GM - Bankruptcy?

[Twentyover]

So let's clear up a couple things right now. I'm tired of hearing people claim that the reason Detroit is in trouble is because "the Feds screwed up the banking..."

NOT TRUE - PERIOD!

Take a look at Chrysler for example. Do you know the main reason why Mercedes took a quality beating between 2003-2005? Because of the Daimler Chrysler fiasco. The actual financial situation of Chrysler BEFORE 2003 was SO bad that they were bleeding like crazy. Mercedes (Daimler Chrysler) had to siphon SO much money away from their core product that it cased massive quality issues on the MB side. Don't believe me? Believe the WSJ. The NYT. The Washington Post. Business Week. Take your pick. The business week quote in 2005 was "Far from being the perfect hedge, Chrysler proved to be a massive rescue job that sucked up billions and absorbed German management for years.".

Come ON people! Wake UP! PLEASE don't make stuff up about how the federal government failing to regulate the banking industry is responsible for this. IT IS NOT. And frankly, the federal government that got us into this mess to begin with. To be very honest, it was trying to use our economy as a social experiment without regard for credit risk that sent us down this path. It was trying to push how every man, woman and child in this country has a "right" to home ownership.

There are a number of vehicles that GM makes that it lost money on every unit sold. Frankly, this is nothing new for GM. A senior management representative back in the late 70s made the comment "for every Chevette we sell, we're putting $600 in every trunk. That's how much we lose on every one we sell".

While I don't agree on point that the Feds didn't under-regulate the banking industry, that's not the thrust of this argument; that is, that the fundamental cause of the current situation was not union wages, but sales tanking.

The implosion in housing values, which has pushed a number of banks to the edge of insolvency, has caused a large number of them to modify lending practices, resulting in a lack of credit and sales. This is being felt by all manufacturer's- note that Toyota's sales loss was IIRC the same as Ford's. If I'm incorrect,it was the same GM's- I haven't seen the graphic in a couple weeks.

The legislatures' experiment in social engineering, by perverting the Community Redevelopment Act, forcing banks to loan money to those who have no possible method to repay, and the fraud that the mortgage and banking industries the resulted, are a seperate issue, and are where I fault the federal regulation.

[Mr.VENGEANCE]

[wmhjr]

While I don't agree on point that the Feds didn't under-regulate the banking industry, that's not the thrust of this argument; that is, that the fundamental cause of the current situation was not union wages, but sales tanking.

The implosion in housing values, which has pushed a number of banks to the edge of insolvency, has caused a large number of them to modify lending practices, resulting in a lack of credit and sales. This is being felt by all manufacturer's- note that Toyota's sales loss was IIRC the same as Ford's. If I'm incorrect,it was the same GM's- I haven't seen the graphic in a couple weeks.

You're making a big mistake. The issue is NOT the sales volume. Yes, Toyota saw a huge drop in sales volume. It's PROFITABILITY!!!!! Yes, they are being impacted by a reduction in sales. But this is NOT what is causing problems at the Big 3. It is a lack of margin resulting from extraordinarily high expense creating huge operating losses. Take a look at the Toyota EPS - TODAY. Or last month. Last quarter. Compare that to GM. Toyota might have a slight loss of share value (about 2.6 or so) for ONE quarter - which is a first - and that's only share value. Now look at GM EPS.

That's what people are just not understanding. The credit crunch has certainly made matters worse for GM. But it did NOT CAUSE the problem. Just like Chrysler. Mercedes abandoned Chrysler after sinking billions of dollars into them. That was WAY before this current mess.

You can't focus on gross sales figures. You've got to look at profitability.

[parsonsj]

Amidst an ongoing financing struggle, and facing a Tuesday deadline to present a restructuring plan, General Motors Corp. is seriously considering filing for Chapter 11 bankruptcy and forming a new company, according to a report in today’s Wall Street Journal.

So... to get us all back on track, what happened? Got an update?

jp

[parsonsj]

I'll answer my own question:

When all is said and done,GM (GM, Fortune 500) said that by 2011 it could need a total of $30 billion, which includes the $13.4 billion in Treasury loans it has already received. In the near term, GM will most certainly need $9.1 billion in additional loans and could require another $7.5 billion in the next two years if auto sales don't improve.

Here's the whole story.

jp

[WS6]

I say Chapter 11. The government needs to stop making loans by taking from me and you to do so.

