Big 3 Auto Bailout

[WhiskeyGirl]

CBB, your legislators speak for you.  That is why we need to contact them.  I know that ours are refusing to vote for any bailout until "New Page" either decides to run or sell the plant they just closed down.  Their parent company is GM.  We have a whole community depending upon those jobs.  We may not get a direct bail out monetary benefit, but by forcing some of these companies to do the responsible thing would keep people employed and able to spend.  As we have known for a long time, it is not just the money that is given to the employee.  That dollar is passed on in a community from one business to another.  Taking a complete payroll out of a community hurts the entire community.

We need to stop closing down factories and businesses.  This is something that those in northern states have been dealing with long before this crisis.  It has been going on for decades.  We not only have plants closed, disassembled and rebuilt in another country, but we have to deal with these closings and relocation in the south.  There needs to be a way of dealing with this besides asking every one to move to a southern state.  This may be one point of support for the automakers, but part of their restructuring plan is to lay off workers and even close out support for companies that they took over in times of prosperity.   We have allowed far too many mergers to the point that it is difficult to tell just who is making the decisions for our local companies any more.

I look at the state of GM and it looks a lot like the US.  GM, I read somewhere, is like 62 billion dollars in debt.  Now, they want the taxpayers to bail them out.  The taxpayers are broke and struggling to make ends meet.

The US government (taxpayers) are trillions (from what I've read) of dollars in debt.  The government/taxpayers are broke.  Who is going to bail us out and at what cost?

Will there be any free land for purchase by common Americans in the future?  Will everyone be able to buy a home?

What real restriction have been placed on the GM board and management?  Are they required to hold any and all stock interests for at least ten years?  Until after taxpayers are paid back?  From my reading they seem to feel the company is worth saving with the same management team that has been leading for years.  I wonder how much of their own money would be willing to risk.

What about the GM UAW pension plan?  Why don't they take GM stock in lieu of payments?  Hold the stock and sell when it increases in value?  Make a tidy profit for the pension?  From my reading they seem to feel the company is worth saving with the same management team that has been leading for years.  I wonder how much of their own money would be willing to risk.

It seems over the past 20-30 years I've read of more boards/management of companies squeezing the life out of retirement plans and leaving Uncle Sam and taxpayers holding the bag.

Why not end the pension, set up 401Ks for 403Bs for everyone and let them invest for themselves?  Manage their own money?  Keep it out of union, company, and government hands?

Why doesn't the GM union take an ownership stake in the company?  Why aren't they looking for radical solutions?  Solutions that will be profitable for all stakeholders?

Taxpayers are broke.  There is no more money.  Why is it that some in the government want to bail out the UAW pension, but Social Security is broke?  Medicare is broke?  Government has been looking into 'government retirement account' s to take people 401Ks and pretend to give back money that was lost?  Taxpayers, one way or another have to foot the bill.

Where is the reality check?  When does the spending spree stop?  We're in the days leading up the Great Depression.  The party for some of the rich and wealthy and criminals continues with taxpayer money.  No control.  The crash is yet to come and it won't be pretty.

just my humble opinions

[GreatOwl]

I can not speak for GM union organization because I just do not know enough about how they operate.  In the case of the Paper Mill and plant I mentioned, the employees and union have offered to buy into it.  "New Page" with GM as principle owner just refuses to sell.  As I wrote earlier, there are signs on lawns through out this area which read, "run it or sell it."  This has been going on for months now.  Workers have protested locally, at the State Capitol and even rented buses to take them to New York where the corporate headquarters are located.  There is a report that the CEO and high ranking officials are going to come to the state to meet with the Governor and community, but it has not happened yet.

While I do support those employees who have put in decades with GM and the other automakers, I can't help but imagine that part of the corporate plan for the bailout will be to divest themselves of other holdings.  This may help the auto workers, but will probably leave thousands of employees of subsidiary companies out of work.  It will not become know to the public until after everything is signed, sealed and delivered with a bailout.

We all know that in sports that a "vote of confidence" during the season probably means a "firing" at the conclusion.  How many times have mergers taken place in your areas with a statement by the take over company, "we have no immediate plans to lay any one off."  About a year later, every begins to close down.  I can't begin to tell you how many times I have witnessed and heard that statement over my years.

We need to be careful and understand fully what a bailout means to the economies of all communities within a holding company.

[WhiskeyGirl]

I am old enough to remember when there was just one phone company, "Ma Bell".  One stop shopping.  Some thought it was to big and stifled competition.  It was broken up into many smaller pieces.  Some had difficulties, some morphed into better things, there were price increases, competition, etc. 

Things continue to change.

It seems like today, things are "to big to fail" - and it always costs taxpayers more money.  Taxpayers, that neverending source of money seem to back everything, and then it goes sour/bad and they end up paying for everyone's failure.  Taxpayers aren't on the bonus program, and do not make millions on any of these ventures that I am aware of.  

When was the last time taxpayers came out ahead?  I can't think of any.

Why not bring back competition?  Break up these giants?  Make them small enough to be successful? 

As soon as taxpayers back things financially, it a sure recipe for disaster.   I have also seen the same message - "We have no immediate plans to change, close, move..."  It's a sure sign that people will be out of work.  What's wrong with competition?  Competition NOT backed by taxpayers?

If something is to big to fail, it should be to big for taxpayers to back.  To big to fail seems to mean it has become a risky business, a gambling proposition, and taxpayers always have the losing hand.

What's wrong with GM becoming several highly competitive companies?  Cut loose the pieces that don't fit?  I been reading about big companies doing that for years.  Sometimes, the little pieces become bigger and better than the parent.

"To big to fail" is another buzzword holding taxpayers hostage for corporate failures.

Privatize profit, socialize failure.

just my humble opinions

[WhiskeyGirl]

I found this interesting tidbit in the last post.  The link is still valid and is a good read in itself.

