Join Early Retirement Today
View Poll Results: Should the government bail out U.S. automakers?
Yes 18 10.00%
No 100 55.56%
Limited bailout 15 8.33%
Need to see the details before deciding 47 26.11%
Voters: 180. You may not vote on this poll

Reply
 
Thread Tools Search this Thread Display Modes
Why bankruptcy probably will not work
Old 11-14-2008, 11:41 AM   #61
Full time employment: Posting here.
cardude's Avatar
 
Join Date: Feb 2006
Posts: 599
Why bankruptcy probably will not work

Why GM can't survive bankruptcy

Some companies use the courts to reorganize and come out stronger. That would be difficult for GM, experts say.

By Chris Isidore, CNNMoney.com senior writer
November 13, 2008: 5:38 AM ET
NEW YORK (CNNMoney.com) -- It worked for the airlines, but it might not work for General Motors. Saving the company through bankruptcy is probably not a viable option for the troubled automaker. . . .

There is precedent for bankruptcy turnarounds. But those companies, filing under Chapter 11 of the bankruptcy code, were able to secure what is known as debtor-in-possession, or DIP, financing.
Lenders make such loans in part because bankruptcy law allow them to go to the front of the line of the company's creditors if the company is not able to stay in business. In turn, the bankrupt company uses the cash to make changes and return to profitability.
Without DIP financing, liquidation -- usually under bankruptcy Chapter 7 -- may be the only option left.
Experts in the field and even GM itself say that DIP financing might not be available for GM. . . .


http://money.cnn.com/2008/11/13/news...ptcy/index.htm
__________________

__________________
cardude is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-14-2008, 12:08 PM   #62
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
youbet's Avatar
 
Join Date: Mar 2005
Location: Chicago
Posts: 9,965
We lived through the steel mills closing and restructuring. We'll live through the auto plants closing and restructuring.
__________________

__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
youbet is offline   Reply With Quote
Old 11-14-2008, 01:03 PM   #63
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
maybe uncle sam should invest in the DIP game?
__________________
al_bundy is offline   Reply With Quote
Old 11-14-2008, 02:08 PM   #64
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Think about Donald Trump. How many times have him or his LLCs went bankrupt? Many.many times, yet he still gets financing for his next venture.

I'm sure he's looked at differently than GM, but if GM can get OUT of their health care commitments that are killing them, I think the bond market would welcome their efforts with open arms.
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 11-14-2008, 02:16 PM   #65
Recycles dryer sheets
bigla's Avatar
 
Join Date: Aug 2007
Location: Mt. Pleasant
Posts: 138
We shouldn't bail them out unless the Board of Directors get totally overhauled and the union contracts are voided and new sensible ones are in place. No sense bailing out a sinking ship when there are too many holes to plug up.
Larry
__________________
Retired early and loving it.
bigla is offline   Reply With Quote
Old 11-14-2008, 02:37 PM   #66
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
It will be interesting. If GM does fail and drives a systemic failure in the industry... Then the impact will be far and wide to our financial system and the economy.

It is not GM... it is the auto industry that could fail.

Those who are quick to say no govt help will $h!t if they lose another 1/3 of their assets from the current level... stocks and bonds (defaults).

We could see a DJIA at 6000. S&P 500 around 650. And perhaps 7 - 10 years to recover.
__________________
chinaco is offline   Reply With Quote
Old 11-14-2008, 02:39 PM   #67
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by chinaco View Post
It will be interesting. If GM does fail and drives a systemic failure in the industry... Then the impact will be far and wide to our financial system and the economy.

Those who are quick to say no govt help will $h!t if they lose another 1/3 of their assets from the current level... stocks and bonds (defaults).

We could see a DJIA at 6000. S&P 500 around 650. And perhaps 7 - 10 years to recover.
I guess the big question is WHEN is it better for GM to go bankrupt, now or after they burn through their $30 billion from the taxpayers?

There's no guarantee that folks will start buying cars like mad if the stock market goes up another couple thousand points on the Dow.......and if they did, WHY would they be GM cars??
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 11-14-2008, 02:44 PM   #68
Moderator Emeritus
laurence's Avatar
 
Join Date: Feb 2005
Location: San Diego
Posts: 5,234
Exactly, people don't want their cars. The brand has become somewhat toxic. It might not be fair, but it is what it is. The big 3 did have rather substantial cash reserves, it's just that their sales plummeted so rapidly they burned through it faster than anyone could have imagined. Restocking the cash reserve only delays the inevitable.
__________________
laurence is offline   Reply With Quote
Old 11-14-2008, 02:52 PM   #69
Thinks s/he gets paid by the post
 
Join Date: Jun 2005
Posts: 1,543
Quote:
Originally Posted by chinaco View Post
It will be interesting. If GM does fail and drives a systemic failure in the industry... Then the impact will be far and wide to our financial system and the economy.

