GM/Chrysler requesting 10Bln In Aid

[DBeaSSt]

http://news.yahoo.com/s/nm/20081028/bs_nm/us_chrysler_gm_6

NEW YORK/DETROIT (Reuters) – General Motors Corp and Cerberus Capital Management have asked the U.S. government for roughly $10 billion in an unprecedented rescue package to support a merger between GM and Chrysler LLC, two sources with direct knowledge of the talks said on Monday.

The government funding would include roughly $3 billion in exchange for preferred stock in the merged automaker, according to one of the sources, who was not authorized to discuss the matter publicly.

The U.S. Treasury Department is considering a request for direct aid to facilitate the merger and a decision could come this week, sources familiar with the still-developing government response said earlier on Monday.

An injection of $3 billion in equity to support a GM acquisition of Chrysler would be roughly equivalent to the current, depressed value of the top U.S. automaker.

It would also give U.S. taxpayers a large stake in the turnaround of a struggling auto industry that employs over 350,000 American workers and is credited with supporting employment for another 4.5 million in related fields.

Analysts see GM, Chrysler and rival Ford Motor Co having been driven to the brink of failure by a combination of management missteps, slowing global growth and problems in credit markets.

In addition to its equity stake, the U.S. government is also being asked to provide support for the GM-Chrysler merger by taking over some $3 billion in pension obligations under the terms of a proposal now before the government for review, the first source said.

The final component of the proposed support package would be a credit line that could include U.S. government purchases of commercial paper issued by GM to relieve short-term pressure on liquidity, the person said.

A combined GM-Chrysler would control roughly a third of the U.S. auto market by sales and would face immediate pressure to cut costs stemming from excess capacity in almost every facet of its business. Those would include a stable of 11 brands, roughly 10,000 dealers and some 97,000 union-represented factory workers, analysts have said.

But one of the conditions of the merger would be that GM-Chrysler would spare as many jobs as possible in order to win broad political support for the government funding needed to complete the deal, people familiar with the merger discussions said.

GM could not be immediately reached for comment. Cerberus and Chrysler had no comment.

The roughly $10 billion to support the GM merger with Chrysler would be in addition to whatever funds would be allocated to the automaker under an already approved $25 billion program to provide low-interest loans to the industry for retooling to make more fuel-efficient cars.

(Additional reporting by David Bailey)

There's got to be some irony in there about Taxpayers who own Toyota's paying for this....

[enzl]

http://news.yahoo.com/s/nm/20081028/bs_nm/us_chrysler_gm_6

There's got to be some irony in there about Taxpayers who own Toyota's paying for this....

Technically, it's ironic that the American public, that has largely abandoned GM & Chrysler as consumers are NOW going to be shareholders in both companies!

Sadly, this has all been set in motion years ago.

How good is that Renault/Nissan deal looking now to RW and the Bored of Directors?

Question: Has any employed CEO presided over a larger total loss of shareholder equity than Red Ink Rick?

[vonVeezelsnider]

This is the only way they can afford the merger... Which would indicate to me they more or less have a framework in place for the merger, maybe an agreement in principle but simply need the capital to make it happen.

[Camino LS6]

I have a bad feeling about this.

[regfootball]

ok by me.

we gave wall street how many billion and it doesn't benefit the average mortgage holder.

this is a pittance in comparison. this seems like a good faith act to me from GM and Chrysler. Folks, this may be the only option. Both GM and Chrylser are subject to failure and absorption by foreign companies if this or something like it does not occur.

Not only this, but Ford and GM are strong in the global arena. We need to have this presence in the global automotive arena. We're a player, if we don't do this, it severely weakens GME and I think it will weaken ford as well.

this isn't about product. GM is getting the product out. maybe not totally fast enough, but honestly, now you understand why we have been seeing so many press releases about killing old models, and the new Cruzes and Volts and such in the pipeline.

If your average toyota owner protests, then that's their own problem. I want to find out who they work for, so I can lobby their leaders to send their corporate offices overseas. I want to find out which products they create, so i can buy something else.

Folks, if we don't retain ownership of the cars we buy and service here, you might as well kiss this thing goodbye. If GM and Chrysler go down, then you can bet its not far off until those workers at the import plants here get job cuts and wage cuts and over time, plants shuttered. All your cars will be built in Asia and India and shipped over. There is no incentive for Import brands to keep as large a presence as they do here, once our own US owned companies fall.

Edited October 28, 2008 by regfootball

[loki]

I have a bad feeling about this.

cause it may not stop anything...it'll keep them in debt several more years...?

[FUTURE_OF_GM]

There's got to be some irony in there about Taxpayers who own Toyota's paying for this....

