GMAC has its hand out to the public

[Americano]

"GMAC is seeking access to federal funds as a recession grips the U.S. economy. The government has provided more than $8.5 trillion in financing to unlock credit markets after almost $1 trillion in write downs and credit losses at the world’s biggest banks and financial institutions."

"GMAC, Ford Motor Co. and Chrysler LLC were shut out of the public market for bonds backed by auto loans for the fifth straight month in October, adding pressure on the automakers to consider mergers and seek taxpayer funding."

"If the debt swap isn’t completed by year-end, there is a “significant risk” GMAC will default, the company said in a Nov. 20 regulatory filing. Private equity firm Cerberus Capital Management LP in New York bought 51 percent of GMAC in November 2006. GM, also based in Detroit, owns the rest."

http://www.bloomberg.com/apps/news?pid=20601087&sid=aRTpnBYVITAM&refer =home (http://www.bloomberg.com/apps/news?pid=20601087&sid=aRTpnBYVITAM&refer=home)

I say let it default rather than giving it borrowed public money. What do others think?

[Michael]

"GMAC is seeking access to federal funds as a recession grips the U.S. economy. The government has provided more than $8.5 trillion in financing to unlock credit markets after almost $1 trillion in write downs and credit losses at the world’s biggest banks and financial institutions."

"GMAC, Ford Motor Co. and Chrysler LLC were shut out of the public market for bonds backed by auto loans for the fifth straight month in October, adding pressure on the automakers to consider mergers and seek taxpayer funding."

"If the debt swap isn’t completed by year-end, there is a “significant risk” GMAC will default, the company said in a Nov. 20 regulatory filing. Private equity firm Cerberus Capital Management LP in New York bought 51 percent of GMAC in November 2006. GM, also based in Detroit, owns the rest."

http://www.bloomberg.com/apps/news?pid=20601087&sid=aRTpnBYVITAM&refer =home (http://www.bloomberg.com/apps/news?pid=20601087&sid=aRTpnBYVITAM&refer=home)

I say let it default rather than giving it borrowed public money. What do others think?
Why let GMAC default and not other financial operations? That smells hypocritical.

If financial assistance is going out to a bunch of financial firms, I see no reason to separate GMAC from that.

I'm not in favor of massive bailouts for the autosector, but I am certainly in favor of doing something to prevent GM from going bankrupt in the next 6-12 months.

I think the government has to help the automakers survive for 2-3 years for markets to fully recover - then let GM/Chrysler go Chapter 11 for restructuring. Letting GM/Chrysler hit bankruptcy right now is doomsday for the US economy.

[Michael]

Senate Republicans kill auto bailout bill

Reporting from Washington -- Republican opposition killed a $14-billion auto industry bailout plan in the Senate on Thursday night, putting the future of U.S. automakers in doubt and threatening to deliver another blow to the economy.

The measure died after a last-ditch effort by Senate Democratic leaders to strike a compromise that would have lured enough support to save the legislation, which was crafted in consultation with the White House.

The bill's failure raises the possibility of bankruptcy by one or more of Detroit's Big Three and puts new pressure on President Bush to authorize emergency loans for the automakers from the $700-billion Wall Street rescue fund, a step he has adamantly refused to take.
Source (http://www.latimes.com/business/la-fi-autobailout12-2008dec12,0,1660301.story)

I can't say I'm surprised by this. The Senate Republicans have never put the needs of the nation ahead of their ideological games-playing and they aren't about to start now.

[The Drunk Guy]

Source (http://www.latimes.com/business/la-fi-autobailout12-2008dec12,0,1660301.story)

I can't say I'm surprised by this. The Senate Republicans have never put the needs of the nation ahead of their ideological games-playing and they aren't about to start now.
I don't know about that. I need a new car for cheaper than what they're selling them now.;)

[Americano]

Why let GMAC default and not other financial operations? That smells hypocritical.

If financial assistance is going out to a bunch of financial firms, I see no reason to separate GMAC from that.

I'm not in favor of massive bailouts for the autosector, but I am certainly in favor of doing something to prevent GM from going bankrupt in the next 6-12 months.

I think the government has to help the automakers survive for 2-3 years for markets to fully recover - then let GM/Chrysler go Chapter 11 for restructuring. Letting GM/Chrysler hit bankruptcy right now is doomsday for the US economy.

