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“Report: GM to say, ‘more aid or bankruptcy’”

Discussion in 'Off Topic' started by targettarget, Feb 15, 2009.

  1. targettarget

    targettarget Calgary - Alberta Member

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    http://youngragingbull.wordpress.com/2009/02/14/%E2%80%9Creport-gm-to-say-%E2%80%98more-aid-or-bankruptcy%E2%80%99%E2%80%9D/
    “Report: GM to say, ‘more aid or bankruptcy’”
    Posted by: youngragingbull | February 14, 2009

    SAN FRANCISCO (MarketWatch) – General Motors Corp. will offer the government the choice of giving it billions more in bailout money or seeing it file for bankruptcy when it presents a restructuring plan next week, according to a report published Saturday.

    The online edition of The Wall Street Journal, citing unnamed sources, said the competing choices present a dilemma for the Obama administration, which may fear seeing the industrial icon carmaker fall into bankruptcy and cut more jobs if it’s refused more aid.

    The government has already committed $13.4 billion to GM as part of a federally-funded bailout. The automaker is expected to include its call for more funds in a restructuring plan it’s required to submit to the Treasury Department by Tuesday, though the company isn’t expected to include a dollar amount, according to the Wall Street Journal report.

    However, Treasury Department officials believe GM needs at least $5 billion more in loans to keep operating beyond the first quarter, according to the report.

    While filing for bankruptcy may be the best way for GM to cut costs and revitalize, if the company chooses that option, it may include politically unpalatable moves to sell off assets and cut more jobs.

    GM and other automakers have been slammed by a drop-off in car sales as the recession has worsened. GM and Chrysler LLC have asked for and received government bailout money, while Ford Motor Co., like its peers, has also seen sales fall sharply in recent months, but has not asked for aid.

    Chrysler is also expected to submit a restructuring plan on Tuesday.

    House Speaker Nancy Pelosi and Financial Services Chairman Barney Frank sent a letter Friday to GM CEO Risk Wagoner and Chrysler CEO Robert Nardelli reminding them that the White House expects to hear about restructuring plans that include a willingness “to make tough decisions,” but which also will “protect American jobs in the future.”

    GM said earlier this week that it plans to cut some 3,400 jobs, or 12% of its U.S. salaried workforce. Shares of the automaker have fallen nearly 15% in the past three months. The shares closed Friday down more than 5% at $2.50.

    GM believes that if it is forced to seek bankruptcy, it would need government funds for debtor-in-possession financing, because such funding wouldn’t be available from private sources, according to the Wall Street Journal report.


    In other words - even if they do file for bankruptcy, it still costs American taxpayers.:confused:

    In addition, the automaker may also seek permission to extend its March 31 deadline for some restructuring actions “by at least several months.”

    While GM’s Wagoner previously opposed filing for bankruptcy protection, the CEO in early December hired bankruptcy lawyers and advisers to prepare a “contingency plan,” the report said.
     
  2. finch6013

    finch6013 Oregon City Active Member

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    Im all about american car companies but for the last decade they have made nothing but sub par cars with the exception of trucks and suv's. If they aren't going to compete with the foreign auto makers then they should go bankrupt. I know it would hurt our economy even more but dumping billions into a failing company every few months isn't helping us out any either. IMHO it seems better to dump billions into the housing market and into the U.S. citizens that are loosing everything.
     
  3. fingolfen

    fingolfen Oregon Member

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    The reason they make sub-par cars is their current labor costs add $2000 to the cost of each car... doesn't hurt you much when you're talking about a $35000 to $40000 truck or SUV, but when you're trying to sell a $10000 to $12000 economy car, you're priced out of the market or have to cut corners...

    I say let them go bankrupt, then the government steps in - once the compnay is bankrupt the union contract is null and void. At this point the UAW has to get it through their thick skulls that either their posh contract goes... or THEY go...
     
  4. Scott

    Scott Battle Ground Well-Known Member

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    They have to go. If people like their cars and trucks thats great. But I am a Tundra guy all the way and if you don't like them or not they are better trucks. Plus Toyota makes more cars in the U.S. than Ford or Chevy. Their problems are unions and it is digging them a bottomless pit. That new law that is going to pass about no secret union ballets is going to cause a lot more problems for more than auto makers. I was union for 10 years once and I had friends that were better off than me. The UAW are just so damn greedy and I blame them for most of these problems with the auto makers. Where would Ford, Chevy, and Dodge be it they were not union? I believe they would be in a much better situation.

    Scott
     
  5. NWMoss

    NWMoss Lost, permanently... Member

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    Yep. Most of those costs are all about the legacy costs is my understanding. Of course, then we'll have all of those retirees who were counting on their UAW pensions that who will now need Social inSecurity, which is already tanking... Fun times, eh?
     
  6. finch6013

    finch6013 Oregon City Active Member

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    Glad to see I'm not the only one that would like to see them go out of business.
     
  7. NWMoss

    NWMoss Lost, permanently... Member

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    Oh - I don't wish them OUT of business or ill-will.

    I would just prefer that they make cars that I would BUY.

    It's hard to support American-Made cars when there are few I would own :(

    I would prefer that they re-invent themselves.

    The current Mustang and Camero are good starts :D

    Plus the car magazines like the new hybrid Fusion, if you're into that sort of thing. Sadly, I thought the Hyuandi was more comfortable inside than the Caddy and Lincoln :huh:... This should not be the case!!!
     
  8. finch6013

    finch6013 Oregon City Active Member

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    Agreed. they just dont make them like they used to. I have a 68 chevy impala that will outlast any car made today if taken care of. If only gm could build quality cars like they used to and still compete. I would like to see the day when I can comfortably by an american made car and not worry about the quality
     
  9. NWMoss

    NWMoss Lost, permanently... Member

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    Back to the topic: Will more aid for GM really help them?

    All the aid in the world won't give them more sales, which is what they really need!

    It's the consumers who can't do any more purchasing... mostly our own fault for over-extending ourselves on credit (I'm not included in that btw! No credit card balance for me!!) and perpetuating this perception that there is ongoing buying-power in the US.

    Now that I've gotten us off-topic again... back to the only "aid" I'm getting: Kool-aid...
     
  10. finch6013

    finch6013 Oregon City Active Member

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    I dont think bail outs for failing companies will do anything but put more money, vacations, and corporate bonuses in the pockets of the people that made poor decisions in the first place.
     
  11. targettarget

    targettarget Calgary - Alberta Member

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    Agreed 100%.

    I really don't want to see either of the Big 3 out of business, but give us a break. For years Detroit has come out with bland throw-away type vehicles all the while pushing this theory that if you don't buy American, then your a commie.

    Personally, I would love the opportunity to buy something of quality from a plant in either Canada or the US. It's just that right now, it doesn't exist, IMHO.

    Mind you, I did have a Chevy Malibu rental recently that I really liked. It's a start at least.
     
  12. Doc In UPlace

    Doc In UPlace Tacoma-ish Well-Known Member

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    Including banks like B of A. Let 'em go into receivership and FDIC can cover us depositors.

    This whole notion of Federalizing the Banks just looks like the last nail to me.
     
  13. JumpWing

    JumpWing NK WA Member

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    Progress comes from allowing badly-run businesses to fail. It also opens up the market for new ideas and new products. Where did people ever get the idea that a business has the right to not fail?
     
  14. Doc In UPlace

    Doc In UPlace Tacoma-ish Well-Known Member

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    Exactly. "Too Big To Fail", -fooey*








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