Folks, if we don't retain ownership of the cars we buy and service here, you might as well kiss this thing goodbye. If GM and Chrysler go down, then you can bet its not far off until those workers at the import plants here get job cuts and wage cuts and over time, plants shuttered. All your cars will be built in Asia and India and shipped over. There is no incentive for Import brands to keep as large a presence as they do here, once our own US owned companies fall.

That was the plan all along, right?

Destroy our industry, then 'enslave' the consumer for the benefit of the company's OWN society.

See, what most americans FAIL to realize is that NO ONE in the global economy has OUR best interests at heart. The average american seems to somehow think that these companies set up shop here and cannibalize our industry because they are "Proud to do business here" or "Proud to contribute to our 'flourishing' lifestyles" or even worse, so they can "Save the environment" But in reality, these corporations are just that: CORPORATIONS that are BASED in other societies that WANT OUR MONEY. These corporations are the most efficient money making machines to ever exist and they are successfully draining our wealth right in under our noses, ALL THE WHILE turning us against OUR moneymakers and CLOSING THEIR MARKETS so that we have NO chance to get that money back.

It's so simple and so brilliant. It's like feeding a starving kid steak and stabbing him in the back with the steak knife at the same time.

Edited October 28, 2008 by FUTURE_OF_GM

[enzl]

That was the plan all along, right?

Destroy our industry, then 'enslave' the consumer for the benefit of the company's OWN society.

See, what most americans FAIL to realize is that NO ONE in the global economy has OUR best interests at heart. The average american seems to somehow think that these companies set up shop here and cannibalize our industry because they are "Proud to do business here" or "Proud to contribute to our 'flourishing' lifestyles" or even worse, so they can "Save the environment" But in reality, these corporations are just that: CORPORATIONS that are BASED in other societies that WANT OUR MONEY. These corporations are the most efficient money making machines to ever exist and they are successfully draining our wealth right in under our noses, ALL THE WHILE turning us against OUR moneymakers and CLOSING THEIR MARKETS so that we have NO chance to get that money back.

It's so simple and so brilliant. It's like feeding a starving kid steak and stabbing him in the back with the steak knife at the same time.

While you're oversimplifying the case, the fact is that the US exports its goods & services throughout the world. We just happen to do a poor job with the export of automotive products.

This can & should be laid at the feet of the Dom 3's management---when you fail to plan, you're planning to fail, et al.

We're a consumptive culture that has put a premium on materialism---that breeds the result that you've identified...

[A Horse With No Name]

I have a bad feeling about this.

I do also! I am not getting "warm fuzzies" thinking about this at all...

Chris

[GXT]

Since 10Billion is several times GM's market cap (not sure if Chrysler is added in... but I get the impression that you don't sell Chrysler so much as you pay someone to take them from you), the US government should then own GM/Chrysler. Rename it to USA Socialist Motors (USASM). Resume making average cars that wouldn't exist without the Socialist USA backing it. The US government could use all their finance and insurance firms to sweeten each vehicle purchase. If that doesn't work, change the US laws so that everyone in the US is obliged to own at least two of them. Call it the God-Bless-USA-Is-The-Bestest-Country-In-The-Universe act. If it doesn't pass, roast your opponent in the next election with it, "My opponent voted against God Blessing America and against the USA being the best country in the universe 100% of the time.".

So does true capitalism actually exist anywhere in the world? Is it safe to say that socialism has "won"? Not that I object... the US' aversion to it seemed to me to be the rich fleecing the poor.

[Robert Hall]

The thought of a nationalised auto industry made up of merged, failing companies reminds of what happened in the 1970s with British Leyland. And we all know how that company turned out...

British Leyland

[regfootball]

That was the plan all along, right?

Destroy our industry, then 'enslave' the consumer for the benefit of the company's OWN society.

See, what most americans FAIL to realize is that NO ONE in the global economy has OUR best interests at heart. The average american seems to somehow think that these companies set up shop here and cannibalize our industry because they are "Proud to do business here" or "Proud to contribute to our 'flourishing' lifestyles" or even worse, so they can "Save the environment" But in reality, these corporations are just that: CORPORATIONS that are BASED in other societies that WANT OUR MONEY. These corporations are the most efficient money making machines to ever exist and they are successfully draining our wealth right in under our noses, ALL THE WHILE turning us against OUR moneymakers and CLOSING THEIR MARKETS so that we have NO chance to get that money back.

It's so simple and so brilliant. It's like feeding a starving kid steak and stabbing him in the back with the steak knife at the same time.

yeah, but so many Americans seem to be fine with. I hope they enjoy flipping burgers and cleaning toilets cause that's all we'll be doing here in the not too distant future. At least 99% of us.

