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Post by psychecc on Aug 22, 2008 14:16:39 GMT -6
The timing on this is interesting, just after GM's spin-off, parts supplier, Delphi, cut 600 jobs. AND if Fannie and Freddie get a bailout, why not mega-automakers too? Well, maybe after their CEOs take a 90% or so pay cut? Once again, government seems intent on saving the rich, while the workers are left out in the cold.
I can't wait for the spin machine to explain to us how this is really good for everybody. Maybe it is? Am I missing something? At least this could keep car manufacturing going, while the GSE bailouts will just be holding onto the fake, paper wealth in housing. Link to full article follows.
US Automakers Are Seeking $25 Billion in Federal Loans
By Reuters | 22 Aug 2008 | 11:58 AM ET The Big 3 Detroit-based automakers are seeking about $25 billion in federal loans as they struggle to ride out a steep downturn in U.S. auto sales, The Wall Street Journal reported on Friday.
Lobbyists for the U.S. automakers—General Motors, Ford Motor and Chrysler—briefed White House officials, as well as U.S. Rep. John Dingell and other Michigan Democrats, on a possible bailout and plan to unveil the proposal after Labor Day, according to the report.
The plan is for the government to lend some $25 billion to the automakers in the first year at an interest rate of 4.5 percent, or about one-third what the companies are currently paying to borrow, the report said.
Under the proposal, the government would have the option of deferring any payment at all for up to five years, the article said.
Representatives at GM, Ford and Chrysler were not immediately available for comment.
In a letter to U.S. Senate Majority Leader Harry Reid and House of Representatives Speaker Nancy Pelosi, Michigan congressmen sought up to $25 billion in low-interest credit for U.S. automakers and parts suppliers from the federal government.
"This incentive program will make it more economically feasible for U.S. auto manufacturers and part suppliers to retool their facilities by providing low-interest credit," said the letter, dated Aug. 1.
"The federal government must be a strong partner in the investment in the advanced technologies," the letter said....
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huck
Contributor
Posts: 81
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Post by huck on Aug 22, 2008 17:56:37 GMT -6
Well, maybe after their CEOs take a 90% or so pay cut? 90%? They still would be making more than 99% of the people that do real work. Make them pay back any bonuses they got for the last 3 years first too. Anyone that only manages managers should be eligible for this deal or should be tossed out by their ear.
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Post by blueneck on Aug 23, 2008 4:41:44 GMT -6
While I am definitely no big fan of bailouts, bailing out the auto industry would have a much greater impact and be shared more effectively than Wall Street bailouts would
Hundreds of thousands of jobs here in the industrial midwest depend on a healthy auto industry. Lee Iacocca knew this - he got to work and rolled up his sleeves to save Chrysler back in the day - when people understood how important manufacturing is to our nations economic health and national security. Iacocca paid back the loans with interest in full and ahead of schedule
We are talking about loans here - not the free "no strings attached" taxpayer handouts that Wall Street is getting.
I would agree with the CEO thing, except that Bill Ford (who is wealthy of course) vowed not to take a salary until Ford is profitable again - his family still controls the majority stake in the company and have a vested interest in its success. Mullaly does not make any of the "top paid" CEO lists of I have seen and seems genuinly interested in turning things around
Waggoner over at GM is another matter though - he continues to preside over one spectacular blunder after another and has made some notoriously bad decisons - yet he is still around
And Nardelli at Chrysler (yes, that Nardelli of running Home Depot into the ground and pocketing 210 million infamy) is only interested in stripping and flipping Chrysler to the Indians or Chinese
The bottom line is a manufacturing "bailout" would give more bang for the buck if you will than a Wall Street bailout, and would be much more likely to benefit more regular people than a few rich elitists. There is also an issue of fairness involved if congress can spare a dime for Wall Street why not help Detroit too?
I see no downside if the help is contingent upon making more fuel efficient cars in the US, and investing in new technologies and capital equipment
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Post by judes on Aug 23, 2008 8:10:47 GMT -6
If any assistance is given, it should be under the condition the money must be invested in the US, no more using it to ship jobs and capital overseas.
