....OK it might not be that "simple", but if it were not for the collapse of the financial markets and the lack of money for borrowing, would Detroit be at Washington's door asking for help?

Of course $4/gal gas and the recession didn't help, but I'm asking about the need for a "bailout".....is it a "bailout" or are they asking for a "loan" from the only place left to get one?

To my simple mind, there's a BIG difference in asking for a "loan" versus asking for a "rescue"....and subsequently the "terms" being attached thereto....

 

I agree Doug. The term "bailout" is now being thrown around far too liberally. I think a lot of the venom being spewed toward Detroit these days is because the media is erroneously attaching the 'B' word to this request.

Regardless of what credit markets look like, GM's own credit rating would still be in the toilet and financially they would still be in the same dire mess right now. I still believe government assistance would be necessary, unfortunately.

 

Doug, you do bring up a subject which is very important.

I can only offer my personal take as it's the only opinion I know is my own and based on my personal experiences.

For several years I have seen NO attitude from GM that suggests the party will never end, nor that the consequences are not dire. If anything it has been made clear to me is that GM has taken heartfelt note that the "vehicle" business is "THE CORE" business. All of the entity sales outside of the core business and subsequent spinoffs have been to that end. It's been more about "Motors" than "General".

Whatever folks think about Wagoner, he has given power to "car" people who do actually have an understanding regarding what GM can be.

As I have some personal insight and opinion regarding GM, I can offer that the passionate folks that truly care about what is engineered and produced be something which one can take personal pride and satisfaction from is ...overwhelming. The present econonomic circumstances may have been privvy to some financial gurus, but the double whammy of fuel prices followed buy credit evaporation was not what even our own specialized government wizards saw and avoided.

GM has made possible hours and hours of personal satisfaction and pleasure for me. Something like a Camaro Z/28 or Corvette Z06 could have never been mine under affordable circumstances otherwise. I have zero interest in unpassionate appliances. Whatever the timeframe, GM and Chevrolet in particular, has played my song. That selfish pleasure I will gladly take ownership of.

Is see what is being requested as nothing other than a loan. I just don't posess the ***** to presume my well being for a little while trumps anyone elses reasons to keep their hard earned dollars.

I'm not special. I absolutely don't presume to be so. I can avow that I have spent more uncomplaining time in the harshest form of capitalism which dictates "no work, no eat".

 

As I've stated previously, I feel that GM was in huge trouble even before the gas-price hit and the credit crunch. As early as 2005 (when GM re-stated its previous five years and took the $38B hit on deferred earnings), it should have been obvious to any casual observer that the game was nearly over. Certainly, the credit rating agencies picked up on this, and the value of credit default insurance on GM bonds reflected the company's perilous situation.

Either GM was going to need to "engage in a strategic partnership" (read: merge with someone that brings metric truckloads of cash and a need for capacity), or it was going to come to this. You simply cannot run a company that's $60B in the hole and has failed to produce a profit with its core operations for several years... at least not for very long.

 

Fixed.

 

You are such an America HATER!!!!

 

the economic "perfect storm" we just had is what brought GM to reality. They wouldn't have pursued a "government loan" (aka emergency bailout) without these circumstances.

What they would have done is kept going sucking as a business the whole way. This company just kept borrowing and borrowing.

Now the fat kid just found the cookie jar empty

 

The Domestic automakers have been asking for help from Washington for a long long time. But in the wake of the huge financial crisis and their direr situation only now are they getting the attention they wanted.

This deal becomes a loan if the Gov't just hands them the money and says go about your business. It becomes a rescue if they actually get involved and start trying to fix some of the legacy burdens that handcuff the Domestic brands. A rescue is what is needed and that means some management changes and some hard decisions because bankruptcy isn't an option.

 

Where the HELL did that come from??!

 

GM went to Ford last summer hoping for a merger. Ford sent GM packing. GM was at looking at a Chrysler merger well before the market tanked. GM gave away 51% of their inhouse financing business, so when loans dried up and now Honda is offering 0% and Toyota offeres under 4%, GMAC won't even give you a loan unless you have a 700+ credit score.

Cerberus has been trying to get rid of Chrysler ever since they discovered the car industry comes with this thing called "government regulations" and "product liability". Outside of accounting practices, neither is something Cerberus is used to, and probably took the fun out of flipping a company for profit.... you actually have to invest effort to make it work.

Ford took a "Hail Mary" pass, and put all their chips on the table and went for broke, smashing up all sacred cows and thinking outside the box, and really trying hard. Even to this very day, Ford isn't centering it's planning based on the prospect of government help.

 

What, you don't get it?

 

I was talking to a friend of mine, who is far more intelligent than myself, about that a few years ago. He told me that GM would be in serious trouble in 2 or 3 years when it all catches up to them. I just thought he was full of sh|t. Here we are 2 years later, GM in serious trouble. Hmm.

 

Anytime you have an outside entity, such as the Federal Government, injecting itself/money into a bankrupt or near bankrupt corporation; it's considered a "bailout' in the financial world.

GM is asking for something from the government it can no longer obtain from the marketplace; money...that being the case, at least within the financial community, it is a "bailout" even if the money is eventually paid back.

 

This is correct. I would add that the Banks got a "buy-in" from the Government not a "bail-out". Our Government now has some control to those companines.

 

That's what you call nationalization. What was left of Penn Central (private entity) became Amtrak (nationalized). It's even possible (and has been suggested) that the gov't is interested in nationalizing the auto industry.