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Chevrolet Volt
The government is yet again practicing tough love with GM, may opt to liquidate parts of the company

The end of the General Motors saga may be nearing.  After months of bailouts and pleas for more money, the U.S. government ruled that GM's recovery plan was unacceptable.  They ordered GM to reorganize, removing CEO Rick Wagoner, a veteran of 30 years at GM and 8 years as CEO, as the first step.

However, according to a new report the government has now reached a decision that GM's debt may be too heavy for it to reorganize outside of a bankruptcy.  The New York Times reports that the U.S. Treasury Department has ordered GM to prepare a bankruptcy filing, despite GM's continued public claims that reorganization without bankruptcy is possible.

Currently, GM is on life support -- emergency bailout loans -- to support its reorganization.  The government is managing GM's efforts to cut costs and reduce its debts carefully.  President Barack Obama's auto task force has given GM 60 days to complete the restructuring.  However, according to the report, the feds have decided on a "surgical" bankruptcy, in addition, to try to revive GM.

The key to whether GM will be forced to submit to bankruptcy will be whether the company and the United Autoworkers Union can reach a settlement with bondholders to exchange roughly $28 billion in debt into equity.

According to the recent Times report, one plan currently being considered is to take the "good" brands and assets of GM and sell them to a new company, while leaving the rest -- unwanted brands, factories and health care obligations -- to bankruptcy and liquidation over the next several years.

One plan being examined could see GM entering and leaving bankruptcy in as little as 2 weeks, with approximately $5B to $7B USD in federal funding.  GM and Treasury Department officials declined comment, and the source of the report declined to be identified as they were not authorized to discuss the proceedings.

In other GM-related news, the company's woes may have a serious impact on the upcoming Chevy Volt.  The company is having trouble getting federal funding for the promising upcoming electric vehicle.  The Obama administration has refused to give the company the over $10.3B USD in U.S. Energy Department loans for development of fuel-efficient vehicles it has applied for until it deems the company viable.

A lot of the requested money was set to go towards enhancing and refining the Volt's powertrain platform.  GM is seeking $2.6B USD for the development of two Volt derivatives, a third hybrid model, and components for the platform.

Bruce Harrison, an IHS Global Insight analyst warns that delays in funding could be catastrophic for the fledgling project.  He states, "Any lack of funding they were counting on is likely to be very serious for the projects it’s connected to.  The company is fighting for its life and needs every dollar it can get."

GM continues to say that with or without federal funding, the company will release the Volt next year.  States GM spokesman David Darovitz, "The Volt continues to be one of our highest priorities among all GM’s future product programs and remains on track for a November 2010 launch -- with or without a Sec. 136 award."

However, in order to accomplish this, GM may transfer funds from its more viable brands, which analysts warn could put the company in worse shape.  States Rob Kleinbaum, managing director of RAK & Co., a consulting firm in Ann Arbor, Mich., "That would be a mistake.  The Volt won’t be commercially successful for quite some time. By robbing Peter to pay Paul, they’d be undermining their bottom line."



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Before anyone says it
By 91TTZ on 4/13/2009 10:36:36 AM , Rating: 5
Before anyone says it, this doesn't mean that GM is going out of business. It just means that they'll be operating under bankrupcy.




RE: Before anyone says it
By JasonMick (blog) on 4/13/2009 10:41:35 AM , Rating: 3
Agreed. Parts of GM (certain brands) may be liquidated (go out of business) -- but only the struggling ones like Saturn and Pontiac. The healthier brands like Chevy and GMC will continue to produce though their capacity may be significantly diminished.

Bankruptcy is by no means death for all the company's brands, but a bankruptcy would likely mean an end for the company as we currently know it.

Let's hope GM can make the best of this bad situation, for its employees sake, and for the sake of the nation's economy.


RE: Before anyone says it
By mmcdonalataocdotgov on 4/13/2009 11:24:30 AM , Rating: 4
quote:
According to the recent Times report, one plan currently being considered is to take the "good" brands and assets of GM and sell them to a new company, while leaving the rest -- unwanted brands, factories and health care obligations -- to bankruptcy and liquidation over the next several years.


This is how they are going to get rid of the UAW and other employee obligations. It is succession of corporate responsibilities. The left-over bits are GM, and they are going to go under. The sold bits will be a new company that has no UAW obligations. So this is how the lawyers decided to get the monopolistic UAW off GM's throat.


RE: Before anyone says it
By Adonlude on 4/13/2009 1:06:58 PM , Rating: 5
Good riddance. The unions overinflated their own salaries and caused the demise of the company that feeds them. They cut open the goose to get the golden eggs so that their generation could make more money but their children will be left jobless.

The workers are not intelligent unough to understand competition in the global market place so we can't give them the power to band together and extort employers.


RE: Before anyone says it
By rs1 on 4/13/2009 5:22:33 PM , Rating: 4
The thing that bothers me is that we're giving 5+ billion dollars to a company whose market cap is hovering at around $1 billion. How does it make sense to bail out a company at a cost of 5 times its current market value? We might as well just buy it outright and take it over.


RE: Before anyone says it
By michael2k on 4/13/2009 6:24:12 PM , Rating: 2
Isn't that exactly what the government is doing to GM?


RE: Before anyone says it
By rs1 on 4/13/2009 10:55:00 PM , Rating: 4
I could be wrong, but my understanding of it is that the bailout money essentially behaves as a low-interest loan, and that the government isn't actually getting any ownership stake in the company in return. The government's "ordering" of GM into bankruptcy is more of the form "we're not giving you any more bailout funds unless you do it this way" than it is of the form "as the new majority stakeholder, this is what we're going to do with the company".

And that's what doesn't really make sense. Who in their right mind gives a $5 billion loan to a company that is barely worth $1 billion. They don't even have enough equity to use as collateral to cover the cost of the loan in the extremely likely event that they cannot repay it.

If the government is going to pump more money into the company than the company is currently worth, then the government deserves enough of an equity stake in the company to become the new majority shareholder. If the government is unwilling to take such a stake, then it shouldn't be willing to hand out any bailout money at all.


RE: Before anyone says it
By 67STANG on 4/13/2009 7:36:00 PM , Rating: 2
Ahh, another nail in a rusty coffin:

GM recalling 1.5M vehicles over potential fires
http://www.msnbc.msn.com/id/30198296/

Just f'ing die already...the only good car you make is the Corvette anyway...


RE: Before anyone says it
By theapparition on 4/13/2009 10:03:17 PM , Rating: 2
Right,
Like the latest highest quality brand (out of ALL brands), Buick. Or several car of the year awards like the Malibu, or when they swept car and truck of the year awards in 2007.

Even in the midst of one of the worst recessions on record, GM still sells almost 50% of the total cars in the US.

Yes, clearly they are incapable of building cars/trucks that anyone wants.
</sarcasm>

I'm not defending them by any means, but for anyone to claim that no one wants to buy thier cars is just false.

But I do agree with the Corvette :)


RE: Before anyone says it
By PlasmaBomb on 4/14/2009 6:31:26 AM , Rating: 2
quote:
Yes, clearly they are incapable of building cars/trucks that anyone wants for a profit.


Fixed.


RE: Before anyone says it
By nbourbaki on 4/14/2009 6:36:39 PM , Rating: 2
Initial quality ratings are not benchmarks of overall value. The Chevrolet Vega also won a car of the year award in it's day. I wouldn't use that as a benchmark. GM accounts for less than 25% of all vehicles (including light trucks) sold in North America. If you take into account the fleet sales to rental car companies, sales of cars (not light trucks) to individuals are far less. How long has it been since a US auto maker had the best selling car in North America?


