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Old 12-12-2008, 10:31 AM
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Automakers Bailout...

I'm bored today...and been reading up more on this....I used to work in that industry being an automotive engineer so it does interest me somewhat...

Auto bailout suffers possibly fatal blow in Senate - Dec. 11, 2008

Auto bailout collapses in Senate
Deal to move forward on $14 billion stopgap measure falls short, possibly dooming GM and Chrysler to bankruptcy.
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See all CNNMoney.com RSS FEEDS (close) By Chris Isidore, CNNMoney.com senior writer
Last Updated: December 12, 2008: 8:44 AM ET

Detroit's $14 billion lifeline

More VideosDETROIT'S DOWNFALL
UAW: TARP is 'only resolution'
Honda cuts North American production again
Auto industry stocks recover
Wall St. bailout targeted for Big 3
Auto bailout collapses in Senate

NEW YORK (CNNMoney.com) -- The future of the U.S. auto industry was in doubt Friday morning after a proposal for $14 billion in federal loans died in a late night Senate vote.

The Senate voted 52-35 to bring the measure for a vote -- short of the 60 votes needed to advance the legislation. The failure followed the collapse of negotiations between Senate Democrats and Republicans seeking a compromise that both parties, as well as the companies and the United Auto Workers union, could accept.

The dramatic late-night developments could doom General Motors (GM, Fortune 500) to a bankruptcy and closure in the coming weeks, with Chrysler LLC potentially following close behind.

While Ford Motor (F, Fortune 500) has more cash on hand to avoid an immediate crisis, its production could be disrupted by problems in the supplier base, as could the production of overseas automakers with U.S. plants such as Toyota Motor (TM) and Honda Motor (HMC).

Investors around the world reacted negatively. Stocks closed lower in Japan and Hong Kong and were trading down in Europe. U.S. stock futures were down sharply. General Motors was trading 34% lower and Ford 11% in premarket trading. Chrysler is privately held.

GM and Chrysler said in statements that they were disappointed but did not reveal their next moves.

"We will assess all of our options to continue our restructuring and to obtain the means to weather the current economic crisis," according to the GM statement.

GM has continually said it could not continue to operate if it is forced to file for bankruptcy. In response to reports that the company has hired a prominent bankruptcy attorney, GM said its board "is meeting frequently and monitoring the situation very closely and is committed to considering all options -- as is management -- and has engaged appropriate advisors for all contingencies."

However, the Big Three could still wind up getting government funding. Bush officials warned wavering GOP senators earlier Thursday that if they didn't support the legislation, the White House will likely be forced to tap funds from the Wall Street bailout to lend them money, two Republican congressional officials told CNN.

The White House has been strongly opposed to using any of the $700 billion in bank bailout funds to help the auto industry, but the Bush administration has also said the Big Three must get some financial assistance soon.

"It's disappointing that Congress failed to act last night," said White House Deputy Press Secretary Tony Fratto. "We will evaluate our options in light of the breakdown in Congress."

The measure the Senate turned back would have provided $14 billion in federal loans as a stopgap measure until the new Congress and the incoming Obama administration could reach a longer-term solution.

While the package was far less than the $34 billion requested by the automakers earlier this month, it would have seen them through their current cash crisis.

GM has said it needs $4 billion by the end of the month or its cash reserves will fall below the level it needs to continue operations. It needs another $6 billion in the first two months of 2009, according to its request to Congress. Chrysler had said its cash would run out early next year and it would need $4 billion in the first quarter to continue operations.

Hopes for compromise quickly faded
Earlier in the evening, it appeared that the two sides were getting close to an agreement on the bailout. But just after 10 p.m., Senate Majority Leader Harry Reid, D-Nev., announced a failure to reach an agreement and that he would call for a procedural vote to test support for the measure.

"We have worked and worked and we can spend all night tonight, tomorrow, Saturday, and Sunday, and we're not going to get to the finish line," Reid said on the Senate floor before the vote. "That's just the way it is. There's too much difference between the two sides."

Senate Minority Leader Mitch McConnell, R-Ky., said the sticking point was the United Auto Workers union's refusal to put employees at U.S. auto manufacturers at "parity pay" with U.S. employees at nonunion plants operated by foreign automakers in the United States.