[Z-06]

Since 10Billion is several times GM's market cap (not sure if Chrysler is added in... but I get the impression that you don't sell Chrysler so much as you pay someone to take them from you), the US government should then own GM/Chrysler. Rename it to USA Socialist Motors (USASM). Resume making average cars that wouldn't exist without the Socialist USA backing it. The US government could use all their finance and insurance firms to sweeten each vehicle purchase. If that doesn't work, change the US laws so that everyone in the US is obliged to own at least two of them. Call it the God-Bless-USA-Is-The-Bestest-Country-In-The-Universe act. If it doesn't pass, roast your opponent in the next election with it, "My opponent voted against God Blessing America and against the USA being the best country in the universe 100% of the time.".

So does true capitalism actually exist anywhere in the world? Is it safe to say that socialism has "won"? Not that I object... the US' aversion to it seemed to me to be the rich fleecing the poor.

Truthfully, capitalism, has not existed, is not existing and will not exist in its purest form in the world period. The real trick is how much you balance the socialism and capitalism to create the so called free economy. Asians learnt it early and have been doing it for a long time, Americans are learning it the hard way.

It is a necessity in pure capitalism to let those who do not succeed to fall and honestly according to hardcore Adam Smith theory GM and Chrysler should go down, but there is a difference between theory and practice. The practice is that the competition is not following pure capitalism, the practice is that other parts of this automotive ecosystem - which are 10 times more than the auto manufacturers - are going to be endangared with GM failure, the practice is that lawmakers know they have FUBARed the situation and need to cover their hinds, the practice is that failures are going to trigger the collapse of this nation and the entire world. Therefore like it or not bailouts will come for the Big Three.

[regfootball]

Since 10Billion is several times GM's market cap (not sure if Chrysler is added in... but I get the impression that you don't sell Chrysler so much as you pay someone to take them from you), the US government should then own GM/Chrysler. Rename it to USA Socialist Motors (USASM). Resume making average cars that wouldn't exist without the Socialist USA backing it. The US government could use all their finance and insurance firms to sweeten each vehicle purchase. If that doesn't work, change the US laws so that everyone in the US is obliged to own at least two of them. Call it the God-Bless-USA-Is-The-Bestest-Country-In-The-Universe act. If it doesn't pass, roast your opponent in the next election with it, "My opponent voted against God Blessing America and against the USA being the best country in the universe 100% of the time.".

So does true capitalism actually exist anywhere in the world? Is it safe to say that socialism has "won"? Not that I object... the US' aversion to it seemed to me to be the rich fleecing the poor.

everyone else is already doing it, Japan is the best at it already. Maybe the US needs to do it, just to keep pace.

y'all realize our agriculture is heavily subsidized here......with part of the express purpose of strategy, to ensure we have the basic ability to make our own food and not become dependent on another society to do so. If we went to war, but got all our food from elsewhere, and then had to suffer a complete cut off of food supply, we would be in a weakened position and could be taken over.

Now cars, it can viewed as a luxury, but people, part of what makes us a strong nation is our mobility. Since we all need to be mobile, we need cars. I would maintain its in our national interest to have the capacity to design and manufacture vehicles ourselves. We let GM and Chrysler go down, you might as well call us strategically weakened on that standpoint as well.

[regfootball]

Since 10Billion is several times GM's market cap (not sure if Chrysler is added in... but I get the impression that you don't sell Chrysler so much as you pay someone to take them from you), the US government should then own GM/Chrysler. Rename it to USA Socialist Motors (USASM). Resume making average cars that wouldn't exist without the Socialist USA backing it. The US government could use all their finance and insurance firms to sweeten each vehicle purchase. If that doesn't work, change the US laws so that everyone in the US is obliged to own at least two of them. Call it the God-Bless-USA-Is-The-Bestest-Country-In-The-Universe act. If it doesn't pass, roast your opponent in the next election with it, "My opponent voted against God Blessing America and against the USA being the best country in the universe 100% of the time.".

So does true capitalism actually exist anywhere in the world? Is it safe to say that socialism has "won"? Not that I object... the US' aversion to it seemed to me to be the rich fleecing the poor.

BTW, GM ford etc are worth so little partially because of wall street conspiracy to short sell and drive down stock prices, to eliminate the wealth of the middle class, and to extort payoff money from the taxpayer. GM and Ford etc. they see as future profit potential, that once the market turns around, they can make a killing by being able to buy it rock bottom.

If GM's stock were worth 20 bucks a share, their market cap would be much more. Right now their market cap is artifically low vs. what they really bring to the table.

[regfootball]

Truthfully, capitalism, has not existed, is not existing and will not exist in its purest form in the world period. The real trick is how much you balance the socialism and capitalism to create the so called free economy. Asians learnt it early and have been doing it for a long time, Americans are learning it the hard way.