RE: Before anyone says it
By Samus on 4/14/2009 3:52:27 AM , Rating: 2
quote:
Just f'ing die already...the only good car you make is the Corvette anyway...


how sadly true that is. not once in my life has it ever crossed my mind to buy any GM vehicle. i almost bought a Daewoo once, which had a GM engine and transmission, but they went backrupt and as they say, the idea plug was pulled...


RE: Before anyone says it
By DemolitionInc on 4/14/2009 8:59:48 AM , Rating: 2
Good thing they do not sell so many cars anymore, otherwise they would have recalled 2.5 million cars, think about the cost involved.


RE: Before anyone says it
By DjiSaSie on 4/15/2009 5:01:58 AM , Rating: 2
...And Obama's Cadillac Presidential Car.
Now, whos gonna built a car for the next President?
It couldn't it be a privateer for sure...:)


RE: Before anyone says it
By Athena on 4/14/2009 6:49:45 PM , Rating: 2
More crap. The people who don't understand what is going on are all those public workers whose pensions are protected by law and white collar professionals who don't realize that their own benefit programs are the direct result of the automobile industry gains.

The unions are not responsible for the fix these companies are in...it was the management of the companies who took the US consumer for granted and assumed that they could pay the unions off with future market share. It was management that generated production schedules that made the "job bank" seem acceptable. And it was management that caved in to dealership agreements that are now problematic.

Anyone who thinks that vitiating union contracts is the answer to getting GM or Chrysler on the road to profitability is seriously deluded.


RE: Before anyone says it
By StevoLincolnite on 4/13/2009 11:36:11 AM , Rating: 2
I don't think Pontiac will go, There 2008 model was built and designed in Australia where it is badged as the Holden Commodore and actually does sell pretty well, most police/taxis/business/government cars are usually Holden Commodores.

If the Pontiac does go, I would be surprised, heck even the GTO was based on the Monaro at one stage, which really does shrink the R&D costs of designing an entirely new American Vehicle for that particular market segment.

I think Bankruptcy will be the best thing for GM as an entity, however if the Holden Commodore line gets butchered there will probably be thousands of guys in a singlet, wearing thongs (The ones that go on your feet) holding a can of beer sitting at there doorstep red faced holding pitch forks and torches.


RE: Before anyone says it
By bhieb on 4/13/2009 1:45:36 PM , Rating: 2
quote:
heck even the GTO was based on the Monaro at one stage


And arguably the resulting car was a disgrace to the GTO badge. To paraphrase Car and Driver. You [GM] stopped making the Camaro and gave us this? Now the Camaro has been reborn since, but they had a good point. It was a blah car that did not deserve the GTO badge.


RE: Before anyone says it
By Durrr on 4/13/2009 6:12:44 PM , Rating: 2
You've obviously never driven one heh.


RE: Before anyone says it
By nbourbaki on 4/14/2009 9:34:10 PM , Rating: 2
I've never driven one but to be honest most of the time I can't tell it's a GTO from another Pontiac I get from Avis until I notice it's only has two doors. The styling for an enthusiast's vehicle leaves a lot to be desired. The new Camaro on the other hand would not be confused with a typical Avis rental.


RE: Before anyone says it
By teldar on 4/13/2009 5:07:53 PM , Rating: 2
You're giving Pontiac too much credit.

It's an australian car that sells well in australia. Here's it's an uglified version of the same car that was designed and built in australia.
Pontiac had nothing to do with it other than ruining it.

It could be sold as the next generation Impala rather or Buick Riviera instead of an uglified Ponywacker.

Pontiac could go and GM wouldn't even have to drop the few cars that do well, just shift them to another badging.


RE: Before anyone says it
By AlmostExAMD on 4/13/2009 7:51:00 PM , Rating: 2
Yep I may be one of them! :)
I can't see Holden going under,Every third car on the road is one.
Mind you I am a VY SS owner but would love them to tame down,Possibly go back to a mid sized 6cyl turbo commodore like the good old VL. The power struggle is becoming a bit rediculous between Ford and Holden,Huge cars with huge V8's,when they really could get the same power and better fuel economy with a mid sized Commodore/Falcon.


RE: Before anyone says it
By TSS on 4/13/2009 11:40:24 AM , Rating: 2
GM's already stated that bankruptcy means liquidation. and with their massive debt + the recent taxpayer debts, it's no wonder either.

the latest plan i've read is splitting GM up into 2 company's: a good and bad GM. the good GM will be headed up by current management. yes, that's not a typo.

it's not possible to prevent job losses here. the car market has shrunk 30-40%, so unless *everbody* on the car market shrinks 30-40%, someone's gotta go under.

GM's the weakest. they have to go. or else chrysler. in either case, it would allow other company's to absorb their market share and get those back on the road. else everybody's losses will continue untill the jobs that would've been lost are lost anyway.

i'm aware of the suppliers effect but 40% fewer cars also means 40% fewer supplies needed. so 40% of the market will dissapear. it already has! (but has been kept alive by, yes you guessed it, a $10.4B goverment bailout)

just let the economy slide then pull yourself out of it with a new and improved icon. i hear NASA's pretty good with the dollars going into it.

everything has a beginning and an end. if anything wouldn't now be the time for innovation?


RE: Before anyone says it
By Suomynona on 4/13/2009 11:47:09 AM , Rating: 3
It's a shame that Saturn has to go under -- they sell the few GM cars that are even mildly attractive. Hopefully whatever emerges from GM's ashes brings over some more Opel derivatives, they actually make some cars that are worth taking a look at.


RE: Before anyone says it
By nbourbaki on 4/14/2009 11:41:04 PM , Rating: 2
quote:
It's a shame that Saturn has to go under -- they sell the few GM cars that are even mildly attractive. Hopefully whatever emerges from GM's ashes brings over some more Opel derivatives, they actually make some cars that are worth taking a look at.


Saturn had a great UAW contract, a motivated workforce, a new state of the art assembly plant, a better sales experience and a huge amount of good will from car buyers and owners. Infighting between the various GM divisions, jealous about the huge investment (at their supposed expense) that was made and the attention Roger Smith gave it, kept Saturn from having an update to their product line for over a decade.

Talk about squandered opportunity!


RE: Before anyone says it
By Reclaimer77 on 4/13/2009 12:08:39 PM , Rating: 2
Why is everyone just accepting this ?

quote:
The end of the General Motors saga may be nearing. After months of bailouts and pleas for more money, the U.S. government ruled that GM's recovery plan was unacceptable. They ordered GM to reorganize, removing CEO Rick Wagoner, a veteran of 30 years at GM and 8 years as CEO, as the first step.


So basically the government, which has never met a deadline, kept an agenda, or balanced a budget or handled money responsibly, has told GM it's plan is unnacceptable.

And none of you are pointing out how ironic this is ?

As a voter and taxpayer, I would really like to know which aspects of Gm's plan the government thought was unnacceptable. Since the whole POINT of the bailouts were supposed to be to prevent bankruptcy in the first place.

See what I'm getting at ? Would GM's plan have prevented bankruptcy and made them profitable ? Or was that not really the point here anymore ? Or was the point to extend the argument " you took money, so you will do things the way WE say so, not the way you NEED to do things to survive. " ?

Isn't the job of the media to point these things out and ASK these questions ?


RE: Before anyone says it
By MrBungle123 on 4/13/2009 12:36:09 PM , Rating: 2
quote:
As a voter and taxpayer, I would really like to know which aspects of Gm's plan the government thought was unnacceptable. Since the whole POINT of the bailouts were supposed to be to prevent bankruptcy in the first place.


The whole point of the bailouts was to preserve the union strangle hold on GM and at the same time make GM subject to the wants and desires of the leftists running the federal government. It had absolutely nothing to do with "bailing out" GM the company. All you need to do is connect the dots.