Car dealers, with their low-production-value TV commercials and glad-handing tactics, seem like the archetypal small businessmen, and it’s hard to believe that they could sway the decisions of global corporations like G.M. and Ford. But, collectively, they have enormous leverage. Dealers are not employees of the car companies—they own local franchises, which, in every state, are protected by so-called “franchise laws.” These laws do things like restrict G.M.’s freedom to open a new Cadillac dealership a few miles away from an old one. More important, they also make it nearly impossible for an auto manufacturer to simply shut down a dealership. If G.M. decided to get rid of Pontiac and Buick, it couldn’t just go to those dealers and say, “Nice doing business with you.” It would have to get them to agree to close up shop, which in practice would mean buying them out. When, a few years ago, G.M. actually did eliminate one of its brands, Oldsmobile, it had to shell out around a billion dollars to pay dealers off—and it still ended up defending itself in court against myriad lawsuits. As a result, dropping a brand may very well cost more than it saves, since it’s the dealers who end up with a hefty chunk of the intended savings.

http://www.newyorker.com/archive/2006/09/04/060904ta_talk_surowiecki

In fact, the end of some GM brands could represent a singular opportunity for small dealers to get some value for a business with a questionable financial future. In fact, under these rules, it appears to me that a GM bankruptcy would be the real nightmare, unless the dealership laws grants dealers a superior position in the credit line.

We are going to have fewer brands and fewer dealers, especially in rural America.  Which means to me the number one quality for my vehicles will be reliability.  But as we have become adapted to machinery dealers an hour or more away, perhaps this too is an adjustment we can make more easily than we think.

http://johnwphipps.blogspot.com/


What a tangled web.  Someone recently said something like - make the best use of a crisis to get things done. 

[Sam]

Thought you all might enjoy seeing this.

http://www.youtube.com/watch?v=WYSZ8TUa3Vg&NR=1




Japan Air Lines (JAL) CEO interview on CNN

                                                       
http://www.youtube.com/watch?v=WYSZ8TUa3Vg&NR=1

[WhiskeyGirl]

End bailout secrecy, McGuinty tells Big 3

Today's markets Highs and lows Mutual fund finder Dec 10, 2008 10:27 AM

Canada's struggling Detroit 3 automakers should end the secrecy around their restructuring plans if they expect the public to support $6 billion in government financial aid, Premier Dalton McGuinty said today.

"We're on a two-way street here," McGuinty told reporters.

"Ontarians are people of goodwill and they do want to lend a hand...but don't try to pull the wool over our eyes, be honest with us."

While CAW president Ken Lewenza said yesterday that the union doesn't need to cut benefits and wages because it's already agreed to wage freezes and made other concessions worth up to $900 million for the Detroit 3 with hard times coming.

But the premier suggested that will not be enough.

"That was then...we have a new crisis in front of us."

http://www.thestar.com/Business/article/551450

[WhiskeyGirl]

I'm Changing the School's Name to Chrysler

By Jesse Hagopian, December 9, 2008

I am going down to Washington, D.C. to ask for a handout.

My industry is falling on hard times and needs at least $34 billion to cover basic operating costs—but I assure you the emergency aid isn't just for me and my associates. The truth is my industry is too big to fail, and if it were to go under it would have disastrous effects for the economy and millions of Americans lives.

No, I am not an automaker executive from one of the Big Three (General Motors, Chrysler, Ford)—I teach social studies to 13-year-olds and the Public Schools are my trade.

"I'm changing my name to Chrysler/I am leaving for that great receiving line/When they hand a million grand out, I'll be standing with my hand out/Yes sir, I'll get mine!"

http://www.progressive.org/mag/mphagopian120908.html

I told my friend the other day she should apply for bailout money for her business.  I think we should all apply to buy someones piggy bank, and claim we want to buy a bank to at taxpayer expense.

I'm still waiting for my $1 billion.  I'm having a few concerns.  The Illinois stories that made the news yesterday made me think I live in the wrong state and don't have the right connections to get anything from the Obama stimulus package.   

Time will tell.

jmho

[crazybabyborg]

Thought you all might enjoy seeing this.

http://www.youtube.com/watch?v=WYSZ8TUa3Vg&NR=1




Japan Air Lines (JAL) CEO interview on CNN

                                                       
http://www.youtube.com/watch?v=WYSZ8TUa3Vg&NR=1

Thanks for bringing that to our attention, Sam. Now, THAT, I can relate to.

[WhiskeyGirl]

Chrysler's Hidden Coffers

Dan Gerstein, 12.10.08, 12:01 AM EST
Why is Cerberus, one of the world's richest private equity firms, begging for a bailout?
 
When I wrote about the bailout blunders of the auto industry two weeks ago, I thought the Big Three had most likely topped out on the political outrage meter. But that was before the shady story of Cerberus, the uber-connected private equity firm that owns Chrysler, reared its three ugly heads over the weekend.

Somehow, I thought Cerberus was poor.  Why did they buy Chrysler in the first place?  Did they do their due diligence?

...Cerberus is sparing no expense to spare their investors any exposure. Together with Chrysler, it has spent $7 million to hire such high-rent lobbyists as Dan Quayle (who runs one of Cerberus' international units), former Sen. John Breaux (D-La.) and former Bush legislative liaison David Hobbs. Their goal: $7 billion from the auto industry bailout package Congress is working on now and another $8.5 billion in loans from the Energy Department that have already been authorized.

Seems like $7 million would insulate a lot of homes, build some homeless shelters, and feed the poor.

...Turns out that Cerberus CEO John Snow, who spent three-and-a-half lackluster, and some might say lap-doggish, years as President Bush's second Treasury secretary, is leading a who's who of crony capitalists in a lobbying campaign for a taxpayer bailout to "salvage Cerberus' investment in Chrysler."

How much is Cerberus pumping into Chrysler?  Loaning?  If we're all in this together, why aren't they digging deep first?

At a bare minimum, there is something deeply unseemly and unsettling about one influence-peddling ex-Treasury secretary using his special access to personally lobby his even more bank-beholden successor for favors. If I were running the House or Senate banking committees, I would be asking some tough questions about this conflict of interest cornucopia before giving Chrysler a dime--starting with what kind of financial connections Paulson's old firm, Goldman Sachs (nyse: GS - news - people ), has to Cerberus.

Good idea!