It is a necessity in pure capitalism to let those who do not succeed to fall and honestly according to hardcore Adam Smith theory GM and Chrysler should go down, but there is a difference between theory and practice. The practice is that the competition is not following pure capitalism, the practice is that other parts of this automotive ecosystem - which are 10 times more than the auto manufacturers - are going to be endangared with GM failure, the practice is that lawmakers know they have FUBARed the situation and need to cover their hinds, the practice is that failures are going to trigger the collapse of this nation and the entire world. Therefore like it or not bailouts will come for the Big Three.

its not like we would be bailing out incompetents. On some aspects, yes. But look at how successful GM and Ford's products are elsewhere and how much of their sales occur globally. I would maintain even from a global trade balance scenario alone doing a bailout justifies this action.

We have 2 major players in the world auto market, in terms of US presence in the global arena in a broad sense, and not just cars....we need to do this.

You could even argue that its our own internals laws and policies that keep these companies from being successful here when they can be so successful abroad. That alone suggests our system here may be the problem. Doing a bailout may just be righting the ship here, so to speak.

PCS can remind us how much of GM's total business is done outside the US. If we endorse GM going down, then you as a country are saying, 'I do not want a US company to represent us in the global economy'.

Edited October 28, 2008 by regfootball

[CARBIZ]

If this were just limited to GM's plight, I'd tend to agree that GM has made their own bed, now lay in it, but that clearly is not the case. There are more powerful forces at work and I have to admit that I am growing more panicky by the day.

Simply put: where has all this 'wealth' vanished to?

Entire countries are teetering on the verge of insolvency: Iceland, much of the former USSR republics. The Russian and Brazilan stock exchanges are closed more than open lately. Manulife, one of Canada's biggest insurance companies is now whining about needing a government bail out because they 'over sold' their amazing GICs and now the value of their stock won't cover the IOUs they've writte - OOPS!

We are smugly told that Canada is in beter shape: yeah? Then explain why 24% of my mutual funds have evaporated in the past 6 weeks (more if I include how much they were worth at their peak in June!)

This is more than bailing out Detroit. There is something fundamentally wrong with our capitalist system. We have 100 years of economic history to learn from - something those who lived through the 1929 implosion did not have. How has this mess happened and where has this wealth gone?

[Camino LS6]

The thought of a nationalised auto industry made up of merged, failing companies reminds of what happened in the 1970s with British Leyland. And we all know how that company turned out...

British Leyland

This is part of what worries me about this deal.

I just don't see it working out the way that the Chrysler bailout did a few decades ago.

[longtooth]

If this were just limited to GM's plight, I'd tend to agree that GM has made their own bed, now lay in it, but that clearly is not the case. There are more powerful forces at work and I have to admit that I am growing more panicky by the day.

Simply put: where has all this 'wealth' vanished to?

Entire countries are teetering on the verge of insolvency: Iceland, much of the former USSR republics. The Russian and Brazilan stock exchanges are closed more than open lately. Manulife, one of Canada's biggest insurance companies is now whining about needing a government bail out because they 'over sold' their amazing GICs and now the value of their stock won't cover the IOUs they've writte - OOPS!

We are smugly told that Canada is in better shape: yeah? Then explain why 24% of my mutual funds have evaporated in the past 6 weeks (more if I include how much they were worth at their peak in June!)

This is more than bailing out Detroit. There is something fundamentally wrong with our capitalist system. We have 100 years of economic history to learn from - something those who lived through the 1929 implosion did not have. How has this mess happened and where has this wealth gone?

There was a lot of on-paper wealth involved, witness the recent bursting of the petroleum and housing bubble. Intangible wealth that people had no compunction in tapping when perceived values were on the rise.

So now we're seeing the re-calibration of who it is that we really are and our collective valuation.

[Robert Hall]

This is part of what worries me about this deal.

I just don't see it working out the way that the Chrysler bailout did a few decades ago.

The Chrysler thing around '81 were loan guarantees that they paid back in full within a few years, IIRC.

[Robert Hall]

. How has this mess happened and where has this wealth gone?

Where has the 'Big Money' gone?

Big money goes around the world

Big money underground

Big money got a mighty voice

Big money make no sound

Big money pull a million strings

Big money hold the prize

Big money weave a mighty web

Big money draw the flies

Sometimes pushing people around

Sometimes pulling out the rug

Sometimes pushing all the buttons

Sometimes pulling out the plug

Its the power and the glory

Its a war in paradise

Its a cinderella story

On a tumble of the dice

Big money goes around the world

Big money take a cruise

Big money leave a mighty wake

Big money leave a bruise

Big money make a million dreams

Big money spin big deals

Big money make a mighty head

Big money spin big wheels

Sometimes building ivory towers

Sometimes knocking castles down

Sometimes building you a stairway --

Lock you underground

Its that old-time religion

Its the kingdom they would rule

Its the fool on television

Getting paid to play the fool

Big money goes around the world

Big money give and take

Big money done a power of good

Big money make mistakes

Big money got a heavy hand

Big money take control

Big money got a mean streak

Big money got no soul...