Negotiations centered around proposals from Sen. Bob Corker, R-Tenn., that would have set dates in 2009 by which the automakers receiving the loans had to reach cost cutting agreements with unions and creditors or be forced into bankruptcy. Corker said the two sides were very close to a deal and stumbled on the deadline for the union to agree to the reduced pay.

"We are about three words away from a deal," Corker said.

Currently, analysts estimate the union workers at U.S. automakers make about $3 to $4 per hour more than the non-union U.S. employees of foreign automakers like Toyota and Honda, according to the Center for Automotive Research.

The benefit costs are significantly greater for U.S. automakers, though, because they have to pay health care costs for hundreds of thousands of retirees. The union agreed to close much of that gap in the 2007 labor agreements by shifting responsibility for retiree health care to union-controlled trust funds. But those changes won't take effect until 2010.

The House easily passed the bailout bill Wednesday night but it quickly ran into trouble in the Senate, where Republicans objected to several provisions.
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The bold interests me, if I were a UAW employee I would take the pay cut instead of risking not having a job at all
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Old 12-12-2008, 10:48 AM
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The bold interests me, if I were a UAW employee I would take the pay cut instead of risking not having a job at all
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Exactly. That money should be invested in companies that are producing products people actually want.

What next, the Jennifer Lopez bail out program?
"Congress, Gigli just isn't making any money anymore, please bail us out." Lame.
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Old 12-12-2008, 10:52 AM
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What next, the Jennifer Lopez bail out program?
"Congress, Gigli just isn't making any money anymore, please bail us out." Lame.
Oh SNAP!
LOL
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Old 12-12-2008, 10:53 AM
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As much as I hate to say it, the bailout is a waste of time and taxpayers dollars. I have no sympathy for the CEO's of the big 3. First of all, the bailout will do little to help curb the demise of these automakers. That money from tax payers is just gonna go down the drain within a year.

Secondly, look at the salaries/bonuses/stock options that the CEO's are getting paid, even in these hard times. Cutbacks should start at the top, meaning cut their ridiculous salaries to cope up with the times and maybe not fly in the company's private jet to these congressional hearings. I mean, why can't they just fly coach?

Lastly, until they make better cars that can compete with their german/japanese competitors, their sales will only reflect the quality of their cars. A buddy at Mercedes Benz head office tells me their hitting record sales, even for their special AMG line of cars in these bad times. Meanwhile, Chrysler is literally giving away their PT Cruisers at the moment.

Again, thats just my point of view and i know there are a few ppl who'll disagree...but thats why we're here in the first place. =)
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Old 12-12-2008, 11:41 AM
 
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the CEOs are not the beneficiaries of the bailouts, it is the $70/hr auto workers
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Old 12-12-2008, 11:46 AM
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the CEOs are not the beneficiaries of the bailouts, it is the $70/hr auto workers
yup

only in north america can you graduate HS, get an assembly line job and still be able to afford annual caribbean vacations
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Old 12-12-2008, 11:48 AM
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the CEOs are not the beneficiaries of the bailouts, it is the $70/hr auto workers
Don't be ridiculous. No company = no overpaid CEO. No 80K hunting trips. NO 1.5 Million retreats, no jets, ad nauseum, but yes, overpaid, low-skilled labour is a contributing factor to the overall problem.

Last edited by brody; 12-12-2008 at 11:50 AM.
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Old 12-12-2008, 11:52 AM
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the CEOs are not the beneficiaries of the bailouts, it is the $70/hr auto workers
no definitely not, but they could start at the top.

this is one of the main reasons why these american car companies aren't making as big profits as their japanese/german competitors.
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Old 12-12-2008, 12:17 PM
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um, the main reason isn't $1.5 million to a CEO, it's the tens and hundreds of millions in UNION (scumbag) workers' benefits, wages, and most importantly, retirees' benefits.
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Old 12-12-2008, 12:17 PM
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Well I hate to say this but Chrysler was just bailed out a while ago, right? And now they need more....

IMO cars are over engineered and the UAW is ridiculously overpaid.
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Old 12-12-2008, 12:27 PM
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No sympathy here, the economy isn't to blame for their problems, it's their product line.
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Old 12-12-2008, 12:38 PM
 
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Don't be ridiculous. No company = no overpaid CEO. No 80K hunting trips. NO 1.5 Million retreats, no jets, ad nauseum, but yes, overpaid, low-skilled labour is a contributing factor to the overall problem.
Alan Mulally at F makes close to $10m, when he gets fired he'll move into some consulting job that still pays him $5m, pretty good living.