A bailout, were it truly a bailout would have no strings attached and all the companies that have taken government money GM included are now quasi-private government entities. examples: firing of former GM CEO Rick Wagner at the direction of the US Gov. AIG execs being forced to give back bonuses which were allowed under the "stimulus" (but made for a convienient distraction while the fed printed a trillion dollars) and the government owns an 80% stake so hey why not right?

quote:
See what I'm getting at ? Would GM's plan have prevented bankruptcy and made them profitable ?


The most direct path back to profitablity for GM is through bankruptcy, which SHOULD free them of the shackles placed on them by the unions.

quote:
Or was that not really the point here anymore ? Or was the point to extend the argument " you took money, so you will do things the way WE say so, not the way you NEED to do things to survive. " ?


Exactly, lets look at recent history for a minute.

1. The government gives GM money so they can survive under their current business model which has them losing money on every car they make.
2. Taking government money puts GM in a position of having to submitt to government direction.
3. The government tells GM to come up with a recovery plan.
4. GM's plan was did not fit closely enough with the leftist agenda of making ever smaller cars which rely perpetual motion systems for power. So now they get a slap on the wrist and are told to go into bankruptcy.

what do you want to bet next the government will take a direct role in orchistrating this bankruptcy and after its all said and done GM is still slave to the unions and the government is still calling the shots?

let the downrating by the leftists educated by MSNBC commence!


RE: Before anyone says it
By sgw2n5 on 4/13/2009 12:55:56 PM , Rating: 1
Your tinfoil hat is on a wee bit tight, bud.


RE: Before anyone says it
By DigitalFreak on 4/13/2009 12:56:10 PM , Rating: 2
I would rate you down because you are a moron. EOL


RE: Before anyone says it
By EasyAce on 4/13/2009 1:49:19 PM , Rating: 2
Very well put. It's good to see somebody has the ability to see the obvious, because it's just sad the amount of people who can't.


RE: Before anyone says it
By Nfarce on 4/13/2009 2:39:33 PM , Rating: 2
And as usual, when those who don't agree with some rational, thought provoking, and logical arguments start name calling and downrating instead of being adults and counter arguing with intelligent and civil discourse.

Ah, just another day on DT when politics are involved.


RE: Before anyone says it
By nbourbaki on 4/13/2009 4:19:04 PM , Rating: 2
I don't see how purely blaming the unions without even a mention of how the management team led GM to bailouts and bankruptcy is thought provoking.

I don't see how every problem is the result of a liberal conspiracy is rational.

GM stopped producing cars people wanted to buy. They focused on SUVs and when that market took a nose dive, they suffered more than the automakers that had a more balanced product line.

GM, Ford and Chrysler have been using substandard materials in their cars since the 70's. I own a 1991 Honda Accord that's got over 300,000 miles on it. It's never had any serious work done on it. My daughter drives it every day. You don't see that kind of quality from GM, Ford or Chysler. American automobiles were once the highest quality vechicles on the road. Remember "Planned Obsolescence" was invented by GM and now it's the company itself that is now obsolete.


RE: Before anyone says it
By Reclaimer77 on 4/13/2009 4:54:53 PM , Rating: 1
quote:
I don't see how every problem is the result of a liberal conspiracy is rational.


It's not a conspiracy. That's the thing you guys just don't get. This isn't a coverup, it's the simple facts of the situation. Only a blind fool would call it a conspiracy when it's so blatantly in the open for anyone with a brain and reasoning powers to notice.

quote:
GM stopped producing cars people wanted to buy.


Another lie. I know you guys just can't stand this fact, but truck and SUV sales were through the roof. The American people had spoken, and they wanted trucks and SUV's. Period.

quote:
They focused on SUVs and when that market took a nose dive


Again, you are making no sense. SUV's were outselling all their other "balanced product lines" 5 to 1. There were EXACTLY focusing on what their customers WANTED. There is no other way to interpret the facts. What would you rather them have focused on ?

If you think smaller fuel efficient cars, or hybrids, would have generated nearly as much consumer interest as their SUV's or trucks you're nuts. Only 1.3 million hybrids have been sold in America in the past DECADE. GM probably sold more SUV's than that in a year.


RE: Before anyone says it
By chrnochime on 4/13/2009 5:32:46 PM , Rating: 2
According to you SUVs once sold at a ratio of 5 to 1 , with respect to cars. That does NOT equal to GM having their SUVs outsell the "Balanced product lines" 5 to 1. How the hell did you come up with that??


RE: Before anyone says it
By Nfarce on 4/13/2009 7:57:52 PM , Rating: 2
quote:
Another lie. I know you guys just can't stand this fact, but truck and SUV sales were through the roof. The American people had spoken, and they wanted trucks and SUV's. Period.


Yep. And it wasn't just from GM either. In the 1990s and early 00s the Ford Explorer & Expedition, Jeep Grand Cherokee, and Dodge Durango were all extremely popular (I had a Durango and loved it).

The SUV of the 1990s replaced the station wagon of the 1970s as the family car - at least for those that didn't want the other very popular family hauler (and the rather nerdy image it came with): the minivan.

People want what they want. The market will determine what is and what is not produced. SUV and truck sales tanked in the last two years over gas prices and the new and used lots were overflowing with them and auctioneers were dumping the pre-owned ones for 50% below their wholesale market value. People looked to small cars and hybrids.

Now that gas prices have stabilized, guess what kinds of vehicles are sitting on lots unpurchased while prices rise on the used market rise? (Queue up the violin and comments of "well most people don't NEED an SUV or pickup truck."


RE: Before anyone says it
By Athena on 4/14/2009 11:08:37 AM , Rating: 2
quote:
Again, you are making no sense. SUV's were outselling all their other "balanced product lines" 5 to 1. There were EXACTLY focusing on what their customers WANTED. There is no other way to interpret the facts. What would you rather them have focused on ?
There most certainly is another way to interpret the facts: SUV sales outsold other lines because their prices were artificially depressed by the irrational fuel regulations. If truck-based SUVs had been subject to passenger fuel and safety regulations, they would have been classified as gas guzzlers and subjected to a surcharge. They would also have had to meet passenger safety standards.

The reason US consumers jumped on the SUV bandwagon was that they appeared to be better value as opposed to something like station wagons, which were classified as passenger cars. In other words, consumer preferences were in fact manipulated to the benefit of the manufacturers.

I have no problem with individuals actually paying for whatever their personal preferences may be. Most SUV buyers in the United States though have not; they and the manufacturers drove through a giant loophole in federal regulations. GM and the rest of Detroit were well aware of the reality...which is why they so fiercely fought essential revisions.


RE: Before anyone says it
By Reclaimer77 on 4/14/2009 11:13:09 AM , Rating: 1
Oh that's bunk and you know it. Consumer manipulation ? What a load !


RE: Before anyone says it
By nbourbaki on 4/14/2009 6:07:36 PM , Rating: 2
Well I own two cars that were subject to the gas guzzler tax. Both cars get far better mileage (19/30) than almost any full size SUV. One of my friends bought a Hummer that because of it's weight, qualified for a tax break and the Hummer wasn't subject to the gas guzzler tax. Whether you call that manipulation or just stupid policy is all point of view.


RE: Before anyone says it
By Athena on 4/14/2009 6:42:17 PM , Rating: 2
The crap is being spouted by those who maintain that SUVs were somehow a manifestation of inherent consumer preferences.

Consumers will always want more for less. The fact that truck based SUVs were not subject to passenger regulations is what made them seem to be good value. If they had been obliged to pay their freight as passenger vehicles, they would not have been nearly as attractive to buyers.

