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RE: GM Bail-Out? - 11/13/2008 9:09:12 PM
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GroupW
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From: Up in the hills of Colorado (very BIG hills...)
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DD-
Here you go. It's in the definitions (Section 3) under part 9, letter B.
(B) any other financial instrument that the Secretary, after consultation with the Chairman of the Board of Governors of the Federal Reserve System, determines the purchase of which is necessary to promote financial market stability, but only upon transmittal of such determination, in writing, to the appropriate committees of Congress.
That section was purposefully included to give the Secretary very broad latitude. Not knowing where the financial contagion might spread to, it was important that the Treasury be authorized to buy a wide variety of financial instruments. Nothing in that section can be read as precluding the purchase of preferred stock in financial institutions.
I'm afraid you are mistaken - Paulson is operating within the existing legal mandate. There has been a change of tactics, to be sure. There has not, however, been a change in the underlying deal.
< Message edited by GroupW -- 11/13/2008 10:00:44 PM >
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RE: GM Bail-Out? - 11/13/2008 9:34:17 PM
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colliefan
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quote:
Somebody said to me last night that they bailed out Chrysler some years ago - why not GM. My reply is that it is a different set of circumstances
Chrysler was involved in the production of tanks.
Let's go back a hundred years. Was there any bailout of the buggy makers industry? The horse whip industry? The United Blacksmiths Union?
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RE: GM Bail-Out? - 11/13/2008 10:03:17 PM
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GroupW
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Colliefan-
It really is an interesting question. You rightly point out the risk of government intervention artificially propping up an obsolete technology. On the other hand, is GM obsolete? They've made remarkable progress on quality vs the Japanese, and yet the Japanese themselves are under increasing pressure from the Koreans.
I for one am not smart enough to figure this one out, but it's fun to debate at least.
Edit:
Here's what I wish would happen - the government stays out of it and GM goes through a Chapter 11 bankruptcy and emerges as a reorganized entity with its union contracts and post retirement benefits contracts nullified or substantially changed. (That sounds really heartless - there are lots of 80-year old retirees that need those benefits. Something would need to be done for some of them, though I don't know what.)
Here's why I don't think it will happen - taking GM through BK would require debtor-in-posession bank loans. There isn't a bank in the country healthy enough to do that right now. That takes BK off the table - the government won't allow a liquidation, which is the only other alternative in BK land.
So will the government step in to provide the bank loans? Nope. What senator in his right mind wants to tell a bunch of GM retirees that he's funding GM's reorganization and termination of their benefits? That's just not going to happen.
So a BK isnt in the cards, which means the only likely outcome is a bailout.
Not the best solution, but the only politically viable one right now.
How's that for an analysis?
< Message edited by GroupW -- 11/15/2008 3:17:00 PM >
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: GM Bail-Out? - 11/15/2008 6:35:59 AM
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deliveredarling
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GroupW, I jsut can't agrre at all with your analysis. For further reading:READ THIS
Now you should be sick......
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RE: GM Bail-Out? - 11/15/2008 3:05:47 PM
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GroupW
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quote:
ORIGINAL: deliveredarling
GroupW, I jsut can't agrre at all with your analysis. For further reading:[link
=http://www.financialsense.com/fsu/editorials/martenson/2008/1111.html]READ THIS[/link]
Now you should be sick......
We haven't agreed yet, so why start now? 
Specifically, which part do you disagree with? Keep in mind that it's just a prediction of mine, not necessarily a statement of what SHOULD be.
As far as the link, like most other things the issue is slightly more complicated than what you are aware of. The reason behind the change in S.382 of the code is to make bank acquisitions more attractive. It's a tax strategy that goes hand in hand with the Treasury providing equity capital to acquisitive banks. The overall purpose is to provide maximum incentive and ability for the remaining healthy banks to begin buying the sick ones.
I'm not sure I agree with the strategy myself, but there is indeed some logic to it.
