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Put Chrysler Back In Christmas
It's official:
General Motors Corp. and Chrysler LLC will get $13.4 billion in initial government loans to keep operating in exchange for a restructuring under a rescue plan announced by President George W. Bush....
The money will be drawn from the Troubled Asset Relief Program and the automakers will get an additional $4 billion from the fund in February for a total of $17.4 billion in assistance, according to a statement from the Bush administration. The funds would allow GM and Chrysler to keep operating until March....
In exchange for the money, the automakers must provide warrants for non-voting stock, accept limits on executive pay, give the government access to financial records and not issue dividends until the debt is repaid. The government will have the authority to block transactions larger than $100 million.
|12.19.08 @ 9:43AM|#
Good ole Boy Dictator Bush just LOVES giving money away at Main
Street Americas expense doesnt he!
jess
www.privacy-center.be.tc
Joe American|12.19.08 @ 9:44AM|#
Now we will hear (in the press) from the unskilled illiterate
UAW members about how they are still entitled to exaggerated wages
and benefits while the rest of the country suffers.
Stand by.....
|12.19.08 @ 9:46AM|#
WTF? Why even bother? What is the point of keeping them going until March? Are they going to get more money then? Obviously, they will.
|12.19.08 @ 9:48AM|#
In exchange for the money, the automakers must provide warrants
for non-voting stock, accept limits on executive pay, give the
government access to financial records and not issue dividends
until the debt is repaid. The government will have the authority to
block transactions larger than $100 million."
Throwing out the wisdom of the bailout in the first place how is
some of the above going to help?
Why would any executive who is any good want to work for a company
where their pay is limited?
Why would an investor want to buy stock in a company that will not
be allowed to pay dividends?
|12.19.08 @ 9:50AM|#
Take that, Detroit. We really showed you guys, didn't we?
Obama should pick Gettelfinger to negotiate with Kim Jong Il on
nuclear issues. He certainly stomped the balls off our guys.
|12.19.08 @ 9:54AM|#
Why would any executive who is any good want to work for a
company where their pay is limited?
Why would an investor want to buy stock in a company that will not
be allowed to pay dividends?
Let's wait until wee see how "limited" executive compensation
really is. And people have been buying Berkshire Hathaway shares
for decades; Buffet has never paid a dividend.
But- it's highly unlikely there will be any visible price
appreciation for GM shares.
kinnath|12.19.08 @ 9:55AM|#
There was one news report yesterday that said the purpose of the
17B loan was to fund GM & Chrysler till March 09 or so that
they could be prepared for an "orderly bankruptcy" then rather than
a "disorderly bankruptcy" now.
Today's new reports only mention "restructuring", so it's not
really clear to me that this is a bailout or just a holding
pattern.
|12.19.08 @ 9:55AM|#
Two things: 1) since this was done by the president and the
treasury with no legal authorization whatsoever, the incoming
administration can change the terms of the deal on a whim. Which if
course they will.
2) the loans are going to be "senior" to existing debt - including
that secured by the assets of the company. If (when) the company
eventually goes bankrupt anyway, the government gets paid first -
meaning people further down the capital structure get screwed. A
couple of good law sites are already talking about the 5th
amendment takings issues that this brings up - since effectively
the government is taking the cash from junior claimants.
Good case for IJ to take up or file amicus brief when this
inevitably gets litigated.
|12.19.08 @ 9:56AM|#
"Why would any executive who is any good want to work for a
company where their pay is limited?
Why would an investor want to buy stock in a company that will not
be allowed to pay dividends?"
Maybe driving the stock value down abruptly is the real purpose
behind this plan ? You know, like what Allende (and then Chavez)
did to nationalize companies on the cheap ? Fast forward to March
2009, and Obama announces executive failures are forcing him to put
the Big 3 under direct federal management.
creech|12.19.08 @ 10:01AM|#
How can the Detroit 3 survive if the demand side of the equation
is ignored? Consumers have to want to buy cars, otherwise no amount
of bailout loans, etc. to the manufacturers will help. For the most
part, those driving clunkers that need replacing are the same folks
who can't afford a new car or can't get a loan. Those driving newer
cars are still concerned about their jobs or the hit their
retirement savings took. So, because cars are so much more
mechanically sound than they were a decade ago, these folks have
little to lose by just driving their current car another year or so
until the economic outlook brightens.