Yes, it most certainly was market manipulation.


RE: Before anyone says it
By sgw2n5 on 4/13/09, Rating: 0
RE: Before anyone says it
By Atheist Icon on 4/13/2009 6:24:54 PM , Rating: 1
quote:
I own a 1991 Honda Accord that's got over 300,000 miles on it. It's never had any serious work done on it. My daughter drives it every day. You don't see that kind of quality from GM, Ford or Chysler.


I own an 89 Supercharged Tbird with 257,000 miles on it, still driving. Define serious work, I have had to replace a couple clutches, radiators, etc. Normal wear and tear type stuff. I still drive it to this day.

I see the kind of quality that the Big 3 put out, and it is frustrating. Me, I couldn't really give two craps about things that need to be replaced under warranty, it's bound to happen, it's mass production. I heard people bitching about getting their Cats replaced at the Caddy dealer, for free, just because they paid such and such for the car. SERIOUSLY?! And don't tell me peoples time is valuable, I do not know of many people making $1400 an hour.


RE: Before anyone says it
By nbourbaki on 4/13/2009 10:42:24 PM , Rating: 2
Brakes, CV joints two times, driver side electric window motor which replaced myself. No engine or drive train work other than the CV joints. Original clutch, original paint.

As far as the 5 to 1 ratio of trucks to cars sales.

Jan - Sept, 2008
Light Duty Trucks 5,188,289
Cars 5,574,659

Light duty trucks includes Large, medium, small SUVs, mini vans and pickup trucks. Don't you just hate it when fact get in the way of a diatribe


RE: Before anyone says it
By rudolphna on 4/13/2009 11:25:20 PM , Rating: 2
that was in the middle of the gas crunch you realize, right?


RE: Before anyone says it
By nbourbaki on 4/13/2009 11:33:31 PM , Rating: 2
The information was published Autodata. Assuming I could be wrong, it was the first data I could pull down from the web that showed actual sales numbers. I would be happy to review any published sales numbers that showed a 5 to 1, truck to car sales numbers.


RE: Before anyone says it
By Reclaimer77 on 4/14/2009 10:19:49 AM , Rating: 2
lol yeah. Talk about cherry picking.

Why is the ratio so important though ? The point was that people DID want those vehicles. They wanted them by the boat load. Even using the numbers in his highly cherry picked month of gass crunch '08, look at how many people were STILL buying trucks and SUV's !

And you guys honestly expect a business to literally throw that many sales away because it doesn't fit your political agenda on how things should work ?


RE: Before anyone says it
By nbourbaki on 4/14/2009 5:31:01 PM , Rating: 2
quote:
Why is the ratio so important though ?


The point is you stated that trucks outsold cars 5 to 1 to make a point. You have not back up that outrageous claim and seem to be backing away from your own posts when presented with facts. I would as well since they are totally unfounded. Boat load, through the roof and other euphemisms while colorful, are pure hyperbola.

I've never suggested that the US automakers should not address a market that they could successfully compete in. My point was that by giving up the car market to Toyota and Honda they were risking their future if the price of gas went up too high. Which is obviously the case. You have taken a position that all the American consumers want is large SUVs and trucks. That's obviously hasn't been true for over a year. And the lack of a balance in their product mix has hurt American automakers disproportionately.

So here's a suggestion, if you don't believe the facts I've posted are representative, do some work and post published sales numbers that substantiate your claims.


RE: Before anyone says it
By Atheist Icon on 4/14/2009 7:03:09 PM , Rating: 2
quote:
Original clutch


You have one magical clutch...mine wore out usually 35,000 - 50,000 miles, depending on how I treated them. My shortest one was 12,000 miles, too much drifing in a 4,000lb car.


RE: Before anyone says it
By nbourbaki on 4/14/2009 7:14:28 PM , Rating: 2
Tell me about it. My two kids and my niece and nephew learned to drive a stick in this car so it hasn't been exactly pampered. Since the early 70's every vehicle I've owned has been a stick. Out of ten vehicles, hundreds of thousands of combined miles and decades of use, I've only had to replace one clutch. 1981 Datsun 200sx.


RE: Before anyone says it
By EglsFly on 4/13/2009 5:25:28 PM , Rating: 2
quote:
So basically the government, which has never met a deadline, kept an agenda, or balanced a budget or handled money responsibly, has told GM it's plan is unnacceptable. And none of you are pointing out how ironic this is ?

Its ok, watching this video:
http://www.youtube.com/watch?v=omHUsRTYFAU
you can tell that this guy has the solutions to our economic problems...


RE: Before anyone says it
By EricMartello on 4/14/2009 5:55:01 PM , Rating: 2
I know, right. I bet he picked up some ideas when he visited those 57 states of America...too bad he couldn't make Alaska and Hawaii...but he has one more to go so yeah...60 states.

http://www.youtube.com/watch?v=EpGH02DtIws


RE: Before anyone says it
By nbourbaki on 4/13/2009 10:54:09 PM , Rating: 2
quote:
So basically the government, which has never met a deadline, kept an agenda, or balanced a budget or handled money responsibly, has told GM it's plan is unnacceptable.

And none of you are pointing out how ironic this is ?


You mean the government that put men on the moon in less than a decade, right on schedule? Or the government that rebuilt Europe after War World II?


RE: Before anyone says it
By nbourbaki on 4/13/2009 11:58:07 PM , Rating: 2
quote:
or balanced a budget


...and if I remember correctly, the U.S. Government was running a surplus between Bush I and Bush II.


RE: Before anyone says it
By mvpx02 on 4/14/2009 1:43:31 PM , Rating: 2
quote:
...and if I remember correctly, the U.S. Government was running a surplus between Bush I and Bush II.


That is correct... the government - while over-taxing its citizens, ignoring a festering problem in the middle east, and benefitting from one of the biggest technological growths in the nation's history - was running a surplus in the mid-to-late 1990's.

It sure is funny how excluding a few little details can change a story =)


RE: Before anyone says it
By nbourbaki on 4/14/2009 5:48:53 PM , Rating: 2
quote:
or balanced a budget


Reclaimer77 didn't qualify his query and as such, to set the record straight neither did I. I just pointed out the obvious factual errors. As to whether the taxpayers were over taxed during this period can only be debated. If you honestly wanted to compare the tax burden from this period with other periods in American history, the burden was far less than under the Eisenhower, Kennedy, Johnson or Nixon administrations. Comparing the tax burden to other 1st world countries in the same time period, I think you would find that the US was in the lower rank of tax burden. But the fact remains that the budget was balanced.


RE: Before anyone says it
By tallcool1 on 4/13/2009 12:39:45 PM , Rating: 3
quote:
The healthier brands like Chevy and GMC will continue to produce though their capacity may be significantly diminished.
Of all the GM brands, GMC is the one that should go. GMC vehicles are nothing but re-trimmed Chevy products and therefore not needed.


RE: Before anyone says it
By DigitalFreak on 4/13/2009 1:03:40 PM , Rating: 2
Last I heard, the GM plan called for keeping Cadillac, Buick, Chevrolet and GMC. The other brands would be dumped, sold off, etc. I have never understood the reasoning being the GMC model, other than it gives Buick / Pontiac dealers a truck to sell. Pretty stupid.


RE: Before anyone says it
By theapparition on 4/13/2009 10:10:38 PM , Rating: 2
Personally, I think there is a place for all 4.
Chevy: Standard Brand
Buick: Old persons car
Cadillac: Upscale luxury import competitor
GMC: Stripped down fleet sales only, no commercial dealerships.

Other than fleet sales, I don't see any reason to keep the GMC brand.


RE: Before anyone says it
By Nfarce on 4/13/2009 10:23:12 PM , Rating: 2
quote:
GMC: Stripped down fleet sales only, no commercial dealerships.


