What is really happening with the Big3 bailout...

[cgallery]

But this is what I believe is going on. I haven't heard any pundits put this forward, BTW. This is strictly my own imagination at work.

I believe the White House has made several offers to GM, and they have all been turned down. I believe TWH has made offers (using TARP money) but that GM won't take the money without help on labor, as it just delays the inevitable. I believe GM would actually prefer to go into bankruptcy than take a bailout loan, unless the loan comes w/ concessions from labor.

That is why I believe no deal has been announced yet. The White House keeps pushing-off further any announcement because they don't want to announce an unaccepted offer. TWH says they are evaluating a course of action, but they're really negotiating with GM, and it isn't going well.

Furthermore, GM wishes to declare sooner rather than later, as the political makeup in DC is about to change, and they feel like their best time to do something about their perceived labor problem is now. I believe GM feels like their window of opportunity is closing.

And the White House isn't going to do anything about Chrysler until they have GM figured out.

So I'm predicting no deal this week, unless GM changes strategy and goes for a much larger bailout than has been discussed until now. That is, TWH is going to have to come up with much more than 15 billion dollars to get cooperation from GM.

What do you guys think?

[Daryl]

The bail out will pass just as soon as the senate, house and president can think of enough pork to ad to it.

[LCHIEN]

Phil, you may not be off the mark by much. GM's problems will only be solved by a loan PLUS cost cutting and union labor is high on the list of cost cutting measures, having been untouchable in the past. We've all heard that UAW was the stumbling block in last weeks negotations when they fell apart, so likely nothings changed.

Is this economic news or is this skirting with politics? Have to watch the board rules...
I'm avoiding talking about what the White house or the congress is doing.

[cgallery]

Is this economic news or is this skirting with politics?

I was shooting for business news (maybe business future telling?). I tried not bringing any poltical parties or even names of politicians into it.

But I apologize if I stepped over any lines.

[Ed62]

I dunno. I think the UAW will give concessions. I think the amount of money that will be available will be looked at very heavily, and it will not be given all at once. If there is not an acceptable plan in the works to include a good chance of survival, the money will not and should not be available at all. I know a lot of people think it should be available even if there is not a good plan. If we all thought alike, we'd really be in big trouble.

Ed

[cgallery]

I dunno. I think the UAW will give concessions. I think the amount of money that will be available will be looked at very heavily, and it will not be given all at once. If there is not an acceptable plan in the works to include a good chance of survival, the money will not and should not be available at all. I know a lot of people think it should be available even if there is not a good plan. If we all thought alike, we'd really be in big trouble.

Ed

I hadn't considered the possibility that they (UAW) are still negotiating behind the scenes. That ads a whole nother level of fascination for me.

[gsmittle]

The bail out will pass just as soon as the senate, house and president can think of enough pork to ad to it.

Mmmm...Bacon!

Sorry, couldn't resist!

I'm not sure it's possible to get the straight facts about what's going on--too many stakeholders have their own axes to grind. Right now it looks to me like LOTS of fingers pointing in lots of directions.

I feel for the lower/middle managers and the guys/gals on the line. They're the ones who will have to pay, whatever happens.

g.

[radhak]

Amidst all that, we have big3 dealers here offering buy-1-get-1 deals on various vehicles , and other deals like $4000 to $9000 cash back, etc.

I am seriously wondering - will a new purchaser get hosed if any of the 3 go under? what if the dealer closes shop soon after the sale?

[cgallery]

Amidst all that, we have big3 dealers here offering buy-1-get-1 deals on various vehicles , and other deals like $4000 to $9000 cash back, etc.

I am seriously wondering - will a new purchaser get hosed if any of the 3 go under? what if the dealer closes shop soon after the sale?

I guess at some point the price discount becomes 'nuff to warrant taking a chance on warranty issues? Of course, if the parts aren't available then you're kinda hosed.

[LinuxRandal]

Anyone old enough to remember Truman threatening to draft an industry that was striking?
They "announced" an agreement, stopping him when he was nationally addressing congress, then actually settled a couple of weeks later.

Even if the "big 3" (global companies, not USA companies) were to go bankrupt, I would expect the government to step in, in some forum due to keeping some industrial "national security" manufacturing base, in this country.

We have a non used old oil plant in an adjoining town. It received updated security plans after 911.

[Hoover]

Sunday night on CNBC, there was a show about GM and their troubles. The gist of the show, was that there are 3600 different vendors in the system, too many overlapping models of vehicles, and too many dealerships.
Management dragged their feet on all their troubles, and now the rest is history. The workers and first line management were not the problem.

[LCHIEN]

Amidst all that, we have big3 dealers here offering buy-1-get-1 deals on various vehicles , and other deals like $4000 to $9000 cash back, etc.

I am seriously wondering - will a new purchaser get hosed if any of the 3 go under? what if the dealer closes shop soon after the sale?

I really don't think you'll be left high and dry if you buy a car from the big 3 and they declare bankruptcy.
First of all they'll probably go chapter 11 to get protection from creditors and rewrite their labor contracts and reorganize under protection from the government. They'll have to pay premiums to borrow but they're probably already in that boat. If they go chapter 13 and close the door then the creditors will take over under court management and sell off the assets to pay creditors first and stockholders last. All the spare parts, documentation and inventory will have value to repair shops so someone will buy it and furnish genuine GM parts probably getting the name rights to call them so as well. Per laws GM should have produced enough parts to maintain repair stock for at least 10 years... Repair parts do carry a high value, remember that a car built from repair stock at repair stock prices would cost about 10 times the original car. The firm that buys the parts will then continue to sell them through retail channels to former dealerships and auto parts stores.

You won't have problems buying replacement parts or finding qualified service.

I suppose the warranty is another issue. If they go Chapter 11 then warranties will probably still be honored, possibly at fewer dealerships. If they go Chapter 13, then warranties may become useless. Or you may have to pay for repairs and then file for warranty reimbursement from the courts handling the creditors... not a very desireable thing since you need to do it within the time limits (probably a couple of years) the courts dissolve and resolve creditor issues and you might only gets cents on the dollar.

[sparkeyjames]

I hate to say this but it's all political. It's the Republicans way of slapping the UAW and unions in general for their continued support of the Democratic party.
Not that they deserve the support of the unions what with all the Republicans pro-corporate legislation and loosening of regulations.

[Daryl]

Sunday night on CNBC, there was a show about GM and their troubles. The gist of the show, was that there are 3600 different vendors in the system, too many overlapping models of vehicles, and too many dealerships.
Management dragged their feet on all their troubles, and now the rest is history. The workers and first line management were not the problem.

THe media is not unbiased in their reporting. Search the web, you will find the 25 pound union contract full of rules and regulations. You can also find out that the average employee cost the big three nealy one hundrred bucks in pay and fringes. Over 2000 dollars of the cost of a new auto is tied up in union benefits. There is so much featherbedding going on that no one could operate profitably. This has been one big ponzi scheme where each level uses the next. So it is collapsing, I will not cry one tear. And management is just as complicit for approving the new and bigger contracts and not putting their foot down and running the companies responsibaly. Anybody who thinks things will be better with government involvment doesn't remember the last program that government helped.
I will never buy another Ford, Chevy or Dodge, new or used.

[jackellis]

Worth reading.