U.S. car companies ask for loans

[The Old Maid]

What are your thoughts on the American car companies asking for federal loans?

Some people like the idea because a loan could get repaid. They point out that Detroit makes hybrids already and that Ford in particular scores at the top of the charts in terms of safety.

Other people dislike the idea because they think the car companies brought things upon themselves. They also think the American cars aren't very good.

Some people argue that the American companies pay health insurance for workers, health insurance for retirees, pensions, job retraining programs, and unemployment benefits (the "job bank"). In Korea, Japan, Germany, etc., the government pays for these things. That affects how much their cars cost to buy. People also wonder why the white-collar banks and investment groups got money with no mocking or conditions -- Citigroup didn't even ask; the money was pressed into their hands -- but when some blue-collar companies asked for a LOAN, they were ridiculed and sent away.

Here's an insta-chart of how widespread the problem could be state by state (http://money.cnn.com/news/specials/storysupplement/stateautoworkers/index.html).

If there were a manufacturing collapse, odds are that very few industries or occupations would escape untouched. But how should we stop it? What do you think?

[sun]

I am for giving the three auto makers loans. At this time, they are asking for 34 Billion in loans in order to keep their business operating. Loans will be paid back over time.

If we do not give them loans, GM and Chrysler are likely to go bankrupt in the next 30 days. It is currently estimated that as many as 2 million people will lose their jobs if this happens. This is the worst time to add that many people to the unemployment rolls. I am definitely for giving the auto makers loans to save jobs.

[Style]

How about saving just 2 out of 3? There is a legitimate argument that they were unable to compete in the market on there own terms. Maybe if congealed the industry a bit, the remaining 2 would be stronger and in a better financial position than continuing to support a 3 way domestic battle.

[defunctzombie]

I agree that we need to do something, but there needs to be a consequence or two for the guys who make more figures than most of the rest of the nation. A Loan is a good idea.

[chdr]

Loans should be given, but only for productive uses (no extravagant bonuses or unneeded expenses).

[Rook]

Side thought, isnt GM rooted in aeronautics and train engine development?

[DBZNarutoWarrior]

I think they should get loans. Not $34 billion though....

http://www.nowpublic.com/tech-biz/ford-and-gm-ceos-work-1

Some CEO's said they would accept a $1 annual salary but I hope that means they don't get any huge compensation/bonuses like they usually do each year. They really need to pay for how poorly they ran their companies in the recent times. Some companies also would agree to sell their private jets too.

So how about they do all of that first and subtract that difference from the $34 billion then see what we would be dealing with. It wouldn't be a substantial reduction, but that would give congress the absolute MAX they would agree on. However a $34 billion loan won't even last that long while the three companies combined are losing $6 billion a month. They're screwed.

It's definitely a tough issue and each solution does have setbacks. I'm hoping they pick the best solution possible.

[Beefy]

I'm against the government getting involved. Why should the government and the tax payer have to pay to clean up the mess made by these companies' poor decisions?

Some airlines went bankrupt after September 11th, maybe some car manufacturers should too.
There's still lots of other airlines and car manufacturers out there. If two or three go out of business, how much of a loss will it really be?

All the car manufacturers are suffering from low sales. What makes the Detroit Big Three think they're the only ones who deserve loans? Where are the loans for the Asian and European car manufacturers?

Where does the line get drawn? If we're bailing out mortgage companies and auto manufacturers today, what industry will my tax dollars have to rescue next?

[RayChuang]

Interestingly, I think what will happen is this:

1) Ford will get some sort of financial assistance, since Ford has a clear product path to more efficient vehicles that Congress likes. We'll get the new Fiesta at the end of 2009, the next-generation Focus by fall 2010, and Ford recently unveiled an updated version of the Fusion/Milan sedan with much improved fuel economy (Ford will replace the Fusion/Milan with an all new model that will be the same as the Mondeo sold in Europe by 2012).

2) We will see a pre-planned entrance of both GM and Chrysler into Chapter 11 bankruptcy proceedings with a special "czar" designated by the Commerce Department to guide these two companies into a merger. We will end up with a smaller, leaner GM (which will take over Chrysler's technology portfolio) with three divisions: Chevrolet (family cars plus Corvette), Cadillac (luxury cars) and GMC (light trucks and SUV's).

[G. Wen]

No. Small businesses do not get bailed out when they fail, and neither should big businesses. Everybody is equal under the law. Furthermore, didn't they ask for a loan some time ago, saying the money was going to their workers and pensions, but they ended up dipping into that fund because of bad business strategy? And when they were asking for this loan, didn't they fly to Capital Hill in private jets, which cost $20,000 each? They haven't started their new practices yet, and they won't. As long as we bail them out, they won't learn their lesson. It's just like the bank situation. When we bailed them out, the next day, they went to an expensive spa getting treatments well over thousands of dollars.

Detroit needs to start attracting new manufacturing businesses to their area. They needed to do this a loooong time ago.

[Punisher]

My opinions are strong on this matter(especially on the unions), but in short, I am for giving the big three the loans they need. Seeing the American auto industry sink away into bankruptcy and worse is extremely disheartening, as well as disastorous for over two million workers.

[Old Guy]

Other people dislike the idea because they think the car companies brought things upon themselves.

The auto industry is one of the reasons why we're in this mess. The economic crisis can be blamed on many things, but one of the main reasons is that we don't produce anything anymore. The auto industry back in the `80s decided to pack their bags and head overseas making us lose jobs and creating jobs for others. Since then other businesses have followed in their footsteps. If all these businesses would have stayed here everyone would have jobs which means that we'd be making money and buying stuff.

