Posted on 12/11/2008 9:15:59 PM PST by BurbankKarl
A frantic, last-ditch attempt to forge an relief package for the auto industry collapsed in the U.S. Senate, dealing a giant blow to hopes of the Big Three.
Senate Majority Leader Harry Reid of Nevada suggested the $14 billion wouldn't be revisited until January. "It's over with," he said.
The talks, which appeared close to a deal several times, broke off due to a sharp partisan dispute over the wages paid to workers at the troubled manufacturing giants.
General Motors Corp. and Chrysler LLC, which have said they can't last the year without federal aid, both hope the White House will now relent and allow the Treasury to provide emergency loans from the $700 billion Wall Street fund, people familiar with the matter said. Mr. Reid also urged that option.
To date, the administration has resisted the idea. But "that may be where they go next," said Sen. John Thune (R., S.D.). There is always a chance Congress will act sooner if one of the companies totters on the brink, although that possibility appears remote.
GM, in a statement, said it is "deeply disappointed" that an agreement couldn't be reached. GM had told Congress it needs $4 billion by the end of the month or it might not be able to keep its operations going.
The company added that it will "assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis."
The package's difficulties hit Asian markets, which had posted gains this week in response to broad government efforts to help the world economy. In Tokyo, the Nikkei Stock Average of 225 companies was down 6.5% intraday, while shares in Hong Kong were down 7.3%.
(Excerpt) Read more at online.wsj.com ...
My Representative voted against this turkey of a plan in the House. He also voted against the bank bailout.
The new UAW motto:
FULL PAY, UNTIL THE LAST DAY.
Interesting how the Senate has been and is now controlled by the Democrats but, somehow, this is the fault of the GOP.
“Dems refused to lower UAW wages to Nissan, Toyota, Honda pay levels”
That’s really not quite accurate.
The whole difference in labor costs between the Japanese and the Big 3 are pension and medical costs for retired workers. And if the Big 3 go bankrupt, the Federal government will get stuck for most of those pension and medical costs.
This is a tough problem to solve.
Why should we have to pay to bail out the UAW union?
They largely created most of this mess.
See ya in Bankruptcy court, UAW.
Scabs are US.
it is what they reported:
The focus of talks was on seeking commitments to restructure the industry’s debt load and bring labor costs in line with wages paid by Toyota Motor Corp. and Nissan Motor Co. in the U.S., among other things.
Management presumably offered reduced wages; and...
The UAW fungi are holding out for (ultimately) ... zero dollars per hour.
You are right, it’s a tough problem. Unfortunately, I think that this, and the insurance-related problems of the millions soon to be out of work, is why we will end up with national health.
i recently bought a honda, so screw the unions.
Weil Gotshal & Manges LP - get to work!
I’m not sure if the Big Three were bluffing to get what they thought would be a better deal from Bush and this lame duck Congress (by claiming the burn rate was going to sink them before January 20th), but I’ll take the risk. And they can prove they were not bluffing.
I generally would be loathe to cite Thomas Friedman of the NYT - but he did a good job of characterizing this attempted bailout as analogous to investing heavily in typewriter manufacturers just before the PC revolution... There are forces of change in the auto industry and the broader economy and Detroit has been tone deaf to them for 40 years. What is it about an infusion of Federal taxpayer funds that makes people think it (by that fact) will change?
I think Corker has been doing a good job of focusing the issue - but I cringe when I hear him say that the Big Three and the UAW have to agree on hourly age costs equal to those of the transplants. It’s not the job of Congress to negotiate such things - and if the bailout begins on these terms how long will it be before we see legislation specifying the absolute minutiae of auto company operations? And we all know what likelihood of success that will have.
It will be interesting....Sweden is bailing out Saab and Volvo....
Hooray!
“FULL PAY, UNTIL THE LAST DAY.”
haha...sounds right. If the union had any sense of mind, they’d be more than willing to have a job...rather than have nothing.
Not entirely true, but very hard to tell from the shallow coverage this issue has been receiving.
The Pension Benefits Guaranty Corporation PBGC has been collecting premiums form GM, Ford and Chrysler for the pension benefits of their employees under traditional pension plans. GM, Ford and Chrysler have been making payments into a pension fund to cover those liabilities, though, no doubt the pension allocations underfund the contractual liabilities by a lot.
If the Big 3 go bankrupt the PBGC will enter the bankruptcy case and get the Court to transfer assets (the assets already set aside for pension coverage) to the PBGC. Again, that will not cover the total liability - however the liability may not be that huge - since the coverage is capped at about ~50,000/year. If all 3 go, PBGC becomes insolvent quickly. If Chrysler and GM go, maybe not, but then the taxpayer bailout goes to PBGC and not to Chrysler and GM. And the magnitude of it is not clear. I wouldn't trust most of the numbers and assumptions floating around out there right now - they come typically from CAR (Center for automotive Research) - hardly an objective source.
It may well be that the least costly avenue for taxpayers is bankruptcy.
Socialists win then....and they get to blame the Republicans!
How will the federal government get stuck with this unless you are referring to medicaid, etc??
If by insolvent, you mean the PBGC is underfunded, it is already insolvent.
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