GM asks for government socialization to help fund merger with Chrysler
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Banned
Joined: Jul 2001
Posts: 3,604
From: Milton, FL
GM asks for government socialization to help fund merger with Chrysler
http://www.cnbc.com/id/27409944
The government funding would include roughly $3 billion in exchange for preferred stock in the merged automaker
...
An injection of $3 billion in equity to support a GM acquisition of Chrysler would be roughly equivalent to the current, depressed value of the top U.S. automaker.
...
An injection of $3 billion in equity to support a GM acquisition of Chrysler would be roughly equivalent to the current, depressed value of the top U.S. automaker.
Registered User
Joined: Nov 2001
Posts: 1,022
From: Newhall, CA USA
Oh, Jesus H Mongoloid Christ.
Given GM's current valuation, can't we throw together enough money from the change in our couches to buy GM, fire their entire board, rout the bureaucracy, kill the irrelevant brands, and focus on making only the good cars that people want to buy (read: recent Chevrolet and Cadillac offerings--oh, and a lot of the good overseas offerings we never see)?
It sure doesn't seem that fundamental change is going to happen from the inside!
Given GM's current valuation, can't we throw together enough money from the change in our couches to buy GM, fire their entire board, rout the bureaucracy, kill the irrelevant brands, and focus on making only the good cars that people want to buy (read: recent Chevrolet and Cadillac offerings--oh, and a lot of the good overseas offerings we never see)?
It sure doesn't seem that fundamental change is going to happen from the inside!
Registered User
Joined: Sep 2002
Posts: 9,705
From: Oakland, California
This morning's news was saying it was more like $10B that the feds would need to kick in to make the merger work.
At this point, I'd rather see Nissan-Renault buy Chrysler and keep it afloat.
At this point, I'd rather see Nissan-Renault buy Chrysler and keep it afloat.
Registered User
Joined: Nov 2000
Posts: 16,176
From: Chicagoland IL
oh, jesus h mongoloid christ.
Given gm's current valuation, can't we throw together enough money from the change in our couches to buy gm, fire their entire board, rout the bureaucracy, kill the irrelevant brands, and focus on making only the good cars that people want to buy (read: Recent chevrolet and cadillac offerings--oh, and a lot of the good overseas offerings we never see)?
It sure doesn't seem that fundamental change is going to happen from the inside!
Given gm's current valuation, can't we throw together enough money from the change in our couches to buy gm, fire their entire board, rout the bureaucracy, kill the irrelevant brands, and focus on making only the good cars that people want to buy (read: Recent chevrolet and cadillac offerings--oh, and a lot of the good overseas offerings we never see)?
It sure doesn't seem that fundamental change is going to happen from the inside!
hallelujah!
Registered User
Joined: Sep 2002
Posts: 9,705
From: Oakland, California
It's looking closer and closer to being a done deal...
http://www.reuters.com/article/innov...35477920081029
http://www.reuters.com/article/innov...35477920081029
Super Moderator
Joined: Jul 2005
Posts: 9,507
From: Okemos, MI
I heard that too. I heard (or read) somewhere yesterday that the main objective here was to get their hands on Chrysler's $11B in liquid assets. Seems like they'd be better off just taking the $10B and leaving Chrysler out of it.
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Joined: Sep 2002
Posts: 9,705
From: Oakland, California
http://online.wsj.com/article/SB1225...googlenews_wsj
P.S. Nevermind, I re-read the full article. GM has to give up part of GMAC so that they don't own more than 24.9% to qualify. It looks like both sides need this merger to qualify for the government loans.
Last edited by jg95z28; Oct 29, 2008 at 12:44 PM.
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Joined: Mar 2001
Posts: 954
From: Shelton, WA
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Joined: Mar 2001
Posts: 13,713
From: The Golden State
I rarely sound any alarms here. But I sincerly and really wish I was only an alarmist or was going off the deep end when I started that "I'll lose all respect for GM" thread instead of being proven true over the past couple of weeks.
This whole thing from the begining was all about GM getting it's hands on Chrysler's money. Nothing more.
If GM was going through a massive reorganization of management philosophy, buying out half it's blue collar force, forcing those who can't adapt or stand in the way of reform to retire or be retired, shutting down large numbers of plants and taking what's left and filling them with vehicles you make overseas, and investing in massive quality improvements and even returning to regularly scheduled facelifts, and on top of all that, having a clear, direct, and short product approval process (like Ford, for instance), then although I wouldn't like it, I could see the logic in getting Chrysler and grabbing their cash.
But they aren't... and I don't.
Now that GM is looking to the government, not just for a portion of the $25 billion to get competitive again (which I wholeheartedly support) but for a specified additional $3-10 billion so they can get this additional $11 billion out of Chrysler. To me, that's just plan sick.
