ZenLunatic

So Democrats reject the $25 billion for the energy car thing being used as help for the car companies. Auto industry has no bailout. Senate will meet again in December for another meeting to see if GM and others have a better plan. I really think the Democrats are taking a big risk with that if they really wanna help the car companies.

Well then shouldn't they get some of the money if they feel they need it? Pretty big strings attached.

 

I am saying that because most banks would avoid the money like the plague if they didn't need it.

Then why shouldnt any other non-bank finanical company have access to the money also? Get in line, I think the credit card companies were first. This brings up the future of credit cards. Dont be suprised when you start seeing your credit cards drastically lowering your limit.

Why doesnt GM sell off GMAC?

I assume you know that Ditech is part of GMAC -- and that GMAC is pretty heavily involved in mortgages.

I know GMAC is into mortgages, started out as car loans and went into mortgages.

How do you feel about large insurance companies acquiring failing banks in order to get some bail out money?

Unacceptable. A bank that gets acquired should not have access to any bailout funds.

Yeah, Chapter 11 is going to be awesome.

 

And GMAC is 51% owned by Cerberus who also owns Chrysler Financial and Chrysler. GMAC probably will get bank status -- Goldman Sachs did.

I know its gonna suck for Detriot and whoever is directly effected but it is the right move.

They can get bank status if they want, but the government has to realize all these businesses cant just start changing into banks just to get money.

Really doesnt look like a bailout is gonna happen this calendar year. So happy that America isnt as stupid as I thought it was. Good sense won this time, I just hope we are getting smarter about this whole bailout plan. Worried about what Obama may do once he gets in.

If GM wasnt lying, they should file Chater11 early Janurary. GMAC now trying to become a bank to get bailout funds. Dont think this will work either.

I wasn't saying keep them intact at all. I agree that the pensions and labor agreements are a huge part of the problem and need to be scaled way back or eliminated which would be possible in bankruptcy. I was trying to say (not very clearly) that the Feds should be prepared to provide some level of safety net for the folks displaced in the inevitable upheaval that the bankruptcies will create. That safety net already exists in unemployment benefits, etc which can and probably should be extended in this situation.

Yeah we have to try to help the people that are hurt the most by this. I just dont support giving billions to the same people who ran the companies at this point. For the most part, we offered them the $25 billion from the energy car plan, they want to keep that and get $25 more. Cmon..... they dont deserve the first $25.

The hearings are over. GM needs money now or else they will file Chpter11, they wont make it till Obama gets in so we should hear a resolution soon.

I have seen the mother dropped in for a feeding before.

I have been on the watch for the mother myself and havent seen her. It's naptime now.

What the Feds should do is provide the DIP financing necessary to keep these 3 going once they've filed for Chapter 11. A likely problem right now is that if any one of the 3 filed Chapter 11 the chance that any bank would step in to finance ongoing operations during the restructuring has to be very low given the credit markets. The Feds can step in to provide that ongoing financing, be first in line to be repaid and let someone else come in to restructure the companies or buy them out without the incredible burden of the existing labor and pension contracts. That will almost necessarily lead to hardship for many of the past and present workers which is a terrible thing and the gov't. should be planning to help those people out but doing nothing is only going to lead to the situation getting worse not better.

The existing labor and pension contracts are a big part of the problem though, why do you want to keep them in tact? The fact is, people will suffer and you cant avoid it. Trying to avoid it makes political sense but not economic sense.

One just woke up and looks to want the others awake.

They also support more retired/ex-employees than current employees. It's a clusterfuck of biblical proportions.

The sad part about all this, is that we as tax payers will probably end up giving them money. Then later, they will ask for more and we maybe give them more. Our leaders have lead us astray, the only thing we can do now is protect our own wealth.