I have been replacing my car every three years - not because it
needed it but because I wanted to. My present car is three years
old this month, running fine and I expect to keep it another two or
three years. Multiply me by thousands and you have a serious drop
in new car sales that won't be helped by loans to the Big Three
unless car prices are slashed to "going out of business"
levels.
|12.19.08 @ 10:05AM|#
I love how they threaten to take back the money which is
supposed to get them through the next three months. Out of what
pile of gold left lying around by GM?
And how they act as if any threat they make now will be honored by
Obama. And "don't want to buden the new administration with a
bankrupt industry" is a laugh! What do they think they have there
come March?
I also wonder why bankruptcy is supposed to scare buyers off, but
pronouncing the industry dead on its feet is not going to bother
anyone....
They just kicked this down the road a couple of months. Really
lame.
|12.19.08 @ 10:06AM|#
It's a good time to buy a used car. With the shit economy and end of the year inventory tax panic, I set my barracuda of a wife loose of hapless salesmen and ran off with a 2006 ex-lease in perfect condition for a song.
|12.19.08 @ 10:13AM|#
And "don't want to buden the new administration with a bankrupt industry" is a laugh!
Would you believe more if it were phrased, "Don't want them to go
bankrupt before Obama's Administration starts, and let Obama blame
us while remaining vague over whether or not he would have saved
them?"
On the one hand, the President-elect has continually issued
statements saying that he wants something like this to be done so
that they don't go bankrupt. On the other, perhaps he doesn't
really mean it, he wants it to collapse but wants to be able to
blame Bush.
I remember when Roderick Long pointed to the Chrysler bailout as an
example of the government always encouraging a fewer number of
firms in various industries. Really? Not just a case of protecting
incumbents. He really thinks that the bailouts don't increase the
number of car companies, that there would be plenty of car startups
instead of existing car companies taking up the market share?
|12.19.08 @ 10:14AM|#
I love how they threaten to take back the money which is
supposed to get them through the next three months. Out of what
pile of gold left lying around by GM?
That's the thing: in bankruptcy, the equity holders get nothing,
the unsecured people get nothing, and even the secured people take
a haircut - maybe they'd get 85 cents on the dollar after selling
the assets. GM has 38 bn of long term debt - so I'm figureing the
assets are worth ~32.5 bn in liquidation.
Now, assuming GM gets 15bn of the TARP funds for itself, and then
burns through that by march and goes bankrupt then. The government
puts them into chapter 7 and pays itself back 15 bn by selling the
assets. That means there is only 17.5bn left to pay back the senior
secured. So thats 46% recovery - massive taking.
|12.19.08 @ 10:15AM|#
My wife and I will probably be in the market for two new (or,
more likely, somewhat used) cars in the next year. She's driving a
1996 Mercury Villager (which is actually a Nissan Quest) that is on
its last legs, and I'm driving a 1995 Honda Accord that is
approaching 200K. We haven't even considered buying an American
replacement for either, because we like driving cars into the
ground.
I think engine performance in the U.S. cars is much better that in
the past and often comparable to what the Japanese are producing;
however, my feeling is that U.S. manufacturers muck around too much
with all of the other systems, just to be "different" from year to
year. Honda doesn't do that--some of the features on my '95 Accord
are the same as on my old '85 Accord, even though the cars look
entirely different. Through two Accords, the only problem I've had
any frustration with is the A/C, and that only with this car after
owning it for seven years.
Next up? Probably a Sienna (two adults and four kids requires a
minivan) and another Accord. I was thinking about getting something
different for myself this time around, but I really like the new
Accord.