Actually, GMC was/is always the upscale Chevrolet truck/SUV. The Tahoe does not have the Yukon quality luxury interior materials, for example. The Chevy was always the stripper fleet sales truck of the two.


RE: Before anyone says it
By Mathos on 4/13/2009 11:12:15 PM , Rating: 2
Actually Isuzu is the fleet cheap end GM truck line, take a look at any place where they use cheap fleet trucks, and most of the time it'll say Isuzu on the front.

Everyone thinks it's a japanese brand, but they're actually made by GM. They use to make a lot of em at the Shreveport plant, and the Truck and Bus plant in Flint Michigan.

The Chevy GMC thing has kind of flip flopped over the years with certain vehicles. For example the Chevy S10, and GMC Jimmy, both the same vehicle but the jimmy is the lower end. Same for the Blazer variant on the s10/Jimmy line. I know my 4 door blazer with the power sunroof, tented windows, push button 4wd mode select, and automatic tranny, along with being full power everything is a chevy. And I can't complain about the 21mpg highway on that 4.3L Vortec engine either.

Now on the pick up truck/full size truck line, GMC is usually the higher end vehicle.


RE: Before anyone says it
By theapparition on 4/14/2009 10:14:32 AM , Rating: 2
While that's true, I was expressing my opinion on what should be done with the brands. There is no need for a mid-upscale truck brand. The base and upscale packages should belong to Chevy. Luxury level trucks should belong to Cadillac. GMC should be strictly fleet sales and cab frames.

No need to have both Chevy and GMC dealerships selling essentially the same vehicles.


RE: Before anyone says it
By heavyorangejuice on 4/13/2009 11:20:14 AM , Rating: 2
That is true, however, people may be less inclined to buy from GM while in bankruptcy as they fear the cars they buy will no longer be covered by the manufacturers warranty. This will just be exasperating an already bad situation for the company, which could lead to the ceasing of operations for a majority of the company or divisions within the company.


RE: Before anyone says it
By mars2k on 4/14/2009 5:13:29 AM , Rating: 2
It's silly to blame the UAW for all of GM's woes. The bottom line is they just made crappy cars. If they made cars that were really great then people would buy them with or without a price premium.

And please don't tell me you can get a European or Japanese worker cheaper once you add benefits.
This is a design problem not a problem cuased by the workers. Further ask Ross Perot about the corpoarate culture at GM, the management is brain dead.

Take 3 cars, A GM, any Japanese and any European, equipped the same, in comparable price ranges (give an extra $1500 to GM to cover the extra Union cost they complain about)and drive them for 10 years.

Which one would still be presentable at the end of that time? I bet not the GM

The GM would be rotted out, the engine bay would be a smelly groaning wheeze fest and the paint would be gone. I saw a Saturn the other day with all of the external body panels rotted away (they were plastic remember) just the body framing and interior panels left.

The Japanese would still be running but with some dings and a maybe a cracked dashboard or a door seal that hand shrunken a bit. Also with no major repairs so far and still another 100K in mileage left.

The Euro model would have the best looking body but be on its second engine. Also with another 100K in it.


Sad Day, but we knew it was coming..
By Hiawa23 on 4/13/2009 10:42:21 AM , Rating: 2
I am sorry to see this as an American, but not surprised that this is where we are at. I am surprised the govt gave them the money in first place last year, cause it was clear there was noway GM was going to be able to pay the loans back given their cost structure, & given that they have been losing money since 2004 if I am not mistaken. I am so looking forward to the Volt & the technology that will power it & beyond, but is anyone surprised? They need to go into chapter 11 in order to get their debt, & all these bad contracts(UAW, other) in order. Did some just think that magically when the clock struck 2009 that GM would be able to magically sell more cars & make money when they had been bleeding for years? I am not bashing, I just don't see any other alternatives for em right now. Do you?




RE: Sad Day, but we knew it was coming..
By Nfarce on 4/13/2009 11:18:03 AM , Rating: 2
quote:
Did some just think that magically when the clock struck 2009 that GM would be able to magically sell more cars & make money when they had been bleeding for years?


Obviously so. This nation, the majority of politicians running Washington right now and the constituents that put them there have this sudden got-to-fix-it-now mentality and worry about long term repercussions later. That so-called "stimulus" bill that was rushed through Congress so fast that most of it wasn't even read is a perfect example. It sure sounded like an instant fix, didn't it?

When I look around, the global economy is still sour, there are still poor people in this nation and around the world, the war in Iraq and Afghanistan are still going on, terrorism and piracy are still prevalent around the globe, and North Korea and Iran are still thumbing their noses at the world and UN mandates.


By Steve1981 on 4/13/2009 11:22:05 AM , Rating: 2
Brought to you by Carls Jr.


RE: Sad Day, but we knew it was coming..
By MrBungle123 on 4/13/2009 11:25:34 AM , Rating: 5
quote:
This nation, the majority of politicians running Washington right now and the constituents that put them there have this sudden got-to-fix-it-now mentality and worry about long term repercussions later. That so-called "stimulus" bill that was rushed through Congress so fast that most of it wasn't even read is a perfect example. It sure sounded like an instant fix, didn't it?


The "stimulus" bill was never designed to be economically stimulitive. It was a campaign contributor payoff from the begining. It was fast tracked through the system so that the people would not be able to figure out what was in it before it was signed into law. Political bait and switch on a scale not seen before.


By Reclaimer77 on 4/13/2009 12:00:03 PM , Rating: 3
I guess the people downrating this actually think there was ANYTHING in the stimulus bill that could actually STIMULATE the economy ?

Guys wake up please. Even Seanators that voted for it came out and basically stated they weren't even given time to study what they were voting on.


RE: Sad Day, but we knew it was coming..
By Bateluer on 4/13/2009 12:14:22 PM , Rating: 2
Why was this rated down? He's dead right. The bill was nothing more than a giant collection of campaign payoffs and pork barrel spending, from both political parties.


RE: Sad Day, but we knew it was coming..
By Reclaimer77 on 4/13/2009 5:00:44 PM , Rating: 2
Which is funny because Obama ran his election campaign on being against earmarks and government corruption. Then 60 days later spearheads, and signs, the biggest earmark bill in the history of the country.

Where is that Obama today and what happened to that other guy ? I liked the other guy a lot better (relatively speaking).


RE: Sad Day, but we knew it was coming..
By Alexvrb on 4/13/2009 9:23:54 PM , Rating: 2
Shoot, are there any major campaign bullet points he hasn't crossed out since he got elected?


By Nfarce on 4/13/2009 10:33:30 PM , Rating: 2
Obama is a politician just like everyone else: say things the mindless masses agree with or sound good to them, get in office, and then backpedal like a Ringling Bros. circus clown. I really like his new $83.4 billion request for U.S. military ops in Iraq and Afghanistan. Boy that's gotta pi$$ off the Code Pink liberal anti-war crowd.

And his latest continuing with supporting Bush's "illegal" wiretapping just HAS to make the sheep want to jump off the cliff (need any help? LOL). Then again, I have yet to hear any of them say one single negative thing about Obama. Not one.


By nbourbaki on 4/14/2009 6:22:01 PM , Rating: 2
Not just today, it hasn't changed from the days of invading Iraq or the passage of the Patriot Act.

The lessons learned from the last severe financial crisis of the 30's was to pump money into the economy as quickly as possible. Treasury taking additional assets on it's balance sheet, the budget, the stimulus package was intended to pump as much money into the system to avoid deflation and a significant contraction of the economy. When your house is on fire, your first priority is to put out the fire as quickly as possible not worrying about the optimum number of buckets of water.