...even a casual ******* can see what a taxpayer ripoff Cerberus appears to be getting away with--but Congress and the Bush administration somehow cannot or will not. Why are they unable tell the obvious difference between General Motors (nyse: GM - news - people ) and Chrysler?  GM is broke, can't get a loan and is actually facing an emergency. Via Cerberus, on the other hand, Chrysler has access to loads of capital, and the only thing collapsing is its credibility.

Ripoff, ripoff, flipoff of the taxpayers.  How many generations of Americans unborn will be paying for this?  Maybe we'll just give the nations creditors Florida?  Arctic mineral rights?

http://www.forbes.com/business/2008/12/09/chrysler-cerberus-bailout-oped-cx_dg_1210gerstein.html

wow.

jmho

[WhiskeyGirl]

Thought you all might enjoy seeing this.

http://www.youtube.com/watch?v=WYSZ8TUa3Vg&NR=1




Japan Air Lines (JAL) CEO interview on CNN

                                                       
http://www.youtube.com/watch?v=WYSZ8TUa3Vg&NR=1

Thanks for bringing that to our attention, Sam. Now, THAT, I can relate to.

Me to.

Excellent journalism.

[WhiskeyGirl]

Update on the bailout -

I'm really skeptical that the federal government can appoint somebody who can do a better job of running these businesses than the board of directors and the management of these car companies, but let's say they can,” says Sen. John Cornyn (R) of Texas. “They still need to have the appropriate powers to restructure the companies in a way to make them competitive and viable in the long run. I don’t think that power and authority have been given.”

Why leave the important requirement for restructuring out of the bill?  There doesn't seem to be a plug in place to keep taxpayer money safe.  Who's looking out for taxpayers?  Future generations of Americans?  Old saying "you don't throw the baby away with the bathwater".  Taxpayers, in this instance are the baby, and they're being thrown out with the dirty water. 

Does anyone think GM or Chrysler will enter Chapter 11 voluntarily? 

The House bill, which passed on a 237-to-170 vote, allows US auto companies to tap bridge loans as early as next week.Over the longer term, it sets up a federal administrator, dubbed a “car czar,” to preside over bargaining among stakeholders ­- auto companies, unions, suppliers, dealers, and other creditors  -  on how to cut costs and restructure the industry to be more competitive.

I think the car companies need a "car czar" from day one.  Bankruptcy court is already in place, and has worked for a number of companies.  Could they get the paperwork done and in place by December 31, 2008?

"over the longer term" - why doesn't that make me feel warm and fuzzy?  It sounds like another political appointee with special interest connections.

If the parties are not able to come together over a restructuring plan by March 31, then Washington can require immediate repayment of the loan.

What value does this clause have?  What am I missing?  As an example, if GM doesn't have enough money to make it to December 31, where does anyone in their right mind think they'd be able to repay the 'loan' immediately on April 1 or any other date?

If GM hasn't been able to accomplish the restructuring they've been working on for years (from what I've read), are they "likely" to come together with anyone on a plan for success?

“The taxpayers get a return on their investment or are the first in line to be repaid,” said Speaker Nancy Pelosi in a floor speech just before the vote.

Sounds like all the reform that went into Fannie/Freddie.  Somehow, in my negativity, they'll be some reason NOTHING is left to repay taxpayers.  Maybe everything is already 'leveraged' through some lease/buyback scheme promoted over the years.  What exactly does Nancy think will satisfy these loans in the end?

As a safeguard to taxpayers, the legislation provides that the government be given nonvoting shares in company stock to ensure that taxpayers benefit from any future growth. Lawmakers also added a requirement that taxpayers be repaid first, even if the company enters bankruptcy.

Enough to make a real difference?  Using a stock price from two years ago?  What will be left if the company (GM) enters bankruptcy?  Maybe a bankruptcy judge will decide taxpayers are getting "0"?   What if NOTHING is left to repay taxpayers? 

Are the senion management/board on the hook for anything?  Maybe they will dig deep and return the money taxpayers have invested in their salaries and bonuses and other compensation?

The negative me feel the management/board is already plotting alternatives to ensure that they remain "whole" from a financial standpoint. 

Companies accepting bridge loans would be barred from paying dividends or bonuses or “golden parachutes” for highly paid employees for the duration of the loan. The bill also mandates the sale of corporate jets.

Will companies be barred from funding the UAW retirement and healthcare funds?  Social Security is broke, Medicare is broke. 

Ok...they have to sell the corporate jets.  Does that mean they'll turn around and lease them?  Yearly?  Daily?  On-call?  Any requirement to travel like the common business traveler?  Maybe in a budget seat with no no leg room?

I'm guessing they will sell them and lease them back...

In a bid to ensure that car companies do not use taxpayer loans to shift more production overseas, the bill also requires management to notify and allow the car czar to disapprove of any asset sale, investment, contract, or commitment of more than $100 million, up from $25 million in the first draft of the bill.

Who will keep an eye on the "car czar"?  Somehow, I imagine at least one car company, maybe two will go under and take the taxpayer investment with them.  Hindsight will be 20/20, but the car czar will be blind and deaf, like many in government, imho

They raised the contract thing from $25 million to $100 million?  Makes no sense to me.  I imagine at that level, the car czar will have less to do.  Not much chance of catching house flies if the net has holes the size of Texas, fly won't even be bothered by currents in the wind.

Why not lower the contract level?  Maybe contracts $100,000 or higher?  How much spending will they be doing without car czar knowledge? 

At the $100 million dollar level, it seems real easy to just break up the contracts so they don't meet that threshhold.  Even at the $25 million level, just bread up the contracts. 

This reminds me of the $10,000 transaction reporting to catch money laundering and drug dealing and such.  How well is that working?  Seems like I read that those intended for the net learned to work around it real quick.

Why not track imports by the recipients of these loans?  Check at the boarder?

After negotiation with the White House, Democrats dropped a measure that would have banned automakers accepting financial assistance from supporting legal challenges to state laws that impose greenhouse gas emission standards than those in federal law.

“Green is gold. Making a commitment to innovation, fuel economy, and better emission standards makes the auto industry in our country more competitive. People will want to buy their cars,” Speaker Pelosi added.

