgiving.

© 2008 msnbc.com

Everyone needs to be worried about competing with Hyundai.
Best everything in its class and 35,000 bucks. Hard to compete with that. Bigger, faster, stops faster, and gets better mileage than BMW Mercedes and Lexus.

Everyone needs to keep an eye on Hyundai. My wife wants a new Genisis so bad, she's threatening to sell my car to get one.

[Vegas69]

I don't think so....Hyundai is like GM bad stigma. I don't think the torch gets passed quite so easily.

[Lcamino]

Couple of thoughts on this.
1. Didn't we bail Chrysler out in the 80's? When they got back on their feet they tried to screw the govt out of the rest of the deal they made with them. And now they are asking for another handout?

2. Don't the big 3 employees that are unionized have the ability to decertify the union? They act like it's not their fault that the union exists. The union only exists because you allow it to. The results are consistent with the hypothesis that successful union decertifications increase firm valuation and unsuccessful ones reduce firm valuation.

3. There is an economic theory called Comparative Advantage. It refers to the ability of a person or a country to produce a particular good at a lower opportunity cost than another country. It goes on to imply that if we are only producing cars that are of equal quality with foreign car makers but our cost is higher then we should stop making cars and let the foreign car companies make the cars. They are obviously more efficient at it. I would hate to see these companies disappear but it is just not good business.

[slownova]

only way for them to lose the union is to file bankrupty. i think they should take the bailout money, pay off thier suppliers, file bankrupty, lose the union, then work on a game plan.