Japan has canceled plans for a US Prius plant in 2010, signaling 2012 as their earliest forecast point of a potential US economic recovery. GM's Nov08 sales dropped 47% on an annualized basis, with even the most optimistic industry writers already looking at 2009 as a 'lost' year. To save GM is going to require nationalization, not mere bailouts.

[Michael]

Japan has canceled plans for a US Prius plant in 2010, signaling 2012 as their earliest forecast point of a potential US economic recovery. GM's Nov08 sales dropped 47% on an annualized basis, with even the most optimistic industry writers already looking at 2009 as a 'lost' year. To save GM is going to require nationalization, not mere bailouts.
At the present stock market capitalization, GM can be bought outright for $5 billion. That's small change.

[Americano]

At the present stock market capitalization, GM can be bought outright for $5 billion. That's small change.

Buying it outright would include their liabilities, contractual agreements and operating overheads. Hopefully, no one is that stupid.

[Dominick]

I'm each day more surprised that in this whole issue hardly anyone ever mentions......cars. You know, the actual product these companies make. IMO when markets globalized the US manufacturers were too complacent or arrogant to react to that. American cars had a notoriously and well-deserved bad reputation when it comes to handling. Muscle cars are pretty much useless on the hilly and curvy roads of Europe or Japan.

But since a few years that was rapidly changing. The latest Corvette, in former days the epitome of shitty handling, is on par with any Ferrari in this respect, which would open up a huge (relatively speaking) market for them. Personally, and apart from any economical or political consideration, I think it would be a real shame to lose that legacy and recent potential just now when the tide was turning.

[Americano]

I'm each day more surprised that in this whole issue hardly anyone ever mentions......cars. You know, the actual product these companies make. IMO when markets globalized the US manufacturers were too complacent or arrogant to react to that. American cars had a notoriously and well-deserved bad reputation when it comes to handling. Muscle cars are pretty much useless on the hilly and curvy roads of Europe or Japan.

But since a few years that was rapidly changing. The latest Corvette, in former days the epitome of shitty handling, is on par with any Ferrari in this respect, which would open up a huge (relatively speaking) market for them. Personally, and apart from any economical or political consideration, I think it would be a real shame to lose that legacy and recent potential just now when the tide was turning.

In Nov08 Chevy sold a whopping 1093 Corvettes. Corvette will never be on a par with the Ferrari Marque for anything.

Looks to me like the tide is still going out with a long, long ways to go before it turns.

[Michael]

I'm each day more surprised that in this whole issue hardly anyone ever mentions......cars. You know, the actual product these companies make. IMO when markets globalized the US manufacturers were too complacent or arrogant to react to that. American cars had a notoriously and well-deserved bad reputation when it comes to handling. Muscle cars are pretty much useless on the hilly and curvy roads of Europe or Japan.

But since a few years that was rapidly changing. The latest Corvette, in former days the epitome of shitty handling, is on par with any Ferrari in this respect, which would open up a huge (relatively speaking) market for them. Personally, and apart from any economical or political consideration, I think it would be a real shame to lose that legacy and recent potential just now when the tide was turning.
I agree that the big US car companies are a valuable resource. They have a long history of innovation and quality production. Their current bad management that has them making big-ass gas-guzzling SUV's is only a temporal phenomena (and bad business) that has driven them into the ground. At the moment, it is the credit freeze that is killing them, not their products (which are relatively popular).

We need a new generation of environmentally better cars. Ford and GM really can and ought to be a part of that. They have the resources to do it.

[Americano]

I agree that the big US car companies are a valuable resource. They have a long history of innovation and quality production. Their current bad management that has them making big-ass gas-guzzling SUV's is only a temporal phenomena (and bad business) that has driven them into the ground. At the moment, it is the credit freeze that is killing them, not their products (which are relatively popular).

Relatively popular is a key issue. Their mostly shoddy and inefficient products annually lose significant market share to their competition, the only true definition of popularity. They all bet on the SUV gas guzzlers with margins supposedly high enough to offset their legacy and higher operating costs in the 1990s and miserably failed.

We need a new generation of environmentally better cars. Ford and GM really can and ought to be a part of that. They have the resources to do it.

They're all broke, tapped out and with such low market cap should be facing bankruptcy reorganization. Instead, borrowed public money is being used to perpetuate their failures. Ford, the financially healthiest of the three might hit break-even in 2011 if annual US production remains above 9-million units. I'm already reading forecasts of 7-million units sold in 2009.