In my mind, "Making a commitment to innovation, fuel economy" and restructuring is the only road to the future.  Why didn't some of them commit before? 

When will the 75-100 mpg cars show up at the dealers?  When can I stand in line to buy one?  How popular will the prices be?  Fuel efficient cars are already here and at good prices.  I'm not seeing an action plan for competition. 

I just see a rehash of what went on in November.  Why not start the restructuring through Chapter 11 now?  Before year end?  What is wrong with Chapter 11 for these folks (the ones that want the money - GM and Chrysler)?  It seems that is the only way to get things done.  I don't see an action plan, just more empty promises and future failures to recover taxpayer money.

In a few words - another example of trying to fix Fannie/Freddie in 2005/2006.  Fail, fail, fail.

What if they don't want to buy those cars?  Who's going to pay those autoworkers not to work?  Who's going to pay them 95% of there wages for 4 years as I read or heard somewhere?  What if those green cars never get off the ground?

Are there assurances the taxpayer money WILL NOT be used to fund the UAW retirement?   I read they were looking for money and wanted the government to fund the plan until 2080.  Social Security is BROKE.  MEDICARE is BROKE.  When do all Americans come first, and not special interests? 

Republican lawmakers opposing the bill insist that $14 billion isn’t enough to leverage those changes.

“This is only a down payment. We had testimony last week by one noted economist [that] it’d be $125 billion. Other people say more,” said Sen. Richard Shelby (R) of Alabama, the top Republican on the Senate Banking, Housing, and Urban Affairs Committee, at a briefing on Wednesday. “Unless Chrysler, Ford, and General Motors become lean and innovative and competitive in the marketplace, this is only delaying their funeral.”

IIRC, Ford doesn't seem as desperate as GM.  Chrysler has an ownership group with funds available to invest in their success.  GM is set to close the doors at the end of the year.  Apples to Oranges to Grapes. 

Chapter 11, Chapter 11, Chapter 11...a serious commitment to the future of your car company success.

Why not tie loans to Chapter 11?  I don't know why taxpayers always come last.

Are all of these loans (and future loans) really cheapers than just paying standard unemployment?  The county is already broke/bankrupt and has no pot for waste products. 

Maybe the grand plan includes a collapse of the US government, currency, and the destruction of a nation.

http://features.csmonitor.com/politics/2008/12/11/auto-bailout-clears-house-bigger-hurdle-ahead/

just my humble opinions

[WhiskeyGirl]

The Donald weighs in -

Trump: Rescue Big 3, but Then Its Bankruptcy 

Wednesday, December 10, 2008 4:04 PM

By: Gene J. Koprowski  Article Font Size   
 
(snip)

Trump on Wednesday said a combined bailout and bankruptcy would restore consumer confidence in the carmakers and allow Detroit to pay its creditors, which will boost the U.S. economy. The survival of General Motors, Ford and Chrysler is important to the long-term health of the United States, Trump told CNBC.

"It would seem to be that they should Chapter 11 it and the country should put up the financing," said Trump. "You have to save the car industry in this country. General Motors can be great again. Ford can be great again. And Chrysler could be great."

Dismissing arguments that bankruptcy filings would spook consumers...

...

"When Delta went, when United went, and so many others, people didn't stop flying. In fact, I think their business went up. As long as they know the company is going to exist, people will continue to fly. You sit there as long as it takes to get wonderful union contracts and wonderful contracts with your suppliers and everyone else."

http://moneynews.newsmax.com/streettalk/trump_auto_bailout/2008/12/10/160419.html

I nominate Donald Trump as "Car Czar" .  This car thing could be a REAL reality based TV show.  See the inner workings of restructuring.  The goal - save the taxpayers, save the nation.

jmho

[WhiskeyGirl]

I can't believe I posted this in the wrong thread...

White House: Nation 'can't withstand' failure of automakers

By TODD SPANGLER • FREE PRESS WASHINGTON STAFF • December 11, 2008

“We believe that the economy is such — is in such a weakened state right now that adding another million jobs – another possible loss of 1 million jobs is just something our economy cannot sustain at the moment,” said Perino.

Can the nation afford $15 billion a month?  A quarter? 

Why is it so hard for those interested in the bailout money to formally reorganize through Chapter 11 as a condition for future success?

Maybe Chrysler should look to it's ownership group for financing first?  Ford just wants a line of credit...why not TARP funds for Ford only?

GM seems to be so far past resuscitation, is there hope at ANY price to taxpayers?

Perino said that while some skeptics believe tough concessions must be forced on the automakers and their workers upfront, the auto czar whose position would be created by the legislation would have wide-ranging powers to bring all parties to the negotiating table and, in the end, put them in a place where they either had a plan for long-term viability or were headed toward an “orderly” bankruptcy proceeding.

Was anyone in Congress or the White House able to fix Fannie/Freddie before they became such a problem?   IIRC, there were many warnings, and smart people who predicted that they would fail and cost taxpayers trillions...

Maybe the government will be going door to door after January 21, 2008 and force money on every American?   Here--billions with no strings attached!!!   

I would love the government to offer me $14 billion with no strings attached. 

I would still love the government to offer me $14 billion with a few strings - lose a few pounds/shed some dead weight, change your diet for a healthy future, buy some new clothes, buy a new car, get some job training for the future...

Where is my $1 billion?  I'm cheap compared to GM/Chrysler/Ford.  Maybe I should apply for billions too?  Rebuild my aging vehicle from the ground up for a few billions of taxpayer money?

jmho

[WhiskeyGirl]

In my mind, when I read about people saved from disaster, they are usually very happy with whatever lifeline has come along.

"Thank you so much for thowing me that rope.  I don't know what I would have done if you hadn't happened along."

"Thank you so much for being a firefighter and going into that burning building for my family..."

"Thank you for throwing that financial lifeline.  It was just what we needed to help us through Chapter 11 and restructuring.  Thanks to your help, future generations will have the opportunity to drive an American made care, with cutting edge technology, and punch the timeclock in the factory that made them..."

or

"This the lifeline we want you to throw.  Not that one, this one.  We want this color, this quality, and no we will not allow ourselves to be rescued unless you meet our conditions.  We WILL threaten you will loss of our life.  It will be all YOUR fault if WE do not take the lifeline you offer us.  Your lifeline is not to our liking.  Try again.  We do not want just any lifeline FORCED on us.  It's YOUR fault if WE die because you threw a lifeline we did not approve of and refused to grab hold of." 