By Penti on 4/13/2009 5:24:59 PM , Rating: 2
Under the current climate it doesn't matter if the workers would work for free it wouldn't be profitable any how.

Same problem with Volvo Cars and Saab Automobile here in Sweden. They have strong unions but only a average pay here, much much much less then they cost for the employer in the US. Most benefits are payed through the tax-bill or out of our own pockets here. Universal health care with the possibility to get treatment in any country (if you find something lacking or need specialist treatment we don't do) who has signed some agreement i.e. all of Europe, is much cheaper then your chaotic health-care system. Companies don't run their own pensions founds any more since a long time ago either. So no legacy costs. Volvo and Saab will have a hard time trying to keep afloat, but it's really the suppliers that might go under and then neither brand has parts any more :)

Pretty much all car brands needs to sell more cars again to work.

US has been loosing money which they do barrow back again since the 70's any how. Bush practically made your country broke. Trade deficit is gigantic. If you don't stop importing cheap crap, that is stop consuming! some products which you clearly don't afford and start exporting goods then you can never get your economy into shape. Any loans and support should really go into making that a reality. You can't support a 800 billion USD trade deficit forever. You shouldn't have one at all. Stop giving out loans isn't the solution though, Thatcher tried that one and ruined the manufacturing industry of UK. That would only give you a larger deficit in manufactured goods and machinery in the future.


Its about time
By MrBungle123 on 4/13/2009 10:50:24 AM , Rating: 5
Hey Bush, Obama, Congress and the rest of the swine in Washington. If we had just done this in the first place, the end result would be the same and our national debt would be $17.4 Billion dollars lower! >:D




RE: Its about time
By crleap on 4/13/2009 12:56:10 PM , Rating: 2
I wish I could rate you a 6.


RE: Its about time
By bdewong on 4/13/2009 1:42:03 PM , Rating: 2
But that was only $17.4 Billion, not like it was $17,400 Million.

http://xkcd.com/558/


RE: Its about time
By 67STANG on 4/13/2009 3:43:53 PM , Rating: 2
I owe over $10,000 in taxes this year. It pains me greatly that some of that is going towards this Cluster-F, especially since I'm a Ford guy...

I'm wondering why Japan or China don't just swoop in and buy GM... they already own nearly 50% of our public debt-- what's just a little more going to hurt? Then we could have commercials like "Chevy. A Chinese revolution."


RE: Its about time
By Nfarce on 4/13/2009 8:25:24 PM , Rating: 2
quote:
t pains me greatly that some of that is going towards this Cluster-F, especially since I'm a Ford guy...


Gee I'd have never guessed! Every Ford my family members have owned, including a 90s Mustang, fell apart and had problems. I never liked the way they drove either, including my mom's 2004 Lincoln Town Car - about the only thing good about that was rear wheel drive. And WTF is up with those suspension boots that pump up and down? Who's the brilliant Ford engineer that came up with that?

Oh, and on to Chevy, it looks like the new Camaro, and I'm talking the V6 version, will give your beloved Moosetang, the V8 version, serious competition. I thoroughly enjoyed spanking Moosetang a$$ in the 1990s with a (Chevy powered LT1) Pontiac Firebird Formula.

Enjoy your Ford. I hate 'em.


RE: Its about time
By Nfarce on 4/13/2009 8:36:34 PM , Rating: 2
Oh, and one other thing:

quote:
I'm wondering why Japan or China don't just swoop in and buy GM... they already own nearly 50% of our public debt-- what's just a little more going to hurt?


You need to check your facts. This is two years old, but you get the idea:

http://www.optimist123.com/photos/uncategorized/20...

A later link:

http://www.goldworld.com/articles/us-national-debt...

Try more like 10%.

Yeah, I'm over your Chevy hating on here. There are other forums for that. Like the ladies Mustang owner club.


RE: Its about time
By nbourbaki on 4/14/2009 7:25:29 PM , Rating: 2
My younger sister got a brand new Ford Mustang for graduation in the early nineties. Less than a year later, the car caught fire in the driveway many hours after it was last driven. The official cause was deemed an electrical short.

Quality has gone up in the last decade. I've noticed an improvement in my weekly rentals from Avis, but still not anywhere near the level of a Toyota or Honda and their derivatives.


Morbid curiosity
By MrPeabody on 4/13/2009 2:04:56 PM , Rating: 2
So I'm not quite an expert on U.S. business law. I'm also afraid that, if I dig too deeply into this fiasco, my capacity for reason will shatter into billions of tiny, tiny pieces. However, I've a question:

". . . the U.S. Treasury Department has ordered GM to prepare a bankruptcy filing . . ."

Constitutional arguments et al. aside, what happens if GM refuses this order? What authority, specifically, would GM be at odds with? Which laws would they be in breach of, and what would be the legal penalties?

Okay, maybe that's three or four questions. But I don't ask them rhetorically; I'm genuinely curious. Anyone?




RE: Morbid curiosity
By Motoman on 4/13/2009 2:50:05 PM , Rating: 2
No laws, as far as I am aware.

GM is begging for money at the capitol. The capitol says you have to prepare a bankruptcy plan so we can see it, as part of our decision-making process to give you money or not.

GM can just refuse, no problem. But then the government can say "OK, we'll stop even considering giving you any money then. Soup line's that way."


RE: Morbid curiosity
By MrPeabody on 4/13/2009 3:10:55 PM , Rating: 2
Ah. So it's not so much an "order" as it is a "request", or maybe a "stipulation". Thanks for clearing that up.

I don't mean to be a pedant, but it does put the story in a somewhat different perspective. It's "Do this, or you won't get money." Not, "Do this, or you go to jail."


HA!
By FITCamaro on 4/13/2009 3:45:16 PM , Rating: 2
quote:
By robbing Peter to pay Paul, they’d be undermining their bottom line."


Our government has been doing this for over 30 years. Hence why Social Security is broke.




RE: HA!
By Motoman on 4/13/2009 3:51:50 PM , Rating: 4
...don't tell anyone, but our governmental finance strategy is actually one big Ponzi scheme.


Switched positions
By svenkesd on 4/14/2009 9:45:57 AM , Rating: 2
Strange how a few months ago the Presidents administration was adamant about not letting GM fail because it would be devastating for the economy.

Are they not so vital to the economy now?

Just wondering about the Presidents change of heart.




RE: Switched positions
By aj28 on 4/15/2009 4:25:45 AM , Rating: 2
Bankruptcy != Failing
Failing == Gone. *poof* OOB.

Stop trying to find flaws wherever you can... Would you whine less if they kept feeding GM money? 'Cause something tells me you'd take issue with that too.


RE: Switched positions
By svenkesd on 4/15/2009 8:50:11 AM , Rating: 2
Oops, sorry. I was just remembering how a few months ago everybody ( GM and government ) was saying there is no way GM could survive a bankruptcy. I guess that never happened.

I don't even know what your point is in the second paragraph. I never said I have an issue with anything. I am just wondering why the stance on this issue changed.


What about all the retirees?
By settytb on 4/13/2009 1:29:11 PM , Rating: 1
Now that they go into bankruptcy who's gonna pay the 200+ billion in health care and pensions for the retirees? The government? So now all the people that put in 30 years working there are going to get cut off so thousands won't have money to contribute to the economy. I think keeping GM afloat for even a couple years is cheaper than shouldering that burden.




RE: What about all the retirees?
By settytb on 4/13/2009 1:36:06 PM , Rating: 1
Also, It's ok to just GIVE the banks 700 billion which they don't create anything viable just skim the money off of what everyone else has made. But, it isn't ok to LOAN and automaker money who employ thousands and make something worthwhile.