BT
< Message edited by GroupW -- 11/15/2008 3:16:07 PM >
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: GM Bail-Out? - 11/15/2008 7:01:26 PM
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relady
Posts: 1216
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quote:
Plus we all get hurt when a couple million people go unemployed. And uninsured and who knows what else. This is just a really ugly situation that I'm not sure has a truly "good" answer. On the one hand they are screaming for money while still handing out big bonuses to the top execs and crying that they can't pay their workers. There's just so much wrong with that picture I don't even know where to start.
quote:
When my taxes are used to fund the bailout of GM or any other company, the government is stealing from me to give other people welfare. Not really, they do have the authority through the Constitution to "regulate" interstate commerce, which in today's world encompasses any number of businesses, including banking. What is the proper amount of regulation is certainly debatable, but not their authority to do so.
quote:
I guarantee that this spring the credit card companies will be going under.... I don't think I could consider that a negative, actually.
quote:
And the contracts which should have priority are those with the retirees and NOY with the current executives. On this I completely and totally agree.
quote:
(That sounds really heartless - there are lots of 80-year old retirees that need those benefits. Something would need to be done for some of them, though I don't know what.) I think they would end up doing what generally happens...picking a date, somewhat arbitrarily, and "grandfathering" those who retired before that date so that they don't lose their pensions. The ones that would lose badly would be the employees right on the cusp of retirement.
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RE: GM Bail-Out? - 11/15/2008 8:53:57 PM
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GroupW
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quote:
ORIGINAL: relady
I think they would end up doing what generally happens...picking a date, somewhat arbitrarily, and "grandfathering" those who retired before that date so that they don't lose their pensions. The ones that would lose badly would be the employees right on the cusp of retirement.
I suspect you're right.
On a related and somewhat positive note, Pelosi went on record today saying that any bailout should require stockholders, bondholders, unions and retirees to all take hits that are equivalent to the hits each would take if GM were to enter BK as a reorganization.
If that happened, I'd be shocked. My prediction a few short posts ago would be utterly wrong.
I still think that's an unlikely outcome. I just can't see people who are up for reelection dying to vote to have pensions cut and union rules reworked.
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: GM Bail-Out? - 11/15/2008 8:54:48 PM
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colliefan
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quote:
I don't think I could consider that a negative, actually.
Think of the amount of comerce that would be lost. People would be carrying more cash and thus more subject to robbery.
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RE: GM Bail-Out? - 11/15/2008 8:57:19 PM
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GroupW
Posts: 2863
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As opposed to being robbed by the credit card companies?
_____________________________
“For every problem, there is a solution that is simple, elegant and wrong.” -H.L. Mencken
"Most people would rather die than think; in fact, they do so." -Bertrand Russell
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RE: GM Bail-Out? - 11/15/2008 9:00:09 PM
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Miss Giggles
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You can be "robbed" by identity theft, credit card and check fraud too.. not just by carrying cash.
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RE: GM Bail-Out? - 11/15/2008 9:27:52 PM
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relady
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quote:
Think of the amount of comerce that would be lost. People would be carrying more cash and thus more subject to robbery. As far as commerce goes....well, we need to quit living on credit anyway. As far as carrying cash...I have no credit cards, I use my debit card and I rarely carry much cash.
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RE: GM Bail-Out? - 11/15/2008 9:40:37 PM
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GregandJenny
Posts: 680
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From: Near Seattle Washington
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if they bail them out what is to say we won't have to do it again in 5-15 years. The American auto makers not only have to produce a better product folks they have to convince the people who have already had problems with them to switch back over.
I understand the ramifications if the industry collapses but is the bailout gonna be life support until it finally has to die or a healing in which the company will succeed. If we are putting the industry on life support when there is really no hope we are delaying the inevitable death.
G
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RE: GM Bail-Out? - 11/17/2008 4:36:40 PM
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chrisb743
Posts: 102
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Wake up people. Let em crash and burn. It stinks yeah.. They did it to themselves.. year after year of more more more... give me give me give me.. I dont feel sorry for them the least bit.. The powers that be tell us to go spend... buy more... loan more... give more credit... credit credit credit... thats the problem... we cant afford what we have now.. so we should buy more to prop up this economy? Heck no!!!!!! I'll admit that I'm not above hard times... Myself and my family may very well have them in the coming months.. but I truly believe that this nation needs to be humbled and brought to it's knees... we need to hit bottom... see our faults... ask for help from God above... then rebuild the right way... same holds true for the automotive industry, as with any industry..
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RE: GM Bail-Out? - 11/17/2008 6:52:04 PM
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blessedinnyc
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If GM and Ford go under, there could be a domino effect. Their suppliers will probably go under, too. The retail establishments that sell GM employees and parts makers food, electronics, toys, and furniture might go under, too. Municipalities in the states of Ohio and Michigan will have trouble collecting property taxes from bankrupt entities, and it's hard for these states to collect income taxes when everyone is out of work.
If these firms slip into bankruptcy, Ohio and Michigan will wish things were only as bad as the Great Depression.