Live Puppy Cam

http://cdn1.ustream.tv/swf/4/viewer.45.swf?cid=317016

Also, ZenL, I don't want you to tell that "markets go up over time" -- this isn't econ class. This is the real world. Where "over time" means that when people retire they need to draw on their 401k. People don't have "over time." They have their lifetime. And if we head for the implosion that you seem to want (by ignoring bailouts), there's going to be a lot of baby boomers with 401ks that are a mere fraction of what they were once worth. And they will have to live, and die, on that amount. Telling them to wait another 30 years because "markets go up over time" ain't gonna cut it.

Ok back to my point, I dont want implosion, who does?? -- its just are fate. I just want to cut off creating more damage and start the healing.

The closer you are to retirement, the more you should in cash and bonds types than in equities. You cant afford to be at risk so close, and if you were, you were playing and you lost. To the people that did lose, it is horrible and you can blame the FED for this mess. Blame Alan Greenspan and Bernake who's job was to look over things like this. What the result of our situation can lead to is that there is no retirement anymore except for the super wealthy. That is the reality. What we cant do is try to take care of everyone who's hurting because we dont have the resources anymore. We are all suffering and will suffer more and thats the reality. We just have to make do with what we have.

Haha, ZenL, it's like we exist in alternate universes. I think that, without fail, I respectfully disagree with everything you say on here.

 

First of all, timing is everything when investing. Literally, everything. How can you say it's not that important? If, 4 years ago, you foresaw this bubble, and you shorted the real estate market, you would have gone bankrupt as the market continued to rip while you were a bear. Ok, you would have been proven right in the long run, but "right" in the market means you made money. There's no moral victories.

 

Now, if you want to tell me that timing isn't everything in academia or idiotic Fox News interviews, sure I can agree with you. But only because the proof isn't in the proverbial pudding. Those who can, do. Those who can't, go teach economics at business school or give interviews on Fox News. And if they are right, we hold them up after the fact. If they are wrong, we forget about them.

 

I am not trying to rain on Mr. Schiff's parade -- the guy flat out nailed it, and with a degree of specificity that should be applauded. But he is not the only guy that saw this coming. Did you see how much money guys like John Paulson and Phil Falcone made last year betting against the subprime market? So much that they were brought before Congress last week to testify. And so much so that the House Committee asked them what they think about TARP and how it's going.

Yeah, I think we are the two opposing sides.

Of course you have to have timing to play the markets. Just saying timing on calling big trends is not important, because those trends will eventually happen. If you have to wait years or a few months, it will happen. No one can predict when bubbles will pop close enough to make sound investments. His plays are long terms on sound investments not trying to catch the right side of a certain bubble. There's always high risk factor, when trying playing this way. You could argue that you want to play short term markets and in that timing is crucial, I agree. I know alot of people made money in the tech and housing bubble, but more people lost money in it.

I know there are others that think like Schiff, but he is just the one with a more public profile so we talk about him.

Yes, but in the market, the only thing worse than being wrong, is being right too early. So part of what I am saying is that being "right" involves a timing element too. And that this can certainly occur by "accident." Schiff was certainly right on the money in his analysis, but he wasn't the only one who saw this coming, and he was one of the few that timed it right.

 

Lots of people knew the dotcom craze was a bubble. But they thought they were smart enough to get out before the bubble burst. If dotcoms are flying high, even if you know it's ridiculous, you can stand on the sidelines and say it, or you can continue buying and selling and making money. While you stand on the sidelines, lots of people are making money. Lots of people "knew" that we were overleveraged and that the housing market wasn't sustainable, but people were flipping homes and making lots of cash. Schiff put his stake in the ground, but if the market had kept chugging along for 3 years, he would have been forgotten about, and lots of people would have gotten rich in the meantime. In other words: there were people saying exactly what Schiff was saying 4 years ago, 2 years ago, etc. They were right too, but they were too early.

Schiff's ideas are not about timing the market. Its about the fundalmentals based on Austrian Economics. He's not out there giving short term advice or calling timed deals. If you know there is a bubble about to burst and you play, you are really gambling big time cause no one can predict the burst. If you are wrong, you lose tons of money, if you are late, you make your money later. How can being late be worse?