It's almost pathetic to watch US attempts at maintaining its former glory and standard of living which for the past decade has been maintained only by credit incurred in an irresponsible manner to pursue aggressive war with no plunder and unaffordable standards of living. The game is over.

[Michael]

Relatively popular is a key issue. Their mostly shoddy and inefficient products annually lose significant market share to their competition, the only true definition of popularity. They all bet on the SUV gas guzzlers with margins supposedly high enough to offset their legacy and higher operating costs in the 1990s and miserably failed.
Yes, but big-three car sales are definitely decent. They do offer good products here that are popular. Sure they've lost market share, but that's due to the push on the SUV's.

Any car company that comes out with a good quality and low-cost environmentally sound 'plug-in' car is going to be hugely successful. This has the opportunity to be a 'game-changer' in the auto-business.

They're all broke, tapped out and with such low market cap should be facing bankruptcy reorganization. Instead, borrowed public money is being used to perpetuate their failures. Ford, the financially healthiest of the three might hit break-even in 2011 if annual US production remains above 9-million units. I'm already reading forecasts of 7-million units sold in 2009.
Yes, this is true. But like I said, put a first class environmental car on the mass market and watch the sales figures climb back.

It's almost pathetic to watch US attempts at maintaining its former glory and standard of living which for the past decade has been maintained only by credit incurred in an irresponsible manner to pursue aggressive war with no plunder and unaffordable standards of living. The game is over.
No, the game is not over. It never is.

History teaches that any successful nation or empire will not abjure the system that got them there - even if it fails in the new conditions. They will remain married to the method of their 'traditional' success - even as it fails.

Rome is a good example of this, pretending they had an elected republic all the while they ruled their Empire as rapacious tyrants, plutocratic allies and a fascist economic system. They also maintained a reliance on an infantry-based army (that had proven so successful in the past) when times changed in favor of cavalry based armies that destroyed them. The Brits also were in love with control of their free trading colonial empire long after it ceased to provide any benefit at all (and began to cost far more than it was worth). Both empires declined while both continued to rule the same way they'd always ruled.

With this background, I expect the USA to 'double-down' on trying to run a financial-bubble based economy based on entirely unreal expectations of growth that will never materialize. Off-shore funding will be available in the billions just because no matter how badly run the markets in the USA are, other places are much much worse. So the game will continue - perhaps with a bit less gusto and self-confidance as before, but they will still play the game and keep on playing it till they die trying (or when China eventually starts to offshore its cheap-wiget factories to the cheap labor available in the USA).

[Americano]

Yes, but big-three car sales are definitely decent. They do offer good products here that are popular. Sure they've lost market share, but that's due to the push on the SUV's.

Any car company that comes out with a good quality and low-cost environmentally sound 'plug-in' car is going to be hugely successful. This has the opportunity to be a 'game-changer' in the auto-business.


Yes, this is true. But like I said, put a first class environmental car on the mass market and watch the sales figures climb back.


No, the game is not over. It never is.

History teaches that any successful nation or empire will not abjure the system that got them there - even if it fails in the new conditions. They will remain married to the method of their 'traditional' success - even as it fails.

Rome is a good example of this, pretending they had an elected republic all the while they ruled their Empire as rapacious tyrants, plutocratic allies and a fascist economic system. They also maintained a reliance on an infantry-based army (that had proven so successful in the past) when times changed in favor of cavalry based armies that destroyed them. The Brits also were in love with control of their free trading colonial empire long after it ceased to provide any benefit at all (and began to cost far more than it was worth). Both empires declined while both continued to rule the same way they'd always ruled.

With this background, I expect the USA to 'double-down' on trying to run a financial-bubble based economy based on entirely unreal expectations of growth that will never materialize. Off-shore funding will be available in the billions just because no matter how badly run the markets in the USA are, other places are much much worse. So the game will continue - perhaps with a bit less gusto and self-confidance as before, but they will still play the game and keep on playing it till they die trying (or when China eventually starts to offshore its cheap-wiget factories to the cheap labor available in the USA).

As their per-capita income rises, China is already outsourcing assembly production to less developed countries with favorable labor costs. The US will eventually be on that list as our currency continues its demise and makes capital investment in the US with of all that enormous oversupply and inflated USD dirt cheap. The Wiemar republic attempted spending its way out of debt and we all know the results of that effort. The only question in the US is when will the eventual depression finally be acknowledged by 'official government numbers'.

These band aids, like bailing out failed vehicle manufacturers, won't cure a chest wound.