What is the worst thing that could happen if they didn't take hold of a lifeline with a few strings attached?  Maybe there is a better offer?  A bidding war somewhere? 

I think I could walk down Mainstreet in my town and others, and find a lot of people that would take the government bailout - the one being refused by Detroit.

Is my $1 billion dollar check in the mail yet?

jmho

[WhiskeyGirl]

...Senate Republican leader Mitch McConnell. "Government help is not the only option. It's not even the best option."

...

The Corker plan, which grew out of a combative exchange with U.S. auto chief executives at a hearing last week, would require a number of concessions before federal money is awarded. The companies would have to file Chapter 11 bankruptcy if conditions were not met by a fixed date.

...

The Corker alternative would require the companies to immediately bring unionized wages in line with scales at foreign competitors, mainly Japanese companies, that operate assembly and other plants.

Japanese, Korean and German manufacturers have or are building 18 auto assembly plants in the United States. None is unionized and 11 are located in Southern states, including Tennessee.

Another provision would require a portion of contributions to a United Auto Workers retiree healthcare trust be in stock instead of cash, a move that would improve the industry's liquidity crunch.

...

Corker said GM "was very supportive" of his alternative, which he said was the "only way" a bailout was going to happen right now.

...

GM has warned its cash levels would dip below minimum levels by the end of this month absent help. Chrysler has said it could hold on into 2009 and Ford's liquidity is stable for now. Ford is seeking a government line of credit as a hedge against worsening finances down the road.

http://www.iht.com/articles/reuters/2008/12/12/business/OUKBS-UK-AUTOS-BAILOUT1.php

[color=green]I recall reading for many years that politicians in Washington are awash with legal degrees.  With so many lawyers, why is it taxpayers seem to get the short end of the stick?  Why don't taxpayers come out ahead once in awhile?

The country is broke.  Where is the money coming from for all of these bailouts?[/color]

[WhiskeyGirl]

I found an excellent web site with transcripts and summaries -

Corker Proposes Amendment to Auto Bailout Plan

DECEMBER 11, 2008 - 05:31 PM

(snip)

Following are (1) a summary, provided by the senator's office, of the terms of the amendment; and (2) a transcript of Corker's remarks on the Senate floor Thursday:

(1)

The draft "Corker plan", which is still open to enhancements, imposes specific conditions on the Detroit 3 automakers to ensure these companies make the necessary changes that would allow them to be viable and competitive for the long-term while protecting any taxpayer investment. A responsible plan should have far more accountability and preserve strong competitive jobs across our country.

It addresses required changes in the following areas:

1)Debt Load Reduction

2)Wage Cost and Work Rule Competitiveness

3) Changes to VEBA Payments

4)Elimination of Jobs Bank and Supplemental Unemployment Benefits

First, the legislation would require that participating companies reduce their outstanding unsecured debt obligations by at least 2/3rds by forcing bondholders to accept an equity swap or debt for debt and equity swap. At current levels, the companies have unsustainable debt loads and cannot have long-term viability without significant reductions. Government money would be wasted if it were to come in on top of existing debt holders with no reductions on outstanding debt.

Second, in an effort to make these companies more competitive with foreign automakers that operate in the United States, the legislation requires that the "all-in" labor costs and work rules of the Detroit 3 be immediately brought on par with companies like Nissan, Toyota and Honda as certified by the Secretary of Labor.

Three, the legislation would require that changes in payments to the UAW VEBA accounts occur to help the liquidity and cash-flow of the automakers. Specifically, it would require that at least half of any scheduled payment be made in stock.

Four, any compensation (outside of customary severance pay) that occurs for workers who have been fired, laid off, furloughed, or idled is immediately terminated. This will allow the companies to accurately size their workforce and not continue to be saddled with the labor costs associated with programs like the JOBs Bank and other arrangements that force continued pay--even when no work is going on.

Funding will immediately go out to companies but they must achieve a reduction in debt load by March 15, 2009 and then additional funding for UAW agreements in place by no later than March 31, 2009.

Failure to adhere to any one of these conditions by any such date will result in the requirement that the company file bankruptcy under Chapter 11.

(2)

Floor Remarks of U.S. Senator Bob Corker

Regarding the Detroit Three's Request for Federal Assistance

December 11, 2008

Mr. President, thank you. I rise today to talk about where we are in this auto bailout. And in essence, it's show time here. A bill came over from the House last night. It's the end of the year. There's an impending crisis that we're dealing with here in the country, and so today we'll be debating that and hopefully in the next few days taking votes. You know, Mr. President, I've spent a lot of time in the committee talking with the various parties involved. I've spent a lot of the time outside of the committee doing the same thing. No doubt we're going through an economic time that is very, very difficult to the auto industry. It's also difficult for businesses all across this country, just as it is for families as they try to make their budgets work.

I know there's been a lot of negotiations that have taken place between the White House and House Democrats. I really feel the product that's been developed is a very poor product, and I really don't blame that on my Democratic colleagues who negotiated, because I know the White House is actually at a point where they're looking for the next flight out of town on January 20th and basically want to kick the can down the road and let some other administration and some other Congress deal with this issue.

But all of us are going to be here next year, and I think it's our responsibility to deal with this issue in a professional, competent manner and actually solve this problem. I want to say to all of my colleagues on both the left and right, on the Democratic and Republican sides, we have a historic opportunity to actually solve this problem, and I think the solution is very, very simple. I've looked at this legislation that's come over. It's like so many things we do around here, it's like a three hump camel. You couldn't make it almost more ineffective and more complicated.

Mr. President, we put in place a czar. It seems like that everything we do around here, we try to find a person who can save us, if you will, from the crisis that's happening. We did the same with the financial rescue package not long ago. I've looked at the actual responsibilities of the czar. I said yesterday that I had a banking staff person who actually could fulfill those responsibilities. She read that in the paper this morning and came in and said she wouldn't. She's overqualified. That in essence, you know, this is not something she'd want to take on. Look, I think we can use some help certainly from the outside, and there may be a role for somebody like this. But, Mr. President, what we're really looking at is a fairly simple transaction. A lot of money, fairly simple transaction.