Schiff is probably early on his current predictions, just like his other ones, but he's always been right. His track record speaks for itself. Timing isnt that important when playing long.

What has been driving the market for US vehicles is cheap loans with no down payments, so people have been trading up to negative equity for years. So many people are underwater on their auto loans -- I think we have a stat that more than 35% of people who have a car loan are upside down (though don't quote me -- I need to look it up). So now they can't trade them in because they can't get another loan -- so traffic is way down in dealerships across the US.

 

And you are right about T and H being smart and manufacturing and selling high quality, high mileage vehicles. However, I can argue that SUVs and trucks last longer than passenger vehicles on average. I have the stats to prove it (its my job).

 

T and H also sell trucks and SUVs -- and they are taking a bath on them too. They just have been smarter about their product mix as the big 3 ceded the small/midsize passenger vehicle market years ago so they could own the bigger profit SUV truck market -- which they had to in order to pay their US workers in plants around the US.

 

Do you know how a car is made economically -- and how long engineering just one vehicle takes? This is not a "pick up the pieces and start over" kind of thing -- like a bank.

First off, you cant have a company driven by cheap loans. Cheap money is the reason we are in the this mess. If you rely on that, you're company is garbage. You also have to admit to being a fool if you are in a upside down car loan. If you buy a car with no money down, you are trying to live way past your means. Stupid irresponsible move. Companys should be driven by quality products at good prices.

Well it seems like GM really doesnt know how to make a car economically. It hasnt for the past decade or 2. So what's going to make me think they know now? At least give someone else a chance.

Peter Schiff, economic advisier for Ron Paul. Why dont we listen to the people who predicted this whole thing instead of relying on the people who got us here.

So now that the Republicans sent the entire economy into the toilet they want to flush whatever's left?

 

I mean is it even worth talking about??

 

Every day or two the Republicans have some new stupid fugging clarion call that was brought to their attention by whoever and now all of the sudden they are worried about that subject and know all about it.

 

sit back ladies. whatever The President Elect wants to do about the Big 3 is what we will do. I'll leave the judgement on the facts up to him. The decision making process with input from experts. all i know is republicans should just shut up. WE havent even started yet. Your time to cry will come soon and im sure it will be loud.

From what I've been hearing, GM cant wait until Obama is president. They maybe gone by year end or else they would just wait.

I am really on the fence over whether there should be an auto industry bailout. The national defense aspect needs to be considered as well. If we do end up nationalizing it, like we did Wall Street, we should make them build hybrids that completely undercut Honda and Toyota in price and quality. No more of this SUV shit, unless they are hybrids. All they do is eat up gas and encourage their owners to think they are better than other people.

Undercutting Honda and Toyota in price and quality. Now thats a US car company I want, can GM and Ford even get there with where they are now?

Just because the Big 3 fails doesnt mean there will be no US car company ever. Someone is bound to buy up the pieces and build a company from the ground up that can compete effectively. There is alot of opportunity here for the right businessman.

The perfect shit storm of the market today is the issue. They could survive any one of these, or even two, but all three at the same time are a catastrophe.

 

1. Meltdown of the capital market -- they can't borrow money right now by selling stock -- they are too "risky"

2. Meltdown of the consumer credit market -- they can't sell cars as fast. This includes the leasing market, which has largely disappeared since residuals are almost impossible to predict

3. Rapidly shifting consumer demand -- Yes they were addicted to the big profit truck/SUV, and you can say "their cars suck" but remember that until August, the Ford F150 was the top seller every single month for 20 years, and until this year, GM was still the number one car maker in sales. People traded in these vehicles the first time it cost north of $100 to fill up their tanks -- where they went to auction, only to sell for 25-60% less than they were a year earlier, wreaking havoc on the wholesale markets and messing up leasing for all vehicles. They cantilevered their product mix to SUVs in the same way AIG cantilevered their risk portfolio to credit swaps. AIG gets bailed out -- why not GM?

