Great piece and for once (well...more than once) there is NOTHING I disagree with. This sucks but compared to the **** going on with the banks, it's damn near nirvana. If this deal could be used as a political lever to force the restructuring of the bank bailouts, it would be more than worth it.

It appears good and well, but let's be realistic. We know it will not help. We know that the Big 3 will be BK by March. However, do you really think it is going to be this simple. There will be more screaming and kicking in Congress and they will get more.

Sorry, I have to say bull****.

do something similar yourselves!!!
I just sent this in to my republican senator norm coleman:


On the laughably bad auto bill:
until we see the books on Chrysler,
until the jobs bank is canceled, not suspended,
until Wagoner is fired by GM itself,
until Cerberus partners guarantee the loans personally,
until they set a date for vote and disclose preliminarily agreed upon benefit reductions,
until they agree to a moratorium on lobbying,
until they agree to wipe out the common shareholders,
until Paulson agrees to provide debtor in possession financing out of TARP if it is necessary,
and until a mandatory debt haircut is included in the bill itself and written so it cannot be challenged in court, vote NO on this horrible bill. We need strong auto makers employing Americans, and anything short of painful, smart, businesslike decisions will only extend the pain.

I am not in favor of any US taxpayer funds being given to the Big 3 until all the haircuts to be taken are signed, sealed and delivered.

Until the UAW and the Big 3 can prove that by the March 31, 2009 deadline they will be competitive with their labor and legacy costs, I am opposed to the bailout and am faxing this opinion to Shelby, Corker and other Republican Senators. They aren't even close to being competitive, so all this bailout does is support the UAW and the legacy baggage that has strangled American carbuilders.

Prepackaged Chapter 11 bankruptcy may be a quicker, better and more certain solution to these problems.

I'm willing to give them enough rope to hang themselves with. It's worth a shot to let them restructure on their own. I agree that chapter 11 would have been (will be) best. The domestic auto manufacturers can't compete because of overhead costs like unions and too many dealerships. This has forced them to cut corners on quality and get a bad reputation in the market place. The fix is going to take some time though. They will have to exceed the best warranty currently available by any production auto maker to get back the market share in a timely manner. If the domestic auto manufacturers are truly making cars as good as the foreign auto makers then there is no reason not to match their warranty. If a GM car is as good as a Hyundai then why not give it a 10 year 100,000 mile warranty? If it definitely won't break for 100,000 miles then there is ZERO cost to warranty it for that period. The bumper to bumper warranties are especially lacking. I want to buy American... I just can't afford it.

Ford seems to have the best chance of the big three to survive.

I don't see the point.

Chrysler and GM both suck and need to go bankrupt right now, it is the best way for them to turn these companies around. This is a 15 billion dollar bandaid that only allows the incompetent to come up with a plan to turn around a company they were instrumental in destroying.

indeep:
a large part of the never ending problems at the automakers is that nothing happens fast for contractual reasons. that's why a prepack is so incredibly appealing. this is not nice to say but it's true--they have to screw the bondholders, stockholders, retirees, health care recipients, and dealers AT THE SAME TIME (and not bankrupt the suppliers who are still healthy--yes, there are a few). Congress CAN help them do this. But GM won't do this voluntarily. They can't. They have to see the blue steel barrel pointed at their noses.
They'll take the bait.
A lot of people in this debate are forgetting the average senator has run a business, handled HR contracts, and managed a capitol structure in the real world. Many may have inherited their companies, but they did operate them successfully. Hell, several are multi-millionaires. GM should be asking for advice!!!

instead of the autobailout bill, they should have called it, all the ways we got bent over the table by tarp, but were afraid to ask.

They can't bk them unless they negate the CDS contracts as well, so we're stuck with this miserable attempt at keeping all the balls still in the air.

I just love how we're going to try and manage the exec salaries etc., and Chrysler hasn't opened up page one of their books. They can game it however they want to, they're not under the same regulatory and reporting constraints.

berkley...where were these so callled business experts in turning wall street around....let alone not letting the trainwreck get in motion years ago....bunch of blowhards that still dont get it....look how well the bailout has worked so far.....morons plain and simple....