Small businesses do not get bailed out when they fail, and neither should big businesses. Everybody is equal under the law.

No, they're not. Wal-Mart employs thousands across the country. A small business is mom, dad, and the kids. If Wal-Mart shuts down like 10-15% of the country will be unemployed. Big difference.

[G. Wen]

No, they're not. Wal-Mart employs thousands across the country. A small business is mom, dad, and the kids. If Wal-Mart shuts down like 10-15% of the country will be unemployed. Big difference.

10-15% of the country will not be unemployed if Wal-Mart shuts down. I don't think that many people work for them. In a capitalist society, if one business does not succeed, another one replaces it. There's no point in draining everyone's pockets by keeping an inefficient business. If Wal-Mart fails, then another store will grow and replace it, much like how Wal-Mart replaced K-Mart, and how Kohl's and Marshall's is replacing Mervyn's (or is Marshall's the one going out of business, I honestly can't remember).

[defunctzombie]

10-15% of the country will not be unemployed if Wal-Mart shuts down. I don't think that many people work for them. In a capitalist society, if one business does not succeed, another one replaces it. There's no point in draining everyone's pockets by keeping an inefficient business. If Wal-Mart fails, then another store will grow and replace it, much like how Wal-Mart replaced K-Mart, and how Kohl's and Marshall's is replacing Mervyn's (or is Marshall's the one going out of business, I honestly can't remember).
Hey, we like our K-Mart, they still have lay-away.

[Old Guy]

if one business does not succeed, another one replaces it.

True, but these things don't happen overnight. Especially since the people who lost their jobs won't exactly be hired the following day by the company taking over. If Wal-Mart falls apart that doesn't mean that Target is gonna hire everyone. And people out of work means less spending and more companies being affected. It's a domino effect. Also, I don't think my number of 10-15% was high. There's a lot of Wal-Marts in the United States. It's like McDonalds. Think of all the McDonalds in the U.S. and how many employees it has. These large companies represent a large percentage of the work force.

[Joe]

So I suppose every multimillion dollar business should get bail-outs if it risks losing jobs, despite how bad the business decisions are. It's a very bad precedent to make a free market economy completely dependent on the government to keep it on its legs. What ever happened to making businesses accountable for their own mistakes, rather than pampering the big boys and leaving the smaller companies to rot because they don't employ a larger percentage of the U.S. population.

Well, whatever. If this country wants to have a socialist economy, then so be it. There's nothing I can do about it.

[The Old Maid]

Today the CEO of General Motors resigned after the U.S. president purportedly made it a condition of continued aid to the car companies.

Chrysler has practically been ordered to complete their proposed merger with Fiat. If they do merge, would American taxpayers be sending money to Fiat as well?

http://money.cnn.com/news/specials/detroitcrisis/

On a side note, Ford didn't take any loans. Can they survive alone? What do you think they're doing differently than the other companies?

We could be looking at 2 million people being added to the unemployment rolls. Maybe it will "only" be 1.5 million if Ford survives.

Thoughts?

[G. Wen]

On a side note, Ford didn't take any loans. Can they survive alone? What do you think they're doing differently than the other companies?

We could be looking at 2 million people being added to the unemployment rolls. Maybe it will "only" be 1.5 million if Ford survives.

Thoughts?
I don't know what Ford is doing differently, but doesn't Ford manufacture a lot of vehicles for police and fire departments? Maybe that's how they're staying afloat. Or is that Dodge?:confused:

If we have 1.5-2 million unemployed, we have to open up new (preferably private) business sectors to replace the failed businesses. It's difficult, but it'll fix the economy quicker than bailing out failing businesses who don't learn from their mistakes. Also, isn't a healthy economy a diverse economy? But we have cities/states depending on only one resource/service to keep it afloat (i.e. automotive, coal, etc.). It's time to change that!

[Yusuke Urameshi]

If we have 1.5-2 million unemployed, we have to open up new (preferably private) business sectors to replace the failed businesses. It's difficult, but it'll fix the economy quicker than bailing out failing businesses who don't learn from their mistakes. Also, isn't a healthy economy a diverse economy? But we have cities/states depending on only one resource/service to keep it afloat (i.e. automotive, coal, etc.). It's time to change that!


I agree, I dont want hard earned money to be used on seceret partys and jet-planes..its sad how these companys and beg and cry and then recieve the bailout only to abuse it.

[Ickis]

This is old news and as far as I care they don't deserve loans, their company management has been poor, most American cars have been over-stylized and budget-cut, they can get alot of money if their excecs get rid of their planes and whatever uneeded belongings of theirs, and there are more important issues than car companies. I'm a car nut but with how GM and Chrysler have been I can do without them.

[En Sabah Nur]

Ford isnt asking for any loans, they have a lot of cash flow in their foundation to help them. Its not that they are doing something different, its just they are not in a financial distress like the other two.

[defunctzombie]

I don't know what Ford is doing differently, but doesn't Ford manufacture a lot of vehicles for police and fire departments? Maybe that's how they're staying afloat. Or is that Dodge?:confused:
The Ford Police Interceptor is the standard police car that you see everywhere. It's just a fleet version of the Crown Victoria. http://en.wikipedia.org/wiki/Ford_Crown_Victoria_Police_Interceptor

Although lately, all of the police stations around me are buying Dodge Chargers instead. http://en.wikipedia.org/wiki/Dodge_Charger_(LX)#Police_Package_Version (http://en.wikipedia.org/wiki/Dodge_Charger_%28LX%29#Police_Package_Version)

Police sales have got to be helping Ford. Just about every town in the country has a market for these things.