If you disbanded the UAW, and auto worker employment was a true free market. These assembly high school grads would be lucky to pull $30/hr.
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Old 12-12-2008, 12:42 PM
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Ok so if we put aside how crappy the automakers run their companies and that the UAW is seriously overpaid, does anyone think that the government should still bail them out just because the # of jobs that are going to be lost and how badly this will affect our economy as a whole?
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Old 12-12-2008, 12:43 PM
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no.

socializing the risk is the antithesis of a free market and is a page out of mussolini's fascism.
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Old 12-12-2008, 12:44 PM
 
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Ok so if we put aside how crappy the automakers run their companies and that the UAW is seriously overpaid, does anyone think that the government should still bail them out just because the # of jobs that are going to be lost and how badly this will affect our economy as a whole?
No, it will flush itself out in a few years.

But bailing out will have consequences for years to come.
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Old 12-12-2008, 12:48 PM
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Alan Mulally at F makes close to $10m, when he gets fired he'll move into some consulting job that still pays him $5m, pretty good living.

If you disbanded the UAW, and auto worker employment was a true free market. These assembly high school grads would be lucky to pull $30/hr.
Buddha. I don't disagree with the latter part of your statement at all.
I believe in treating workers fairly, but I am anti-union.
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Old 12-12-2008, 12:52 PM
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Then why are both politicians wanting to bail them out?

Both Bush and Obama want to bail them out....

Just curious
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Old 12-12-2008, 12:58 PM
 
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Then why are both politicians wanting to bail them out?

Both Bush and Obama want to bail them out....

Just curious
potentially 1-1.5million jobs. This the multiplier effects means it would probably effect 5+ million people. Politician read this as 5 million votes more than enough to swing an election.
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Old 12-12-2008, 01:02 PM
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Bush doesn't care about votes anymore.....

I know they care about the jobs, but it just seems wrong to me
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Old 12-12-2008, 01:40 PM
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^ Yes, but Bush is desperately wants to leave some sort of positive legacy. Pardoning a bunch of dog killers and wife beaters, just doesn't have the same ring to it as "The saviour of 5.5 million jobs"
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Old 12-12-2008, 01:43 PM
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^^LOL thats funny....

Okay so why does Obama want it? Future votes?
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Old 12-12-2008, 01:44 PM
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Well I hate to say this but Chrysler was just bailed out a while ago, right? And now they need more....

IMO cars are over engineered and the UAW is ridiculously overpaid.
One of Canada's richest guys bought Chrysler which is why it's privately held now. I haven't been keeping up w/ the automakers and their bailout requests but I think there is over payment of wages on all levels. They should not be allowed to have their cake, with frosting, and eat it too.
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Old 12-12-2008, 01:49 PM
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^^LOL thats funny....

Okay so why does Obama want it? Future votes?
Yep. Obama is appealing to a lot of the working class. Given the fact that he is newly elected, he will probably stand straight in the middle for quite a while.
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Old 12-12-2008, 02:00 PM
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Fuck no! No bailout. I am sick of this crap.

There are so many problems with this one IMO. The government tells them what they can and can't build despite what people will actually buy (MPG minimums for instance). Then you have the CEOs and unions.

Let them fail and file bankruptcy. Then they can get rid of the unions and all the money they have to pay to people that no longer work for them. Why the fuck do people that make $15 per hour have to bail out those that make $30 per hour?

It doesn't matter what we want to anyone making the decision. We are going to pay for this come hell or high water. If they can't do it now they will do it in the next session. The funniest thing is that we have people like Barny Frank and Chris Dodd lecturing people when they were the main players in the mortgage crisis and should be in orange jumpsuit.

We really need term limits for these fuckers. They are dragging us down into the mud and they won’t even listen to what the majority of people want. Its too much government.


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Old 12-12-2008, 02:03 PM
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One of Canada's richest guys bought Chrysler which is why it's privately held now. I haven't been keeping up w/ the automakers and their bailout requests but I think there is over payment of wages on all levels. They should not be allowed to have their cake, with frosting, and eat it too.
If I buy a cake I want it to have frosting and I want to eat it too. LOL
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