[DBeaSSt]

everyone else is already doing it, Japan is the best at it already. Maybe the US needs to do it, just to keep pace.

y'all realize our agriculture is heavily subsidized here......with part of the express purpose of strategy, to ensure we have the basic ability to make our own food and not become dependent on another society to do so. If we went to war, but got all our food from elsewhere, and then had to suffer a complete cut off of food supply, we would be in a weakened position and could be taken over.

Now cars, it can viewed as a luxury, but people, part of what makes us a strong nation is our mobility. Since we all need to be mobile, we need cars. I would maintain its in our national interest to have the capacity to design and manufacture vehicles ourselves. We let GM and Chrysler go down, you might as well call us strategically weakened on that standpoint as well.

An interesting point you bring up. It could perhaps be generalized a bit further to say that we need the capability of manufacturing machinery in this country. If we do go to war (okay already are) we need to be able to build our own stuff. I'm not saying that our tanks, etc are made in Japan (or wherever) now but with a dwindling manufacturing base, how long before that becomes a possibility? Perhaps it really is an issue of national security?

I remember seeing old posters from WW2. Cadillac powered tanks. Now that's impressive!

[Robert Hall]

An interesting point you bring up. It could perhaps be generalized a bit further to say that we need the capability of manufacturing machinery in this country. If we do go to war (okay already are) we need to be able to build our own stuff. I'm not saying that our tanks, etc are made in Japan (or wherever) now but with a dwindling manufacturing base, how long before that becomes a possibility? Perhaps it really is an issue of national security?

I remember seeing old posters from WW2. Cadillac powered tanks. Now that's impressive!

Maybe the military will work with Toyota on building green tanks powered by Prius drivetrains..

[regfootball]

An interesting point you bring up. It could perhaps be generalized a bit further to say that we need the capability of manufacturing machinery in this country. If we do go to war (okay already are) we need to be able to build our own stuff. I'm not saying that our tanks, etc are made in Japan (or wherever) now but with a dwindling manufacturing base, how long before that becomes a possibility? Perhaps it really is an issue of national security?

I remember seeing old posters from WW2. Cadillac powered tanks. Now that's impressive!

any nation that wants to remain strong against any adversary must be able to make their own war tools and also be able to provide people's basic needs within their own boundaries as well.

Don't think for one second that there isn't some other country out there waiting for us to incapacitate ourselves in this way. Same thing goes for technology and medical. We need to have the ability to provide food and supplies, mobility, technology and communication, and medical, all ourselves, in case the sht comes down. And other countries are strategically trying over time to erode our ability to do this. Part of the way they do this is to weaken our economic capacity to do this ourselves.

did it ever occur to anyone that part of the reason we buy oil overseas is so we don't use our own, so we have it in case we need it?

Edited October 28, 2008 by regfootball

[enzl]

BTW, GM ford etc are worth so little partially because of wall street conspiracy to short sell and drive down stock prices, to eliminate the wealth of the middle class, and to extort payoff money from the taxpayer. GM and Ford etc. they see as future profit potential, that once the market turns around, they can make a killing by being able to buy it rock bottom.

If GM's stock were worth 20 bucks a share, their market cap would be much more. Right now their market cap is artifically low vs. what they really bring to the table.

Actually, both companies are effectively giant liabilities with institutional shareholders and market-makers keeping their share price far above the companies 'technical' valuation.

Plainly, you couldn't cover 10% of their outstanding liabilities if they were to be parted out in pieces. The same people who gave them the money to dig the hole they're in are the same people that are desperate to keep them solvent.

Donald Trump once famously said if you owe the banks millions and cannot repay it, they own you---if you owe them billions, that's when you own them---such is GM & Ford's lot today.

[balthazar]

>>"Maybe the military will work with Toyota on building green tanks powered by Prius drivetrains"<<

Pretty sure the military spec does not allow for grinding to a dead halt in the middle of a maneuver.

[Robert Hall]

>>"Maybe the military will work with Toyota on building green tanks powered by Prius drivetrains"<<

Pretty sure the military spec does not allow for grinding to a dead halt in the middle of a maneuver.

A hybrid or electric tank could be very quiet and stealthy, though..

[biff]

They could call the combined company American Motors Corporation. Has a nice ring to it huh?

Does it seem odd that the government would support a merger which would cost thousands of jobs? Or in the end is it cheaper to pay the welfare of those losing their jobs and support 1 company?

How about giving tax breaks to foreign companies so they can put domestic companies out of business who are paying for thousands of x-workers health care and benefits? Irony indeed.

[FAPTurbo]

Where has the 'Big Money' gone?

Thanks a lot. Now I'll have Geddy's bassline stuck in my head for another week.

