Posted on 12/12/2008 7:04:08 AM PST by meandog
Bush changes mind, may save auto giants
Facing the potential bankruptcy of iconic American firms, President Bush on Friday abandoned his longstanding objection to using using the Wall Street bailout fund to help save G.M., Ford and Chrysler.
A frustrated Republican congressional official said: "If only they had said this last week, we could have saved ourselves a full week."
Ten hours after the Senate rejected a separate lifeline for the automakers, White House Press Secretary Dana Perino said in a statement it would be "irresponsible" to let the companies crash. So she said Bush will "consider other options," including the $700 billion Troubled Assets Relief Program that Congress created for the Treasury Department in October.
"Under normal economic conditions we would prefer that markets determine the ultimate fate of private firms," Perino said in a statement. "However, given the current weakened state of the U.S. economy, we will consider other options if necessary – including use of the TARP program — to prevent a collapse of troubled automakers. A precipitous collapse of this industry would have a severe impact on our economy, and it would be irresponsible to further weaken and destabilize our economy at this time."
(Excerpt) Read more at politico.com ...
Dishonest to add in legacy? It's dishonest not to. Any financial analysis, any financial statement would do so.
I can understand that it's to the UAW's benefit to redefine financial terms, but they will not be successful.
Well, yes they have. Any bill providing DIP financing from the Feds would have practically unanimous support from the right.
You would find, however, hesitance on the part of the left.
The GOP handled this responsibly; they offered a restructuring that would accomplish much of what a Chapt 11 would, without the stigma or complications of BK.
If you care to search, you'll find where I've been mocked for pointing out how disruptive a BK filing would be.
My position is simple and clear: no loans for companies that are not viable. I know Chrysler is not viable, and I suspect GM is not, either. Ford, it's an open question.
I'm willing to be as concerned as the UAW is. They KO'd the Senate agreement because they figured they could do better. I say, good luck with that.
The UAW has been given an alternative to Chapt 11. It's up to them whether they take it.
Your statement doesn't really document that. In any case, it was a responsible position.
Before this action I was willing to give the UAW a graceful way out. It has since been shown they are the problem. No more face saving gestures.
Look, it is not a responsible position to put something into an agreement which you know can not work...better to admit the truth. No agreement would be acceptable. These people showed their true lack of fitness for any responsible office...when a big three failure could sent millions out of work and perhaps cause a depression, the time to play politics is over. These Senators are a disgrace to the South. God don’t like ugly...they will get theirs in the end.
Some call it Karma...for example after dumping millions of taxpayer’s money into Mississippi for a transplant facility...not going to happen. The government ‘partnered’ with the company. What hypocrites these Southern Senators are to cry about taxpayer money when they give millions and millions to the transplants-hardly free market. It was put on indefinite hold. These bozos who brokered the deal can’t even get their money back if it doesn’t happen-not in the contract. The Japanese worry about their country not the US. Time people figured this out.
Of course, any thinking person would hesitate...not that the left is known for thinking-because it’s not just about the money. It’s about the suppliers who are on the verge of bankruptcy because of market conditions. It would take time to get this in place...there is no time.
Also, if you want to see what happens when a manufacturer goes into Bankruptcy,look at Adelphi. They were suppose to come out of bankruptcy last year and failed. It’s been years. This was a much smaller company also. GM can not afford to be in bankruptcy for years. No one will buy the cars in this circumstance. The government can talk about honoring those warranties all they want;it won’t work. You need specialized equipment to work on cars. If GM goes away bye bye dealerships who have such equipment. You think a guy who works on cars is going to buy this expensive equipment when no more cars are being produced? Never happen. This is not Grandpa’s chevy that you could work on yourself...it’s a complicated repair for almost everything.
No-bankruptcy means the entire American Auto industry goes away. We become a weak, dependent nations who produces nothing and sooner or later is going to have to beg for crumbs...please sir can I have some more?
Of course, any thinking person would hesitate...not that the left is known for thinking-because it’s not just about the money. It’s about the suppliers who are on the verge of bankruptcy because of market conditions. It would take time to get this in place...there is no time.
Also, if you want to see what happens when a manufacturer goes into Bankruptcy,look at Adelphi. They were suppose to come out of bankruptcy last year and failed. It’s been years. This was a much smaller company also. GM can not afford to be in bankruptcy for years. No one will buy the cars in this circumstance. The government can talk about honoring those warranties all they want;it won’t work. You need specialized equipment to work on cars. If GM goes away bye bye dealerships who have such equipment. You think a guy who works on cars is going to buy this expensive equipment when no more cars are being produced? Never happen. This is not Grandpa’s chevy that you could work on yourself...it’s a complicated repair for almost everything.
