Bailout for automakers?

[COLONEL]

All this bail out is , Just a big bandaid and who to say that down the road this won't happen again , Look at Chrysler they have already been bailed out and now they need bailing again . I say let them file bankrupcey and start over . If they ( the Govt ) really want to help, then give the money drectly to the people that are facing forclosers on their homes That way they would get to keep their home and they would be helping the banks as they paid their morgages . Look what happened when They gave money to AIG it ,was Buss. as usual CEO's got their bonuses and the American public got F***ed

 

[Disbelief]

GM is burning through more than $1 billion per month - how much will it cost to get them to last until March 2010? Add in Ford and Chrysler. How much in US taxpayer dollars are you willing to burn to achieve that limited (and practically meaningless) goal?

And do you really think anything will change after that?

If the bailout of the banks frees up money for credit (which was supposed to be part of the point), then they will easily make it to 2010. Of course things will change, as they have been changing. Of course, since you have been oblivious to evidence presented that undermines your little rants against the industry, I don't expect you to understand.

 

[PaKu]

I keep hearing about this " too big to fail" companies..

isn't that becoming a variant of monopoly?
maybe such companies should be carved up like Bell Telephone before they become too big?
Otherwise, one has "only" to grow big enough and do whatever they want ( e.g. to grow that big) because the govn't (taxpayers) will HAVE to bail them out eventually

 

[Meadmaker]

If they ( the Govt ) really want to help, then give the money drectly to the people that are facing forclosers on their homes

In my house, my workshop area is too small, the kitchen doesn't have enough counter space, and the bedrooms are too close to the living room, which creates constant fights between those who wish to stay awake and watch television, versus those who wish to sleep. I wish that were not the case, but I bought the house I could afford, not the house I wanted.

I would be mad as heck if my money went to people who bought houses they couldn't afford.

What I'm questioning is the wisdom of any bailout. The only possible reason to bail out a company that is failing is to prevent the spinoff damage. I understand what the spinoff damage would be from a sudden collapse of the auto industry. It would be Bad. I would hope that there would be some way to avoid that without handing money to some people who drove their companies into bankruptcy, but if that were the only way, it would be worth it.

I'm not so sure about that when it comes to banks. There are plenty of banks that haven't failed. If the goal is to make sure credit is available, why not give money to banks that haven't collapsed?

Again, this contrasts with the auto industry. There are no American auto companies that haven't failed,or aren't about to fail, and the transplants wouldn't be able to take up the slack in time to prevent the spinoff damage.

 

[Meadmaker]

I keep hearing about this " too big to fail" companies..

isn't that becoming a variant of monopoly?
maybe such companies should be carved up like Bell Telephone before they become too big?

I've had the same thought. An awful lot of people in Detroit say that there is one too many car companies. The solution, they say, has to involve going from three to two.

I'm not so sure about that. I think maybe going from three to four would be better. I'm a low level auto industry insider. I certainly see the economies of scale that come from having a big company, but I also see the inefficiencies from the same cause. I'm not so sure that the industry wouldn't be better off if the bankruptcy judge for GM found a way to break them into two or three. I think an extra company could survive, and thrive. The problem isn't the inefficiency of a smaller company. The problem is the capital required to start such an entity.

 

[balrog666]

If the bailout of the banks frees up money for credit (which was supposed to be part of the point), then they will easily make it to 2010. Of course things will change, as they have been changing. Of course, since you have been oblivious to evidence presented that undermines your little rants against the industry, I don't expect you to understand.

GM owes over $200 billion in long term debt. How much more can they borrow? And who would be foolish enough to lend it to them?

.

 

[Francesca R]

GM owes over $200 billion in long term debt. How much more can they borrow? And who would be foolish enough to lend it to them?

Quite. GM's debt trades below 20 cents. The market is not about to extend any credit.

 

[Disbelief]

GM owes over $200 billion in long term debt. How much more can they borrow? And who would be foolish enough to lend it to them?

.

Once the economy stabilizes, they will get money because they will have lost much of the legacy costs and will be the low cost producer in the US. Then, they will be able to make money off of their full line of vehicles and not just off trucks/SUVs and luxury.

 

[Francesca R]

Why do you think that existing creditors completely disagree with you?

 

[ponderingturtle]

Have any of you guys seen the documentary: "Who Killed the Electric Car?" ?? GM actually built a viable zero emission vehicle. It was a pure electric called the EV-1 which had a range of 120 miles (3rd generation batteries...their 1st gen ranged about 60 miles)

There was a thread on that movie a few years ago.