[daves87rs]

I still can't see it happening...just based on the HUGE job loss...

And it's not going to be just in Detriot either.....

[Robert Hall]

I still can't see it happening...just based on the HUGE job loss...

And it's not going to be just in Detriot either.....

Yeah.... which is the lesser of two evils---merge with large layoffs following, or declare bankruptcy with large layoffs following? One article I saw today said that if GM declared bankruptcy next year, Ford and Chrysler would immediately follow..something about they'd have to be able to match GM's terms with labour or something to that effect.

[76ChevyTrucker]

going off the tank comment, I'd rather keep my Abrams that's powered by a gas turbine engine (nothing in the world like a JET power tank). As far as this merger, since I now work for a DCX dealership, we've been kept in the dark about the whole idea of a merger. I see both sides of the coin involving the merger, and I say let it play out and see what happens, GM and DCX have already worked together on things in the past, ie the transmissions for the Tahoe and Durango hybrids, so I say let the hand play out and see what happens.

[Robert Hall]

The whole prospect of the merger still seems surreal to me. Desperate times lead to desperate decisions.

[daves87rs]

Yeah.... which is the lesser of two evils---merge with large layoffs following, or declare bankruptcy with large layoffs following? One article I saw today said that if GM declared bankruptcy next year, Ford and Chrysler would immediately follow..something about they'd have to be able to match GM's terms with labour or something to that effect.

Sadly, I'd go with number two, beacuse it will aloow GM to do more.....

[CARBIZ]

There was a lot of on-paper wealth involved, witness the recent bursting of the petroleum and housing bubble. Intangible wealth that people had no compunction in tapping when perceived values were on the rise.

So now we're seeing the re-calibration of who it is that we really are and our collective valuation.

Which goes to the root of my argument (which others accused me of being an idiot) that WallStreet produces NOTHING. It is starting to look like all the prosperity of the past several years - the so-called consumer driven market, was a total f'ing sham. That is something I long suspected was true. Are we now going eat that paper wealth? I guess so. So we off-shored all our damned jobs and lying economists would point to the 'healthy' job market (all job increases were in the low paying Starbucks jobs and the high paying analyst jobs) as proof that this globalization is working.

Really? For whom?

And, as usual, the rich will hide their wealth under the proverbial mattress and let the rest of us rot. I am less than happy about this mess: the housing bubble, the oil bubble.

I am sick of this &#036;h&#33;. I have done my bit and sank my life savings into the supposedly healthy Canadian banks, only to watch 30% of it evaporate in the past month or so.

[longtooth]

Which goes to the root of my argument (which others accused me of being an idiot) that WallStreet produces NOTHING. It is starting to look like all the prosperity of the past several years - the so-called consumer driven market, was a total f'ing sham. That is something I long suspected was true. Are we now going eat that paper wealth? I guess so. So we off-shored all our damned jobs and lying economists would point to the 'healthy' job market (all job increases were in the low paying Starbucks jobs and the high paying analyst jobs) as proof that this globalization is working.

Really? For whom?

And, as usual, the rich will hide their wealth under the proverbial mattress and let the rest of us rot. I am less than happy about this mess: the housing bubble, the oil bubble.

I am sick of this &#036;h&#33;. I have done my bit and sank my life savings into the supposedly healthy Canadian banks, only to watch 30% of it evaporate in the past month or so.

We did as the societal-model compelled us. We shopped until we dropped. That we did, dropped, with a thud. So now a new order of things will come out of this malaise and then, notoriously short of memory and attention span that we are, we'll get right back to some of those same behaviors that brought us to where we are today. Employment will lag for some time to come. Governmental intercessions into the 'free-market' (lol) not withstanding, employed people buy stuff. Rebating income taxes to consumers, to the point of bankrupting the Treasury, so that citizen-consumers can descend en masse on the local WalMart* as locusts to purchase cheap goods manufactured off of our shores will not sustain a Nation. We need jobs that pay decently commensurate with the applied effort and skill. We need reciprocity in any trade agreement going forward and a review of agreements that already exist.

It ought to be evident that a Nation that doesn't make what is consumes becomes a hollowed out debtor nation.

[FUTURE_OF_GM]

While you're oversimplifying the case, the fact is that the US exports its goods & services throughout the world. We just happen to do a poor job with the export of automotive products.

Our trade deficit says otherwise.

This can & should be laid at the feet of the Dom 3's management---when you fail to plan, you're planning to fail, et al.

Not really. This country produces (produced) a lot more than autos and that shift is increasing by the day. It's not Detroit's fault that they were locked out of 3 out of 5 of the largest markets on the planet for many years. Just as it's not their fault that the industry is maturing and hence slowing down.

So does true capitalism actually exist anywhere in the world? Is it safe to say that socialism has "won"? Not that I object... the US' aversion to it seemed to me to be the rich fleecing the poor.