Here's what we have. We have three companies, okay. Two of the companies are on the verge of bankruptcy. As a matter of fact, I would say that two of the companies are in bankruptcy. I know that Chrysler today is meeting with their supplier group. I know that if they don't win concessions today, they're in great trouble. General Motors told us if they don't receive funding by the end of this year that they're going to have to file bankruptcy. And, by the way, I believe that. We have a lot of Republicans that would like to see that happen, would like to see Chapter 11 occur and to see them go through the laws that exist here in our country for reorganization in a way that's clean and allow them to move ahead in a financially stable way. As a matter of fact, many Republicans would actually agree to something called debtor-in-possession financing after that occurred so that these companies could evolve.

There are people on the other side of the aisle that have decided that that's a cost that's too great to bear. I will tell you, Mr. President, I started out along the path that I felt like the best way for us to solve this problem was to actually cause these companies to go through reorganization, and any role that we might play as the federal government would be in the way of debtor-in-possession financing. After listening to the testimony and after talking to people all across our country that are involved, I do believe that the supply chain is in great stress. I think they're undercapitalized. I think that three companies have already been utilizing the supplier chain for financing by paying late and carrying payments for lengths of time and so I do think the supply chain is very fragile. What I tried to do is figure out a way to create a piece of legislation that is elegant, is simple, actually solves the problem and causes these companies to be in great shape and for us to be able to move ahead and know that that has been done.

You know, there are a lot of times I've heard people say, "we're from the government and we're here to help you." And obviously when people hear that, they usually run for the hills. I think this is a case where if we will just take a moment, we can actually do something that is great for these companies because we have a big stick. These companies cannot get financing any place except from the federal government. And so we have an opportunity to sort of thread the needle in a very simple way and cause these companies to be successful.

Let me just say other than the economic issues, these companies have three major issues. Each of them are different. We know that basically we're talking about General Motors here. We wouldn't be having this discussion if it weren't for General Motors. Chrysler wouldn't be here really if it weren't for that. They're in serious trouble but wouldn't have the clout to be able to talk to us in this way. Ford has money today because of refinancing that they did back in 2006, and they're not even part of the discussion today. They might be down the road, but today they are financially viable, although burning cash at a rate that's almost equal to that of General Motors.

So we're really talking -- I just want to make this clear to people. We're talking about three entities that we need to talk to: General Motors, Cerberus or Chrysler and the U.A.W. and there are three things that are basically causing these companies difficulty. One is the capital structure. The debt that these companies have is not sustainable. It doesn't matter how much money we were to put into General Motors with the $62 billion in debt that they have today, there is no way that they can sustain their company. They cannot. G.M. only has a market cap today of around $2 billion. $2 billion. Toyota has a market cap of $130 billion. BMW has a market cap of $14 billion. This is a company that has a huge amount of debt and very little value. Chrysler probably has no value. They're privately held. And so we have two companies that we need to deal with in a very similar way, as it turns out. Let me lay something out.

Right now their capital structure in both places is too high. Cerberus and Chrysler can't withstand its debt. GM cannot withstand its debt. Secondly, the labor cost is out of line. I know there's a lot of talking about the U.A.W. Candidly, I will just admit, I think in some cases they get a bad rap. A lot of the people that are my friends won't like me saying that. But in some cases they actually get a bad rap as to the way the comparisons go. The third issue is the dealership issue. I don't think we can deal with that today. There's two issues that we can deal with in this loan and solve the problem; okay? One is the capital structure. The other is the labor issue.

So here is what I propose. And we're going to be putting this forward, as Senator Reid mentioned. We have some alternative legislation. I hope it's something that both Democrats and Republicans can embrace. Very, very simple. Let's go ahead and fund the money. Let's fund the money that's been requested. To Republicans, that's like debtor in possession financing anyway, because these companies are basically bankrupt anyway. To Democrats, the funding is in place to cause these companies to be whole. So let's go ahead and fund the request that has taken place. And let's have three covenants, only three covenants. We can do this with a very short bill which we drafted. Three covenants.

The first covenant is that by March 15, the outstanding indebtedness at the two companies that are going to apply for this has to be reduced by two-thirds, two-thirds, or the companies have to file for bankruptcy on March 15th. That gives the companies, it gives the bondholders, which we've talked to on the phone, plenty of incentive to make sure that the debt is reduced by two-thirds so these companies have a capital structure that allows them to go forward. This is the only way they're going to be successful. We've had plenty of people testify and say that if we put our money on top of the $62 billion in debt that G.M. has, there is no way they can be successful. Even if we're selling 20 million cars a year in our country, and today we know we're selling at a $10 million rate.

So that's number one. Give them the money. If by March 15th, they haven't reduced their capital structure in that regard -- and by the way, we've talked to people on all sides who believe this can happen. But it can only happen with the stick of government, meaning that we're going to force them into bankruptcy if they don't do this. That's the first covenant. The second covenant is - and I listened to Mr. Gettelfinger's testimony and talked to him on the phone this morning-- he says the only way the U.A.W. can make concessions is if they see the bondholders have done so first. This legislation makes that happen by March 15th. So, secondly, after the U.A.W. has seen that the bondholders have -- quote - "taken a haircut" - a word that's used around here a lot -- they have to do two things.

Number one, they have to convert half of the VEBA obligations--Voluntary Employee Benefit Association obligations-- they have to convert half of those to equity. If a company goes bankrupt, these future payments are never going to happen anyway. And that again, that reduces the debt at G.M. by another $10.5 billion, and it gives the U.A.W. equity in a company that actually has value now, because the debt by the bondholders has been reduced too. That's the second covenant. Very, very simple. And then the third thing they have to do is at that same public meeting where they take a vote, they have to agree to have a contract in place that puts them on parity -- on parity - with companies like Toyota and Nissan and Volkswagen and other companies here in our country.

