Can Congress save the U.S. auto industry?

[shank0668]

http://www.miamiherald.com/news/poli...ry/768346.html
Discuss

[FenwickHockey65]

I read the title of this thread and almost did a happy dance.

Until I read the article and saw that it was just another article about the proposed bailout.

And the $25 billion loan that we should ALREADY have.

[Kyle2k]

Can people quit posting this stuff until they actually "pull the trigger"

[BowtieGuy]

It isn't a bailout. It's a low interest loan.

[fastball]

I just saw on the news the current proposal being discussed in congress has the $25B offered with a very heavy stipulation: that in turn the govt. will own a percentage of the companies. This is the proposal that is gaining momentum. I have to say, I am not completely opposed to that. It gives some checks and ballances to the loan that the money will be used properly.

This is going to be one hellatious roller coaster ride before it's all said and done.

[headpunter]

my dad said that Barney frank was saying the government should give them some money and force the union to loosen its stranglehold on the industry by lowering pension contributions and medical requirements.

[fastball]

Originally Posted by headpunter

my dad said that Barney frank was saying the government should give them some money and force the union to loosen its stranglehold on the industry by lowering pension contributions and medical requirements.

I think that will happen by the time it's all said and done. The govt. wants the loan to go to helping the company restructure for profitability, not to load off on pensions and healthcare costs (although, in a way that would help GM get back to profitability in and of itself). If the feds have part ownership, they could make the UAW all but dissappear.

[nester7929]

I'd rather see the government bail out GM than the companies that helped caused this crisis in the first place like they've been doing.

[Georgie]

how about they just don't listen to the UAW anymore

[The_Blur]

Originally Posted by BowtieGuy

It isn't a bailout. It's a low interest loan.

It amazes me how thoroughly uninformed some people are about the world around them. Bailouts don't get paid back. Loans do. This is a loan.

[Georgie]

the "bailout" is one big a-- loan anyway, we are supposed to get all that money back w/ interest. its just referred to as a bailout

[The_Blur]

Originally Posted by Georgie

the "bailout" is one big a-- loan anyway, we are supposed to get all that money back w/ interest. its just referred to as a bailout by those who aren't really listening

I corrected it for you.

[Georgie]

it should have a negative connotation like "bailout" attached to it because companies shouldn't think they can just get a fairly generous "loan" from the taxpayers' government whenever they get in trouble

[MrIcky]

Originally Posted by The_Blur

It amazes me how thoroughly uninformed some people are about the world around them. Bailouts don't get paid back. Loans do. This is a loan.

Well your theory is sound, however in practice it almost never works this way. These loans invariably turn into bailouts. This is because GM will simply default. Then the government is in the position of having to force GM into bankruptcy to pay the 'loan' which was granted to keep GM from filing bankruptcy- see the catch-22? It's an uncallable financial instrument. An uncallable financial instrument is called a 'gift'. In fact, the entire 700b dollar package that was supposed to buy bad assets was just changed into a plan to get more loans into the market. This includes unsecured credit card debt (heavily, actually). It just got turned into an ad hoc stimulus through increased credit package.

I don't want to go ad hominem on you Blur (and others), but I don't think you've been paying attention to the way the finance system interacts with government.