It is not GM... it is the auto industry that could fail.

Those who are quick to say no govt help will $h!t if they lose another 1/3 of their assets from the current level... stocks and bonds (defaults).

We could see a DJIA at 6000. S&P 500 around 650. And perhaps 7 - 10 years to recover.
if GM goes into Chapter 7 then Toyota and the other automakers will probably buy up a lot of the plants at firesale prices and get cheap money from Uncle Sam to retool them. The auto bailout they passed a few weeks ago says anyone is qualified as long as they use the money for plants that are 20 years old or older
__________________
al_bundy is offline   Reply With Quote
Old 11-14-2008, 02:54 PM   #70
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
If the American Automotive industry does fail, our GDP will fall a substantial amount... The impact to our economy and industry will the equivalent of a economic nuclear blast.


The ripple effect into businesses that have nothing to do with car manufacturing will be devastating also. Doesn't matter if you are in the industry. You will feel it. It will impact you directly and indirectly. And the impact will be for years.

I doubt anyone will cheer when (if) it happens. Those basic principles that some are repeating will be cold comfort if it happens.
__________________
chinaco is offline   Reply With Quote
Old 11-14-2008, 04:12 PM   #71
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
FinanceDude's Avatar
 
Join Date: Aug 2006
Posts: 12,484
Quote:
Originally Posted by chinaco View Post
If the American Automotive industry does fail, our GDP will fall a substantial amount... The impact to our economy and industry will the equivalent of a economic nuclear blast.
Our GDP has already fallen a substantial amount.

Quote:
The ripple effect into businesses that have nothing to do with car manufacturing will be devastating also. Doesn't matter if you are in the industry. You will feel it. It will impact you directly and indirectly. And the impact will be for years.
If we give GM $30 billion, WHAT is their incentive to make any better business decisions going forward? All they will do is take the taxpayer money and use it to make pension and health care payments to their retired workers. It's NOT going to make them any more efficient than they already are unless GM makes the DECISION to quit being stupid. Bottom line, all we would be doing is giving GM a NIV (no income verification) loan, much like we did for Joe Smith in 2005 so he can get the $500,000 house he didn't deserve.........

I doubt anyone will cheer when (if) it happens. Those basic principles that some are repeating will be cold comfort if it happens.[/quote]

I guess you are in favor of a new paradigm in the USA. If your public company makes bad decisions, don't worry, the govt will bail you out. So when Obama slaps the oil companies with windfall taxes as the price of oil drops $50 a barrel, or he decides that pharmaceutical companies make too much money, and hits them with an excess profits tax, can they get bailed out too?
__________________
Consult with your own advisor or representative. My thoughts should not be construed as investment advice. Past performance is no guarantee of future results (love that one).......:)


This Thread is USELESS without pics.........:)
FinanceDude is offline   Reply With Quote
Old 11-14-2008, 04:36 PM   #72
Recycles dryer sheets
 
Join Date: Feb 2005
Posts: 166
I think that this bailout thing has gotten out of contol. Every state and local government and every industry wants or will want a bailout. Heck I even heard that the Atlanta Airport wants a bailout. GM and the other American auto makers have made some terrible decisions in their product line and union agreements. Even if they receive the $30 Billion, which they probably will get in January, they will burn through it quickly and be back again. There cars are not what the market wants. In order to design new cars and bring to market cars that the buyers want to buy at a price they are willing to pay, it will cost more billions in capital. Unless we are going to continue to pour billions into this hole, I see no solution in sight. If they are going to get this bailout, there should be some conditions attached such as renegotiate the union agreements and bring in new executives to run the company, preferably from Honda or Toyota.
__________________
treypar is offline   Reply With Quote
Old 11-14-2008, 04:57 PM   #73
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Midpack's Avatar
 
Join Date: Jan 2008
Location: Chicagoland
Posts: 11,977
Why should all the average Joe's with inferior wages, no pension and no retiree benefits bail out autoworkers who make cars almost no one wants?
Attached Images
File Type: jpg wages.jpg (53.8 KB, 3 views)
__________________
No one agrees with other people's opinions; they merely agree with their own opinions -- expressed by somebody else. Sydney Tremayne
Retired Jun 2011 at age 57

Target AA: 60% equity funds / 35% bond funds / 5% cash
Target WR: Approx 2.5% Approx 20% SI (secure income, SS only)
Midpack is offline   Reply With Quote
Old 11-14-2008, 05:05 PM   #74
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,284
Quote:
Originally Posted by Midpack View Post
Why should all the average Joe's with inferior wages, no pension and no retiree benefits bail out autoworkers who make cars almost no one wants?
That says it all - well done! Midpack - get - succinct - award.

