Megabucks Bail-Out For Car Giants

[dipsydoodle]

Source: Sky News

Links to follow. Breaking on TV news as I write.

Fuller story up now on BBC :

The US government will provide $17.4bn (£11.6bn) in loans to troubled US carmakers GM, Chrysler and Ford.

President George W Bush said allowing the US car industry to fail would not be "a responsible course of action".

Carmakers will get $13.4bn in short-term financing from the $700bn Wall Street bail-out, and another $4bn will be provided later.

The government set a deadline of 31 March for the firms to become viable, officials said.

http://news.bbc.co.uk/1/hi/business/7791999.stm

Read more: http://news.sky.com/skynews/Home/Business/Megabucks-Bail-Out-For-US-Car-Giants/Article/200812315187912?lpos=Business_Carousel_Region_0&lid=ARTICLE_15187912_Megabucks_Bail-Out_For_US_Car_Giants_

[muriel_volestrangler]

1. Is Murdoch letting The Sun sub-editors write the Sky News website now?

'Megabucks' - how old do they think their target audience is, 12?

[dipsydoodle]

2. What amazed me was that they got it before CNN and BBC

I was channel flicking whilst cooking some turkey........lol. I think they might subsequently change the headline anyway but I felt obliged to copy it exact.

[matcom]

3. Auto Bailout Deal Reached

Source: CNN

Breaking. Details in Press Conference at 9:00 am EST

Details to come.

CNN says Automakers MUST BE VIABLE IN 4 MONTHS

No link yet.

[Hugin]

4. Oh, on this they set a timeline?

:eyes:

Meanwhile, back in White Collar Land the flailing continues.

[OwnedByFerrets]

5. I am SHOCKED that there are evidently no concessions being

asked of the UAW.

[matcom]

6. I don't think that is true

I heard in the background that there ARE UAW concessions

no details though

[Dennis Donovan]

10. The deal states the companies have to "bring costs in line with non-US automakers"

...meaning paying the workers NON-Union wages!:grr:

[matcom]

12. they have already started doing that

as I understand it, entry-level workers get about $14/hour.

[Dennis Donovan]

17. The unions have been conceding all along - this effectively BUSTS the unions...

...by forcing them to pay the workers NON-union wages (which is even less than $14/hr.)

This deal sucks major league donkeys!!!:thumbsdown:

[matcom]

19. I honestly don't know what the alternative is

:shrug:

i'm certainly pro union but having a job vs. not having one?

I just don't know

[Dennis Donovan]

21. If the Big 3 can hold out until 1/20/09, they'll get a much better deal from Obama...

I know, it's a scary chance to take, but this is a stand the UAW has to take. This is as important a union cause as when Reagan fired the PATCO ATC guys in 1981.

[matcom]

26. but GM claims it is broke on 12/31

without $4 Billion

[Dennis Donovan]

30. GM can say whatever it wants. It's in THEIR interests to bust the unions, too...

We can only hope President Obama re-writes the loan terms on 1/21.

[kirby]

52. And they will be broke on 1/1 also..

The only difference is our taxpayer money will be in their pocket.

[Rhiannon12866]

73. It would certainly help if they had more competent leaders...

;)

[acmavm]

27. We all know what the alternative is. But Gitmo doesn't look very

good to me.

[depakid]

13. Not quite

Under the terms of the plan, if the companies can’t demonstrate financial viability by March 31 the loans will be called and the money must be returned, the statement said. The government’s debt would have priority over any other debts. The companies also must provide the government with warrants for non-voting stock.

The companies also must accept limits on executive compensation and management and labor must negotiate new wage and benefit agreements by the deadline, according to an administration official who briefed reporters on the plan.

Government officials will examine all financial statements and records of the car companies. The government has the authority to block any transaction over $100 million.

The package is intended for GM and Chrysler initially; Ford Motor Co. has said it can continue operations under current circumstances.

http://www.bloomberg.com/apps/news?pid=20601103&sid=aAcLCgseGmjw&refer=news

[Paulie]

49. If they are going to call the loans

Then they might as well go Chapter 11 right now because market conditions will NOT improve in 4 months. It also means their collapse happens on Obama's watch.