RE: What about all the retirees?
By jjmcubed on 4/14/2009 3:12:14 AM , Rating: 2
Now I'm all for making autos and also for the working man...

But if GM can't afford to pay them because of the rocketing cost of health care, should they just go out of business? This deal was agreed upon, but they really didn't understand how much that was to cost them. Sometimes they are paying health care longer than the employee was working for the company.

If a contract isn't financially viable, then maybe it shouldn't be forced to be used.


So in conclusion...
By ZachDontScare on 4/13/2009 3:02:23 PM , Rating: 2
...we pissed away how many billions in US taxpayer money to keep this bloated organization afloat, only to have them go into bankruptcy anyways?




RE: So in conclusion...
By MrBungle123 on 4/13/2009 5:06:39 PM , Rating: 2
what do ya know the fiscal conservatives were right again... for the 10 billionth time...


There's one reason I want GM to survive...
By callmeroy on 4/14/2009 10:06:34 AM , Rating: 2
The 2010 Camaro....

First before the naysayers step on my joy over this car, know a tidbit about me.....I have always loved the Camaro brand (well I didn't care for the "IROC" era much), I've owned two camaro's thus far....and while my fav GM sports car is the Corvette -- my budget can't support one of those so I have to pin my hopes to the much more affordable Camaro.

Well in the last couple months i've been reading up on the new '10 camaro, including a ton of reviews .... this pass weekend I was looking at one up close and personal and I have to say I want one -- bad.

All the reviews are raving about the value it provides and largely are very positive, praising GM with what they did with the revival of the camaro.

Let's face it -- if you don't see the significance of a BASE MODEL sports car w a 304 HP engine that is rated 29 mpg HWY for UNDER $23k..then you aren't that into cars or at least don't follow car history.

That is phenominal.

Anyway here's the clincher...according to the reviews I've read thus far --- its actually not crap either...its quality built and if you read up on pony car reviews most reviews are VERY critical of the often cheap and lousy interiors of sports cars....they are actually giving the thumbs up on the "'10" for interior...having sat in one myself I won't lie its not going to match the luxury of your BMW or Lexus but then its not competing to either...its a sports car...the interior is functional, well laid out and modest....with hints to the older model's of the car.

The car has the looks, the power, the economy (for the class of car that it is) and the handling too.

As far as negatives --- so far the massive one is the enormous blind spot issue from the C pillars. I can live with that....

So hopefully the '10 is still a reality (That GM's fate doesn't cause them to stop production on it ) -- I'm really considering buying one but I can't until early next year.




By nbourbaki on 4/14/2009 7:42:02 PM , Rating: 2
I too have been reading the glowing reviews for the new Camaro and GM may have a hit on their hands if bankruptcy doesn't scare the potential buyers off. Good looking car, good specs and a killer price (at least for the V6). Does anyone know if the independent rear suspension is a multi-link?

The reviews I've read ranked the interior below that of the Mustang. Something about running out of budget after designing the instrument cluster.

I hope this is a start to GM offering cars that people can get excited about.


By Doormat on 4/13/2009 11:08:17 AM , Rating: 2
Since all payments to creditors will be stopped during the BK process, suppliers will not be paid for work done while GM is in BK. This is one of the big sticking points - making sure that there isn't any more harm on the suppliers than there already is. I would say that its critical to keep BK to less than a month for GM - its got to be a prepackaged BK.




Not just GM?
By sage1 on 4/13/2009 1:41:22 PM , Rating: 2
I may be getting ahead of myself here, but if GM is able to rid itself of UAW contracts and the massive debt it has and comes out a stronger company, why wouldn't a company like Ford follow suit? (I'm not saying this necessarily would be a bad thing.)
The airline industry comes to mind as an example.




Na-na na-na, hey hey...
By walk2k on 4/13/2009 9:55:45 PM , Rating: 1
GOOD BYE!!

And good riddance. Maybe if you didn't build shitastic cars someone would care.

Don't let the door hit your ass.




The beginning of the end...
By Beenthere on 4/13/09, Rating: 0
Where?
By acejj26 on 4/13/09, Rating: -1
RE: Where?
By Brandon Hill (blog) on 4/13/2009 10:41:24 AM , Rating: 4
It's kinda different when your company is sucking from the government's teat to stay alive...

Or at least that seems to be the justification.


RE: Where?
By WoWCow on 4/13/2009 11:06:37 AM , Rating: 2
Agreed, its really a shame the same can't be said for the banks...

However, I do expect the feds to be involved in the background if not directly with the bankruptcy process; too much tax dollars are already invested and a return isn't just expected, it has to be taken out of it somewhere.


RE: Where?
By Regs on 4/13/2009 11:48:30 AM , Rating: 2
No no please do not think gov't controlled banks or even more regulations would make things better.

Looks like the Banks are suffering now because of their actions. Who needs regulations? Let the natural flow of the economy do it's deed.


RE: Where?
By Regs on 4/13/2009 11:51:18 AM , Rating: 3
And regulations don't prevent, they only stop the flood in one area while the water travels somewhere else downstream.


RE: Where?
By TheSpaniard on 4/13/2009 12:19:08 PM , Rating: 3
agree 100%

the bad loans were almost a direct result of the "equal lending" practices forced onto them from the feds


RE: Where?
By DigitalFreak on 4/13/09, Rating: 0
RE: Where?
By MrBungle123 on 4/13/2009 1:57:36 PM , Rating: 2
quote:
Stop spreading that bullshit. Banks got greedy and made very stupid decisions, which lead to their failure. Nothing more.


well, not exactly.

quote:
"We must begin to close this homeownership gap by dismantling the barriers that prevent minorities from owning a piece of the American dream" -George W. Bush


quote:
"The federal government in the meantime has increased pressure on lenders to seek out minorities, as well as low-income groups and borrowers with poor credit histories"

"The mortgage industry intends to pursue minorities with greater intensity as federal regulators turn up the heat to increase home ownership,"

-David Glenn, Former CEO of Freddie Mac


quote:
"These two entities – Fannie Mae and Freddie Mac – are not facing any kind of financial crisis."
- US Representative Barney Frank (D) MA and chairman of the House Financial Services Committee (2003)


-September, 2008 the treasury backs Fannie and Freddie with $100Billion each to keep them solvent and in Feb. 2009 ups that amount to $200 Billion each.

The government is using the bankers as a scapegoat. They forced them to make these bad loans, then bailed them out with your money, and now are trying to make it look like socialization of the banking industry is the only route out because capitalism [supposedly] failed. (although without government intervention the banks would have never given out these loans to begin with because these people would have never qualified)


RE: Where?
By fownde on 4/13/2009 3:36:40 PM , Rating: 2
This video (2 parts) does a fairly good job explaining how the banks got themselves into trouble
part 1 - http://www.youtube.com/watch?v=Q0zEXdDO5JU
part 2 - http://www.youtube.com/watch?v=iYhDkZjKBEw


RE: Where?
By fownde on 4/13/2009 3:38:05 PM , Rating: 2
Err pardon, it explains why the banks are in trouble now, not how they got themselves into trouble.


RE: Where?
By Nfarce on 4/13/2009 8:01:47 PM , Rating: 2
Another quote:

"These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis," said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. "The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing." - Barney Frank, 2003 in response to the Bush administration on increasing Fannie & Freddie regulations.

Read all about it in, of all places, the New York Times from 2003:

http://www.nytimes.com/2003/09/11/business/new-age...

The truth. It be out there. Our media only selectively chooses to find it, let alone report it.


RE: Where?
By callmeroy on 4/14/2009 10:26:52 AM , Rating: 2
Of all the crap that gets rated to a "5" or "6" I find it odd and kind of lame that your post is only a "2" -- since you hit the nail right on the head.....