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Post by blueneck on Aug 23, 2008 9:19:53 GMT -6
Exactly right Judes. There must be strings attached as to where and how the money is invested to qualify
We do not want a repeat of the massive airlines bailout after 911, that most of them took the money and bought planes from europe's Airbus
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Post by unlawflcombatnt on Aug 23, 2008 10:11:04 GMT -6
Exactly right Judes. There must be strings attached as to where and how the money is invested to qualify Absolutely. Whenever someone or something receives money from a private organization or government, they have every right to attach conditions to it. It's perfectly reasonable to expect the recipient to do something in return. That's exactly what we do with the $20 billion/year we give to TANF (classic "welfare" for the poor). In order to remain eligible for TANF, recipients are required to attend classes to learn new skills. Failure to do so causes them to lose their TANF (and the Medi-Cal or Medicaid that they are also eligible for.) As such, there's no reason not to attach conditions to Corporate welfare as well. Forcing them to spend every penny of US taxpayer-funded handouts in the US is perfectly reasonable requirement. Furthermore, there's nothing "free-market" about a failing business receiving money from the government, so any claims that attaching "strings" interferes with the free market is nonsense. Corporate handouts interfere with the free market to begin with. Attaching strings is a fully justified "price" for the recipients to pay. Taxpayers have every right to expect their money to be spent to help the overall economy, instead of just a handful of rich Corporate plutocrats.
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Post by psychecc on Aug 23, 2008 21:26:48 GMT -6
You're all right. I do remember that Iaccoca handled that loan very well. And I know this $25 billion is being called a loan too. But if car makers fail to survive, it won't be a loan. And Fannie and Freddie is being called a loan too, but everyone knows they're so far in the red, there's no paying it back.
And yes, it's much better to save manufacturing than to save banks. Attaching strings to ensure American workers benefit and that money is spent here would be great too. I'm all for saving the auto industry. It just irritates me that so many have lost their jobs, then we bailout Fannie and Freddie (fairly soon, according to CNBC rumors), and right on the heals of that, we hear of this $25 billion. I just wonder who will be next in line for tax dollars when the budget is already busted, and average Americans don't seem to reap any of the bailout/loan benefits. That said, I would love to see the auto industry survive if it can keep employing Americans.
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Post by blueneck on Aug 24, 2008 5:45:08 GMT -6
The car makers may not all survive without some assistance. Ford probably has the best chance to survive relatively intact. GM will likely be a much smaller GM. Chrysler will either get parcelled off between multiple makers, or sold to the Indians or Chinese.
In the case of manufacturing loans, at least there would be assets to sieze if it goes under - intellectual property - trademarks and patents, capital equipment and real estate so it wouldn't necessarily be a total loss in failure unlike the "paper" assets of Wall Street which are essentially worthless in failure. There is always the possibility of nationalization as well - like when Conrail took over several bankrupt railroads in the 70's.
On a side note - you never hear the right and free marketeers talk about the success story of govt controlled Conrail - Conrail was actually profitable and was able to be sold off to other lines after the government successfully took it over and turned it around.
Bottom line is a failure of the domestic auto industry would be economic catastrophy for the US economy- and would be nuclear devastation of the industrial midwest
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Post by psychecc on Aug 24, 2008 10:18:52 GMT -6
The car makers may not all survive without some assistance.... Bottom line is a failure of the domestic auto industry would be economic catastrophy for the US economy- and would be nuclear devastation of the industrial midwest People all over the world still want to buy American cars. It's been a rough road for this once proud industry. These jobs used to support families, buy homes, send kids to college, generally support the "American way of life." If not for corporate greed, they would still. The acceptance of the view that "globalism is inevitable" was the death knell of manufacturing in America. We entered the race to the bottom when we should have placed tariffs on imports to make up for the difference in the cost of making quality products and paying a living wage. A tariff is, in my view, simply a fee to access the best consumer market in the world. As with so many good ideas, the rich have managed to attach such a negative wrap to tariffs that even those who would benefit from them don't like them. If $25 billion would save the bulk of the auto industry, and they would accept some conditions with the loan, then I agree it would be tax money well spent/loaned.
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