Gets people though the xmas holiday, that's about all. Sigh.

[Dennis Donovan]

7. They have to "bring their costs in line with non-US automakers..."

In other words, FORCE the UNIONS to accept non-union wages!

FUCK THAT!!!:grr:

[joeglow3]

18. I agree with your sentiment, but HOW can you avoid it?

We live in a global economy. Companies can easily go somewhere else and get cheaper labor. Other companies can compete within the SAME market with cheaper labor costs. The impacts of increased labor costs can already be seen - less money invested in R&D and less innovative products. I cannot count the number of people I see here who flat out refuse to even look at a US made car. There is NO way you can compete with that.

This is not to say that I do not agree with your sentiment. However, I have racked my brain for a long time trying to think of a way the companies can stay viable and competitive and not drastically change the current arrangement with the UAW. I am honestly open to any thoughts you have on how this could be done.

[Dennis Donovan]

23. We're on the cusp of a Labor-friendly Administration...

32 days away. Trade deals can be renegotiated. A National Health Care plan can be implemented - that ALONE will help bring overall labor costs down.

[bluestateguy]

25. Window dressing

The Obama administration can come in there on January 20 and throw those terms out the window.

[Dennis Donovan]

28. I pray you're right and Bush doesn't somehow "ironclad" it...

[cal04]

8. Auto makers set to receive $17.4 bln in U.S. loans: reports

The White House is prepared to extend $13.4 billion in loans to troubled Detroit auto makers, with an additional $4 billion likely available in February, The Wall Street Journal reported on Friday. The deal could help General Motors and closely held Chrysler LLC avoid bankruptcy and is contingent on the companies showing they are financially viable by March, the newspaper reported. "I think under normal circumstances, no question the bankruptcy court is the best way to sort through credit and debt and restructuring," President Bush reportedly said. "These aren't normal circumstances, that's the problem."


http://www.marketwatch.com/news/story/Auto-makers-set-receive-174/story.aspx?guid=%7B75E69FBB%2DF9E0%2D40A1%2DA43A%2D9A27E125551C%7D



GM and Chrysler Will Get $17.4 Billion in U.S. Loans to Survive

http://news.yahoo.com/s/bloomberg/aaclcgsegmjw

[blueclown]

11. Does the UAW have to make any concessions? n/t

[cal04]

16. not all the information is updated yet

Under the terms of the plan, if the companies can't demonstrate financial viability by March 31 the loans will be called and the money must be returned, the statement said.

[Hugin]

14. Dub won't be President in March.

It's no coincidence IMO that the Automakers shuttered their plants until the 19th of Feb.

[blueclown]

9. Any details?

[nc4bo]

15. American automakers must become competitive with foreign automakers. nice. FU bush. nt

[totodeinhere]

38. If they can't become competitive with foreign automakers, then...

how can they survive long term? What would you propose as an alternative? Do you want them to remain non competitive?

[nc4bo]

39. Well by "competitive" I wasn't referring to product vs product

but the wage/benefit issue. I don't personally know of the quality differences between an American built car vs foreign. I've only owned one foreign car in my life and that was an Audi 4000(?) way back in the day, and it WAS a piece of crap.

I can read the opinions of those here and elsewhere but personally I can't judge.

BUT, what I see bush and other republicans doing is trying to "demote" our workers' benefits to those of the foreign companies when it should be the other way around.

Foreign companies should offer better benefits to their workers.

If there is a difference in product quality and vehicle appeal, then the Big 3 should by all means address the problems immediately.

Unions are good and they do good things and they stand strong for workers' rights (even though I think they can stand too strongly at times) but it's protections that are needed when the rights of corporation always seem to outweigh those of the worker.

[totodeinhere]

46. You make some good points. But herein lies the rub.

How can the USA force foreign auto makers to pay better wages and benefits? If the foreign automakers do not comply should we shut down their plants in the USA and force all of their American workers out of work? Even though they aren't compensated as well as they should be, I doubt if the workers want to lose their jobs.

Or should we apply tariffs and other trade restrictions? Now I know that the subject of trade policy is a real hot potato right now and could be the subject of it's own thread, or actually several threads.