 

And that initial $25B loan in Sept was to help the big three retool and get more economical vehicles on the road faster. Which will be moot if they are gone in six months.

I have to disagree with you on "Rapidly shifting consumer demand". Honda and Toyota have been following consumer interest for years by making high reliability cars that are great on gas mileage, nothing new. When it comes to cars, the thing most people look for is resale value. Check the resale value of american cars to foreign cars on the whole for the past decade. It shows the story. Also, isnt there a fundalmental business problem is you are #1 in sales and you have huge money problems? How is that issue going to be addressed?

Yeah GM made bad business decisions and risks and now facing the consequenses of those just like AIG. You do have a point when it comes to bailing out GM is fair because of what they did before. They never should have bailed out AIG or anyone and in doing that they set a bad precedence. We have to stop this type of thing now rather than later.

Because they don't have the capital to re-emerge (likely). If the financial services industry weren't also in disarray, this might be without question the best bet. But as it stands, it's not that simple.

They need to manage their way out of this mess through retooling in chapter 11 like everyone else. If they cant, they dont belong to exist. Do you think after the auto industry gets the bailout money, people will see the company differently? Will people actually start buying US cars more now? So what change will bailout bring except keeping the company alive for a bit longer and wasting tax payer money?

So we will find out this week. Meetings tues and weds. Auto makers asking for money from govt. Interesting to see how much money will be given and at what conditions.

What is the status of union contracts if GM, etc., goes into Chapter 11? Are they still in effect?

If GM goes Chapter 11, they can run without the restraints of union contracts to help re-org the business. This could be a way to emerge a new company with a different structure. Why not let this happen?

Point 1: You clearly don't know me. Moreover, I am in the USED car business, by and large.

 

Point 2: Do you really have the stomache to find out what it would be like if the big three went out of business here? As has been stated by those who actually know something about the car business, Chap 11 is not really an option for a maker of an item that people buy for use for 4+ years. Would you buy a GM vehicle if it were in Chapter 11? Right. And "massive restructuring and downsizing" is worse than it going away completely?

 

Point 3: I would tell you to go F yourself, but I am above that. Really, I am.

 

Also, here are a couple of senators looking at the big picture. What a surprise.

When I said "you", I was more referring to the person who wrote the article you posted. Main point: I think people who want the bailout of the auto industry is mostly in the auto industry and fighting for their own livelihood. Thats all good and fine, but that doesnt make it right.

I have the stomach to find out what it could have been if we never bailed out the banks so the auto company is small potatoes.

I would not buy a US car before, now, or after bailout. The cars suck and a bailout wont change that. If you think people wont buy from a Chpt 11 company, why would they buy from a company in the mist of it and currently taking a huge bailout? The only thing changing is that the tax payers are paying for all the losses of the company instead of the company. If the US car companies somehow survive this, it will be such a different company, it will pretty much be a new company anyways so the US auto indusrty is gone as we currently know them already.

Everyone is asking for handouts, well it just cant happen. This bailout thing has to stop.

If you want to discuss, please dont get offensive.

Today's Automotive news....

I would have to say you are in a minority on that opinion. You are only thinking of yourself getting bailed out because most of us know that the bailout of GM is a bad idea. Yeah we know GM going down is a huge blow, but you dont know for sure that GM cant survive chapter 11. If it cant, that its own fault. Someone else will come in and make a real profitable car company that will be able to compete. I would not being counting on GM to pull through with or without any government help. Either way, there will be massive restructuring and downsizing.

There's a pretty good shot I'll have a job next week. I toured a factory and peed in a cup today. This is a nifty job where I'll have a nifty uniform with a name patch on my shirt and everything. This time next year, I may be Miss November on a Blue-Collar Babes calendar. Steel toed boots and protective goggles, I'm gonna be so fly! Maybe Navy Officer, Richard Gere will come in and carry me away some day. I'm not particularly enthused about the work itself, but it's right on in the paycheck and hours department, so I'll see how it goes.

YES! Sounds good. A job is a job. With unemployment rising, you are doing good. good work.