For those shaking their heads at a lawyer driving a '95 car, well,
(1) waste not want not and (2) I'm not that kind of lawyer ☺ I do
have, by far, the cheapest car in reserved parking at work,
however.
Mark|12.19.08 @ 10:16AM|#
Could this be one bailout that attracts bi-partisan
support?
http://iowahawk.typepad.com/iowahawk/2008/12/santacorp-pleads-case-for-bailout.html
|12.19.08 @ 10:20AM|#
Pro Lib,
nice one. I have always subscribed to the same philosophy. My first
car was the most I ever spent, and since then I have made an art
form of paying the least$/miles over the life of my vehicles. I
tend to acquire my used cars between 60-100k and ditch them
~150-200k if im lucky. paying 3-6k instead of 25k that the orginal
owner shelled out. My friends in finance shake their heads, but I
just laugh when their BMW's and Lexuses (Lexi?) started getting
keyed a few months ago.
|12.19.08 @ 10:21AM|#
Next up? Probably a Sienna (two adults and four kids
requires a minivan) and another Accord
Ha ha! ProL will be driving mini-van!
|12.19.08 @ 10:22AM|#
GM's 8.375 percent bonds due in July 2033 rose 2.5 cents to
cents[sic] on the dollar, yielding 46.4 percent, according to
Trace, the bond-pricing service of the Financial Industry
Regulatory Authority.
That's quite a risk premium; it's almost as if they don't think
those loans will be repaid.
from the Bloomboig link
|12.19.08 @ 10:25AM|#
ProL will be driving mini-van!
I'm keeping my fingers crossed that while the kids are in school he
cruises town and uses it as a bang bus. There's some good money in
amateur porn if you know what you are doing.
I'm with PL. My wife and I also drive cars into the ground. We just
traded in her '95 Saturn SL2.
|12.19.08 @ 10:26AM|#
I tend to acquire my used cars between 60-100k and ditch
them ~150-200k if im lucky
My family has a pretty cool scheme going. My grandfather, who likes
cars, buys new Toyotas and Lexuses for cash (right now he has an
Avalon and an LS 430). He puts few miles on them. After a few
years, he will sell them to someone in the family for a song. Then
after more years, the car will be given to a young person in the
family who is just starting out/in college/etc. This scheme works
out pretty damn well.
|12.19.08 @ 10:27AM|#
Pro L-
I have a couple of friends who say the Honda Odyssey is the way to
go, minivan-wise.
|12.19.08 @ 10:28AM|#
You can get a roomy, stylish and powerful two year old Suburban for about fitty bucks, I hear.
kinnath|12.19.08 @ 10:30AM|#
I used to buy used cars and then drive them until they failed
(two subarus lasted to 140K or better). Now I try buy new cars and
drive them until they fail. Haven't actualy achieved that
though.
My late 90's Nissan 200SX had 125K and was running strong when I
hit two deer at 50+ mph on the freeway. The insurance totalled the
vehicle rather than repair it. My 2002 Xterra has 115K and I expect
to get at least another 60K or better out of it.
The advantage of buying new is that you know for sure that all
scheduled maintenance has been performed. There is no reason to
expect the cars will ever stop running if you start new and do all
scheduled maintenance.
|12.19.08 @ 10:33AM|#
kinnath
back in the day i did my own maintenance. I target 60-100k because
usually there's nothing major to be done before then. I like to get
anal family man types who I know change the oil every 3k - but that
said if you dont have the time inclination to give the engine a
once over yourself - new is probably safer. I never ended up with a
dog though...
kinnath|12.19.08 @ 10:36AM|#
Domo, I used to do a lot of my own work as well. Two things happened: I got older and I found a dealer I trust completely.
|12.19.08 @ 10:37AM|#
Episiarch,
It's usually my wife driving the minivan, but I drive the one we
have on occasion. Naturally, I hate it. But there aren't many cars
that can seat 7, especially when one is a baby in a baby seat. We
actually own three cars, because my wife came to the marriage with
a Mitsubishi Eclipse Spyder. I'm driving that right now, while the
minivan is in the shop (Mrs. Libertate's driving the Accord). I
don't care much for the Spyder, which is a chick car in my opinion.