True capitalism cannot exist in a global market in which your primary competitors are socialist. Hell, TRUE capitalism hasn't existed in this country for 30+ years now (Some say that even as far back as the industrial revolution, true capitalism ceased to exist)

You see the effects of TRUE CAPITALISM verses Socialism in the decline of the american manufacturing base, and especially in the automobile sector. Is capitalism better for standard of living? In it's purest form, yes. In the form it's in today, not really.

It is a necessity in pure capitalism to let those who do not succeed to fall and honestly according to hardcore Adam Smith theory GM and Chrysler should go down, but there is a difference between theory and practice. The practice is that the competition is not following pure capitalism, the practice is that other parts of this automotive ecosystem - which are 10 times more than the auto manufacturers - are going to be endangared with GM failure, the practice is that lawmakers know they have FUBARed the situation and need to cover their hinds, the practice is that failures are going to trigger the collapse of this nation and the entire world. Therefore like it or not bailouts will come for the Big Three.

Had I read further in the thread, I would have seen that you illustrated it a lot better than I did.

Edited October 29, 2008 by FUTURE_OF_GM

[FUTURE_OF_GM]

If this were just limited to GM's plight, I'd tend to agree that GM has made their own bed, now lay in it, but that clearly is not the case. There are more powerful forces at work and I have to admit that I am growing more panicky by the day.

Simply put: where has all this 'wealth' vanished to?

Entire countries are teetering on the verge of insolvency: Iceland, much of the former USSR republics. The Russian and Brazilan stock exchanges are closed more than open lately. Manulife, one of Canada's biggest insurance companies is now whining about needing a government bail out because they 'over sold' their amazing GICs and now the value of their stock won't cover the IOUs they've writte - OOPS!

We are smugly told that Canada is in beter shape: yeah? Then explain why 24% of my mutual funds have evaporated in the past 6 weeks (more if I include how much they were worth at their peak in June!)

This is more than bailing out Detroit. There is something fundamentally wrong with our capitalist system. We have 100 years of economic history to learn from - something those who lived through the 1929 implosion did not have. How has this mess happened and where has this wealth gone?

The wealth was never there in the first place.

Deregulation and a lack of government oversight allowed people and corporations to basically scam their way to success.

See, that's the beautiful thing about accounting and statistics. You can pretty much MAKE UP money and justify why you made it up even though it isn't there. (Thanks to market variables in REALITY, the money dries up because assets that we're justified as more valuable really aren't)

[FUTURE_OF_GM]

An interesting point you bring up. It could perhaps be generalized a bit further to say that we need the capability of manufacturing machinery in this country. If we do go to war (okay already are) we need to be able to build our own stuff. I'm not saying that our tanks, etc are made in Japan (or wherever) now but with a dwindling manufacturing base, how long before that becomes a possibility? Perhaps it really is an issue of national security?

I remember seeing old posters from WW2. Cadillac powered tanks. Now that's impressive!

It already is an issue...

I remember reading 2 articles from about a few years ago. One stated that for the first time EVER the Pentagon was having to OUTSOURCE projects for its parts to other countries simply because the US no longer had a manufacturing base that made such products. And the second said that the supposed replacement for the Black Hawk helicopter will come from another country (First time that american war machines will not be american)

Of course, evok will probably come on here now and tell us all how none of this really matters and how the domestics are not relevant to our defense. (Just like he did back when we first had this discussion)

To say what has already been said here a million times: A nation that cannot manufacture cannot defend itself.

Don't think for one second that there isn't some other country out there waiting for us to incapacitate ourselves in this way. Same thing goes for technology and medical. We need to have the ability to provide food and supplies, mobility, technology and communication, and medical, all ourselves, in case the sht comes down. And other countries are strategically trying over time to erode our ability to do this. Part of the way they do this is to weaken our economic capacity to do this ourselves.

americans seem to blindly believe that the new global economy is one of peace and that everyone has OUR best interests at heart WHILE trying to elevate themselves to our levels. Even the biggest idiot in Texas could see that this IS NOT the case.

I used to talk war with a Navy friend of mine and it was his belief that america was at war AS WE SPEAK, but people were too blind to see it. America is in ECONOMIC WAR. China has already said that they plan to displace us as the superpower and they (along with the unconscious help of other countries and us) are doing just that.

Ever wonder if it's a good idea that foreign ownership of our businesses has grown SUBSTANTIALLY in recent years? Ever think it's a good idea that China holds enough of our currency to destroy the dollar if it needs to? Ever think it's a good idea that the majority of our manufacturing base AND technology that we created is now in the hands of other countries? Ever wonder if it's a good thing that our generation will be the first generation that DOES NOT enjoy a better standard of living than our parents?

america is already at war... And america is losing that war by the day.