[nc4bo]

55. Totodeinhere - I wish I knew the answers, I really do - America could use some good ones

right about now.

With no answers all I have are questions and agree with your points.

Would American and foreign companies be willing to compromise for the benefit of both foreign and American workers?

If the U.S. could find some way to ensure everyone has health care, that would be a really good start.

Then we have those incentives offered to the foreign companies that build plants here, especially in the poorer southern states. Unemployed workers get jobs, it's a boost to the local economies but at what price to the taxpayers who pay for these incentives? Additional tariffs could help repay the cost of those incentives and maybe be used to provide better benefits to those workers (more in line with the UAW) but would also probably be a huge turn off to the consumer once they see that bottom line.

Do you think all of the automakers are guilty of over supplying the auto market? They had to have a clue that with a struggling economy that demand would decrease. If they couldn't predict the decrease or chose not to act accordingly, then those in power failed to do their jobs properly and should be removed from their positions. I know it's late for pointing fingers but if we can't identify the problem, how can we hope to fix it so it doesn't happen again?

Like I said, I wish I knew the answers, I'm just bouncing thoughts off the wall. Hopefully Obama will have a solution that will benefit every one.

What a mess we're in, eh? :(

[lelgt60]

20. So, it appears Bush didn't force the companies into bankruptcy or break the UAW...

Before you all go off on me, I hate Bush as much as anybody for hundreds of reasons, but most of all because he got a million people killed in an illegal war.

However, all the fuck Bush comments in this case seem to be unfounded. Can't everyone just breath a sigh of relief for a few minutes now that Obama can handle this himself?

[nc4bo]

29. Only because he won't be in office to see it through...

Bring wages down, get rid of the job bank and some other union benefits, etc. (that's the meaning I got from his "competitive" comments) is what bush would like to see done but bush won't be in office during the next 3 month period Obama will.

If bush forced bankruptcy or refused to help the Big 3 now, he would have sealed the fate of the republicans EVER winning in any of the affected American autoworker states for a very, very long time.

Then there's that bush legacy thing that seems to be very important to him.

But yea, I'm definitely relieved that Obama's steady hand will be dealing with this and the Big 3 get some breathing room.

[lelgt60]

31. Absolutely agree n/t

[Romulox]

22. An Obama admin won't force GM into bankruptcy and break the UAW, so the conditions mean little...

The money's the thing. All these terms and conditions are negotiable--stated in the absolute in the large print, and made subject to change in the fine. It's mostly political theater for the mouthbreathers. :hi:

These terms and conditions would be non-binding in the sense that negotiations can deviate from the quantitative targets above, providing that the firm reports the reasons for these deviations and makes the business case to achieve long-term viability in spite of the deviations.

http://www.politico.com/news/stories/1208/16740.html

[Hugin]

24. Good.

Thanks for the dose of optimism and fact. :)

[Jack Bone]

32. This from The Detroit Free Press...more info

Bush to offer $17.4 billion in loans
Auto package to come with new wage limits sought by Republicans
BY JUSTIN HYDE • FREE PRESS WASHINGTON STAFF • December 19, 2008

http://www.freep.com/article/20081219/BUSINESS01/81219021/1014
<snip>
The money will come from the $700-billion bailout of the financial industry and the first loan of $13.4 billion will be available immediately, with a second amount of $4 billion available in February assuming the Obama administration draws down the second half of the bailout funds.

The White House said that some of the terms are targets rather than requirements, and that there is some wiggle room if the automakers prove progress on their turnaround plan. If the government feels there’s not enough progress by March 31, the loans can be called back. The binding rules mirror the agreement the White House made with Democrats including limits on executive pay and veto power over large transactions.

The targets draw from the proposal made by Sen. Bob Corker, R-Tenn., including requiring a two-thirds cut in debt, the UAW wage conditions and eliminating the jobs bank. In addition, GM and Chrysler will be required to make new agreements with dealers and suppliers by March 31.

[Romulox]

35. This part makes no sense: "GM and Chrysler will be required to make new agreements with dealers..."

"In addition, GM and Chrysler will be required to make new agreements with dealers and suppliers by March 31."