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RE: GM Bail-Out? - 11/17/2008 6:58:11 PM
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GregandJenny
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From: Near Seattle Washington
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quote:
If these firms slip into bankruptcy, Ohio and Michigan will wish things were only as bad as the Great Depression.
I agree, however are we just delaying that if we bail them out?
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It does not have to be well with my circumstance to be well with my soul!
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RE: GM Bail-Out? - 11/17/2008 9:01:29 PM
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chrisb743
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ok... well.. let the government write a check year after year from here to eternity paying for this ****.. you gotta fail.. then rebuild.. I live in Alabama.. we have Nissan, Honda, Chevrolet in Kentucky.. Nissan in TN.. Volkswagen is building a new plant In Chattanooga... All these are doing very well.. There are 5 suppliers in my county alone... you know why all these are doing well? No union... dont need it.. The south can do it right.. why cant Michigan? It's called corruption... would be bad for many.. but you know what? country first..
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RE: GM Bail-Out? - 11/17/2008 9:45:53 PM
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blessedinnyc
Posts: 2003
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quote:
ORIGINAL: GregandJenny
I agree, however are we just delaying that if we bail them out?
Good question. What if we just delay it until there's a recovery in the other parts of the country? If we go that route, it costs us maybe $50 Billion and blunts the blow to those states.
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RE: GM Bail-Out? - 11/17/2008 10:32:34 PM
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Miss Giggles
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Both are not going to fail. I highly doubt it. If bankruptcy is declared tomorrow that does not mean that everyone is automatically out of a job. A reorganization of this magnitude is unprecedented and will take years.
If GM fails then people who want American cars will turn to Ford. Ford might be able to stay in business for the next two years and then their cost savings from starting the two tiered pay system will go into effect.
As for the suppliers, they have already bankrupted the smaller ones.. the restaurants around the plants have already been impacted..
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RE: GM Bail-Out? - 11/18/2008 6:02:40 AM
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_jjp_
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quote:
ORIGINAL: blessedinnyc
Municipalities in the states of Ohio and Michigan will have trouble collecting property taxes from bankrupt entities, and it's hard for these states to collect income taxes when everyone is out of work.
Good then maybe they will learn to get back to running a government the way it should be, lean.
quote:
If these firms slip into bankruptcy, Ohio and Michigan will wish things were only as bad as the Great Depression.
The personal greed of the unions has placed the workders at this door. We have one union plant in my company and they are so greedy as to continue to demand more even when prior to the demands the company was considering idling the plant. They want blood from a turnip.
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RE: GM Bail-Out? - 11/18/2008 8:03:47 AM
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blessedinnyc
Posts: 2003
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quote:
ORIGINAL: _jjp_
Good then maybe they will learn to get back to running a government the way it should be, lean.
They already are. At a 3.9% flat tax, Michigan has one of the lowest state tax rates in the country.
quote:
The personal greed of the unions has placed the workders at this door. We have one union plant in my company and they are so greedy as to continue to demand more even when prior to the demands the company was considering idling the plant. They want blood from a turnip.
Shall we blame the 100,000+ white-collar employees GM and their suppliers hire for the unions' greed?
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RE: GM Bail-Out? - 11/18/2008 8:18:00 AM
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_jjp_
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quote:
ORIGINAL: blessedinnyc
Shall we blame the 100,000+ white-collar employees GM and their suppliers hire for the unions' greed?
Yes we shall. While the union bosses are to blame so are the everyday workers for being shortsighted and having a gimme gimme attitude. I don't blame them for wanting to make a better life for themselves but due to shortsighted vision they are running their gravy train off the tracks. I didn't see the white collar workers supporting GM when their union demands more from them every single year now they must suffer based on the decisions they made. You know the guy making $70+ dollars/hr could have stood up and said "you know i make a comfortable living, good benefits, and retirement let's not drive the company out of business". Instead they stand up and demand better benefits, more retirement, medical after retirement, more pay, all they while placing barriers in place to weed out unproductive workers.
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RE: GM Bail-Out? - 11/18/2008 10:13:14 AM
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chrisb743
Posts: 102
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If these people couldn't make a good living making $72 a hour.. and still want want want.. They need to come back down to earth for a while.. I'd rather have a steady wage with job security, then having my hand out year after year begging for more.. The good old days of jobs like that are long gone.. the american worker has priced itself out. We are a spoiled nation.. I say once again... Let em crash
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