Now before everybody goes crazy over that, that is certified by the Secretary of Labor. That's not something we prescribed. I realize there are subtleties in that. There are comparisons that have to be made. By the way, just to my friends on the left, that would be a Secretary of Labor by the Obama administration, okay, that has the ability to look at the various differences and nuances to actually certify that.

Now, listen, I talked to Ron Gettlefinger this morning. Because of the debates we had recently, I'm probably not on his Christmas card list this year, I realize. But he actually is talking, ok? He's talking with his leaders about this. I have talked to the COO at General Motors last night and this morning. He was a former chief financial officer, and he agrees that this will work. This gives the stick to the government to make them have to do the things that they need to do to actually cram down their bondholders.

I've heard a lot about Main Street and Wall Street. And for those people who want to take an ounce or a pound of flesh, if you will, from Wall Street, those are mostly the people, by the way, that own these bonds that are going to be taking this huge haircut, if you will. Two-thirds. In G.M.'s case, it's about $20 billion. It would be converted to equity and taken away.

Let me just say this, I plan to be here all day today. I'd like to take 30 minutes off from 12:30 to 1:00 to give a talk someplace. But I would ask any Democrat, any Republican to please come down here to the floor. Call me, e-mail me. Tell me why we couldn't put these three covenants in place, which are very reasonable. They are the only things that can happen in real time to make these companies successful. And let's pass a bill that causes these companies to be strong, gives them the money to breathe.

And, by the way, we had somebody testify the other day in banking that said that if we give money to these companies in the form that they're in today, we're going to end up giving $75 to $125 billion. Okay? I talked again to the president of G.M. this morning. He says if we can make this happen -- of course the bondholders say we can, he says we can -- that they will be limited in their request to only what they've asked for. They do not believe any more US dollars will be required.

So I would just ask of my colleagues: why would we not take a simple piece of legislation, put it in place? It acts like debtor in possession financing. It does the things we need to do to make sure that the bondholders and the U.A.W. themselves do the things they need to do to make the company whole. Management is already hamstrung by the bill. It lays out the things that management must forego for these loans to be in place. And let's leave here having done something that actually causes these companies to be healthy, vibrant, able to go into the future in a strong way for the first time in 30 years. We can do something great today if we will just sit down and do it.

I would ask my colleagues to do one other thing, and I'll sit down. I think my 25 minutes is probably close to up. I would say to my colleagues, we've tried to make this so complicated. There are three groups that each of you can call to see if this work. Call Chrysler. Call General Motors. Call the U.A.W. and ask them if this will work, if there's a sentence we need to change, a comma we need to put in place, let's do it. But it's really very simple. We've drafted a bill as if we're saving the world. We're talking about three companies alone -- actually, two companies today alone and three covenants can solve this problem, put them on a solid foundation, move them ahead. We will have done the right thing for the American taxpayers. We will have done the right thing for these companies, and we would have acted responsibly together in concert doing something that, again, is great for our country, Mr. President. I thank you for the great length of time. I hope that my colleagues on both sides of the aisle will come down and tell me why this won't work. Thank you very much. I yield the floor.

###

-- Jackson Baker is senior editor of The Memphis Flyer, a contributing editor of the Tennessee Journal, and a contributor to Memphis magazine. His primary concerns are political coverage and general news; other duties include editorials, op-ed contributions, and the paper’s online edition. He has worked as a reporter for the Arkansas Gazette and as an aide in the U.S. House of Representatives in Washington, D.C. He was a panelist on the WKNO-TV series Informed Sources and an assistant professor of English at the University of Memphis. Jackson has won numerous journalism awards, including four Green Eyeshade Awards from the Society for Professional Journalists. A frequent TV commentator, he has written for such periodicals as Time Magazine and the New York Times. He is married and has four children and two grandchildren. He lives in Cordova.
COMMENTS

http://www.memphisflyer.com/memphis/Content?oid=oid%3A53151

Looks like a lot of phone lines burning today. 

[WhiskeyGirl]

Auto Workers of Big 3 Sound Off About Life Within

By Glassdoor

When reading the hundreds of reviews employees from these Big 3 companies have contributed to Glassdoor to date (take a look at the November review of the month to start), we found a mix of sentiment: many have pride in their jobs and work but are frustrated - and even embarrassed - with the current situation, the number of management layers and poor decision-making processes. Just look at some of these excerpts from auto industry employees:

A General Motors Journeyman/Trainer tells management:
"Constant threat of lay-offs, plant closings, and job loss. Continual mind games in regard to security. The fact that the general public has such a horrid view of hourly GM employees make it unpleasant to tell people you work there even if you're proud of the job you do."

A Ford Senior Engineer/Six Sigma Master says:
"Ford is a top heavy company with too many chiefs and not enough workers. We have managers for managers. Every time I turn around there is another layer of management to meet with to get my job done. If I could change one thing I would reduce the numbers of management starting at the top by cutting 50%. Then every level down I would cut 5% less than the previous level. This would not only streamline processes (reduce the crazy meetings for approvals) but would reduce our pay structure by millions."

A Chrysler Product Engineer offers this advice:
"The company should focus on the core business with a defined plan going forward. Continue to focus on the customer and their needs and wants in the products. Build cars and trucks the customers want to buy. Remove the amount of tracking and reporting as it detracts from the core job functions. Examine the working levels to improve efficiencies in order to have a smaller, more productive company"

...As one Grand Rapids GM employee advises senior management:
"Be honest with employees. Knowledge is power, true, but shared knowledge is even more power. Stop giving lip service, if you say it, MEAN it and LIVE it yourselves. Respect your hourly employees enough to treat them the way you would wish to be treated."

Since Glassdoor launched in June, carmaker employees have been suggesting a universal theme: companies need to restructure, improve decision making and flatten the organization. While this one continues to play out in the public arena, we think management - and Congress - would be well served by visiting Glassdoor and looking at some sound advice from the people who know best - the employees on the inside.

http://newsblaze.com/story/20081211180300zzzz.nb/topstory.html

http://www.glassdoor.com/Reviews/General-Motors-Reviews-E279.htm

[WhiskeyGirl]

I am sorry to see that there was no agreement.  New comments today -

Auto bailout stalls: White House gets ‘cold shoulder’ from Senate GOP

By Lisa Mascaro · December 11, 2008 · 12:26 PM

The real problem, the Times says, is not the labor costs at the Big Three – their vehicles are still cheaper than those made by the foreign competitors. It’s that “many people don’t want to buy the cars that Detroit makes.”