W. can't avoid existing contracts by Presidential fiat, so this makes no sense to me.

[kirby]

54. That is why bankruptcy makes the most sense...

There are way too many parties/vested interests here to find agreement for a common good. Supposedly the 'Car Czar' would have had this authority, but you can be sure parties will sue. Bankruptcy is the real legal method to force renegotiation of contracts.

The bad thing about bankruptcy is that I can guarantee it will shift the health and pension costs to the taxpayer. Those of us without healthcare or retirement pensions will forever be paying for some contract Big 3 and the UAW agreed upon without our knowledge.

The whole thing disgusts me.

[Romulox]

56. No, that's precisely why bankruptcy was never an option.

"The bad thing about bankruptcy is that I can guarantee it will shift the health and pension costs to the taxpayer."

Here's a newsflash for you: the cost of caring for America's elderly will ultimately be born by the American taxpayer, by hook or by crook. I have no sympathy whatever for those "progressives" who seek to pull others down rather than raise himself (and others) up. How about taking this opportunity to expand healthcare and retirement benefits for all? THAT is achievable. This break the UAW so that no one lives better than Alabamans crap is not.

[kirby]

60. That is not what is going on here...

This could have been an opportunity to make healthcare an emergency issue, but that becomes moot with the bailout. GM and Chrysler will downsize and keep producing the same stuff. They will not be forced to embrace a Green economy revolution now.

The cost of caring for elderly and the benefits I will get from Medicare is much different than a UAW health plan. Those legacy plans are really really expensive and comprehensive. It is fine for them to have them, it is not fine that I have to pay for it unless I get the same benefit. It is a matter of fairness, not to mention a form of taxation without representation.

I sure hope healthcare can be resolved for all. However, I stand by my original point. Bankruptcy is still going to happen because there are too many interests to agree to a common good. The only difference is that we will have wasted $17 billion dollars and there will still be a bankruptcy next year. I guess the only positive in this is that it kicks the issue to Obama where he can advocate for the worker rather than kiss corporate ass like Bush.

[Romulox]

63. You and your "free market" zealots lost this round. Suck it up.

"The cost of caring for elderly and the benefits I will get from Medicare is much different than a UAW health plan. Those legacy plans are really really expensive and comprehensive. It is fine for them to have them, it is not fine that I have to pay for it unless I get the same benefit. It is a matter of fairness, not to mention a form of taxation without representation."

Again, your small-minded, greedy back-biting is why you don't have better benefits. Universal Healthcare is within our grasp, and you're whining about "taxation without representation"? The John Birch Society is thataway.

[kirby]

66. Good luck with that...

"Again, your small-minded, greedy back-biting is why you don't have better benefits. "

If you think THAT is why we dont have better benefits you are kidding yourself. Yes Universal Healthcare could be within our grasp, especially if the Big 3 / UAW legacy cost issue is made a central issue of how Universal Healthcare could make us competitive while lifting the standard of living of all Americans. Requiring all taxpayers to subsidized a Big 3/UAW negotiated plan is not the solution.

[DainBramaged]

72. Squeellllllllll squeelllllllll, pigs at the trough, oink oink oink

It's always labor's fault, squeelllllllllll oink oink oink. Bad labor bad labor, down, bad labor. We might as well change our currency to the Yen or won for all you care. Jump in that transplant, you got yours, squeelllllll squeellllllllll oinkoinkoink.

[madrchsod]

33. they are viable now........

the problem is no credit,general uncertainty in the country and the auto industry,and no jobs.

there`s nothing wrong with the us car industry...

[Jack Bone]

34. I really wish I could REC a reply...you deserve one! nt

[pampango]

43. The US car industry has been closing factories and laying off workers for years. Ask anyone in

Michigan, Ohio and any number of other states or look at the trends in employment in the Big 3. I think you'll see that they have been going downhill for a long time. Their problems have been greatly exacerbated by the current economic decline, but that is hardly the only cause of their troubles.

[Cessna Invesco Palin]

65. If credit is the only problem, why doesn't Ford need a loan?

If global credit markets are the problem, why isn't every automaker in the world in the same boat?

