QFT...^^^ It's pathetic!! They don't want to help GM, but now we're fixin' to help another F-ing bank!!

 

Did CitiGroup have to testify in front of Congress?
Because if they did, I missed it.
What is Congress demanding from them to get money?
Hmm, that's a mystery.

 

There are a number of reasons why the banks are getting help; not the least of which is that Congress knows (even though they’ll never admit it publically) that they, collectively, are the biggest reason why we have a credit/lending crisis in our financial institutions (that coupled with unmitigated greed and/or stupidity of the public who somehow believed they could afford to buy a house with no down payment, no steady source of income and no history of having handled credit wisely in the past).

Not only do the know who to blame; the PROBLEM is easy to identify…bad paper.

Put those two together and it becomes painfully easy for them to agree on a bailout.

(Just to be clear, don’t for one moment that I am even minutely in favor of these bailouts…I’m against them all and for the same reasons).

When it comes to the Detroit Three asking for money, the problems go much, much deeper and are much, much more long-standing that the current credit crisis.

Lot’s of people have a hand in Detroit’s problems plus, it’s much more difficult to put a finger on the problem…if you can’t put your finger on the problem, solving the problem becomes a pretty useless exercise.

Fixing Detroit, if it can be fixed, is going to have to be very, very painful for EVERYONE, the current management, the UAW, the suppliers, the taxpayers…everyone.

And while Congress, collectively, has never proven itself to be very smart, even they know that simply throwing a few billion toward Detroit will NOT solve anything…thus they hesitate…thus they ask for a plan that makes some sense and shows some transparency.

 

I didn't find anything from Citibank with a quick search, but the former head of Lehman Bros. got the usual treatment last month:

http://www.guardian.co.uk/business/2...lehmanbrothers

Nope, not really a mystery:

http://money.cnn.com/2008/11/23/news...ion=2008112408

This is somewhat different than the automakers' approach of "gimme some money now and we'll talk about repayment terms later".

 

I have no problem with the government acquiring some of GM's stock as a security in any loan/bailout scenario- maybe it could be the same securities the CEO's were supposed to get as part of their compensation package-

You do recall that when govenment loans kept Chrysler solvent in the late 80's, those loans were repaid early, with interest? Talk about a win/win- The country kept the jobs, the income generated, the tax base, and made a profit....

I agree that the big 3 have many problems, including but not limited to: an unlevel playing field, where foreign companies can 'dump' their products here at below cost, while our manufacturers are kept out of foreign markets by many regulations and taxes; many government edicts about how to build cars and what choices the buying public is 'allowed' to make in regards to fuel mileage and safety requirements; and poor public perceptions about product quality that may have had some validity back a decade or two ago, but are not accurate any more.

Combine these built-in problems with the tightening money supply and buyer reluctance to make big-ticket purchases because of the uncertain financial climate, and you can see where GM and others are weathering a 'perfect storm' juxtoposition.

 

As I understand Chrysler's situation in the 80s, it was an issue of liquidity - the company had a positive balance sheet, but not enough cash to keep the operation going.

What we have with Ford and GM (and I suspect Chrysler as well, although its finances are rather opaque) is an issue of solvency - the companies simply have more debt than assets.

GM has a claimed $130B in assets ($22B in inventory, $16B in cash, $10B in receivables, $47B in equipment and real estate, etc.), but $190B in debt ($70B owed to suppliers, $35B in long-term debt, $10B in short-term debt, $80B in "other", etc.). Putting $12B of cash into that mix isn't going to fix any problems, but rather will just prolong the inevitable.

What GM needs is some what to reduce its debt and obligations by tens of billions of dollars. That's what a GM bail-out looks like.

 

http://blogs.moneycentral.msn.com/to...utomakers.aspx

 

http://jalopnik.com/5097509/snl-sket...sional-hearing

A few mildly funny moments (a nice shot at the bank's tendency to keep coming back to the table, and a poke at Barney Frank's sexual preferences), but overall, a lack of accuracy is the least of its problems.

 

After now having watched the entire skit, I'll admit that they did hit the Big 3 CEOs pretty hard although I think the article in your link made an excellent; that being that the skit was "further evidence the automakers have done the world's worst job of getting their message out".

 

First time I read any statement about GM considering dropping brands... albeit from the press.