Will Congress bail out the car industry?

  • Posted by a hidden member.
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    Dec 03, 2008 7:38 PM GMT
    Are they too big to be allowed to fail? In the 1970s the UK government bailed out car companies like British Leyland but they still went bust.
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    Dec 03, 2008 8:57 PM GMT
    The current power holders worry about votes in big blue auto states. Of course they'll see it as a priority to avoid losing favor among the unions and working class voters.

    Exec's carpooling to DC with hat in hand are at a disadvantage. They really really really want money. They'll have to cower before the DC power holders and make plenty of promises.

    Who knows if we really have to bail them out. I guess if you work for GM or Ford you say HELL YES! If you don't then you say HELL NO! It depends on which person might make the difference come election seasons.
  • boilerup_82

    Posts: 188

    Dec 03, 2008 9:06 PM GMT
    I really hope congress does not bail any of the car companies out. The problem with these companies is not the faltering economy (well, for the most part). A few years ago, when the economy was surging, these firms were losing money. This means that there is something with their current business plan/strategy.

    When the CEO's went to DC to beg for a bail out, they made it seem that their bankruptcy will have a profound effect on the US economy. One thing they don't realize is that filing for Ch.11 Bankruptcy protection does necessarily mean they will fold. Filing will allow them to rethink their business agenda and do much needed restructuring.

    I'm afraid giving bailing them out will just delay their collapse...
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    Dec 03, 2008 9:06 PM GMT
    GOD is all merciful. Once you set up government as a GOD substitute how canit say no to anyone.
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    Dec 03, 2008 9:37 PM GMT
    boilerup_82 saidI really hope congress does not bail any of the car companies out. The problem with these companies is not the faltering economy (well, for the most part). A few years ago, when the economy was surging, these firms were losing money. This means that there is something with their current business plan/strategy.

    When the CEO's went to DC to beg for a bail out, they made it seem that their bankruptcy will have a profound effect on the US economy. One thing they don't realize is that filing for Ch.11 Bankruptcy protection does necessarily mean they will fold. Filing will allow them to rethink their business agenda and do much needed restructuring.

    I'm afraid giving bailing them out will just delay their collapse...


    Auto companies don't really emerge from Chapter 11, they just enter a zombie like state until they are finally put down.

    Chapter 11 would create a terminal crisis of faith in the company's future which would kill the majority of their sales. Why would anyone buy a GM/Ford/Chrysler when then can walk across the street to any number of solvent automakers and not have to worry about anything? Especially now people who do happen to be in the market for a new car won't be willing to take the risk.

    If it was this simple they already would have done it ages ago to reduce their debt load and break the union contracts.
  • GQjock

    Posts: 11649

    Dec 03, 2008 9:52 PM GMT
    The problem is that the number of people effected will cause a house of cards situation for the economy

    Do these companies deserve this money...? Absolutely not
    They've been run like crap
    Giving us shoddy equipment and not standing behind the product that they sell

    But can we really afford to lose the little industry that we have left in the US?
  • Posted by a hidden member.
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    Dec 03, 2008 10:43 PM GMT
    People will always need cars.

    These companies just need to make cars that people want to buy.
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    Dec 04, 2008 12:32 AM GMT
    ok not big on politics...normally dont understand this shit

    but if they get the bailout, they are gonna use the money to pay off their debts to other companies and shit right? well their not the only one thats hurting...and in debt

    so when do i get my motha fucking bailout economy? personally i think all these companies are a bunch of fucking babys. not sure what happens if they all crash like everyone says they should but they would bounce back right? so i think until the govt decideds to bailout every one in the usa thats in any kind of debt then i dont think they should bailout anyone.

    especially not companies whose products are considered a privelaged luxury item.
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    Dec 04, 2008 12:34 AM GMT
    Yes they will, but the question is will it do any good? Even the Japanese car manufacturers are having trouble selling cars in the US (Honda and Toyota sales both off over 30% in November). The biggest problem is the lack of credit. Most people cannot buy a car with cash but need a loan to help out. Unfortunately banks are not that forthcoming these days due to their need to bolster their balance sheets.
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    Dec 04, 2008 12:41 AM GMT
    Maybe, GM, for example, could send out a mass email to all its shareholders and ask for a small donation. They could say something like this:
    Dear shareholders, we will go under, and take your stock with us, unless you find it in your heart to send $50 each. We are lobbying congress to make this donation tax-deductible. Thank you and God bless.
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    Dec 04, 2008 12:58 AM GMT
    My own view is that the Big Three should NOT be bailed out. Ford should attempt to soldier on for now. GM should take its chances with bankruptcy - possibly with the government fronting the money for the bankruptcy and underwriting warranties on cars so that they can keep selling. Chrysler is probably beyond saving and should be broken up, sold or just shut down.

    However, my guess is that congress will cave to lobbying and fear-mongering and provide a bailout. Mark my words: it will not be the last. The car makers will be back within a year or so looking to be bailed out yet again. Did anyone notice that the amount they are seeking went up by $9bn in the couple of weeks between their first trip to DC and the current one?

    If they do receive a bailout, it should be conditioned on all of the current shareholders being wiped out and all of the current bonds being subordinated to the government's loans. The giveaway deals the banks got are disgusting; they amount to bail outs of shareholders who collected dividends for years - thereby reducing the cushion the banks had to weather tough times.
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    Dec 04, 2008 1:25 AM GMT
    Repeatedly, the point is made in the media that if the auto makers are forced into bankruptcy, nobody will be confident enough buy their cars. That seems like a reasonable statement; but it also seems reasonable that even if they do get bailed out, people will still lack confidence. Too many people, myself included, have been burned by the big 3, and quality reports are abysmal compared to foreign manufacturers. These companies have been run into the ground by poor management, and in my opinion, nothing can save them. Getting their hands on bailout money will only put off the inevitable. They are going down sooner or later. Let them go down sooner so we don't have to bail them out.