Even worse, now there's new scare tactics being thrown out that Chrysler will go bankrupt, shut down, and even larger numbers of people would be thrown out of work within a year if this aid package isn't approved. I DON'T BUY IT!!
Unless Cerberus told a blantant, boldface lie, and the estimates of running Chrysler is completely bogus, Chrysler's cash savings has gone from 11.7 to about 11 billion dollars from June to September. Less than $1 billion per quarter (GM went through $18 billion the 1st quarter and has a steady burn of $1 billion every month). Chrysler has a winner with the new Dodge Ram, it also has Nissan building the Dodge Hornet (in Japan!), they were in talks to base the Sebring replacement on a Nissan vehicle, and they are in a 3 way partnership for a new class of powerful 4 cylinder engines. With fuel prices coming down (yesterday I just paid 2.99 per gallon... in San Francisco!!!!
) the only thing standing in the way of Chrysler growing cash again is tight credit.
In short, Chrysler doesn't have tons of new vehicles in the pipeline like Ford and GM, but Chrysler isn't exactly sitting around, waiting to die like the scenario GM is pushing.
If the government wants to really do some good for the US auto industry, I have an idea. It's very simple, and very cost effective:
A. Continue with the $25 billion in aid for the US auto industry. Use this to fund development of fuel efficient vehicles. This money makes sense because the cost of the government paying the pensions of all displaced autoworkers (which is law, by the way) would far exceed that $25 billion. Plus, one can't completely blame the US car industry for not having good small cars when the buying public started feeling like buying big SUVs was a necessity even though it wasn't.
B. Go into the car lending business. Set aside that $10 billion that GM wants and instead use that money to finance the purchase of vehicles of manufacturers based in the US and cars built in North America. Do this at an intrest rate of around 10%. That way we kill 3 big birds with one stone:
1) We tell the banks either you start lending money or we'll do it.
2) The taxpayer is protected. The taxpayer gets not just that $10 billion back, they also get 10% intrest on it. It beats taking a gamble on and betting on GM using it wisely.
3) We stimulate the economy by getting the automotive sector moving. Because it's focused on US based companies, it benefits them over foreign brands. Because it focuses on North American built vehicles, it puts people here back to work.
C. Take 4 months worth of the tankers of money we're pissing away in Iraq, and build up a Natural Gas distribution network. This would come in a form of a direct tax credit to...gasp, it's ME who's saying this now.... oil companies. Let them know they have 12-24 months and no more to have this network up and running at all fuel stations that distribute their product. Distribution is the only real stumbling block that prevents us from switching to CNG in normal public vehicles. State and city agencies have been using CNG for over 20 years. The United States has one of the largest Natural gas supplies in the world, and short of a national gas tax, is the quickest and easiest way to take a huge chunk out of oil imports.
All modern conventional engines are capable of running on CNG with very little to no modifications outside of fuel storage systems. It's also by and large, cheaper than a diesel engine. To top it off, we still have high performance cars, a way to cut emissions with little expense, and force the anti-car people to find something else to complain about since the CO2 issue would be wiped away.
This idea will force all US car makers to change to meet the market and times or fail with no excuses. Can't blame the lack of government help. Can't blame the financial institutions for not lending money. At the moment, can't blame high fuel prices.
At the same time, taxpayers minimize risk and might actually come out ahead in the end. The banks and lending institutions will be forced to lend money or see a part of their market taken away from them. We'll put people back to work.
Or.....
we go with what it seems GM wants, and give money (all but under threat) to create the world's biggest car maker, and a monster that we will always have to pump money into when things are bad (even if it's because of bad management) because if it failed, it would take out the US economy with it.
This whole thing from the begining was all about GM getting it's hands on Chrysler's money. Nothing more.
If GM was going through a massive reorganization of management philosophy, buying out half it's blue collar force, forcing those who can't adapt or stand in the way of reform to retire or be retired, shutting down large numbers of plants and taking what's left and filling them with vehicles you make overseas, and investing in massive quality improvements and even returning to regularly scheduled facelifts, and on top of all that, having a clear, direct, and short product approval process (like Ford, for instance), then although I wouldn't like it, I could see the logic in getting Chrysler and grabbing their cash.
But they aren't... and I don't.
Now that GM is looking to the government, not just for a portion of the $25 billion to get competitive again (which I wholeheartedly support) but for a specified additional $3-10 billion so they can get this additional $11 billion out of Chrysler. To me, that's just plan sick.
Even worse, now there's new scare tactics being thrown out that Chrysler will go bankrupt, shut down, and even larger numbers of people would be thrown out of work within a year if this aid package isn't approved. I DON'T BUY IT!!