GOOD JOB!!!

That is probably the best accurate summation of what REALLY went down that started this whole fiasco that I've read in the last few months.

Having worked at a once top 10 bank before the bottom dropped out....that is exactly what happened.

I guess only sensationalism gets rated up though.....


RE: Where?
By nbourbaki on 4/14/2009 8:03:07 PM , Rating: 2
Right, Barney Frank in the minority in congress at the time of the quote. I bet you can't name the Republican Chairman of the Banking committee in 2003.

How about Alan Greenspan who was cheerleader in chief as James Cayne pushed leverage at Bear Stearns to 33 to 1. Or how about Chris Cox who lead the SEC from '05 on. Former Republican congressman Cox had a seat on the Federal Housing Finance Oversight Board, which advises the Director of the Federal Housing Finance Agency with respect to overall strategies and policies regarding the safety and soundness of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

No of all the villains in this debacle, you decide to highlight Barney Frank. How courageous and intellectual bankrupt


RE: Where?
By nbourbaki on 4/14/2009 8:30:05 PM , Rating: 2
quote:
US Representative Barney Frank (D) MA and chairman of the House Financial Services Committee (2003)


Revisionist history? The 108th US Congress had a Republican majority. Barney Frank (D) MA was the ranking Democratic member of the committee at the time of the quote. The chairman of the House Banking Committee 2001-2007 was Mike Oxley (R) OH.


RE: Where?
By nbourbaki on 4/14/2009 9:20:40 PM , Rating: 2
quote:
agree 100%

the bad loans were almost a direct result of the "equal lending" practices forced onto them from the feds


While that might align with your political philosophy it really didn't cause the collapse.

US Major financial institutions leverage as high as 33 to 1 to increase profits with almost no effective oversight. Effectively operating as hedge funds in the sub-prime market.

Double whammy of interest rates rising to combat inflation by the FED (and the associated increase in ARM payments) and high gas prices (close to $5 a gallon where I live) hits consumers, home & vehicle sales plunge.

As home sales plunge, value of homes plunge. As the value of homes sink, many homeowners are underwater on their mortgages. More homeowners go into default which causes a vicious cycle. More homes on the market that aren't selling further depressing prices.

Instead of recouping their investments in the form of mortgage payments, banks take ownership of homes that are worth less every month.

The obvious error here is the prevailing wisdom before the collapse that home values in the U.S. always go up. So even if the exposure on the sub-prime mortgages was default, the home would appreciate in value to cover the banks. Credit Default Swaps were meant to spread that risk beyond the major financial institutions but the lack of transparency and true fair market value of the assets results in almost a complete unwinding of that 33 to 1 leverage the majors have created.

We all know what happened next, credit markets freeze, major US financial companies go on Federal life support. Individuals and companies with perfect credit can get loans further choking economic expansion.

I guess because of the complexity of what actually happened, its easier to blame one policy, law, or political party than to actually try to understand how things fell apart.


RE: Where?
By MozeeToby on 4/13/2009 1:45:15 PM , Rating: 2
Externalities.

Look it up. (Here, I'll help: http://en.wikipedia.org/wiki/Externalities )

The problem isn't that the banks made bad decisions and now they are being punished by the market. That's fine, and you're right, it's how the system is supposed to work.

The problem is that the banks failing causes problems in other industries, even industries that didn't make any bad decisions.

No matter how much you hate the bailout, you can't deny that it saved at least of few of the biggest banks in the world. Even with those banks still operating, credit is squeezed tighter than it has been at any time in the past 40 years. If another 20% (in terms of size) of the banking system had closed its doors it would be all but impossible for anyone to get loans.

If you don't realize that that's a problem, you don't understand the way businesses are funded; they need those loans to start, to expand, to ride out tough times. Any business who tried to do those things without loans would need to keep so much cash on hand that expansion would slow to a crawl.


RE: Where?
By Reclaimer77 on 4/13/2009 11:21:15 AM , Rating: 3
quote:
It's kinda different when your company is sucking from the government's teat to stay alive...


Which, in itself, wasn't constitutional either.


RE: Where?
By chrnochime on 4/13/2009 9:50:15 PM , Rating: 2
It's not unconstitutional to include terms when giving loans. GM/Chrysler were not forced to take the loans. Not like there's a law forbidding the gov't to provide conditional help. GM failed. Simple as that.


RE: Where?
By TheSpaniard on 4/13/2009 12:16:12 PM , Rating: 2
thats exactly the reason...

US govt. stands now as the most important creditor of GM... so you really should do what they say, lest they call for GM to start paying it back :(


RE: Where?
By Spuke on 4/13/2009 12:38:47 PM , Rating: 2
This not new. Bankruptcy has been on the table for months now. GM already hired bankruptcy lawyers months ago. What you more than likely see is a pre-packaged bankruptcy. This will cut down on the time needed to restructure and enable them to stay in business. Obama has already stated that GM will not be hacked up and sold off.


RE: Where?
By Gideonic on 4/13/2009 10:41:38 AM , Rating: 2
And where is it written that the Government has to bail those companies out ?

The creditor makes the rules, as always.


RE: Where?
By NYY2009 on 4/13/2009 10:43:38 AM , Rating: 4
Not much chance of that. The bankruptcy option should have been exercised months ago, rather than continue to pour money into a black hole. Then, any government aid could have went toward making the company viable.


RE: Where?
By Hiawa23 on 4/13/2009 10:45:21 AM , Rating: 2
I would love to see where in the Constitution the federal government has the right to tell a company how to run itself.

every right when your company starts taking taxpayer dollars, & it's clear you can't run your company profitably.


RE: Where?
By DallasFlier on 4/13/2009 10:45:43 AM , Rating: 2
Gee, it may have something to do with the federal government giving that company BILLIONS of dollars of assistance, you think? The government can't force the company to do as it says - all they have to do if they wish to not follow the government's directions is simply stop taking the money, and pay back what they've already gotten - pretty simple, huh?


RE: Where?
By MrBungle123 on 4/13/2009 11:01:51 AM , Rating: 4
The government should have never offered the money in the first place.


RE: Where?
By phitzl on 4/14/2009 9:54:18 AM , Rating: 2
That's a lot easier to say in hindsight.

Come to think of it. All politicians should need to do to push their agenda is to claim to be from the future!

In the year 2000, Wagoner is ousted and GM folds, don't do it!


RE: Where?
By MrBungle123 on 4/14/2009 4:37:39 PM , Rating: 2
I would have argued against it before they did it too.


RE: Where?
By wsgroves on 4/13/2009 10:48:03 AM , Rating: 2
I could not agree more, but I suppose when they start taking bailout money, that gives the gov the right to tell them what to do. Its happening with the state bailout money too.


RE: Where?
By MrBungle123 on 4/13/2009 11:29:47 AM , Rating: 1
Then you have to ask yourself... Is it a bailout or a stealth power grab by the federal government? I'm guessing the latter.


RE: Where?
By DigitalFreak on 4/13/2009 1:01:05 PM , Rating: 1
The mother ship is coming to pick you up soon...


RE: Where?
By nbourbaki on 4/14/2009 11:04:43 PM , Rating: 2
The impact of losing one of the major manufacturing segments of the U.S. economy at a time of a severe financial crisis might be the impetus to throw the U.S. economy into a tailspin that would take decades to recover from. The initial bailout money was given to the automakers to put forward turn around plans that would put them on the road to profitability and off government assistance. I don't believe for one minute that any politician, Democrat or Republican wants to run GM as a ward of the state. I'm not surprised that the plan put forward by GM was deemed unacceptable to the U.S. government. Call it tough love if you like, but GM has one shot at remaining a viable company.


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