No-bankruptcy means the entire American Auto industry goes away. We become a weak, dependent nation who produces nothing and sooner or later is going to have to beg for crumbs...please sir can I have some more?
It is dishonest to pretend that a UAW worker is making $73.00 per hour. It’s an out and out lie. As for legacy, the union assumes such costs right now in 2011-you need courts to change pensions. However, part of the deal in the senate included the UAW taking over legacy now; the car czar would have teeth to make this work. The UAW would receive equity instead of cash for the contributions made by their members over the years-this is a big concession. so quite lying; you hate the union. I get it. Just admit, you hate the union more than you love your country. An America without an auto industry is an America on its way down. We need to rebuild our manufacturing base not become a pathetic, dependent nation.
I guess you missed the last two months of news...nobody is getting loans. Then bailed out banks won’t lend. So let’s not pretend that available money is being denied to GM...another lie. Look you hate the union so much... you can not have a logical discussion because if you believe the union caused this by themselves;you are delustional. Why do you think American manufacturing is gone? These were the jobs that allowed America to have a middle class life. Americans in the last ten years or so borrowed money off their houses in order to maintain a middle class lifestyle...Why? The crappy service industry jobs that replaced manufacturing jobs are lousy jobs with no benefits.
Another problem with the loss of manufacturing is that, we are heading towards socialism...national health care. Millions of people are out of work already because of these terrible policies. They voted for the Dem Party and expect an expanded safety net. The sad thing is the GOP did it to itself by championing trade policies that drove American companies either to offshore or go out of business...Good going guys. The left didn’t destroy us we committed conservative suicide.
Again-it does matter where the money shows up....because saying it’s in their checks is a lie...period. Those who spread this are liars.
It's not responsible to insist upon contracts that are economically unsustainable.
"Can not work?" I think you're implying that if the UAW doesn't agree, it ain't gonna happen. It's pretty clear what place they see for themselves in this.
The UAW is not the arbiter of the possible and impossible.
I think there's an excellent chance that the UAW, through their hard ball tactics, has put Chrysler out of business. The Treasury plan hasn't been announced yet, but I believe it will acknowledge that Chrysler is not a viable business and has no future plan...that would have been avoided for awhile, at least, had the UAW allowed the Senate plan. Kiss another 40,000+/- UAW members goodbye. Now, THAT'S karma...and poetic justice.
No agreement would be acceptable. These people showed their true lack of fitness for any responsible office...when a big three failure could sent millions out of work and perhaps cause a depression, the time to play politics is over.
They insisted upon a viable business model before they would provide any money...that's responsible. As much as you try to avoid the facts, the UAW torpedoed this agreement as unacceptable.
The UAW has enforced their will upon the Detroit 3, and that's why they're in the state they're in. They were unable to enforce their will upon the Senate.
These Senators are a disgrace to the South. God don’t like ugly...they will get theirs in the end...
"You didn't vote for the UAW...God's gonna gitchew!"
This is the cherry on top of what is an unappetizing dessert of anti-intellectual cr@p. Try again.
I see you have a problem with the South. You have said it more than a few times already so don't deny it.
Your senators are Stabenow and Levin. I can see why you would be jealous.
Yes, if anything the suppliers are in as bad shape, if not worse, than the OEMs.
Yes, and I agree that the left is not notorious for logic...it's what makes the divide between us so much larger.
You've been trying to portray me as some mean spirited conservative robot in my responses. Square that with this post from me, on a thread that just suggested 'let them file for BK, it's the only way':
I am amazed at the persistence of drive-by analysts. I suspect most of those who have opined on this thread have no operational experience in any business of any size...much less any background in BK law, or the auto industry. I think there's a lot of schadenfreude being exhibited, also.
As taxpayers they can decide whether they want their tax dollars to go to try to fix this problem.
The naysayers are wrong about just about everything else, though...which is my point, I guess. I've had serious discussions on many subjects here at FR, and I've been impressed by the level of expertise.
I don't know whether that's changed, or whether I'm just more aware of it...I know I have little patience with ignorance. I have no patience with ignorance proudly displayed.
If Chrysler files for Chapt 11 BK, they won't emerge from it...they'll be converted to Chapt 7 and liquidated. There's some chance they would take down Ford and GM, in which case both would likely be liquidated...if not immediately, within two or three years.
You can't stop this machine, which consists of dealers, the OEMs, the Tier 1 suppliers, and the smaller suppliers...and expect to start it up again. Anyone with just a superficial understanding of BK law and the structure of the auto industry understands why...which seems to eliminate most posting on this thread.
In 2007 the Big 3 sold at wholesale about 9 million cars and trucks at a net wholesale of about $210 billion dollars.