[shmoov69]

Sadly it ain't gonna happen Trey, and even sadder is that it is only gonna get worse! I would hope that it will be for only 3-4 more years, but I am quite affraid it will be starting from here on out the way the sheeple are starting to believe......that the government IS their savior.

[Damn True]

I say Chapter 11. The government needs to stop making loans by taking from me and you to do so.

I agree. But, the UAW played a big part in the results of the recent election at both the legislative and executive level. Thus, those who took fat checks from the UAW are not about to let GM and Mopar (Ford I think might make it on their own) go BK and crush the UAW. Therefore you and I will be made to pay for the bridge loan/bailout/handout or whatever they plan to call this one. Any way you spell it, it's my freakin money going to people who did not earn it.

[wicked68]

I agree. But, the UAW played a big part in the results of the recent election at both the legislative and executive level. Thus, those who took fat checks from the UAW are not about to let GM and Mopar (Ford I think might make it on their own) go BK and crush the UAW. Therefore you and I will be made to pay for the bridge loan/bailout/handout or whatever they plan to call this one. Any way you spell it, it's my freakin money going to people who did not earn it.

welcome to the USSA - united socialist states of america

[wmhjr]

I agree. But, the UAW played a big part in the results of the recent election at both the legislative and executive level. Thus, those who took fat checks from the UAW are not about to let GM and Mopar (Ford I think might make it on their own) go BK and crush the UAW. Therefore you and I will be made to pay for the bridge loan/bailout/handout or whatever they plan to call this one. Any way you spell it, it's my freakin money going to people who did not earn it.

What's even worse is Chrysler! They're owned by a Private Equity Group that has cash, but will not invest it in Chrysler. They instead want the taxpayers to bail them out.

This is criminal.

[Jim Nilsen]

Since there are so many non-believers..... Here's a pic. This was taken last year after I removed the bed in order to start getting at things. The vehicle was only moved to where it is in this picture in order to have room to lift the bed and put it somewhere else. Prior to this - and since - it has been garaged.

The frame is rusty. The interesting thing is that it rusted from the inside out. In other words, there is a rubbery coating from the factory on the frame, and the metal rusted through finally breaking the coating. The crossmembers have pinholes all the way around them near the joints to the frame rails. The body is rusty all along the rockers from the back of the cab to the front. In particular on the frame, you can see where the rust exists UNDER the coating. Unlike what you normally see for rust, where exposed metal starts to rust and then flakes off, in this case it really seems as though whatever coating GM put on (from the factory) trapped some sort of moisture or corrosive, causing the underlying metal to begin rusting. I have never seen anything like this before. The guy doing the interior on my '66 has a son who owns an '01 Silverado. His is exactly the same. The GM Executive office and a Senior VP of Engineering admitted to abnormal rust issues specific to the first 2.5 yrs of this model run.

The truck was well maintained, and lightly used. Honestly, it rarely saw action in the winter but was kept clean. My car is AWD. In 8 (going on 9) years it (the truck) barely has 50k miles on it. All of my vehicles are VERY well maintained. They generally look - and run - like new when I sell them used (with a couple exceptions, including the '90 Lumina).

My 1977 pickup frame looks better than that.wow.

[Nicks67GTO]

I agree. But, the UAW played a big part in the results of the recent election at both the legislative and executive level. Thus, those who took fat checks from the UAW are not about to let GM and Mopar (Ford I think might make it on their own) go BK and crush the UAW. Therefore you and I will be made to pay for the bridge loan/bailout/handout or whatever they plan to call this one. Any way you spell it, it's my freakin money going to people who did not earn it.

Ive got somthing to think about here, it may be a bit philisophical but....You know the sad truth is that you do this every day and every paycheck. There are millions of a-bags out there that get there own little individual "bailout" every month because they made bad decisions or what ever. This bailout is called welfare and you and I both pay it down every single month. I would actually be curious as to how much the entire welfare program in America costs annually. Does it compare to the bailout packages? I made the connections because the bailout is kind of like welfare on a huge scale. Does anyone have this information? I have a good feeling that theres alot more people abusing welfare than there are UAW members....at least the UAW's are going to work, let it be for what you call too much money or not. Like you said above "any way you spell it, its my freakin money going to people who did not earn it."

