I won't have to blog about the Detroit automakers again until next year

I won't have to blog about the Detroit automakers again until next year

Summary: Congratulations, fellow American, you and I are now part-owners or at least managers in absentia of two of the most crippled manufacturing companies on earth--that being General Motors and Chrysler. Should we urge a merge?

TOPICS: Banking

Congratulations, fellow American, you and I are now part-owners or at least managers in absentia of two of the most crippled manufacturing companies on earth--that being General Motors and Chrysler. Should we urge a merge? How many more billions of dollars will we fork over before this nightmare either ends or becomes a happy dream?

What's the deal? GM and Chysler today were granted loans of up to $17.4 billion dollars and a life-extension of three months to get their #*&^ together. Whaddaya think?

Some of the issues to be decided by federal government overseers: How many concessions from union workers. Does Chrysler, like the cheese, stand alone? New managers or keep the old gang? How many cars should they be building? This translates into shutting down plants, firing lots more people. Projected sales for 2009 are looking very slender at this point. Formal bankruptcy? What models do they make? For our purposes: does the Volt make it to the salesroom floor?

Chrysler's privately owned and will be granting equity to labor unions and creditors to lower its outstanding debt. The loans are supposed to force UAW wages to be reduced to match those at non-union factories run by foreign-owned automakers. That has displeased the union and its supporters in Congress. So, essentially this whole mess just moves on the down road and will be sitting in the parking lot when Obama's moving van arrives. Welcome to Washington, can we save Detroit?

In typical Washington logic, the two borrowers have until March 31 to show they can profitable at some unpsecified future date. If they can't succeed in somehow meeting that ill-defined standard of profitable or viable they have to repay the federal loans. Of course, they'll be broke and no private lender will give them a dime so how are they going to repay the taxpayers? By selling off their assets like excessive factory capacity and hot real estate in booming markets like Detroit, Flint and other rust-belt places. t is not clear what legal status all theseloan terms have, can the next President just unilaterally change all the terms of these loans? We shall find out in another month.

[poll id=62]

Remember, at the Senate hearings there was testimony that it would take as much as $120-billion to save the Detroit Three. And we all know how accurate all government price estimates have been so far, right? The Wall Street bail-out, loans to AIG, Iraq invasion, Katrina clean-up, Star Wars missile defense system--all brilliant investments still paying huge dividends to taxpayers like you and me. Aren't you being pestered by all the banks wanting to lower the interest rate on your credit cards? Ummmm...

Topic: Banking

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  • Bailouts without pre-conditions? The economy is screwed :( nt

    • what are you talking about?

      Without pre-conditions? Please inform yourself a bit. There are a lot of pre-conditions
  • Kick the can

    This was to keep the big 3 from falling under W's watch, nothing more.
    • I can sympathize though

      For 8 years the Bush administration has been trying to reform Freddie Mac and Fannie Mae and was blocked at every turn by democrats. (check out the YouTube video of Barney Frank telling the administration there is no problem and that Bush is playing politics). I can totally sympathize with him saying: "You know what **** it. I tried to fix this mess and all I got was grief from you, the press and the American Public. Here. Catch; it's all yours, now."
  • Then it is a bonus for us, as well,

    as we will not have to listen to your inane drivel until next year, ourselves.

    Have a happy Christmas Harry, or will the thought of the auto workers having a future of their own be a bit bothersome for you, ruining your Holiday?
    • Thanks

      for your <sarcasm>very constructive</sarcasm> contribution.

      Don't you feel sad seeing that the other commenters added something useful to the discussion while you failed miserably to do so.

      Have a happy Christmas (Un)guiding light, it's a bonus knowing we're free from your useless rants until next year.

      P.S. It just occurred to me that perhaps you work for the union. Do you?
      InAction Man
      • I have at times in the past added

        very usefull comments to Harry's blogs (as have others), in an attempt to maybe have him research other avenues to explore when blogging on the subject.

        But as I have noticed he seems to take no one's view into account as other bloggers here do, mearly assuming his self rightous assesment is the correct one, no matter what, and it shows in his blogs.

        I am as about as anti-union as one can get, actually turning away work based on the fact that the company was unionized, and I will have no part of it.

        It was stated by some that the unions play an extreamly large part in the problems that plauge Detroit, problems not seen at the foreign factories, who are fareing better.

        How easy is it to build a vehicle built to quality specs set by a union, and not a manufacturer? How easy is it to have reasonably priced, good quality parts manufactured for you when it [i]must[/i] be built and shipped via unionized shops and trucking companies?
        How do you sell a vehicle at a profit when even the person who has the job of stocking a container full of parts is paid 50,000 dollars plus? I am not talking about the laborers with skills, I am talking about the many, many jobs in these plants that require little training?

        When the "unskilled" laborers earn better salaries and benefits then a teacher or designer does, how do you think that reflects in the cost of the vehicle in the end?

        The foreign plants down south do not seem to have this problem, and the workers are all teken care of.

        And yet Harry seems to dismiss this all, instead telling us all, time and time again that it really is [i]all[/i] management's and the government's fault.

        And in the end, after all his cries and pleas that the plants should all shut down as the only solution that should be considered, one has to ask:

        "and how do you feel about all those connected to the company being out of jobs, Harry?"

        Would that even be something he considers "an issue"?
        • Thanks for the clarification

          That was worthy of a Guiding Light (no sarcasm.)
          InAction Man
  • RE: I won't have to blog about the Detroit automakers again until next year

    I like the condition where the autoworkers can't make more than the non-union workers. It will force the union heads to make less per year. Maybe the unions will quite bleeding the workers, AND the automakers dry. The unions force the costs up so they can get more dues out of the workers. American auto makers have been crippled by the unions, and have had to deal with lower profits then the foreign autoworkers, which has been an unfair crutch.
    A. Noid
  • poor analysis, wrong place

    This is ZDnet, explain please to me what on Earth does this article has to do with technical stuff. You are not an economics analyst, and from your article you don't seem to be on the right track to become one.

    Honestly, I don't know if this bridge loan was a good idea or not. But there are foundations to the decision and you fail to bring those up. First, you don't mention the potential consequences of not providing the loan. Second, it is a loan. It's not free money. And because of this loan, auto makers now have committed to follow certain new rules like more investment in alternative fuels, something that governments should definitely support.

    I understand your frustration but if you are gonna talk about it, please do it in the right place and with the right arguments, not this way.
    • Ah, the naivete

      If you think this money is a loan, I have a bridge to sell you in Brooklyn.

      Here's what this money is: A payout to the Unions. Expect more under the Obama administration.

      In fact, the blog author didn't put down the correct question on his list:

      Is this the first step to nationalizing the American auto industry?