Unless Cerberus told a blantant, boldface lie, and the estimates of running Chrysler is completely bogus, Chrysler's cash savings has gone from 11.7 to about 11 billion dollars from June to September. Less than $1 billion per quarter (GM went through $18 billion the 1st quarter and has a steady burn of $1 billion every month). Chrysler has a winner with the new Dodge Ram, it also has Nissan building the Dodge Hornet (in Japan!), they were in talks to base the Sebring replacement on a Nissan vehicle, and they are in a 3 way partnership for a new class of powerful 4 cylinder engines. With fuel prices coming down (yesterday I just paid 2.99 per gallon... in San Francisco!!!!
) the only thing standing in the way of Chrysler growing cash again is tight credit. In short, Chrysler doesn't have tons of new vehicles in the pipeline like Ford and GM, but Chrysler isn't exactly sitting around, waiting to die like the scenario GM is pushing.
If the government wants to really do some good for the US auto industry, I have an idea. It's very simple, and very cost effective:
A. Continue with the $25 billion in aid for the US auto industry. Use this to fund development of fuel efficient vehicles. This money makes sense because the cost of the government paying the pensions of all displaced autoworkers (which is law, by the way) would far exceed that $25 billion. Plus, one can't completely blame the US car industry for not having good small cars when the buying public started feeling like buying big SUVs was a necessity even though it wasn't.
B. Go into the car lending business. Set aside that $10 billion that GM wants and instead use that money to finance the purchase of vehicles of manufacturers based in the US and cars built in North America. Do this at an intrest rate of around 10%. That way we kill 3 big birds with one stone:
1) We tell the banks either you start lending money or we'll do it.
2) The taxpayer is protected. The taxpayer gets not just that $10 billion back, they also get 10% intrest on it. It beats taking a gamble on and betting on GM using it wisely.
3) We stimulate the economy by getting the automotive sector moving. Because it's focused on US based companies, it benefits them over foreign brands. Because it focuses on North American built vehicles, it puts people here back to work.
C. Take 4 months worth of the tankers of money we're pissing away in Iraq, and build up a Natural Gas distribution network. This would come in a form of a direct tax credit to...gasp, it's ME who's saying this now.... oil companies. Let them know they have 12-24 months and no more to have this network up and running at all fuel stations that distribute their product. Distribution is the only real stumbling block that prevents us from switching to CNG in normal public vehicles. State and city agencies have been using CNG for over 20 years. The United States has one of the largest Natural gas supplies in the world, and short of a national gas tax, is the quickest and easiest way to take a huge chunk out of oil imports.
All modern conventional engines are capable of running on CNG with very little to no modifications outside of fuel storage systems. It's also by and large, cheaper than a diesel engine. To top it off, we still have high performance cars, a way to cut emissions with little expense, and force the anti-car people to find something else to complain about since the CO2 issue would be wiped away.
This idea will force all US car makers to change to meet the market and times or fail with no excuses. Can't blame the lack of government help. Can't blame the financial institutions for not lending money. At the moment, can't blame high fuel prices.
At the same time, taxpayers minimize risk and might actually come out ahead in the end. The banks and lending institutions will be forced to lend money or see a part of their market taken away from them. We'll put people back to work.
Or.....
we go with what it seems GM wants, and give money (all but under threat) to create the world's biggest car maker, and a monster that we will always have to pump money into when things are bad (even if it's because of bad management) because if it failed, it would take out the US economy with it.
Registered User
Joined: Mar 2000
Posts: 162
From: St. Louis, MO
I think it's a bad idea myself and will only slightly prolong GM not fix anything.
HOWEVER from GM's POV an added benfit is this is a once in a lifetime opportunity.
In 100 years this has been their one and only chance to completely eliminate 1/3 of thier big 3 competition. That's got to be sounding good to someone there at HQ.
Assuming the economy recovers they will probably never get this chance again.
HOWEVER from GM's POV an added benfit is this is a once in a lifetime opportunity.
In 100 years this has been their one and only chance to completely eliminate 1/3 of thier big 3 competition. That's got to be sounding good to someone there at HQ.
Assuming the economy recovers they will probably never get this chance again.
Super Moderator
Joined: Jul 2005
Posts: 9,507
From: Okemos, MI
I don't see what benefit there is for GM in owning Chrysler. Competition is good for the market, and all of Chrysler's brands and models would just be redundant.
Registered User
Joined: Sep 2002
Posts: 9,705
From: Oakland, California
HOWEVER from GM's POV an added benfit is this is a once in a lifetime opportunity.
In 100 years this has been their one and only chance to completely eliminate 1/3 of thier big 3 competition. That's got to be sounding good to someone there at HQ.
Assuming the economy recovers they will probably never get this chance again.
In 100 years this has been their one and only chance to completely eliminate 1/3 of thier big 3 competition. That's got to be sounding good to someone there at HQ.
Assuming the economy recovers they will probably never get this chance again.