Who here thinks the US economy would be stronger, or we would in any way be better off, if those three businesses went away?
What kind of hit will we take on employment, taxes, pension guarantees, bank losses?
Show of hands? Who thinks I'm wrong, and who's willing to explain why?
Again, if you don't want your tax dollars going toward a fix, you're entitled...and you can decide that on any basis you want.
Don't kid yourselves that BK would work, though...or that you won't spend a whole lot more tax dollars picking up the pieces.
Anyone?
I still believe that it makes sense to try to save the domestic auto industry, but not at any cost.
Consider this post from:
http://www.freerepublic.com/focus/news/2142059/posts?page=103#103
It's been proposed that the government provide DIP funding for a pre-structured filing. It hasn't been clearly explained (or thought out, I believe) who will provide the DIP funds required to keep the resultant chain of BK suppliers operating.
Had you more to offer than drive-by analysis, you'd know that these issues are being played out today in the industry. You'd know about a company called Plastech; Chrysler wanted to end the supplier relationship. They notified Plastech, and showed upo at their doors with trucks to haul away the production equipment that Chrysler owned. (I suspect you aren't familiar with that part of the industry...but why should you be?)
Plastech responded by filing for Chapter 11. By order of the court, Chrysler could not touch the machines. The Big 3 were required to provide DIP financing to keep Plastech afloat while the court process sorted itself out.
What do I mean by required? The Court didn't order them to; if they didn't, the Big 3 were out of parts.
Delphi was a supplier spin off from GM. GM retained a lot of contingent liability. Delphi filed for BK, and has been there for about four years, I think. GM pledged billions of dollars to Delphi to help them exit BK. That's been held up, because they haven't been able to secure what's called "exit funding."
GM had no choice. Because Delphi is in Chapter 11, GM cannot modify or end any relationship with Delphi without the consent of the court.
Multiply this by 1500-5000 suppliers, and the domino effect a BK filing on the part of Chrysler, for example, would have on it's suppliers, who are also suppliers to the other two...and it's a financial tsunami.
It's not that I don't understand the issues...I just don't agree with you.
The Det3 liquidity issue is a symptom; the illness is that they are trying to operate on a business model that doesn't work.
It's been made abundantly clear that management gets it; it's clear that white collar gets it; it's clear that bondholders get it.
The only participants who don't "get it" are the UAW. There's a plan still on the table in the Senate, the Corker plan. Management has agreed to it. Bondholders would agree.
The UAW blew it up. Gettelfinger said there was nothing left to discuss and he wouldn't be back.
I'll also note it's no accident that suppliers are financially teetering. Take Delphi and American Axle.
What do those two have in common? The UAW.
I feel sorry for everyone involved. I recognize that the UAW has steered the industry to this point, so I can feel sympathy for the human suffering involved, while recognizing it was self inflicted.
The UAW stands in the way of industry recovery. They have proven this.
I was a supporter of a rational bailout plan. For me now, by definition, any plan will have to be imposed upon the UAW. They have earned no place at the table.
Grow up. It's not just about you.
Legacy costs are a part of the contract with the UAW. By definition, they are a cost of UAW employees. You seem to be engaging in strategic ignorance about this.
As for legacy costs, in this context there are two: pension and retiree health care. Pensions are as of now fully funded. Nothing would change here.
The other, retiree health costs, are nowhere near fully funded. That's where the VEBA comes in.
Changing the funding source for VEBA would require judicial approval...in ordinary circumstances. Congress makes the laws, and could make approval irrelevant.
It should be apparent to anyone following that if the definition of a lie is to give a misleading impression, just about anything the UAW says is a lie.
This VEBA will be operated by the union...but funded by the companies. This is how the union "takes responsibility" for retiree halth care.
The UAW would receive equity instead of cash for the contributions made by their members over the years-this is a big concession...
Contributions? You're arguing that there was actual money contributed? It's a part of what is called "legacy costs" currently, because it wasn't funded on a forward basis. That's where the $73/hr number comes from.
These "contributions," therefore, are a fringe benefit which you've previously argued wasn't actual compensation...or sometimes pay, as you seem to fudge the difference when it suits you.
You exhibit the symptoms of a person in denial.
You're the only person who's saying it's in their checks. There are many forms of compensation that do not show up on a paycheck.
I understand this, as do most people. You can pretend it is not so, but the rest of us don't have to follow your lead.