13th, agree -

Quote:

this is not nice to say but it's true--they have to screw the bondholders, stockholders, retirees, health care recipients, and dealers AT THE SAME TIME (and not bankrupt the suppliers who are still healthy--yes, there are a few). Congress CAN help them do this. But GM won't do this voluntarily. They can't. They have to see the blue steel barrel pointed at their noses.
They'll take the bait.

Agreed, They can't do it on their own and they know it. They need to go down in flames trying everything they can.

You hold the sword and I shall run upon it.

I fear they're just kicking the can down the road and will dump more cash into them next year.

congress is a slow institution just like GM. But lets compare their work with treasury, the fed, and the white house. TARP and several thousand points on the dow blindsided them. they also now know they got played. Fool me one, fool me twice...
GM bailout is a different story. They saw this train wreck coming and had time to react to it.
I know kicking congress is fun. I do it too. But do you remember what the original TARP bill looked like? One page, give Paulson 700B. Hope for the best.
Congress broke it in half, put oversight into the bill, and labeled the use of funds for foreclosure prevention. I may disagree with the intent on the forex bit, but they really managed to slow down treasury. And I give HUGE points to the senate GOP who got that monstrosity killed once. STAND TALL!!!!!

As for the CDS contracts, yes they are out there, but GM has been in such bad shape for so long there probably are fewer speculative positions than expected.

http://moneycentral.msn.com/investor/inv....

GM is losing about $20 billion a year on Revenues of $160B and Costs of about $180B.

In other words it would take an across the board cut of 12% to breakeven.

But a lot of their costs are fixed. So it would require an even deeper cut in variable costs to breakeven. I would guess a 20% cut in variable cost would get them to breakeven. Good luck trying to get those kind of concessions from the UAW and pension holders.

We need a Reagan in charge. Deal with GM the way Reagan dealt with the Air Traffic Controllers. You don't like the deal...then you are fired. There is no leadership now. Bush could do it. He is leaving anyway. But he is a wimp.

You all know of course that Canada is also being asked for around 6 billion by the Detroit 3. I wrote to our PM today and suggested that they take that 6 Bill and buy Ford and make it a Canadian company to take some of the load off the US!!!! Seems like a reasonable bet to me?

A good portion of the auto bailout money will be used to prop up the healthcare benefits for the retired autoworkers. How is that helping the companies to reinvent themselves? And comparing the auto bailout to the $700 billion bailout is like comparing a poke in the eye with a stick to a kick in the crotch resulting in a gonadectomy. Even though one is worse than the other both still hurt. Just say no to all bailouts!

Doing a simple Liabilities vs. Assets....

These guys are bankrupt. No debate, no need for discourse, no need for anything. No MAS is the ticket. What the hell don't the stock buyers get? It's a NEGATIVE net worth company.........jeeez.

I can't see bailing out companies that have given the finger to the american consumer throughout their history. If these companies fail then other companies will come into exitence to fill the need.
Coroporations that are only interested in profit while ignoring their social responsibility deserve to be drawn and quartered with the rotting carcass diplayed as a warning to those who would chose the same path.

I hope not, but I suspect this is going to turn into a never ending saga of kick the can down the road.

Look folks... these companies need to restructure and this deal allows them the opportunity.

The entire country since the early 80's has become more of a sham. It's all a ponzi scheme of credit. Consumer 70% of economy (how can that be if they aren't all going into debt?).

Everyone here should be pulling for their success and they get past break-even.

We all can't work in healthcare or government... those must have the support of a manufacturing base.

"Look folks... these companies need to restructure and this deal allows them the opportunity".

Everybody can agree with the first part of that sentence. However, there wouldnt be so much national debate and Republican Senators wouldn't be threatening fillibuster if there was complete clarity on "this deal allows them the opportunity".

Will the Car Czar really have the authority to bring all parties to the table to force concessions? What if the incoming administration does not approve of the Car Czar's handling of the UAW, does the Car Czar even survive until the March 31 deadline date?

I could go on with more weak links in this package, but suffice it to say things often look prettier on paper than in practice.