The problem is that people do not want an electric car. That car was only ever made because California wrote a law that mandated a fixed percentage of the sales after a certain date had to be electric cars.

So it did not matter how much the car cost to make and how much money each one lost, the auto makers needed electric cars that people would buy. Once the law got repealed there was no need to continue with such a monetary loss proposition.

As for selling the cars built, that had some legal issues that they would have had to support them.

There are plenty of people who will convert a car into an electric car. If people wanted electric cars they can get them. They just do not want to pay the cost for one, and have it as a second vehical.

 

[rikzilla]

There was a thread on that movie a few years ago.

The problem is that people do not want an electric car. That car was only ever made because California wrote a law that mandated a fixed percentage of the sales after a certain date had to be electric cars.

Well that and the fact that the Clinton admin made a subsidy deal with the big 3 to create zero emission cars.

So it did not matter how much the car cost to make and how much money each one lost, the auto makers needed electric cars that people would buy. Once the law got repealed there was no need to continue with such a monetary loss proposition.

The law wasn't repealed. The State of California was sued by a small army of lawyers bought by a consortium of auto makers and oil companies. There was also a "grass roots" movement of people who fought having recharging stations built... a fine bit of astro-turfing, again by oil companies in thin disguise.

As for selling the cars built, that had some legal issues that they would have had to support them.

Support them? When EV-1s arrived at dealerships for maintenance they just rotated the tires and refilled the washer bottles. The dealers had nothing to sell these people with electrics!

There are plenty of people who will convert a car into an electric car. If people wanted electric cars they can get them. They just do not want to pay the cost for one, and have it as a second vehical.

There are lots of people who can home-build a car too...but not many folks likely to buy such a thing. Mass production with quality controls and lowering costs will create an EV that people will buy. We know this from the large waiting lists for EV-1's...watch the movie man! The EV-1 was not the end-all-be-all of modern transportation by any means, but it was a very useful vehicle for most commuters, nevermind the whole Global Warming thingy... If "we the people" must bail out an industry I'd like to bail out the one most socially responsible. Maybe, just maybe, our bailout money should come with some green strings and stipulations.... Building gas munching clunkers with fold-down plasma screens is not the way forward.

-z

 

[Meadmaker]

Maybe, just maybe, our bailout money should come with some green strings and stipulations

So far, it has. Washington has made about 50 billion dollars available for such things. The problem is that those efforts are too long term to stop the cash burn now.

[derail]The movie distorts the reality of the situation, by the way. We talk a lot about cars in this neck of the woods. The EV-1 would never have been a commercial success, and more fossil fuels are burned to run an EV-1 than a gas powered machine. If you get your electricity from some other source, an electric vehicle might help reduce CO2 emissions, but if you burn coal to make your electricity, you'd be better off skipping the middleman and just pouring gas into the tank.[/derail]

 

[Disbelief]

Why do you think that existing creditors completely disagree with you?

Because I am way more forward thinking than them.

You do know that they change their ratings from time to time, so just because the current outlook is grim does not mean that it will stay that way.

If "we the people" must bail out an industry I'd like to bail out the one most socially responsible. Maybe, just maybe, our bailout money should come with some green strings and stipulations.... Building gas munching clunkers with fold-down plasma screens is not the way forward.

Which is why the Big 3 have been going that way. You do know that GM and Chrysler have built fleets of hybrid busses for large metro areas that save far more gas (based on usage) than your average Prius? You do realize that the Escape hybrid is garnering good reviews? You do know that GM has more hybrids available than any other automaker? You do understand that they are trying to get a game changer out in the Volt?

Just because you don't think they are going green does not make it a fact.

 

[rikzilla]

So far, it has. Washington has made about 50 billion dollars available for such things. The problem is that those efforts are too long term to stop the cash burn now.

But when GM created the EV-1 and Toyota created the EV version RAV...and people who had these things raved about them...why did GM collect every last one and crush them? Why did Toyota load their EV RAVs on ships for Japan? It bugs me every time I see that stupid Toyota commercial with those guys weaving a Prius out of twigs and saying they are "working on" producing a zero emission vehicle "someday"....looks to me like someday was back in 1996.

[derail]The movie distorts the reality of the situation, by the way. We talk a lot about cars in this neck of the woods. The EV-1 would never have been a commercial success, and more fossil fuels are burned to run an EV-1 than a gas powered machine. If you get your electricity from some other source, an electric vehicle might help reduce CO2 emissions, but if you burn coal to make your electricity, you'd be better off skipping the middleman and just pouring gas into the tank.[/derail]

True but there are many completely clean and viable ways of producing your electricity. Not only that but even a coal fired plant can be made cleaner than a million gasoline burning cars. One big smokestack can be scrubbed easier than a million little ones.