At least it's a standard--I can't abide automatics. It'll go
(trade-in or, more likely, sale) when we buy the new minivan.
I went back and forth on the Sienna vs. the Odyssey. Looks like the
former is the superior value, though the Odyssey is a good car,
too. The Odyssey is definitely the second choice. We'd considered a
Pilot or a Highlander, but even the big ones are a little tight for
the Libertate Bunch.
|12.19.08 @ 10:39AM|#
Naga, it's not in very good condition. The windshield is smashed and it rolled over. Then it blew up when some dude tried to take the gas. How about a bottle of Thunderbird for it?
|12.19.08 @ 10:41AM|#
So ProL, you are saying that you drive either chick cars or mini-vans. And to think I used to think you were cool, man.
|12.19.08 @ 10:41AM|#
Episiarch! Opinions on Musk's Tesla? And, must one play Tesla when driving it?
|12.19.08 @ 10:42AM|#
Well, I mostly drive the Accord. But my coolness was absorbed by the greater needs of the Family™ long ago. Fatherhood is the jumping the shark of adult maleness.
|12.19.08 @ 10:44AM|#
Epi, leave PL alone. He's obviously hyper-fertile. He could probably knock up on-line if he tried real hard.
kinnath|12.19.08 @ 10:47AM|#
Fatherhood is the jumping the shark of adult
maleness.
For a while.
The most satisfying thing about getting the 350Z was knowing both
my children are now driving minivans ;-)
|12.19.08 @ 10:48AM|#
Episiarch! Opinions on Musk's Tesla?
You mean the electric roadster? I'm sure it's cool and all, but I
think I'd miss the roaring engine.
And, must one play Tesla when driving it?
Obviously. But it wouldn't have to be that loud, because...no
engine noise.
|12.19.08 @ 10:51AM|#
I think I'd miss the roaring engine.
Maybe you can download a Ferrari v-12 track from itunes.
Naga Sadow|12.19.08 @ 10:53AM|#
Epi,
Don't be taken in by the Tesla, dude. If anyone tries to steal the
battery, will it explode? Can you fit a huge turbocharger in front?
Most important of all, can you outrun the Humungous and his band of
warrior outlaws in a Tesla? I think not.
|12.19.08 @ 10:55AM|#
Perhaps Musk could build into the Tesla the sound of the Falcon 1 launching. Without any volume control. Rocket car, bitch!
|12.19.08 @ 10:56AM|#
Fatherhood is the jumping the shark of adult
maleness.
And a microcosm of the horrors of collectivization.
|12.19.08 @ 10:58AM|#
Yes. I provide all of the income, and the unrestrained government decides what to do with it. Fortunately, she is relatively frugal and benevolent.
Always Sunny in Philadelphia M|12.19.08 @ 11:03AM|#
*Pro Liberate in his rocket car*
What happened to the brakes?
*Naga Sadow jumps out the back of the car, screams*
Wilcard, bitches!
|12.19.08 @ 11:05AM|#
Larry Kudlow just came on and said, "You now
own General Motors."
It's worse than that. We don't own anything. We're just pounding
money down a rathole.
And now that fucking lowlife moron scumbag Wagoner is having a
press conference, to "thank his key partners."
Good fucking grief.
|12.19.08 @ 11:06AM|#
Episiarch,
You're right, of course. Skip the Tesla and buy Musk's Falcon
sports car. Zero to escape velocity in 200 seconds!
Vrrroooom!
Naga Sadow|12.19.08 @ 11:07AM|#
P Brooks,
I hereby vote myself a new Camaro as a senior stockholder! I'm in
it to win it! Wildcard, bitches!!!
|12.19.08 @ 11:11AM|#
I'm going to buy a Tesla and have the electric motor removed and a Ferrari V12 put in.
|12.19.08 @ 11:11AM|#
Seriously, how is it almost 2010 and me without a job that
requires commuting to orbit? Or, better yet, to a planetary body?