Not true, I can show you posts where people believe it is in the paychecks. This also begs the question...if Sen. Corker understood legacy than why the wage thing which blew up the Senate deal? They would have to pay GM in order to balance legacy. Plus, the GOP knew the union head could not agree to this. He didn’t have the authority. The GOP should pray Bush bails them out by giving the bridge loan to the auto sector. Without the Mid West, they can not hope to take the presidency. The Southern Senator should be especially worried with the statements from their transplant about suppliers...they may shut down if the big three go under. Some auto experts have said they don’t believe a car will be built in this country by anyone for at least a year maybe two if this happens. I’d love to hear Shelby ET AL explain how they lost those tax payer subsidized jobs.
The veba question was settled during the negotiations, and yes since I was responsible for turning in payroll, my guys came to me with paycheck problems. I can state unequivocally that money was paid into these funds by individuals. I think the company matched some percentage of the fund, but I’m not sure. I only saw the deductions. Management also had the same retirement. We paid into it also. We will never get what we put in...I’ve accepted this, But, I’m sick of the misinformation and outright lies.
I appreciate your understanding of the bankruptcy issue. Few onthis forum do. If I’ve been unpleasent, accept my apologies.I probably confused your post with another poster.
Please understand that the UAW head could not legally agree to this. He can not agree without a vote. He doesn’t have the authority to do so. I know this is hard to understand, but it is a contract-contractual laws do apply. I think everyone involve wanted to do this in the Senate. Many here believe the GOP caucus did this on purpose that they are lawyers (many) and do understand contractual law, and this was their way of sabotaging the deal. It is a reasonable hypothesis.
President Bush’s behavior is erratic to say the least. I can’t understand what he is up to...if he is not going to do something or plans to send the big three to bankruptcy-as you pointed out there is no such thing as a managed bankruptcy. It would result in liquidation. He should just do it so we can get on with our lives.
I have mixed feelings about the GOP. I will probably not vote GOP again after this-probably third party. I believe their policies of free trade, economic policies etc have damaged this country. But,I still care about the GOP. I have been a Republican for many years. I fear if the big three go down. The Republicans will be blamed and pay a heavy price with voters. I’m telling you the repercussions will be felt almost immediately on Wall Street and Main Street. Millions will lose their jobs especially in the Mid West. The Mid West is mostly swing states which the GOP must win in order to win presidential elections. People here hate Republicans. It goes beyond political differences...I’ve never seen anything like this before. Some of the voters who hate Republicans used to be Republicans. Many voted for McCain in fact.
I live in Ohio so you are mistaken about my Senators;those are Michigan Senators. You are darn right I have a problem with Senators who are shilling for the transplants in their states and pretending they have principles. The transplants, these free market Senators championed received billions in direct taxpayer subsidies-hardly free market. They are hypocrites and traitors in my opinion. The joke is on them though. Many of us in the business have come to believe the transplants will have a really difficult time with suppliers in this environment and may have to shut down possible for a year or more. You see if you add them all up...there is not enough production to keep the suppliers in business. Try explaining that to your constituents-Sen. (hypocrite) Shelby.
As for the South, my wife is southern. I have lived in Georgia. Certainly, I do not hate the South. I despise these Benedict Arnold senators though. I will not spend leisure dollars in their states nor will I if by some miracle the transplants remain for a few years, buy their cars.
Contract law is contract law...its the same for the UAW as anyone else. One would expect the GOP caucus-many who are lawyers to know this.
That in response to this:
It's not responsible to insist upon contracts that are economically unsustainable.
"Can not work?" I think you're implying that if the UAW doesn't agree, it ain't gonna happen. It's pretty clear what place they see for themselves in this.
The UAW is not the arbiter of the possible and impossible. I think there's an excellent chance that the UAW, through their hard ball tactics, has put Chrysler out of business. The Treasury plan hasn't been announced yet, but I believe it will acknowledge that Chrysler is not a viable business and has no future plan...that would have been avoided for awhile, at least, had the UAW allowed the Senate plan. Kiss another 40,000+/- UAW members goodbye. Now, THAT'S karma...and poetic justice.
Then you do not understand what is going on...and what I'm saying.
Nobody can force the UAW to do anything. They can stand on their contract while GM and Chrysler file for Chapt 11, because the Treasury wouldn't allow the UAW to dictate the terms of the potential bridge loan.
The UAW had dictated to the Det 3 for the last 60 years. They dictate to a lot of RAT politicians. They don't dictate to the banks, and I don't see where they are going to dictate to Treasury,
The UAW will not dictate the terms of rescue. The entity providing the funding will.
Should the UAW blow things up (rhetorically speaking) and strike a company in BK, they will lose what little sympathy they currently have. The judge will void the contracts.
It's one thing to ask for help. It's another thing to ask for help when injury is self inflicted.
It's quite another when help is demanded and the person suffering from self inflicted injury refuses to stop doing it.
Good luck with that. We'll see if the BK judge buys it.
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