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Vet67to82 (< 20)

GM. Ford, Chrysler ... To Loan or NOT ?

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November 16, 2008 – Comments (6) | RELATED TICKERS: F , GM , HES

The moaning and groaning doesn't HELP!  Unless ... that moaning and groaning is to discourage readers in the hope it'll drive the stock price down (  Do I hear the wimper of shorts about to lose their shirts ?? )

   How quickly you forget what happened to the bears when the US gov loaned/loan guarenteed Lee Iacocca's Chrysler.  Chrysler paid back every penny PLUS interest, PLUS wages, PLUS FICA, PLUS Fed taxes, PLUS state and local taxes, plus Social Security taxes ...   etc, etc, etc !!!!   AND every EMPLOYED worker pays the same taxes, every parts supplier pays the same taxes, every parts supplier employee  ...  DO THE MATH.  Every loan IS a BLOWOUT windfall for the government.   The no loan alternative ... all those employees on unemployment. 
 
  Should the ONLY auto companies in the USA be FOREIGN?  Forever to siphon cash from this country in an un-ending trade decifit?  un-ceasing trade imbalance? 

  The US gov is no doubt going to extend loans/loan guarantees to GM simply on the basis of the crushing ripple effect a GM failure would have on the economy, its suppliers, putting people (tax paying people) out of work, lost taxes: FICA, SSI, state taxes, etc ... You really think the USA isn't considering the permanent loss of USA industry,the trade deficit, AND  the money it will GAIN, vs. the money it risks ???????????????    

  Duh!

Moan and groan all you want.  The Loan/Loan Guarantees will benefit the many  ... not the few.

6 Comments – Post Your Own

#1) On November 16, 2008 at 6:37 PM, garyc27 (< 20) wrote:

If this is a free enterprise system then the better manufacturers should win the contest. 

Why does it cost the foreign manufacturer, making autos in the USA, $400 per car to provide employee health care benefits but, Detroit's cost is $1,500 per car?

COLUMBUS, Ohio – Even as Detroit's Big Three teeter on collapse, United Auto Workers President Ron Gettelfinger said Saturday that workers will not make any more concessions and that getting the automakers back on their feet means figuring out a way to turn around the slumping economy.

We will be rewarding poor management and a greedy union if we bail them out and the $25 Billion price tag is just the start as we will be pumping billions more into these companies over time.

No, I don't think a bailout of this industry is the right thing to do.

Write or call, or do both, your Senator and House Representative to tell them NO BAILOUT FOR DETROIT.

 

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#2) On November 18, 2008 at 8:42 PM, Play2k (< 20) wrote:

 I'm all in with the bailout loans. Americans wanted the gas guzzlers and that's what the Big 3 gave them. There is no choice in the matter. This is where the cheap fuel prices in America bites back, with guzzling roadhogs and spoiled brat consumers. Manufacturers provide what the public buys.  The solution would be to up the gas tax to 1.00 and commit to pay infrastructure and deficit responsibilities (fat chance with the liberals running things). What this would do is keep the demand fractionally lower and let the oil countries pay the difference from lower oill prices, than would be prices without the tax, and higher demand pressure!

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#3) On November 18, 2008 at 9:51 PM, falang1 (96.55) wrote:

I have to agree. The Big 3 built what consumers wanted. In fact the Japanese/Koreans/etc were scrambling to build SUVs as fast as they could. Even mighty Toyota got caught bringing out a new expensive pickup ($40k +?) and had to idle the plant for 3 months. Even Kia was bringing out SUVs. It's a simple fact. Americans want large vehicles unless gas is prohibitively expensive. The future of cars in the US is not tiny Honda Fits. It is large vehicles with good gas mileage, be it Hybrids, electric, fuel cell, etc.

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#4) On November 18, 2008 at 10:17 PM, newphyte (< 20) wrote:

OK, here I go. I say support them and force reform on them. (Reform in the form of retooling and restructuring.) I can't imagine the carnage when we let one of the Big 3 go bankrupt. I'm new to the market and paying attention to financials, but I believe that we will see real panic selling if this occurs. There are just too many businesses supplying the automakers, who will also go down. There are too many other businesses depending on their products. I believe it would be a truly disasterous decision.

I am moving what I can to cash until this issue gets some clarity. I'm thinking of staying out until the new administration is in place.

Anyone have any reassuring comments to make? I'd love to hear them!

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#5) On December 04, 2008 at 3:00 PM, phi16 (29.70) wrote:

Ford has 87,000 employees.  GM 266,000.  By comparison Starbucks has 176,000 employees.  Not that we should give Starbucks 12 billion dollars, but there are many very large or larger companies than these one-time used-to-be Big Three with good products, intelligent management, that are good for the community and good for the country. 

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#6) On December 04, 2008 at 3:13 PM, guiron (26.66) wrote:

That's true, phi16, but allowing the big 3 to fail, wiping out millions of jobs with their suppliers, dealers, etc., not to mention wiping out the shareholders, will put a big boot down on the already very weak economy. Besides, you put up F as an example, which said it may not even need the loan. GM is likely to fail, however.

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