And that's a short commute--20-30 minutes each way.
Yes, I'm serious.
|12.19.08 @ 11:11AM|#
All of this should remind us that centralization, in and of
itself, has been a colossal failure. Centralized management,
centralized political organization, centralized electrical grids,
centralized communications systems, etc....
A significant school of libertarian thought scoffs at the notion
that big is necessarily bad and that centralization is necessarily
bad. I have always regarded that school of thought to be
amateurish, almost knee-jerk in its application to criticims of big
and centralized being bad, in and of themselves.
I submit that the empirical evidence suggests otherwise. GM and
Chrysler are just the latest examples.
|12.19.08 @ 11:14AM|#
Prolib-
Centralized, top-down organizational, management and political
structures have not helped.
Mr. X|12.19.08 @ 11:16AM|#
This bailout is illegal.
The President wants to fund the bailout from the Troubled Asset
Repurchase Program (TARP). The TARP authorized funds for financial
institutions only.
Since (a) the auto companies are not financial institutions and (b)
the Senate explicitly voted down giving them a bailout, it is
illegal for the President to give them money from the TARP.
Why are so few people picking up on this?
Naga Sadow|12.19.08 @ 11:16AM|#
Epi,
Where the hell is a V12 gonna fit? You're gonna tear the wheels
right off of your Tesla. Listen, all you gotta do is get your hands
on one of the new Challengers. I'm sure room can be found for your
V12. Your a senior stockholder now! Live it up my friend.
|12.19.08 @ 11:18AM|#
Naga, being a pimp-type person, I would of course have to have a Cadillac. There's no other option.
Socialist|12.19.08 @ 11:19AM|#
You know, like what Allende (and then Chavez) did to
nationalize companies on the cheap ?
Ahem, we only nationalize successful
companies.
Naga Sadow|12.19.08 @ 11:21AM|#
Personally, I'm gonna put in one of those ejection seats I saw on MythBusters. When I'm done wit da girl, I'll just say "WTF are you still doin' here? Get out there and make my money!" and KA-BLAM! She gets blasted through the roof out onto the street. Just how I roll . . . nuff said.
|12.19.08 @ 11:22AM|#
"Blindsided! We never saw it coming! I'm still trying to figure out what happened."
|12.19.08 @ 11:23AM|#
In exchange for the money, the automakers must provide
warrants for non-voting stock, accept limits on executive pay, give
the government access to financial records and not issue dividends
until the debt is repaid.
What's missing from this list? Starts with a U . . . .
|12.19.08 @ 11:28AM|#
"I'll NEVER leave. I'm a fucking genius, and NOBODY could ever figure out how to run this company better than me! Just look at my unbroken string of triumphs over the years!! Goddammit, are you people BLIND?"
Joe American|12.19.08 @ 11:29AM|#
GM and Chrysler needs to gag their workers if they expect this
to work.
Despite the Feds help, most Americans will not buy from a company
whose workers continue to feel, and loudly voice their opinions,
that they are superior to the common man and immune from pay cuts.
We don't like gangs controlling our streets and we don't like
supporting gangs controlling industry.
Despite all logic we will not buy from people that feel we "owe"
them high wages.
Do you continue to shop at the store with rude cashiers and sales
folk?
Hell no. Why would we support these loudmouths when there are more
polite and reasonable Americans providing the same product?
Paybacks are a bitch eh?
Naga Sadow|12.19.08 @ 11:30AM|#
P Brooks,
I give up. I can't figure out where your quotes are coming from.
Unless you're just saying funny ass shit and throwing some quotes
around it.
|12.19.08 @ 11:32AM|#
Mr. X | December 19, 2008, 11:16am | #
This bailout is illegal.
Only in the same sense that the Iraq War was illegal. Oh
wait...
|12.19.08 @ 11:32AM|#
Honey, I'm de-orbiting right now. Need me to pick anything up on
the way home?