-z

 

[rikzilla]

Just because you don't think they are going green does not make it a fact.

How 'bout this? You tell me how shredding hundreds of nearly new EV-1's over the objections of thousands of people who wanted to own one fits the "green" movement. Similarly how does sueing the state of California to overturn groundbreaking clean air regulations..how does that one fit?

Take your time.

-z

 

[Disbelief]

How 'bout this? You tell me how shredding hundreds of nearly new EV-1's over the objections of thousands of people who wanted to own one fits the "green" movement. Similarly how does sueing the state of California to overturn groundbreaking clean air regulations..how does that one fit?

Take your time.

-z

Theyu crushed the vehicles for safety reasons (could not have them just sitting around), to protect proprietary information (could not just leave them sitting around) and for tort protection.

As for suing the state of California, which all of the automakers did, it was because of the high cost of trying to do business in CA. It would be difficult if not impossible to meet the mandates, and then they would have to build different cars for CA than they would sell in other parts of the country. Since it is the federal gevernments responsibility to set clean air regulations, they were perfectly within their rights.

You want cleaner air, ask your congressman to press for a much higher gas tax so that the consumers would force the automakers to build more efficient vehicles.

 

[Francesca R]

Because I am way more forward thinking than them.

You do know that they change their ratings from time to time, so just because the current outlook is grim does not mean that it will stay that way.

Not ratings agencies. Every investor who doesn't lend to them unless paid a "junk" rate.

 

[Meadmaker]

But when GM created the EV-1 and Toyota created the EV version RAV...and people who had these things raved about them...why did GM collect every last one and crush them?

I'll have to look up why they collected and crushed them. That doesn't make sense to me. If they sold them, then they didn't own them, and didn't have the right to crush them. Unless they didn't sell a single one of them, just gave them to fleet customers for use, they couldn't collect and crush them.

I'll look it up. I'm pretty confident that the answer is not that they were afraid of the cars because they were too cheap, or easy to service, or other such conspiratorial theory.

ETA: To answer my question, they only leased the vehicles. None were sold. The reason for that decision was liability concerns. They were too new and had too many potential problems to trust them for sale in this lawsuit infested nation.

The wikipedia article on the EV1 gives a pretty quick, and accurate, summary of the program and why it wasn't a commercial success.

True but there are many completely clean and viable ways of producing your electricity. Not only that but even a coal fired plant can be made cleaner than a million gasoline burning cars. One big smokestack can be scrubbed easier than a million little ones.

Not for CO2. At least, not easily. You have to put the carbon someplace. Where is that? One solution would be to pump it through pipes and grow algae with it, and then extract oil from the algae for biodiesel. I really like that idea, because I have investments in penny stocks that want to do just that. However, I haven't quit my day job while waiting for the fantastic returns. It turns out no one, including my penny stock companies, has figured out how to do it to cost effectively.

 

[COLONEL]

I would be mad as heck if my money went to people who bought houses they couldn't afford.

.

I would be too . I am talking about the guy that has a house and a family and because of job out sourceing and plant closings has lost his job and fallin on hard times . How would you feel if you lost your job tomorrow and could not afford your home .

 

[Meadmaker]

I would be too . I am talking about the guy that has a house and a family and because of job out sourceing and plant closings has lost his job and fallin on hard times . How would you feel if you lost your job tomorrow and could not afford your home .

That would be a bummer, but that won't happen. It's true that I have a mortgage, and making the payments would be difficult, but when I bought the home, I bought it with the knowledge that I could be temporarily unemployed at some time in the future. I could have bought that other home with the bigger kitchen and extra bedroom. The bank was willing to lend me almost twice what I actually borrowed. I really would have liked that home much better than the one I live in. Instead, I bought a home I could afford, and I keep a few thousand dollars in the bank to tide me over in case of unemployment.

I would feel sorry for that family that lost their home because one or both of the wage earners lost his/her job, but not sorry enough to give them some of my money so they could enjoy their home. I don't think the ants should have to help out the grasshoppers during hard times. I'm for a social safety net to keep people from starving, but not to let them keep their remodelled kitchens.

There is one exception, and it relates to the topic of this thread. If the foreclosure of their home would cause disastrous ripple effects beyond them losing their home, something has to be done about it. However, every attempt should be made to find a way to do that without giving money to people who squandered their own money. This is true for automakers and for homeowners.