[wmhjr]

Ive got somthing to think about here, it may be a bit philisophical but....You know the sad truth is that you do this every day and every paycheck. There are millions of a-bags out there that get there own little individual "bailout" every month because they made bad decisions or what ever. This bailout is called welfare and you and I both pay it down every single month. I would actually be curious as to how much the entire welfare program in America costs annually. Does it compare to the bailout packages? I made the connections because the bailout is kind of like welfare on a huge scale. Does anyone have this information? I have a good feeling that theres alot more people abusing welfare than there are UAW members....at least the UAW's are going to work, let it be for what you call too much money or not. Like you said above "any way you spell it, its my freakin money going to people who did not earn it."

Well, not all of the UAW DOES go to work. Job banks?

But you're right - and I for one am no happier about it and never was. This just makes it far worse on a grander scale. And when we start rationalizing that we should give the free money to these folks because we gave it to some others, that is socialism. If we accept this as being OK, then we've put the stamp of approval of turning the US into a Socialist state.

[wmhjr]

My 1977 pickup frame looks better than that.wow.

Like I said. It is the worst vehicle I've ever owned. It is pure junk. I took this photo the day we pulled the bed off the truck. Since then, we've done the following:

Used a pneumatic scaler to remove as much rust as possible. Also used a slag hammer.
Used a wire brush a LOT
Cleaned everything a big more, then,
Used POR15 everywhere I could.
Replaced rear brake backing plates, emergency brake components (shoe assembly retainers inside the drums that rusted off)
Replaced ALL brake lines - front to rear
Replaced ALL fuel lines
Replaced ABS module because local dealer (when working on brakes previously) deformed one port causing it to leak
Replaced front and rear calipers
Replaced top fuel tank plate (that retains sending unit/pump inside tank) - it was rusted
Replaced rear shocks
Replaced front and rear u-joints on front drivesahft
Scaled front driveshaft and repainted to try and prevent future rust
Replaced front and rear rotors

What is still left to do?
Repair transmission cable that the end snapped off of (rust)
Repair or replace rear bumper - it's real rusty under where the black plastic is.
Blast and repaint trailer hitch
Wire brush bottom or rockers on body, and then POR15 to try and prevent the bottom from just falling off
Drill out one broken body mount bolt on bed, chase or rethread
Mount bed back on frame
Determine if "squealing sound" from engine compartment is water pump failing, belt tensioner, or bearings in compressor, alternator or PS pump

This truck has not been driven on a road for over a year now. I work on it as I have time and energy. I hate the truck so it's always the last thing I work on. Trouble is, it's worth nothing to sell or trade. I'm hoping to get it at least solid that it's somewhat usable for another few years. I'm guessing it'll be in a salvage yard within 3 years.

[WS6]

I believe the job banks have been closed as part of concessions made by the UAW to help the companies. How long did they go on though?

<too political>

I'm moving to Canada. James, if you're reading this can I come live with you for a bit and be on your pit crew for the One Lap camaro? Pretty please?

[Damn True]

What's even worse is Chrysler! They're owned by a Private Equity Group that has cash, but will not invest it in Chrysler. They instead want the taxpayers to bail them out.

This is criminal.

Fiat is buying into ChryCo as well.

[paul67]

And james gets free health care.

[James OLC]

Yeah... life in Canada is cheap and easy... lol.

My door is always open for anyone who wants to explore the great white north for a while... and I can always use a hand with the OLC or the other '67 that is sitting gathering dust... hmmm.. maybe you should send resume's before stopping by....

that being said, the OLC won't be here for much longer...

[Vegas69]

Can the US file Chapter 7? This whole deal kind of reminds me how we got in this mess. Loaning people money that had no business with it. If my business was losing money every year the bank would laugh at me. They should be forced to file chap 11. They aren't making any money anytime soon and that's a guarantee. Everybody else is doing it. We have two of our largest Casino owners doing it now. All they are doing is preparing for the future. Gaming was down 10% but they expect worse. Really disgusting.

[WS6]

Don't tempt me too much James. I'm actually going to be working on my resume soon in preperation for graduation this time next year. I hate to say this but I may start considering looking into working for an oil company or other international engineering firm so I can work over seas somewhere. I'd love to work at DSE I bet but I'm starting to have a hard time justifying staying in this country any more than I have to. Yeah, I know taxes are high for people that do this(I can't think of the term for them right now) but the high taxes don't start until you get to a good pay scale.

Todd, I think you have the best idea yet.