Now for my blabber ....

Doesn't this give us some insight into the minimum wage issue? Does this show us what happens when you try to artificially raise someone's pay beyond what a free market would value it at? It isn't really sustainable, is it?

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 11-14-2008, 05:39 PM   #75
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by harley View Post
On an NPR report last night some dude who is against the bailout pointed out that the casino industry directly employs twice as many people as the auto industry, and is also suffering a major downturn due to the economic hiccup we are currently experiencing. But nobody is talking about bailing them out.
Not only that, brothels in the countryside outside of Reno are going bust left and right. Since this is something Americans still do well let's save the whorehouses.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 11-14-2008, 05:41 PM   #76
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,386
Quote:
Originally Posted by al_bundy View Post
if GM goes into Chapter 7 then Toyota and the other automakers will probably buy up a lot of the plants at firesale prices and get cheap money from Uncle Sam to retool them. The auto bailout they passed a few weeks ago says anyone is qualified as long as they use the money for plants that are 20 years old or older
No way any successful auto manufacturer will go into Michigan. It's UAW or bust. And given who will be in Washington, I'd say it's UAW all the way.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is offline   Reply With Quote
Old 11-14-2008, 05:41 PM   #77
Recycles dryer sheets
 
Join Date: Mar 2005
Posts: 352
Many chickens are coming home to roost here. As usual, the wage slave is the patsy. There will be huge irony in the breaching of contracts relative to the workers who embraced the Rebublican rhetroric and ideology of the past twenty years. The other irony is the substantial bailout of select financiers who actually make "nothing" but money in the abstract. I heard a lying commentator on right wing radio this a.m. saying that the top 3 reasons for the failure of the big 3 were union contracts, federal safety and cafe regulations and the valuation of the dollar relative to foreign currencies (in that order). I am not in a union but live in a region where prosperity is directly linked to the consumerism and satellite services generated by union contracts. When the people who have sold their souls to the big 3 are told, like the patsy in Animal House, that, "Hey, you fu**ed up, you trusted us," there is going to be trouble. The trouble will be a continuing downward spiral of woe that will probably not end up being capitalist nirvana. I realize that there are those who think that the end of unions, the end of government, the end of public schools and the end of ____________ (fill it in) will ensure their individual happiness.
__________________
windsurf is offline   Reply With Quote
Old 11-14-2008, 05:58 PM   #78
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Sep 2005
Location: Northern IL
Posts: 18,284
Quote:
Originally Posted by windsurf View Post
Many chickens are coming home to roost here. As usual, the wage slave is the patsy.
Did you see the numbers posted above? I hardly think "wage slave" applies to some of those union jobs.

Quote:
There will be huge irony in the breaching of contracts relative to the workers who embraced the Rebublican rhetroric
I'm not an R, but I kinda think they aren't real union-friendly. So how is this irony? Explain.

Quote:
I am not in a union but live in a region whee prosperity is directly linked to the consumerism generated by union contracts.
So the obvious solution to national prosperity is a $100/hour minimum wage, right?

-ERD50
__________________
ERD50 is offline   Reply With Quote
Old 11-14-2008, 09:56 PM   #79
Recycles dryer sheets
Steve O's Avatar
 
Join Date: Dec 2007
Posts: 291
The way they are printing $$$ lately you would think so
__________________
Steve O is offline   Reply With Quote
Old 11-14-2008, 10:45 PM   #80
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,431
When SS and Medicare go bankrupt, who will bail us out?
__________________

__________________
NW-Bound is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
How to Bail Out Main Street.... audreyh1 FIRE and Money 75 10-16-2008 09:45 AM
New Bail out Poll :) chinaco FIRE and Money 2 10-01-2008 05:54 AM
Do you support the Paulson bail out? Canadian Grunt FIRE and Money 92 09-29-2008 04:40 PM
So Will the Gov't Bail ME Out... tgotch Other topics 2 05-22-2008 09:05 PM
Can I bail in July???? Cattusbabe Hi, I am... 21 04-28-2006 03:03 PM

 

 
All times are GMT -6. The time now is 03:25 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.