How much do management/board labor costs add to the price of a car?  Retreats?  Management expenses?  Will management costs be adjusted along with other costs?

What is the cost for just parts?  Research?

What is the point of bailing out GM and maybe Chrysler when there is no market for the product the make?  Perhaps it's a quality issue?  Do GM and Chrysler cars last 200,000-300,000 miles before needing expensive repairs?  Do they get 50-75 mpg?  40 mpg?

“These retirees make up arguably Detroit’s best case for a bailout. The Big Three and the U.A.W. had the bad luck of helping to create the middle class in a country where individual companies — as opposed to all of society — must shoulder much of the burden of paying for retirement.”

Social Security is broke.  Medicare is broke.  The US is bankrupt. 

Were is all this money to come from?  TARP funds - banks, Wall Street, and insurance companies party on, buy other banks, and how many new jobs have been created?  Anyone adjusting management/board compensation?

In other companies, they converted private pension plans to 401Ks and retirees were responsible for managing their own retirement funds.  Adjustments are made for age and length of service.

Much of the manufacturing middle class disappeared over the past 30 years.  All that was left was the illusion of prosperity, rising stock prices, and taxpayer ripoffs.

What does the US make?  What wealth does the US create?  Is there anything other than spending money that does not exist?

http://www.lasvegassun.com/blogs/early-line/2008/dec/11/auto-bailout-stalls-white-house-gets-cold-shoulder/

When will Congress worry about fixing Social Security and Medicare?  The country is broke.  Stop spending the TARP funds.  I haven't read anything to suggest that all that "money" has done ANY good.  Maybe it's just the media bias.   

just my humble opinions

(doesn't anyone else have opinions about the bailout?)

[WhiskeyGirl]

Sweden: competitive auto bailouts begin with Saab and Volvo

Edward Harrison | Dec 12, 2008

...the German newspaper Die Welt which outlined the desire for VW and Daimler Benz to receive bailouts in response to the state aid being offered to American car makers. I warned that a competitive bailout situation was underway. Now, this competition has spread to Sweden, where the Swedish government has introduced a bailout package for its auto makers Saab and Volvo.

What levels the playing field?  Trade among equals?  Those with similar cultural values?  Similar benefits? 

...As the global auto industry suffers from a glut of manufacturing capacity, this can only serve to reduce the viability of vulnerable companies including US automakers.

What is balance for any society?  Community?  Jobs?  Cheapest price? 

While I applaud the desire to do something to stop a catastrophic outcome for the US auto industry, we should see the German and Swedish responses as a sign that the proposed bailouts are not going to be successful.

Who can compete with labor costs of $5 a day?  Slave like labor?  Human trafficking?

The plan provides Sweden’s carmakers with a 5 billion-krona rescue loan, additional funding of much as 3 billion kronor for research and development as well as credit guarantees of 20 billion kronor, Finance Minister Anders Borg and Industry Minister Maud Olofsson told a Stockholm press conference today.

“We will exercise significant influence in regards to how the money is spent,” Borg said at the meeting. “This is essentially a measure to secure jobs and production in Sweden.”

General Motors Corp. and Ford Motor Co., the owners of Saab and Volvo Cars, are seeking financial aid from the U.S. government to avert collapse. Ford is exploring the sale of Volvo, and GM is considering options for Saab. Volvo Cars employed 13,000 people in Gothenburg in southern Sweden last year and is cutting more than 2,700 employees in Sweden.

http://www.rgemonitor.com/euro-monitor/254743/sweden_competitive_auto_bailouts_begin_with_saab_and_volvo

In the end, can any of the companies compete with slave labor?  Goods from extreme low wage companies?  Can a company paying $75 / hr for labor compete with one that pays $5 a day?  $48 / hr?   $20 / hr?  Living wage?

Should the goal be to balance the local needs with regard to jobs? Trade?  Housing?

Or should society focus on always finding the lowest wage available?  Lowest government taxes?  Fewest concerns for the environment?

Should the playing field be level?   Where do moral and ethical values come in? 

Fair trade or free trade?   Do either of these really exist?  Is extreme profit for a few the only answer?

When a country is broke, who pays the bills?

Just my humble opinions.

[WhiskeyGirl]

Daimler buys 10 percent of Russia's Kamaz 
 
By CATRINA STEWART
Associated Press
2008-12-12 06:15 PM
 
Daimler AG, the world's largest truck maker, will buy a 10 percent stake in Russian truck maker OAO Kamaz in a $300 million deal signed Friday...

I wonder if Daimler employees will be losing their jobs?  Jobs moving to Russia?

"Daimler now has 10 percent of Kamaz," Daimler truck business head Andreas Renschler said after the signing ceremony in Moscow.

The deal comes as the international auto industry faces plunging demand amid the global economic downturn.

Daimler has been eager to enter the Russian truck market, estimating earlier this year it could grow 20 percent a year over the next two years.

"We don't know how long this crisis will last, but when the global economy gets back on track, the world will need new trucks," Renschler said.

And who in the US is going to help supply them?  Anyone?  Saab?  Volvo?

"The arrival of Daimler gives us the chance to create a modern truck that will sell well not only in Russia but also abroad," said Sergei Chemezov, head of Russian Technologies. He also chairs the Kamaz board.

'nuf said.

Kamaz is Russia's leading truck company, with a market share of about 30 percent. It sold more than 53,000 trucks in 2007 and had $3.8 billion in revenue.

I wonder how that compares with the Big 3?
 
http://www.etaiwannews.com/etn/news_content.php?id=812044&lang=eng_news

Maybe managment of the Big 3 will take a salary/compensation right sizing?  Provide some breathing time for the little people?  Make sure the workers can afford to keep making their car payments? 

All those coins in the Salvation Army kettles add up and help someone.

just my humble opinions