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Study: Automakers' failure would cost U.S. more than aid

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tammywammy Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 05:14 PM
Original message
Study: Automakers' failure would cost U.S. more than aid
http://www.autonews.com/article/20081208/ANA02/81208028...

Study: Automakers' failure would cost U.S. more than aid

DETROIT -- The collapse of two Detroit automakers would cost the United States government at least four times as much as loans to keep them alive, a new study says.

Taxpayers will wind up paying $66 billion if two of the Detroit 3 sink into bankruptcy and then go out of business, according to the report released today by the Anderson Economic Group, a consulting firm, and BBK, a business advisory company.

The firms compared the costs of bankruptcy with federal bridge loans aimed at keeping General Motors, Ford Motor Co. and Chrysler LLC running until they can retool and lower costs.

"The reality is that if the government doesn't provide support now, it will eventually provide it later,'' said Kriss Andrews, managing director of BBK's automotive practice. "It would be far better for the government to come in now under controlled circumstances to resolve the problem than in an uncontrolled circumstance."

The report was released as White House and Congressional negotiators iron out their differences on a $17 billion short-term loan package. White House Press Secretary Dana Perino told reporters that a deal will "very likely" take shape today.

GM and Chrysler say they need a combined $11 billion to avoid running out of cash by Jan. 1. Ford believes it has enough cash on hand to ride out the recession but wants a government-backed $9 billion line of credit in case the market worsens. The figures are part of a combined $34 billion request made by the three companies in survival plans submitted to Congress last week.

-snip-
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LisaM Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 05:16 PM
Response to Original message
1. Of course it would, but it wouldn't help Richard Shelby's constituents in Alabama
The whole thing makes me so angry I can't even speak of it without turning red.

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tammywammy Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 05:19 PM
Response to Reply #1
2. I just love how people who don't work in the industry
Is all of a sudden an expert. *rolls eyes*
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LisaM Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 05:21 PM
Response to Reply #2
3. I don't know if you mean me, but I grew up in the Lansing area
in the shadow of Fisher Body and the Olds plant. Not to mention that both my father and grandfather worked for car companies at various times. But maybe you didn't mean me.
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tammywammy Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 05:36 PM
Response to Reply #3
5. Oh no, not you
Just the random other people that are calling for the complete collapse of the Big 3.

I think many people don't realize how many people would be effected by that and the ultimate cost.
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LisaM Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 05:40 PM
Response to Reply #5
7. That's what I thought!
I am getting tired of the mindset that doesn't respect the value of a good honest day's labor. We can't all sit at the computer all day long - nor do a lot of people want to.

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doc03 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 05:35 PM
Response to Original message
4. I read recently that if the Big 3 dump their pensions
on the PBGC it would cost $200 billion to bail that already bankrupt program out.
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Edweird Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 05:36 PM
Response to Original message
6. Why has that been evident to me the whole time, but DC can't see it?
Edited on Mon Dec-08-08 05:37 PM by Edweird
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doc03 Donating Member (1000+ posts) Send PM | Profile | Ignore Mon Dec-08-08 05:48 PM
Response to Original message
8. Here is an example of the trickle down effect of
a sick auto industry. The week of December 6, 2008 1,182,000 tons of steel was produced in the USA just 49% of capacity. Steel production is down 43.8% from the same period last year when 2,102,000 tons were produced and the industry was running at 88% of capacity. So steel production is off ruffly 1,000,000 tons per week. The steel industry is also losing millions of dollars a week now and many of them will also be in trouble again in the near future if nothing is done. There goes another vital manufacturing industry.
http://www.steel.org/AM/Template.cfm?Section=Raw_Steel_...
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