The future sucks so far.
|12.19.08 @ 11:33AM|#
This bailout is illegal? You're illegal! The whole government is illegal! They're illegal!
Naga Sadow|12.19.08 @ 11:34AM|#
Pro Lib,
Relax. We got tang and velcro. What more could you want? Sharks
with frickin' lazer beams attached to their heads? It's a very
groovy time, baby. Yeah!
|12.19.08 @ 11:37AM|#
I say, we send Wagoner, his faithful Indian companion Henderson, the entire General Motors Board of Directors and the sitting President to the moon to begin work immediately on the Chevrolet Space Car Assembly Plant. They may not return, except in a functional prototype.
|12.19.08 @ 11:40AM|#
We don't have sharks with friggin' lasers attached to their heads. That was just a movie. Just like easy space travel is just a movie.
Naga Sadow|12.19.08 @ 11:45AM|#
Pro Lib,
Calm down. You're getting all worked up over nothing. We got
orbital flights now at least. (shrugs) Space travel just isn't
profitable yet. Give it time.
|12.19.08 @ 11:51AM|#
Give the government time? Ha! NASA's not going to get me my
family-sized, solar-system-ranging space sedan. Nor is government
research going to get me fusion power in my lifetime.
I reject your future and substitute my own!
Naga Sadow|12.19.08 @ 11:51AM|#
Pro Lib,
Being a senior stockholder at GM and Chrysler means you could
probably leverage some funding for your rocket car. The government
just keeps nuclear waste lying around. Why not rockets that you can
attach to your car? Though I would suggest watching some
MythBusters before you make any attempt yourself.
|12.19.08 @ 11:56AM|#
While I love Mythbusters, they lack the funds to build a practical rocket car. They're more like MacGyver with a non-fictional TV show.
Naga Sadow|12.19.08 @ 11:59AM|#
Pro Lib,
You're gonna ruin my good mood! Listen, I'm told fusion research is
. . . coming along nicely. Hey! Sign up as a space trucker and you
can be in on the ground floor! There's room for the
odd skank too.
Naga Sadow|12.19.08 @ 12:01PM|#
Your not thinking things through Pro Lib. Their rich now too! They are also senior stockholders! I'm sure you could talk em in to prototyping an . . . obital . . . sedan.
Geoff Nathan|12.19.08 @ 12:20PM|#
Just for you-all's information and entertainment, there's a
counter-view going around the cybersphere that the true goal of
this bailout is to murder the UAW--a liberal friend of mine sent me
this link this morning:
WaPo article
In this article you will read that the UAW is responsible for the
destruction of racism and the prosperity of the American middle
class. All by itself (well, with the assistance of Walter Reuther
and Jimmy Hoffa, of course...)
Formerly Jennifer|12.19.08 @ 12:28PM|#
You, too, could own a Space Shuttle!
http://slog.thestranger.com/slog/archives/2008/12/18/in_search_of
Just retrofit engines for your flying car!
(Yes, I know that's not how the shuttles work>)
Gilbert Martin|12.19.08 @ 1:07PM|#
"General Motors Corp. and Chrysler LLC will get $13.4 billion in
initial government loans to keep operating in exchange for a
restructuring under a rescue plan announced by President George W.
Bush...."
Which won't do anything to increase their car sales volume one iota
- the actual root of the problem.
Gilbert Martin|12.19.08 @ 1:09PM|#
"In this article you will read that the UAW is responsible for
the destruction of racism and the prosperity of the American middle
class. All by itself (well, with the assistance of Walter Reuther
and Jimmy Hoffa, of course...)"
That's almost as funny as another liberal myth that the middle
class was created by the government.
Kaiser|12.19.08 @ 3:33PM|#
My apologies if this has already been brought up, I did not take the time to read all of the comments. However isn't this illegal, since the TARP was created to help the financial industries? To my knowledge the car companies have nothing to do with the financial sector.
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