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.
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.