Edited October 29, 2008 by FUTURE_OF_GM

[FUTURE_OF_GM]

>>"Maybe the military will work with Toyota on building green tanks powered by Prius drivetrains"<<

Pretty sure the military spec does not allow for grinding to a dead halt in the middle of a maneuver.

LMFAO

Does it seem odd that the government would support a merger which would cost thousands of jobs? Or in the end is it cheaper to pay the welfare of those losing their jobs and support 1 company?

How about giving tax breaks to foreign companies so they can put domestic companies out of business who are paying for thousands of x-workers health care and benefits? Irony indeed.

Only in america.

Yeah.... which is the lesser of two evils---merge with large layoffs following, or declare bankruptcy with large layoffs following? One article I saw today said that if GM declared bankruptcy next year, Ford and Chrysler would immediately follow..something about they'd have to be able to match GM's terms with labour or something to that effect.

Absolutely...

GM declaring bankruptcy is the equivalent of them getting a clean sheet. No way in hell could Ford or Chrysler, in their inefficient pre-bankruptcy state stand a chance to compete with them. With the equity in GM's remaining post-bankrupcty brands, their technology AND their simplified cost structure, even TOYOTA would have a hard time matching their efficiency (Especially seeing the likely amount of share growth they would receive) So then, we'd be talking about a much smaller, yet more efficient Detroit and a bunch of bloated Japanese companies.

[A Horse With No Name]

Maybe the military will work with Toyota on building green tanks powered by Prius drivetrains..

Maybe we could export these to the French!

You know the old French battle charge...RETREAT!

Couldn't think of anything better for failure or moving backwards than a Toyota powered tank.

Chris

[A Horse With No Name]

I still can't see it happening...just based on the HUGE job loss...

And it's not going to be just in Detriot either.....

No, your right, its not. No matter who gets elected I think the economy is going to get much worse before itgets better. You'd better get a cape and a phone booth, dave, as I think you'll have to play "super rescue hero" to more people in parking lots.

Things are going to get MUCH worse.

Chris

[regfootball]

everyone else is already doing it, Japan is the best at it already. Maybe the US needs to do it, just to keep pace.

y'all realize our agriculture is heavily subsidized here......with part of the express purpose of strategy, to ensure we have the basic ability to make our own food and not become dependent on another society to do so. If we went to war, but got all our food from elsewhere, and then had to suffer a complete cut off of food supply, we would be in a weakened position and could be taken over.

Now cars, it can viewed as a luxury, but people, part of what makes us a strong nation is our mobility. Since we all need to be mobile, we need cars. I would maintain its in our national interest to have the capacity to design and manufacture vehicles ourselves. We let GM and Chrysler go down, you might as well call us strategically weakened on that standpoint as well.

by the way, i was reading this web page and felt it somewhat related to what i mentioned above.......about being able to grow our own food.

this actually is an interesting review on a book about a disturbing topic, controlling global food

http://www.newmediaexplorer.org/sepp/2008/...estruction_.htm

now, does it help a little to understand why we subsidize and promote agriculture?

[haypops]

by the way, i was reading this web page and felt it somewhat related to what i mentioned above.......about being able to grow our own food.

this actually is an interesting review on a book about a disturbing topic, controlling global food

http://www.newmediaexplorer.org/sepp/2008/...estruction_.htm

now, does it help a little to understand why we subsidize and promote agriculture?

Seems like horse poey to me. The books author is not even listed on wikipedia. More disturbing is the part of his review where he describes sheep dying from grazing on cotton plants. Cotton plants gossypol which is highly toxic so naturally they died. Likewise his statement that the Rockefeller institute introduced a new science called microbiology is a hoot. Microbiology has been around for hundreds of years predating even Louis Pasteur.

[regfootball]

well, its fun to read the postulation about it. if you google some of the key words, you read about the seed bunker in like norway and all of that. great conspiracy reading. wouldn't surprise me if there were truth to it.

Edited November 6, 2008 by regfootball

[Intrepidation]

I'd just like to go on record as saying this:

I'm all for the 25 billion loans to help out the automakers. However, GM can itself trying to get the money to take over and kill Chrysler.

If that happens I'd never by a GM product again, and would resort to buying used, or a Ford or Nissan product.

Cerberus is plenty to blame for this, as they are no doubt pushing GM to do it, but be that as it may, if GM does it I wish them no good will.

Besides, it's a suicidal move on GM's part.

With all of this speculation that is being done it is hurting Chrysler even more, as many people to buy from a company that may not exist soon.

Cerberus, in it's impatient haste will kill Chrysler...but then it can be argued that Chrysler died in 1998 when the Germans took it over and began raping it for what it was worth, and dumping the leftovers when it was done with it.

Edited November 6, 2008 by Dodgefan