[AzDar]

36. I hope the UAW rejects Bush-hole's union-busting deal and holds out until Jan.20, 2009

'Viable in four months', my sweet arse.

If no one can get consumer credit, how the bloody hell is that supposed to happen?


:mad:

[blueclown]

37. This is not a union busting deal.

In fact, it is very favorable to us.

[AzDar]

40. Really? Mandating that the Big 3 must make themselves competitive with foreign manufacturers

(read: Non- union) isn't an attempt to bust the Unions?

Along with demanding that Detroit turn itself around within 4 months in THIS economy?

It's a bullshit deal, offered by a bullshit administration that has NEVER acted in the best interest of the American Worker (unless you're a hedge-fund manager, of course).

[blueclown]

42. The terms are non-binding.

While the initial deal is not favorable to us, there is a Democratic president and Democratic Congress entering office that can and will change the terms of this agreement to make sure the union contracts don't get ripped up.

And the Big 3 still get their loan money immediately.

[AzDar]

50. Valid points.

:thumbsup:

[WriteDown]

67. Hate this deal, BUT......

unless you are going to get Americans to actually buy American cars or impose tariffs on Honda, Toyota, etc., I do not see any long term solution.

[ananda]

41. Translation: take away health care from the unions.

nt

[madrchsod]

44. the first chrysler bail out took over three months to hammer out a deal

i expect this deal will take at least that long when obama takes over the negotiations on jan 21,2009.

[debbierlus]

45. This is disgusting. Where is Obama on this? He supported the fucking bank heist

Where the hell is he?

Where are the speeches demanding protection of unions and American workers?

[matcom]

47. Obama isn't the President

chill out

[natrat]

51. stop with the obama is savior crap

for all we know he is no different than reid,pelosi,frank dodd and the rest of our crooked representatives

[matcom]

53. "savior"?

THAT is what you got from my reply?

"for all we know he is no different than reid,pelosi,frank dodd and the rest of our crooked representatives"

and for all we know he is :eyes:

methinks you found the wrong website

[Romulox]

57. Obama has been "triangulating" the auto issue. He hasn't really supported Labor through all of this

He's been calling for concessions from the UAW and offering tepid support for the Big 3 loan program, at best. This "he's not President yet" crap is meaningless when you see the other stimulus plans he's putting forward right now.

[DainBramaged]

48. Four months to completely restructure, that's an eternity

:sarcasm:

[Romulox]

58. Obama doesn't have the guts to break the UAW. Bush out-maneuvered him on this one, imo. nt

[DainBramaged]

71. Bush has been out-maneuvering us for 8 years

Pelosi and Reid need to go. They have not served the party except for the corporations and wealthy among us.

[workinclasszero]

59. If 17B with strings to the auto industry is megabucks what is 700B with no strings

to wall street crooks and insolvent banks? Supercalafragalistic bucks??

Fuckin wall street thieves that drove us into a depression are laughing all the way to the bank at the stupidity of americans.

[Romulox]

61. Interesting: Mods chose to consolidate threads under Murdoch "MegaBucks!" headline.

:wtf:

[dipsydoodle]

62. Bush unveils $17.4bn car bail-out

Sky was first up before any other links were available and the rules dictate we uses unamended headlines.

I then added the BBC one with the above headline.

edit to add : BTW don't fall into the trap of comparing UK's Sky with USA's Fox. Sky here needs to compete against BBC, ITN , CH4 etc and as such is hardly likely to amend / bend news or even worse create non existant news.

[Romulox]

64. Gimme a break. "Megabucks" is editorializing from a Murdoch organ. nt

[muriel_volestrangler]

68. Technically, 'gigabucks' would be accurate

since it's into the billions. It's just the dumbing down of language by Sky that I object to. But this was the first thread in LBN on the subject (and had a link to a news story right from the start), so that will have been the criteria the mods used to decide which one to consolidate them under.

[hatrack]

69. Horrible headline - "Megabucks"= 2.5% of the Great Bank Heist

Pathetic - but then, as you say, it's Murdoch.

[Gin]

70. I bet Paulson gets the rest of the 700B to give away because

they did this for the auto companies. There has to be something in this for his buddies.